2015 (2) TMI 161 - AT - Income Tax

Rectification of mistake - computation of the Income at higher amount ₹ 15,58,379/- as against the return total Income of Rs. Nil - argument of assessee that there is no accumulation of income u/s 11 - Held that - If there is any calculation mistake in the relief allowed by the A.O. in his order /s 154, the same can be challenged by the assessee by filing appeal against this order passed by the Assessing Officer u/s 154 of the Act but in the present appeal, the assessee is not raising any issue about the computation of the amounts done by the Assessing Officer in the impugned order. The case of the assessee is that no such addition is called for because there is no accumulation of income by the assessee. In our considered opinion, this issue can be raised in appeal against the assessment order passed by the Assessing Officer u/s 143(3) of the Act dated 30/03/2013 and not in appeal filed by the assessee against the order passed by the Assessing Officer u/s 154 on 17/05/2013. Therefore, we do not find any merit in this contention raised by Learned A.R. of the assessee and we also do not find any merit in the various grounds of the assessee because the same do not arise out of the order passed by the Assessing Officer u/s 154 of the Act. In proceedings u/s 154, the scope is very limited i.e. an apparent mistake can be rectified in an order passed u/s 154. Since the issue involved here is this that there is accumulation of income or not, it is not an apparent mistake in the assessment order and hence, the same cannot be disputed and decided in the proceedings u/s 154. - Decided against assessee.

Summary

Issues:
1. Assessment order validity under section 143(3) of the Income Tax Act.
2. Computation of income discrepancy between authorities.
3. Treatment of Project Grant Agreement as an "International Treaty" affecting tax laws.
4. Addition to income under section 11(3)(c) and section 143(3) interpretation.
5. Taxability of unutilized accumulated income.
6. Exemption under section 10 (23C) (iv).
7. Compliance with natural justice principles.

Issue 1: Assessment Order Validity under Section 143(3):
The appellant challenged the assessment order's validity under section 143(3) of the Income Tax Act, claiming non-compliance with the proviso to sub-section 3. The appellant cited judgments from the Kerala High Court to support their argument. However, the Assessing Officer's order presumed unutilized income for a specific assessment year, leading to an addition. The authorities noted that the issue raised by the appellant could not be decided under section 154 rectification proceedings.

Issue 2: Computation Discrepancy:
Discrepancies in income computation led to the appellant's appeal against higher assessed income compared to the return total. The authorities addressed the lack of year-wise break-up of accumulated income, resulting in presumptions by the Assessing Officer. The appellant's submissions during rectification proceedings led to a reduction in the assessed income based on provided details.

Issue 3: Project Grant Agreement as an "International Treaty":
The appellant argued that the Project Grant Agreement had the status of an "International Treaty" affecting tax laws. However, the authorities found this argument beyond the scope of rectification proceedings under section 154.

Issue 4: Addition to Income Interpretation:
Challenges were raised regarding additions to income under section 11(3)(c) and section 143(3) interpretation. The Assessing Officer's presumption of unutilized accumulated income and subsequent addition were addressed through rectification proceedings, where relief was granted based on the appellant's submissions.

Issue 5: Taxability of Unutilized Accumulated Income:
The question of taxability on unutilized accumulated income was raised by the appellant. However, the authorities determined this issue as outside the scope of rectification proceedings under section 154.

Issue 6: Exemption under Section 10 (23C) (iv):
The appellant claimed exemption under section 10 (23C) (iv) based on approvals granted by relevant authorities. The authorities noted this claim but emphasized that the issue raised did not fall under rectification proceedings.

Issue 7: Compliance with Natural Justice:
The appellant contended that the assessment order was contrary to natural justice principles. However, the authorities found no grounds for interference based on the limited scope of rectification proceedings.

In conclusion, the appeal of the assessee was dismissed, emphasizing the limitations of rectification proceedings and the need for specific grounds for challenging assessment orders.