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2016 (8) TMI 953 - AT - Income TaxRectification of mistake - addition u/s.115JB - whether the rectification order was barred by time and was void ab initio? -Held that - While completing the original assessment, the AO had determined book profit of the assessee at ₹ 40.89 crores, that the assessee had preferred an appeal before the FAA against the order of the AO passed u/s.143 (3) of the Act,that in the appeal it had not agitated the issue of 115 JB of the Act,that it had challenged the additions made by the AO under the normal provisions, that the matter had travelled up to the Tribunal, that neither in the order of the FAA nor in the order of the Tribunal the issue of completion of book profit was deliberated upon. In the circumstances the order passed by the AO on 28/11/2008 could be rectified up to 31/03/2013. The AO had passed the rectification order in the month of January, 2014. Clearly, the order of the AO was barred by limitation. The issue stands decided in favour of the assessee as held by the Hon ble Supreme Court in case of Vijaya Bank (2010 (4) TMI 46 - SUPREME COURT ). Hence,in our opinion, the order of the FAA does not suffer from any legal infirmity. Confirming his order, we decide the effective ground of appeal against the AO.
Issues:
1. Validity of the order passed by the Assessing Officer (AO) under section 154 of the Income Tax Act. 2. Barred by limitation - Time frame for passing a rectification order under section 154. 3. Merger of orders - Effect of an appeal decided by the First Appellate Authority (FAA) on the order of the Assessing Officer. Issue 1: Validity of the order passed by the Assessing Officer under section 154: The Assessing Officer (AO) passed an order under section 154 of the Income Tax Act, challenging the debited amount of Rs. 4.08 crores by the assessee under the head 'provision for diminution in the value of investment'. The AO contended that this amount needed to be added back to the net profit of the assessee to arrive at the book profit. The assessee argued against this rectification, stating that there was no mistake apparent from the record. The First Appellate Authority (FAA) considered the submissions and held that the AO's order was barred by limitation as it was passed on 17/01/2014, beyond the permissible time frame. Issue 2: Barred by limitation - Time frame for passing a rectification order under section 154: The FAA determined that the order passed by the AO on 17/01/2014 was beyond the permissible time frame for passing a rectification order under section 154. The FAA noted that the original assessment was completed on 28/11/2008, and any rectification order had to be passed within four years from the end of the assessment year. As the rectification order was passed beyond this period, the FAA deemed it as barred by limitation. Issue 3: Merger of orders - Effect of an appeal decided by the First Appellate Authority on the order of the Assessing Officer: The Tribunal observed that the assessee had preferred an appeal before the FAA against the original assessment order passed by the AO under section 143(3) of the Act. However, the issue of section 115JB of the Act was not raised during the appellate proceedings. The Tribunal held that the order passed by the AO on 28/11/2008 could only be rectified up to 31/03/2013, and since the rectification order was passed in January 2014, it was barred by limitation. The Tribunal also referenced a case law to support its decision and confirmed the FAA's order, ultimately dismissing the appeal filed by the AO. In conclusion, the Tribunal upheld the FAA's decision, ruling that the AO's order passed under section 154 was barred by limitation and did not suffer from any legal infirmity. The Tribunal dismissed the appeal filed by the AO, confirming the order pronounced on 22nd August 2016.
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