2015 (12) TMI 1370 - AT - Income Tax

Rectification of mistake - disallowance made out of labour charges - Held that - Even if the claim made by the assessee in the applications filed under S.154 that the disallowance made out of labour charges in both the years under consideration is not sustainable separately was disallowed by the Assessing Officer in the orders passed under S.154 on merit, the same by itself will not enlarge the scope of proceedings under S.154, which is confined to rectification of only the mistakes apparent from record. As held in the case of Mepco Industries Ltd. Vs. CIT (2009 (11) TMI 24 - SUPREME COURT ) relied upon by the learned CIT(A) in her impugned order, the decision rendered on a debatable issue cannot be treated as a mistake apparent from record, so as to rectify the same under S.154. As rightly held by the learned CIT(A) in this context, the rectification sought by the assessee vide applications filed under S.154 for both the years under consideration, was on a debatable issue, and even the learned counsel for the assessee has not been able to dispute this position. We, therefore, find no infirmity in the impugned order of the learned CIT(A), upholding the orders passed by the Assessing Officer under S.154 for both the years under consideration whereby he rejected the rectification sought by the assessee on a debatable issue. Accordingly, the impugned order of the learned CIT(A) is upheld - Decided against assessee.

Summary

Issues:
Appeals against the rejection of rectification applications under Section 154 for assessment years 2008-09 and 2009-10.

Analysis:
1. The appeals were filed by the assessee against the rejection of rectification applications under Section 154 for assessment years 2008-09 and 2009-10 by the Assessing Officer. The original return of income for 2008-09 was filed on 17.9.2008, and a search and seizure action was conducted on 20.08.2009. Subsequently, a notice under Section 153A was issued, and the return of income was filed on 23.6.2010. For 2009-10, the return was filed on 31.3.2010. Certain undisclosed income was agreed upon during the search, leading to additions to the total income for both years. The assessee filed rectification applications claiming that disallowances made out of labour expenses should be adjusted against the undisclosed income. However, the Assessing Officer rejected the applications on the grounds that the disallowances were made to cover deficiencies in bills and vouchers, and the rectification sought was not a mistake apparent from the record.

2. The learned CIT(A) upheld the Assessing Officer's orders, stating that the rectification sought by the assessee was on a debatable issue and not a mistake apparent from the record. The CIT(A) referred to relevant case laws to support the decision. The Tribunal noted that the scope of Section 154 is limited to rectifying mistakes apparent from the record. The Tribunal agreed with the CIT(A) that decisions on debatable issues cannot be rectified under Section 154. The Tribunal found no infirmity in the CIT(A)'s order upholding the rejection of rectification applications. Consequently, the appeals filed by the assessee were dismissed.

3. In conclusion, the Tribunal upheld the orders of the Assessing Officer and CIT(A) in rejecting the rectification applications under Section 154 for assessment years 2008-09 and 2009-10. The Tribunal emphasized that rectification under Section 154 is limited to correcting mistakes apparent from the record and cannot be used to address debatable issues. The appeals filed by the assessee were ultimately dismissed by the Tribunal on 12th August, 2015.