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2013 (3) TMI 192 - HC - Income TaxSecurity Assessment - assessment of income u/s 143(3) below the returned income - rectification of mistake - additional grounds - held that - In the case of National Thermal Power Co. Ltd. v. Commissioner of Income-tax 1996 (12) TMI 7 - SUPREME COURT apex court hold that, There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of the assessment passed by the Income-tax Officer. This Court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. Following the decision of Apex Court 1996 (12) TMI 7 - SUPREME COURT held that - we do not find any reason to interfere with the Tribunal s ultimate conclusion in allowing the assessee s appeal. Though some of the observations may not appeal to us, nevertheless, for the reasons somewhat different from those recorded by the Tribunal we come to the same conclusion. Decision of apex court in CIT v. Shelly Products & others 2003 (5) TMI 4 - SUPREME COURT distinguished wherein it was held that, assessee s assessed income cannot be less that the return income. Decided in favor of assessee.
Issues:
- Interpretation of Section 154 of the Income Tax Act, 1961 - Applicability of CBDT circular No.549 dated 31.10.1989 - Scope of rectification under Section 154 of the Act - Validity of assessed income going below the return income Interpretation of Section 154 of the Income Tax Act, 1961: The case involved an appeal by the Revenue against a Tribunal's decision regarding the computation of taxable income for the assessment year 2001-2002. The Assessing Officer had assessed the income of the assessee at Rs. 1.02 crores, which was later revised to Rs. 22.08 lakhs after considering deductions granted by the CIT(Appeals). The Tribunal allowed the assessee's appeal, emphasizing the quasi-judicial nature of the Assessing Officer's functions and directing to ignore the CBDT circular preventing assessed income from falling below the return income. The High Court upheld the Tribunal's decision, citing previous judgments and emphasizing the independence of the Assessing Officer's judgment in assessments. Applicability of CBDT circular No.549 dated 31.10.1989: The Tribunal relied on the Gujarat Gas Co. Ltd case and held that the CBDT circular directing that assessed income should not be lower than the return income was invalid. The Tribunal also noted that the issue was not a case of rectification under Section 154 of the Act, as there was no patent or obvious mistake of law or fact to rectify. The High Court agreed with the Tribunal's decision, emphasizing the independence of the Assessing Officer's assessment process and the invalidity of the CBDT circular in restricting assessed income to the return income. Scope of rectification under Section 154 of the Act: The Counsel for the Revenue argued that the Tribunal erred in holding the order passed under Section 154 of the Act as bad, as it was based on the assessee's application. However, the High Court found that the Tribunal had erred in examining the scope of Section 154 proceedings when the question did not arise. The High Court clarified that the central issue was whether the assessed income could go below the return income, citing the Gujarat Gas Co. Ltd case to support the invalidity of the CBDT circular in this regard. Validity of assessed income going below the return income: The High Court emphasized the independence of the Assessing Officer's judgment in assessments and cited the Gujarat Gas Co. Ltd case to support the invalidity of the CBDT circular restricting assessed income to the return income. Additionally, the High Court referenced the National Thermal Power Co. Ltd. case to highlight the powers of the Appellate Commissioner and Tribunal in permitting additional grounds. The High Court ultimately dismissed the Tax Appeal, stating that the facts of the case did not warrant interference with the Tribunal's decision, subject to certain observations made.
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