2010 (3) TMI 1121 - AT - Income Tax

Summary

Issues involved: Assessment under u/s.115JA, Rectification u/s.154, Applicability of retrospective amendment, Mistake apparent from record.

Assessment under u/s.115JA:
The assessee filed a return of income for A.Y 1998-99 declaring total income u/s.115JA of the Act. The AO assessed the total income at a different amount. Subsequently, it was found that the provision for doubtful debts was not added back to the profit & loss account while computing deduction u/s.115JA. The AO rectified this by passing an order u/s.154. The CIT(A) allowed this rectification, which was further confirmed by the ITAT based on relevant case laws. The Finance Act, 2009 introduced a clause making provisions for doubtful debts disallowable while calculating profit u/s.115JA w.e.f. A.Y 1998-99. The Tribunal held that the revenue's application for rectification was not valid as there was no mistake apparent from the record in the order of the Tribunal.

Rectification u/s.154:
The revenue filed a miscellaneous application u/s.254[2] of the I.T.Act seeking rectification of the order passed by the AO u/s.154. The assessee contested this, stating that the revenue failed to point out any mistake apparent from the order when it was passed. The assessee relied on a decision of the Bombay High Court to support their argument that retrospective amendments cannot be a basis for rectification if the proceedings were concluded under the existing law. The Tribunal agreed with the assessee, dismissing the revenue's application for rectification.

Applicability of retrospective amendment:
The Tribunal noted that the retrospective amendment of the Act came after the order was passed. Citing a similar case before the Bombay High Court, it held that proceedings concluded under the existing law do not constitute a mistake apparent from the record. The Tribunal emphasized that it is bound by the decision of the jurisdictional High Court, which established that no mistake existed in the Tribunal's order due to subsequent amendments to the law. The Tribunal distinguished a decision of the Karnataka High Court cited by the revenue, further supporting the dismissal of the revenue's application.

Mistake apparent from record:
After considering the arguments of both parties and relevant case laws, the Tribunal concluded that there was no mistake apparent from the record in the order passed by the Tribunal. It highlighted the timing of the law amendments in relation to the Tribunal's order as a crucial factor in determining the validity of the revenue's application. Consequently, the revenue's miscellaneous application was dismissed by the Tribunal.