2018 (9) TMI 2060 - AT - Income Tax

Rectification of mistake u/s 254 - addition on account of investment in excess stock found during the course of survey at the mines of the assessee - HELD THAT - The statement of the assessee was recorded in which he has offered the additional income - Besides, offering additional income assessee has also stated that he will arrive at the actual amount and furnish the details based on the valuation report. The assessee accordingly came forward to offer an amount for taxation in his hands for assessment years 2007-08 and 2008-09. The Tribunal has also recorded the statement of the assessee in its order. The assessee made retraction from his earlier statement after more than a year i.e., on 10.09.2009 when he was repeatedly asked to file the return of income. Through retraction, assessee simply wanted to upgrade the books of account to explain the excess stock. The Tribunal has taken all these facts into account while adjudicating the issue. Since there is addition on account of excess stock found during the course of survey, there was no question of any adjustment of the closing stock of the earlier years which became the opening stock of the succeeding year. That is why, the Tribunal did not specifically deal with ground No. 8 raised by the assessee. As carefully perused the order of the Tribunal and we find that Tribunal has examined all necessary aspects while adjudicating the issue. Since we do not notice any error apparent in the order of the Tribunal, we find no merit in the miscellaneous application of the assessee. Moreover, the scope of section 254 (2) is very limited and only those errors can be rectified which are apparent in the order of the Tribunal. The view taken by the Tribunal cannot be reviewed under the garb of rectification under section 254(2) of the Act. We, therefore, dismiss the miscellaneous application of the assessee.

Summary

Issues:
1. Tribunal's failure to adjudicate on the alternative ground raised through ground No. 8.
2. Scope of rectification under section 254(2) of the Act.

Analysis:
1. The main issue before the Tribunal was the addition on account of investment in excess stock found during a survey at the mines of the assessee. The assessee offered an additional income of ?7 crores and later offered ?11,10,01,980/- for taxation in his hands for assessment years 2007-08 and 2008-09. The Tribunal considered the statement of the assessee, including a retraction made later to explain the excess stock. The Tribunal concluded that since there was an addition due to excess stock found during the survey, there was no need to adjust the closing stock of earlier years. Therefore, the Tribunal did not specifically address the ground No. 8 raised by the assessee.

2. The Tribunal thoroughly examined all necessary aspects while adjudicating the issue. The Tribunal found no error apparent in its order and stated that the scope of rectification under section 254(2) is limited to rectifying only those errors that are apparent in the Tribunal's order. The Tribunal emphasized that its view cannot be reviewed under the guise of rectification under section 254(2) of the Act. Consequently, the Tribunal dismissed the miscellaneous application of the assessee, as it found no merit in the application.

In conclusion, the Tribunal's decision was based on a detailed analysis of the facts and legal provisions related to the addition of excess stock found during a survey. The Tribunal found no error in its order and dismissed the assessee's miscellaneous application. The judgment highlights the limited scope of rectification under section 254(2) and emphasizes that only errors apparent on the face of the Tribunal's order can be rectified under this provision.