AO Justified in Rectification of Apparent Error Instead of Substituting the Same: ITAT [Read Order]

The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) has held that the AO was justified in rectification of apparent error instead of substituting the same.

The assessee Vijayaraghavan Lakshmi who was an individual and was a professional interior decorator,filed return and was selected for scrutiny and the AO passed the order wherein he had made addition  by bringing to tax the long term capital gain by denying the exemption and made addition on account of denial of cost of improvement.

Subsequently, a search and seizure operation was carried out in case of the assessee After due verification and examination of the seized/impounded material and information furnished by the assessee during assessment proceedings, the AO accepted the income originally returned.

Subsequently, the AO noted that the assessment was completed under Section 143(3) of the Income Tax Act for AY 2016-17 on 06.12.2018 wherein the income was determined and demand was raised. The AO, therefore, issued a notice under Section 154 of the Income Tax Act proposing to rectify the assessment. Since the assessee had not responded to the notice the AO determined the assessed income.

A. Srinivas,who appeared on behalf of the revenue submitted that passing of order under Section 154 of the Income Tax Act to bring the same amount to tax in AY 2016-17 was not justified.

V.M.Mahidhar,on behalf of the revenue submitted that the order passed under Section 143(3) read with Section 153A, of the Income Tax Act the AO had accepted the returned income without rectifying the figure of the assessed income, there was an apparent mistake in the order.

The two-member Bench of Rama Kanta Panda, (Accountant Member) and  K.Narasimha Chary, (Judicial Member) dismissed the appeal filed by the assessee holding that,”when there was an apparent mistake in the order of the AO in accepting the returned income instead of substituting the same with the assessed income there was an apparent error and the AO was fully justified in rectifying the same.”

To Read the full text of the Order CLICK HERE

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