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2017 (9) TMI 1523 - AT - Income TaxRectification of mistake - assessing officer completed the assessment by estimating the income @8% on gross receipts before interest and remuneration to partners - AO has not assessed the income from other sources separately - Held that - The assessing officer has already included the income from other sources in the estimation made by him. It was never brought to tax separately. The assessing officer sought to rectify the consequential order giving effect to the ITAT s order to bring the income from other sources separately which was not the direction of the ITAT. Without a specific directions in the order, the assessing officer cannot make such rectification. Therefore, there is no mistake which required to be rectified in the consequential order passed by the assessing officer. Further, as discussed above, the assessing officer has included the income from other sources in the estimation made in the assessment, which was confirmed by the appellate authorities, hence taxing the income from other sources separately is a debatable issue which cannot be adjudicated upon u/s 154 of I.T.Act. Therefore we set aside the order of the lower authorities and allow the appeal of the assessee.
Issues:
Appeal against order of CIT(A) confirming rectification order u/s 154 of I.T.Act by assessing officer for assessment year 2000-01. Analysis: 1. The appeal was filed against the order of the CIT(A) confirming the rectification order passed u/s 154 of I.T.Act by the assessing officer for the assessment year 2000-01. The assessing officer initially estimated the income at 8% of gross bills, including deductions for remuneration and interest paid to partners. The CIT(A) directed the assessing officer to estimate income at 12.5%, and the matter went to the Tribunal, which estimated income at 11% and allowed depreciation, interest, and remuneration to partners. Subsequently, the assessing officer issued a rectification order adding interest on BG deposits, IT refund, internal transfers, and other interest, leading to a revised total income of &8377; 34,37,102/-. 2. The appellant argued that the assessing officer erred in separately assessing income from other sources, such as interest on bank deposits, IT refund, and internal transfers, as these were already included in the total income estimation. The appellant contended that the ITAT did not direct the assessing officer to consider interest income separately, and thus, there was no mistake apparent from the record requiring rectification. The appellant further challenged the partial relief granted by the CIT(A) and sought to set aside the orders of the lower authorities. 3. The ITAT analyzed the case and noted that the assessing officer had not assessed income from other sources separately but had included it in the overall income estimation. The ITAT emphasized that its order did not direct the assessing officer to assess income from other sources separately. Referring to the relevant para of the ITAT order, the ITAT concluded that there was no directive to assess income from other sources independently. Therefore, the assessing officer's rectification to tax income from other sources separately was unwarranted, as it was not the direction of the ITAT. The ITAT held that the issue of taxing income from other sources separately was debatable and could not be addressed under section 154 of the I.T.Act. Consequently, the ITAT set aside the orders of the lower authorities and allowed the appeal of the assessee. 4. In the final decision, the appeal of the assessee was allowed, and the order was pronounced in open court on 13th September 2017.
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