2013 (7) TMI 122 - HC - Income Tax

Rectification of mistake - Tribunal quashed entire assessement order - Held that - The opening words of section 154, gives an indication of the scope of rectification proceedings. It is only with a view to rectify the mistake apparent from the record. The Income-tax authority may amend any order passed by it under the provisions of this Act or amend any intimation or deemed intimation under sub-section (1) of section 143. Therefore, this Section is very much limited. The error should be apparent from the record. If there exists a debatable issue, if two views are possible, it is not open to the authorities under this proviso to initiate proceedings and revise its opinion. All that it can do in these proceeding is to rectify the mistake apparent from the record. Assessing Authority re-appreciated the entire material on record and has come to a different conclusion than the conclusion which it had arrived at in the original Block Assessment order. Therefore, it is not a case of rectifying the error apparent from the record, it is only a case of reframing of the assessment giving reasons. Though the Appellate Authority partly allowed the appeal, merely because the assessee did not, challenge that portion of the order which is against him, would not render the appeal filed by the Revenue maintainable and findings recorded by the Tribunal are vitiated - Decided in favour of assessee.

Summary

Issues:
1. Rectification of assessment order under section 154 of the Income-tax Act, 1961.
2. Validity of rectification order and subsequent appeals.
3. Justification of quashing the entire assessment order by the Tribunal.

Analysis:
1. The judgment revolves around the rectification of the assessment order under section 154 of the Income-tax Act, 1961. The Search and Seizure operations were carried out on the assessee and their sister concerns, resulting in the declaration of undisclosed income. Subsequently, proceedings were initiated for rectification of the assessment order, leading to objections from the assessee. The rectification order was passed, and the Revenue filed an appeal to the Tribunal against the order of the First Appellate Authority. The Tribunal dismissed the appeal, emphasizing that rectification is permissible only for total mistakes apparent from the record.

2. The validity of the rectification order and subsequent appeals was a crucial issue in the judgment. The Tribunal held that the Assessing Officer's reappraisal of facts and evidence, leading to a different conclusion, did not fall under rectification of a mistake apparent from the record. The Tribunal dismissed the Revenue's appeal, stating that the order was not maintainable as the Appellate Authority had partly allowed the assessee's appeal. The judgment emphasized that rectification proceedings are limited to correcting mistakes evident from the record and not for revising opinions based on debatable issues.

3. The third issue addressed in the judgment was the justification of quashing the entire assessment order by the Tribunal. The Tribunal's decision to dismiss the Revenue's appeal was based on the understanding that the Assessing Authority had reframed the assessment instead of rectifying an apparent error. The judgment held that the Tribunal's findings were flawed as the appeal filed by the Revenue was not rendered maintainable solely because the assessee did not challenge the portion of the order against them. Ultimately, the appeal was dismissed, upholding the order of the Commissioner of Income-tax (Appeals) and ruling in favor of the assessee against the Revenue.