The Income Tax Appellate Tribunal (ITAT), comprising Shri Kul Bharat, Judicial Member & Shri Pradip Kumar Kedia, Accountant Member has held that the Assessing Officer cannot invoke the power to rectify an order under section 154 of the Income Tax Act, 1961 in order to enhance the assessed income.
The Assessing Officer passed an assessment order and later rectified the same adjusting Rs.3,32,350/- on account of provision for leave encashment under Section 154 of the Act.
The assessee relied on the decision of the Calcutta High Court in the case of Exide Industries Ltd. vs. Union of India and contended that the High Court at the time of passing of rectification order dated 12.06.2018, expressed aview that Section 43B(f) governing allowability of leave encashment is not a good law and is to be struckdown being arbitrary and unconscionable was in vogue. It is contended that the Assessing Officer at the time of rectification carried out, could not have taken a view inconsistent with judgment of the Calcutta High Court more particularly under the narrow scope of Section 154 of the Act.
Allowing the contentions of the assessee, the Tribunal held that “We concur with the aforesaid contentions raised on behalf of the assessee without any demur. The Assessing Officer could not have enhanced the assessed income towards provision for leave encashment by way of rectification under Section 154 of the Act atthe relevant time contrary to judgment rendered by Hon’ble Calcutta High Court under Section 154 of the Act. The action of the Assessing Officer is thus reversed and position of the assessee is restored.”
Shri I.P. Bansal, Adv appeared for the assessee.
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