2009 (6) TMI 686 - AT - Income Tax

Summary

Issues Involved:
1. Rectification of mistakes apparent from record u/s 254(2) of the Income-tax Act, 1961.
2. Block assessment and addition of undisclosed income u/s 158BC.
3. Treatment of cash found during search operations as undisclosed income.

Summary:

Issue 1: Rectification of mistakes apparent from record u/s 254(2) of the Income-tax Act, 1961
The assessee filed miscellaneous applications seeking rectification of mistakes apparent from the record in the Tribunal's order dated 29-9-2008. The Tribunal held that the issues raised by the assessee were adjudicated on merit after evaluating rival submissions and relevant records. The Tribunal emphasized that issues considered and decided on merit do not constitute obvious, glaring, patent, and self-evident mistakes of facts or law within the meaning of section 254(2). The Tribunal cited the jurisdictional High Court's decision in CIT v. Ramesh Electric & Trading Co. [1993] 203 ITR 4972 (Bom.), stating that the power of rectification can only be exercised for obvious and patent mistakes apparent from the record, not for errors requiring lengthy reasoning or arguments.

Issue 2: Block assessment and addition of undisclosed income u/s 158BC
In M.A. No. 230/Mum./09, the Assessing Officer made an addition of Rs. 1,15,00,000 as undisclosed income, representing investment in imports and profits therefrom. The CIT(A) deleted the addition based on the Commissioner of Customs' adjudication order and the assessee's submissions. However, the Tribunal restored the Assessing Officer's findings, concluding that the CIT(A)'s order was based on irrelevant material and ignored the relevant evidence brought on record by the Assessing Officer.

Issue 3: Treatment of cash found during search operations as undisclosed income
In M.A. No. 231/Mum./09, the Assessing Officer treated Rs. 5,26,000 found at the assessee's residence during a search operation as undisclosed income. The CIT(A) deleted the addition, but the Tribunal upheld the Assessing Officer's decision, noting that the CIT(A) ignored relevant evidence and statements. The Tribunal found that the assessee admitted in a statement u/s 132(4) that he had no evidence to explain the cash found and that it was from unrecorded cash sales.

Conclusion:
The Tribunal dismissed both miscellaneous applications, concluding that the issues raised were adjudicated on merit and did not constitute mistakes apparent from the record u/s 254(2). The Tribunal reiterated that the scope of section 254(2) is limited to rectifying apparent mistakes and does not extend to reviewing or reconsidering decisions taken on merit.