2014 (2) TMI 189 - HC - Income Tax

Rectification of mistake u/s 154 of the Act - Validity of Order Deduction for interest waived not allowed Held that - The rectification of mistake apparent on the record can be allowed by the department which includes amendment of any intimation or deemed intimation under sub-section (1) of Section 143 of the Act - it was a case of short fall in payment of tax - This short fall was calculated properly and correctly based on the return of income declared by the assessee - there was no mistake or error apparent on the face of record in the intimation sent by the department indicating the exact short fall of tax to be paid - This cannot be treated as a mistake apparent on the face of record to compel the department to amend the intimation. The mistake on the part of the appellant assessee in not challenging the assessment order for 2004-2005 and not filing revised return for 2005-2006 has led the assessee to this situation - The entire difficulty in which the appellant is put in is on account of his mistake which cannot be treated as a mistake apparent on the face of record so far as the intimation sent by the department and the same cannot be allowed to be rectified treating it as a mistake in the intimation of the department thus, the Tribunal was justified in rejecting the claim of the appellant assessee Decided against Assessee.

Summary

Issues:
1. Whether the Tribunal was correct in reversing the Commissioner of Income Tax (Appeals) order dated 30.11.2009?
2. Whether the Tribunal was correct in not granting the deduction of 54,40,440/- being interest waived written back for the AY 2005-06?

Analysis:
1. The appellant filed returns for assessment year 2005-2006 while completion of assessment proceedings for the earlier year 2004-2005 was pending. The appellant declared 54,40,440/- as income due to the waiver of interest by the creditor. However, the interest expenditure for 2004-2005 was disallowed by the department, and the appellant did not challenge it. The department computed tax based on the filed return and issued a demand notice for a shortfall tax. The appellant later sought rectification under Section 154(1)(b) of the Income Tax Act, but the court found that the appellant's failure to act timely and revise returns led to the situation. The Tribunal's decision to reject the claim was upheld as there was no mistake apparent on the face of the record in the department's intimation.

2. The appellant believed they would get the benefit of interest expenditure for 2004-2005 and hence declared it as income for 2005-2006. Despite knowing the disallowance of interest expenditure for the previous year, the appellant did not file a revised return. The appellant sought rectification under Section 154(1)(b) of the Income Tax Act, which allows amending intimation under Section 143. However, the court held that the appellant's failure to challenge the assessment order for 2004-2005 and not filing a revised return for 2005-2006 led to their current situation. The Tribunal's decision to reject the claim was upheld, stating that the appellant's mistake did not constitute a mistake apparent on the face of the record, justifying the dismissal of the appeal.