The case of Anandji Kalyanji vs. ACIT was heard by the Income Tax Appellate Tribunal (ITAT) Jodhpur, and it concerns the application of Section 154 of the Income Tax Act, 1961, which allows for the rectification of mistakes in income tax assessments. Here’s a summary of the case:
Background: The assessee filed an appeal against the order of the Commissioner of Income Tax (Appeals) National Faceless Appeal Centre (NFAC), Delhi, dated 27.12.2023, for the Assessment Year 2013-14. The appeal challenged the decision of the Commissioner (Appeals) in confirming the finding of the Assessing Officer (AO) under Section 154 of the Income Tax Act, holding that there was no apparent mistake from the record.
Assessee’s Claim: The assessee contended that during the assessment proceedings, the AO computed the turnover of the assessee by totaling the credit side of cash receipts as per the cash book. However, the assessee argued that not all cash receipts constituted business turnover, and this was a mistake apparent from the record that should have been rectified under Section 154. The appellant also claimed that the Commissioner (Appeals) ignored their submissions and upheld the AO’s order rejecting their Section 154 application.
AO’s Response: The AO supported the impugned order.
ITAT Decision: The ITAT heard both sides and reviewed the available material and the impugned order. The ITAT noted that the claim made by the appellant was essentially a request to review the assessment order through further verification and examination of books of account, including the ledger, cash book, and supporting documents. The ITAT emphasized that the appellant’s claim involved a debatable issue and did not fall under the category of omission or apparent mistake from the record.
Section 154 of the Income Tax Act allows for the rectification of only those mistakes that are apparent and patent from the record, and whose correction doesn’t require further investigation or verification. In this case, the ITAT concluded that the issue raised by the appellant was debatable and not eligible for rectification under Section 154.
As a result, the ITAT dismissed the appeal of the assessee.
Conclusion: The ITAT decision highlights the limitations of Section 154 of the Income Tax Act, which allows rectification of only apparent and patent mistakes in income tax assessments. Debatable issues that require further verification and examination are not eligible for rectification under this provision. In this case, the ITAT determined that the issue raised by the appellant did not meet the criteria for rectification under Section 154 and, therefore, dismissed the appeal.
FULL TEXT OF THE ORDER OF ITAT JODHPUR
This captioned appeal has been filed by the assessee against the order of the ld. CIT (A) National Faceless Appeal Centre (NFAC), Delhi dated 27.12.2023 in respect of Assessment Year 2013-14 challenging therein the decision of the ld. CIT(A) in confirming the finding of the AO u/s 154 of the Act by holding that there was no mistaken apparent from the record.
2. At the outset, the ld. counsel for the assessee has submitted that during the course of assessment proceedings, the ld. AO has examined the books of account of the assessee during the course of scrutiny and computed turnover of the assessee by totaling the credit side of cash receipt as per the cash book which are without application of mind. He argued that all the cash receipts do not constitute the business turnover of the assessee and therefore, it was a mistake apparent form the record which ought to have been considered and rectified by the Assessing Officer to reduce the burden of the Higher Authority. He, further submitted that the ld. CIT(A) has ignored the submissions of the appellant in confirming the finding of the AO in upholding the order passed by the AO in rejecting the application u/s 154 filed by the assessee. He prayed that the matter may be set aside with appropriate direction to the ld. CIT(A) or the ld. AO.
3. Per contra, the ld. AO relied on the impugned order.
4. We have heard both the sides, perused the material available on record and the impugned order. Admittedly, the AO has examined the books of account of the assessee, the cash book in particular while computing turnover of the assessee. At this stage, the claim made by the appellant u/s 154 amounts to review of the assessment order by way of further verification and examination of books of account of the appellant, the ledger, cash book and other supporting documents. Meaning thereby, that AO would again require to conduct scrutiny by further verification to verify quantum of turnover as claimed by the appellant. In our view, the claim of the appellant that there was a wrong computation of turnover based on cash receipts credited in the cash book is debatable and review of the assessment proceedings which do not call under the category of omission or apparent mistake from the record. As per provisions u/s 154 only a mistake which are apparent and patent from record, and whose discovery is not depending on any further investigation/verification can be rectified u/s 154 of the Income Tax Act. In view of that matter, the instant case does not fall in the said category and hence, we hold that the issue being debatable which cannot be rectified u/s 154. Accordingly, issue challenged in the grounds raised by the assessee on the issue are dismissed as not maintainable.
5. In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 12.10.2023