2010 (4) TMI 888 - AT - Income Tax

Enhancement of income rectification of order - ITO issued notice under section 154 to rectify the assessment order in respect of the income - Assessing Officer vide order dated 18-11-2008 rectified its order and enhanced the income which was confirmed by CIT(A) Held that - rectification was made beyond 4 years - It is not open to Assessing Officer while giving effect to order of CIT(A) to invoke provisions of section 154 of the Act with regard to issue of original assessment - Assessing Officer s order dated 3-2-2004 had already merged into the order of CIT(A) dated 6-10-2005. The Assessing Officer cannot disturb the same in effect giving order. - it is only order of CIT(A) which could be rectified by him alone - appeal of the assessee is allowed.

Summary

Issues:
1. Rectification of income enhancement under section 154 of the Income-tax Act, 1961 beyond the limitation period.

Analysis:
The appeal was filed against the order of the CIT(A) confirming the Assessing Officer's decision to enhance the income by Rs. 82,284 under section 154 of the Income-tax Act. The Assessing Officer rectified the original assessment order dated 3-2-2004 by adding the said amount, which was initially omitted. The CIT(A) had allowed partial relief to the assessee in a previous order. The Assessing Officer, while giving effect to the CIT(A)'s order, noticed the omission and rectified the assessment by enhancing the income, a decision upheld by the CIT(A) and opposed by the assessee.

Upon review, it was found that the rectification order dated 18-11-2008, enhancing the income, was beyond the limitation period as per the Income-tax Act, 1961, which allows rectification within four years from the date of the original order. The Tribunal observed that the original assessment order had merged with the CIT(A)'s order, and it was only the CIT(A) who could rectify any mistakes in their order. The Assessing Officer, while giving effect to the CIT(A)'s order, could not invoke section 154 to rectify issues from the original assessment. Therefore, the Tribunal quashed the order of the CIT(A) and directed the Assessing Officer accordingly.

In conclusion, the Tribunal allowed the appeal of the assessee, finding the rectification order under section 154 to be invalid due to being beyond the limitation period and exceeding the Assessing Officer's authority to rectify the original assessment order.

This detailed analysis highlights the procedural and legal aspects involved in the judgment, emphasizing the limitations on rectification under section 154 of the Income-tax Act and the hierarchy of authority in making such rectifications.