Case Law Details
Town Vividodesha Sahakari Bhandara Niyamitha Vs ITO (ITAT Bangalore)
Introduction: In a recent judgment by the Income Tax Appellate Tribunal (ITAT) in Bangalore, the case of Town Vividodesha Sahakari Bhandara Niyamitha Vs Income Tax Officer presents a significant clarification on the scope and limitations of rectification proceedings under Section 154 of the Income Tax Act. This appeal, challenging the CIT(Appeals) National Faceless Appeal Centre, Delhi’s decision for the assessment year 2014-15, delves into whether the CIT(Appeals) was justified in upholding the Assessing Officer’s denial of deduction under Section 80P of the Act amounting to Rs.27,16,210.
Detailed Analysis:
The heart of the dispute lies in the rectification order passed under Section 154, denying the deduction under Section 80P claimed by the assessee, a credit co-operative society. Initially accepted in the assessment order dated 14.12.2016, the deduction was later contested through a rectification notice dated 22.7.2021, citing the decision of the Supreme Court in the case of Citizen Co-operative Society Ltd. and Saurashtra Kutch Stock Exchange Ltd. as justification.
The ITAT’s analysis highlights a fundamental principle of tax law: rectification under Section 154 is constrained to obvious and patent mistakes – errors that are immediately apparent and do not require elaborate reasoning to uncover. The tribunal found that the Assessing Officer’s order lacked a detailed explanation of how the deduction granted was a manifest error, particularly given the absence of any material showing that the assessee had violated the principles of mutuality or engaged in transactions with non-members.
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