2015 (10) TMI 523 - AT - Income Tax

Rectification of mistake - surrendered income which pertains to jewelry in assessment order u/s 143(3)- Held that - As replying to question no. 14 of the revenue authorities, the assessee answered that jewellery worth ₹ 4,14,144 is her stridhan which she got at the time of her marriage and on other occasions. The balance jewellery worth ₹ 20 lakh was purchased by her. We further observe that in reply to question no. 15, the assessee submitted that the source of acquisition of jewellery is not explainable but the same may please be treated as her additional income for the year under consideration which has been spent on the purchase of jewellery. In this situation, we observe that the AO wrongly observed that the assessee surrendered income of ₹ 24,14,144/- on account of jewellery as undisclosed income and it was a mistake apparent from record in the light of statement of assessee recorded on oath during the search proceedings on 28.9.2007. Thus we come to a conclusion that the AO as well as CIT(A) were wrong in holding that there is no mistake apparent from record. Per contra, we are inclined to hold that there was a glaring mistake on the face of record in the light of statement of the assessee recorded on oath which could have been rectified by the AO by allowing application of the assessee filed u/s 154 of the Act but the AO as well as CIT(A) failed to grant justified and legal relief for the assessee. Accordingly, orders of the authorities below are set aside and AO is directed to pass appropriate order on the application of the assessee filed u/s 154 of the Act by affording due opportunity of hearing for the assessee. Therefore, the issue is restored to the file of AO with the above direction - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Appeal against order of CIT(A) upholding ACIT's order u/s 154 of the Income Tax Act, 1961.
2. Whether the mistake in assessment order u/s 143(3) was apparent from the record.
3. Correct application of provisions of section 154 of the Income Tax Act, 1961.

Analysis:

1. The appellant filed an appeal against the order of the CIT(A) upholding the ACIT's order under section 154 of the Income Tax Act, 1961. The appellant contended that the assessing officer did not agree that the mistake in the assessment order u/s 143(3) was apparent from the record. The appellant argued that the mistake was obvious and should have been corrected under section 154. The appellant claimed that the mistake was covered under section 154 and the assessment order needed correction.

2. The AO completed the assessment under section 143(3) of the Act, and the appellant subsequently filed an application under section 154, which was rejected. The AO stated that there was no mistake apparent from the records in the assessment order passed under section 143(3). The AO emphasized that the section 154 deals with mistakes that are apparent from records and since no revised return or rectification application was filed before the completion of the record, no action under section 154 was warranted. The AO rejected the appellant's application under section 154.

3. The Tribunal observed that the appellant had admitted that a part of the jewelry was stri dhan and the remaining amount should be treated as additional income. The Tribunal noted that the AO wrongly considered the entire amount of jewelry as undisclosed income, whereas the appellant's statement recorded on oath during the search proceedings indicated otherwise. The Tribunal held that there was a glaring mistake on the face of the record, which could have been rectified under section 154. The Tribunal set aside the orders of the lower authorities and directed the AO to pass an appropriate order on the appellant's application under section 154, affording a hearing to the appellant. The appeal was deemed allowed for statistical purposes.

This detailed analysis highlights the issues raised in the appeal, the arguments presented by the appellant, and the Tribunal's decision regarding the correction of the mistake in the assessment order under section 143(3) of the Income Tax Act, 1961.