2012 (8) TMI 632 - HC - Income Tax

Rectification of mistake - mistake in the rectification allowed based on the wrong claim by the assessee - assessee conceded his mistake but raised certain other claims Held that - Assessing Officer rectified the assessment on an agreed basis but simultaneously rejected additional loans claimed by the assessee from 3 other persons for want of convincing evidence - assessee s appeal against the second rectification order was allowed by the CIT (Appeals), which was reversed by the Tribunal on Departmental appeal - claims were rejected because the assessee could not substantiate his claim of debt due to the 3 parties, which is a new claim made in second rectification after completion of the assessment, which itself is not maintainable

Summary

Issues: Dispute over undisclosed income computation, rejection of additional loan claims in rectification proceedings.

In this judgment by the Kerala High Court, the main issue revolved around the computation of undisclosed income and the rejection of additional loan claims during rectification proceedings. The court noted that the dispute raised by the appellant did not involve any substantial question of law as it primarily concerned the rejection of the assessee's explanation regarding loans from various creditors. The undisclosed income was computed for block assessment based on the accretion to net wealth during the block period. The Assessing Officer initially accepted the assessee's claim of a debt worth Rs. 82,80,483 from 4 persons, which was over and above specific credits allowed. However, a rectification application was filed claiming a further deduction of Rs. 23,20,000 as payable to another party, which was mistakenly allowed by the Officer. Subsequently, the Assessing Officer rectified the assessment to reverse the mistake, leading to a series of rectifications due to errors in the original assessment.

The court highlighted that the Assessing Officer noticed the mistake in the rectification allowed based on the wrong claim made by the assessee. Despite the assessee conceding the mistake, certain other claims were raised, leading to further rectifications. The court emphasized that the rejection of additional loans claimed by the assessee from 3 other persons was due to the lack of convincing evidence to substantiate the claims. The assessee's appeal against the second rectification order was initially allowed by the CIT (Appeals) but was later reversed by the Tribunal on Departmental appeal.

The key question addressed by the Tribunal was whether there was convincing evidence regarding the 3 items of loan additionally claimed by the assessee in the rectification proceedings. After verifying the records and evidence, the Tribunal found no basis for the claim, leading to the rejection of the claims. The court concluded that the claims were rightfully rejected as the assessee failed to substantiate the debt due to the 3 parties, which was a new claim made during the second rectification after the completion of the assessment. Consequently, the court found no merit in the appeal and dismissed it accordingly.