2022 (12) TMI 1452 - AT - Income Tax

Rectification of mistake - as per assessee gross total income of the assessee cannot be made subject to tax without allowing the corresponding expenses - As per CIT(A) the income shown by the assessee does not require any expenditure to be incurred against such income but it is the surmise and conjecture of the learned CIT-A in the absence of necessary details - HELD THAT - For instance, if the impugned income shown under the head other sources represents the income from interest out of the own interest free fund available with the assessee, then the question of making the deduction of the corresponding expenses under the provisions of section 57 of the Act does not arise. But this fact has to be established which could have been done easily by the authorities below by writing a later to the bank for collecting the information under the provisions of section 133(6) of the Act. But it has not been done so but the entire blame has been put on the head of the assessee without carrying out necessary verification to appreciate the facts in the right perspective. Thus, we are of the view that the ITAT has also passed the order without appreciating the facts and upheld the order of the authorities below. Thus, we are of the view that the order of the ITAT suffers from the mistake apparent from record as it was given without appreciating the fact about the exact nature of the income. It is also important to note that the ITAT in the subsequent order in the case of Shri Naranrai Rambhai Zala 2022 (9) TMI 1515 - ITAT RAJKOT has rightly set aside the issue to the file of the AO for fresh adjudication as per the provisions of law. In view of the above, we recall the order passed by the ITAT with the direction to the registry to fix the same for fresh hearing under intimate to both the parties. Hence the MA filed by the assessee is allowed.

Summary

Issues:
1. Apparent mistake in the order of ITAT dated 20.09.2019 regarding expenses claimed against income in the income tax return.
2. Recalling the order passed in the case due to a mistake apparent from the record.
3. Opposing the recall of the order by the ITAT.
4. Correct appreciation of facts and adherence to provisions of law in passing orders.
5. Failure of the assessee to provide supporting evidence for expenses claimed under other sources.
6. Assessment made ex parte due to failure of the assessee to discharge the onus of providing necessary details.
7. Lack of necessary verification by the AO to appreciate the facts correctly.
8. Setting aside the issue to the file of the AO for fresh adjudication in a similar case.
9. Decision to recall the order passed by the ITAT for fresh hearing.

The Appellate Tribunal ITAT RAJKOT addressed a Miscellaneous Application filed by the assessee, pointing out an apparent mistake in the order of the ITAT dated 20.09.2019 regarding expenses claimed against the income shown in the income tax return. The ITAT upheld the finding that the assessee failed to provide documentary evidence for the expenses claimed. The assessee contended that the gross total income cannot be taxed without allowing corresponding expenses, citing certain judgments. The learned AR referred to a similar case where the matter was sent back for fresh adjudication. The ITAT heard arguments from both parties and emphasized that mistakes apparent from the record must be patent and not subject to differing views. The order must be based on correct facts and legal provisions to render justice. The assessee failed to furnish supporting evidence for expenses under other sources, leading to an ex parte assessment by the AO without proper verification. The ITAT's order was criticized for not appreciating the facts correctly, similar to the findings of the learned CIT-A. The ITAT recalled the order for fresh hearing, following the precedent set in a related case. The Miscellaneous Application filed by the assessee was allowed, leading to the order being pronounced for fresh hearing on 21/12/2022 at Ahmedabad.