ITO Vs Udayan Mandavia (ITAT Ahmedabad)
The ITAT Ahmedabad dismissed the Department’s appeal and upheld the CIT(A)’s order quashing rectification under Section 154, wherein the Assessing Officer had increased the tax rate on addition under Section 69A from 30% to 60% by applying amended Section 115BBE. The Tribunal held that the applicability of the amended 60% rate is a debatable issue and supported by consistent judicial precedents stating that the amendment is prospective and applicable only from 01.04.2017 onwards, not to earlier transactions falling in A.Y. 2017–18. Since rectification under Section 154 is permissible only for mistakes apparent on record, issues involving interpretation of law or multiple views cannot be rectified. The Tribunal also noted procedural lapses, including lack of proper opportunity. Consequently, it upheld that the addition should be taxed at the pre-amended rate of 30%, and the rectification order was rightly quashed.
Core Issue:The core issue involved in the present case is whether the enhanced tax rate of 60% under the amended provisions of section 115BBE can be applied to additions made under section 69A for Assessment Year 2017–18, and whether such application can be made through rectification proceedings under section 154 as a “mistake apparent from record.”
