2016 (1) TMI 1114 - AT - Income Tax

Rectification of mistake - net profit as per profit and loss account is ₹ 1,94,33,895 and that the depreciation as per books of accounts, which is required to be added back to the profit as per profit an dloss account, is ₹ 3,20,466 and not ₹ 32,40,466 - Held that - The fact that mistake has occurred is beyond doubt. The fact that it is attributed to the error of the assessee does not obliterate the fact of mistake or legal remedies for a mistake having crept in. It is only elementary that the income liable to be taxed has to be worked out in accordance with the law as in force. In this process, it is not open to the Revenue authorities to take advantage of mistakes committed by the assessee. Tax cannot be levied on an assessee at a higher amount or at a higher rate merely because the assessee, under a mistaken belief or due to an error, offered the income for taxation at that amount or that rate. It can only be levied when it is authorised by the law, as is the mandate of Art. 265 of the Constitution of India. A sense of fairplay by the field officers towards the taxpayers is not an act of benevolence by the field officers but it is call of duty in a socially accountable governance. If authority is needed even for justifying this approach to the taxpayers, one need not look beyond the circulars issued by the CBDT itself. One can understand the young Assessing Officers being overzealous in their approach and making such mistakes, something is needed to be done to ensure that the appeals are not filed before the higher forums as a matter of routine. Only if the field authorities are little more cautious, and stay away from such pedantic approach, such thoughtful initiatives and pragmatic approach of the Government, at the highest level, will earn more goodwill and greater trust at the ground level. As we are dismissing this appeal, and confirming the relief granted by the learned CIT(A), we make it clear that while we are not awarding any costs in this case, we must put in a word of caution here. There has to be proper mechanism to ensure that such frivolous appeals are not filed. However, if that does not happen and these frivolous appeals continue to clog the system, it is only a matter of time that the Tribunal starts awarding costs, in such cases, as a measure to deterrence to the officers concerned. We hope that does not happen. - Decided against AO

Summary

Issues Involved:
Challenge to correctness of order under section 154 r.w.s. 143(3) for assessment year 2008-09.

Detailed Analysis:
1. The Assessing Officer challenged the correctness of the order dated 12th December 2013 passed by the CIT(A) regarding rectification under section 154 r.w.s. 143(3) of the Income Tax Act, 1961, for the assessment year 2008-09.
2. The Assessing Officer contended that the CIT(A) erred in law by directing the AO to rectify the mistakes under section 154 and should have upheld the original order.
3. The relevant facts indicated discrepancies in the computation of assessed income, particularly in the net profit and depreciation figures, leading to a rectification petition by the assessee.
4. The Assessing Officer rejected the rectification request, citing that the figures were based on the assessee's computation, despite acknowledging the correctness of the profit and depreciation figures pointed out by the assessee.
5. The CIT(A) reversed the Assessing Officer's decision, emphasizing the glaring mistakes apparent from the records and directing the AO to rectify the errors under section 154.
6. Dissatisfied with the CIT(A)'s decision, the Assessing Officer appealed to the ITAT.
7. During the appeal hearing, the Departmental Representative justified the Assessing Officer's stand, arguing against rectification based on the assessee's initial claim and the requirement for a revised return for any new claims.
8. The ITAT criticized the Assessing Officer's inertia in rectifying obvious mistakes in the assessment order, highlighting the necessity to correct errors regardless of their origin and emphasizing fair play in tax proceedings.
9. The ITAT stressed the duty of Revenue authorities to assist taxpayers and rectify mistakes to ensure accurate taxation, citing relevant circulars and legal obligations.
10. The ITAT emphasized the importance of following humane guidance for field officers to maintain taxpayer trust and confidence in the tax system, warning against routine appeals against justified relief granted by appellate authorities.
11. Ultimately, the ITAT dismissed the appeal, confirming the relief granted by the CIT(A) and highlighting the need for a mechanism to prevent frivolous appeals to avoid clogging the system and potential cost penalties in the future.