Mistake not Apparent and Known to AO without In-Depth Analysis: ITAT upholds Rejection of Rectification Application [Read Order]

The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) has upheld the rejection of rectification application holding that the mistake was not apparent and known to Assessing Officer (AO) without in-depth analysis.

A search operation was initiated in the case of the assessee, namely Krishna Kumar D. Shah, being the Kartha of HUF at his residential premises. Simultaneously, a search action was conducted in respect of the remaining assessees, who were none other than his three sons.

The search action was launched in these cases on the basis of specific information gathered by the revenue that the assessee had sold their land property by way of entering into Joint Development Agreement (JDA) with developers.

During the course of assessment proceedings, as per the said JDA, Assessing Officer had proposed to tax capital gains on transfer of property by virtue of deemed transfer under Section 2(47)(v) of the Income Tax Act. The AO completed the assessment against the assessee HUF and the same had been confirmed in appeal.

The assessee filed an application under section 254 before the tribunal seeking rectification of the order passed by it, however the said application for rectification was also dismissed by the tribunal.

Thereafter the assessee filed three separate applications under Section 154 of the Income Tax Act requesting the Assessing Officer to rectify the assessment orders and he held that the scope of this section was limited and that the power under this Section could not be used to review an order.

C.P. Ramaswamy  on behalf of the revenue submitted that the assessee had filed the application under Section 154 of the Income Tax Act before the Assessing Officer after getting a dismissal order from the Tribunal on 12.07.2012.

once the proceedings in the case of the assessee have finalised and the statutory period for filing the appeal before the Hon'ble High Court had lapsed, the assessee resorted to filing of application u/s 154 of the Act before the Assessing Officer and in the said application, the assessee had claimed various reliefs

Rajendra Kumar on behalf of the assessee submitted that the jurisdictional issue being legal in nature could be raised by the assessee in the proceedings under section 154 of the Income Tax Act proceedings being a collateral proceeding and also at any stage

The two-member Bench of Rama Kanta Panda, (Accountant Member) and Laliet Kumar, (Judicial Member) observed that, the apparent mistake was one which could be found out without any efforts and reasoning or for which no detailed reason or enquiry was required.

“In the present case, neither the substantial proceedings nor the collateral proceedings were pending before the Assessing Officer and therefore, the Assessing Officer was right in not entertaining the application for rectification filed by the assessee and had rightly dismissed the same,” the Bench further observed.

The Bench allowed the appeal filed by the revenue and dismissed the rectification application holding that a mistake which could be rectified required to be apparent and should be known to the Assessing Officer without any in-depth analysis.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates