2017 (1) TMI 665 - AT - Income Tax

Rectification of mistake - Validity of proceedings/order under section 154 r.w.s. 143(3) - working of the rebate under section 88E - Held that - The issue of working of the rebate under section 88E of the Act is highly debatable one and are beyond the purview of the rectificatory provisions under section 154 of the Act invoked by the AO. In this view of the matter, we quash the rectification orders of the authorities below as invalid and bad in law, and consequently allow the assessee s appeal on the ground. See Banwari Lal Tulsyan 2011 (8) TMI 1249 - ITAT KOLKATA and Kadar Nath Agarwal 2011 (10) TMI 686 - ITAT KOLKATA - Decided in favour of assessee

Summary

Issues:
1. Validity of proceedings/order under section 154 r.w.s. 143(3) of the Act.
2. Merits of the re-computation of the rebate under section 88E of the Act.

Issue 1 - Validity of proceedings/order under section 154 r.w.s. 143(3) of the Act:
The appeal challenged the order of the CIT(A) dated 08.01.2015 for A.Y. 2008-09, concerning the validity of the order passed by the AO under section 154 r.w.s. 143(3) of the Act dated 22.03.2013. The appellant contended that the invocation of jurisdiction under section 154 was void and bad in law as there was no mistake apparent from the record in the original assessment order. The AO had restricted the rebate under section 88E of the Act after thorough scrutiny. The appellant argued that the proceedings under section 154 amounted to a review of the assessment order, which was beyond the scope of section 154. Citing judicial pronouncements, the appellant sought to invalidate the order under section 154. The ITAT considered the contentions, noting that the CIT(A) did not address the issue raised in the original grounds of appeal. Relying on precedents, the ITAT held that the issue of rebate under section 88E was debatable and beyond the purview of section 154. Consequently, the ITAT quashed the rectification orders as invalid and allowed the appeal on this ground.

Issue 2 - Merits of the re-computation of the rebate under section 88E of the Act:
Since the ITAT had already invalidated the order passed under section 154 r.w.s. 143(3) of the Act, it did not find it necessary to adjudicate on the merits of the re-computation of the rebate under section 88E of the Act. The ITAT's decision to quash the rectification orders rendered this issue moot for further consideration. Consequently, the ITAT allowed the appeal for A.Y. 2008-09 based on the findings related to the first issue.

In conclusion, the ITAT Mumbai, comprising Shri Jason P. Boaz and Shri Sandeep Gosain, allowed the appellant's appeal for A.Y. 2008-09, primarily on the grounds of the invalidity of the proceedings/order under section 154 r.w.s. 143(3) of the Act. The ITAT found that the issue of rebate under section 88E was debatable and beyond the scope of rectification under section 154, leading to the quashing of the rectification orders. The judgment highlighted the importance of adhering to legal procedures and the limitations of rectification provisions in tax assessments.