2011 (10) TMI 647 - AT - Income Tax

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Validity of the rectification order u/s 154.
3. Impact of the Kar Vivad Samadhan Scheme (KVSS) on the rectification order.

Summary:

1. Delay in Filing the Appeal:
The appeal was delayed by 286 days. The delay was condoned based on the precedent set in CIT Vs. K.S.P. Shanmugavel Nadar & Ors. (1985) (153 ITR 596) (Mad.), which allows for the time taken in prosecuting other remedies to be considered when determining if there was sufficient cause for the delay.

2. Validity of the Rectification Order u/s 154:
The Assessee challenged the rectification order u/s 154 dated 27.11.2000, which disallowed the full depreciation claim on assets used for less than 182 days, resulting in an additional tax demand of Rs. 51,19,412/-. The CIT(A) upheld the rectification, stating that the mistake was apparent from the record and within the scope of section 154.

3. Impact of the Kar Vivad Samadhan Scheme (KVSS) on the Rectification Order:
The Assessee argued that the rectification was invalid as the tax arrears had been settled under the KVSS, which should be conclusive. The Tribunal agreed, citing the Supreme Court's decision in Killick Nixon Ltd vs Deputy C.I.T. (2002) 258 ITR 627 (S.C), which held that once a declaration under KVSS is accepted and tax is paid, the assessment cannot be reopened or rectified. The Tribunal also referenced decisions from the High Courts of Allahabad and Madhya Pradesh, which supported the finality of orders under KVSS.

Conclusion:
The Tribunal concluded that the Assessing Officer did not have the jurisdiction to rectify the assessment order that was settled under KVSS. The appeal of the Assessee was allowed, and the addition made by the Assessing Officer was deleted.

Order Pronounced:
The appeal of the Assessee was allowed, and the order was pronounced in the open Court on 13.10.2011.