2019 (6) TMI 230 - AT - Income Tax

Rectification u/s. 154 - as per AO addition made u/s 68 has to be taxed at a flat rate of 30% and no deduction and allowance can be set off there with u/s. 115 BBE - Scope of amendment - HELD THAT -The amendment is applicable from 01.04.2017. In our considered view whether the amendment is prospective or retrospective is a highly debatable issue and, therefore, cannot be a subject matter of rectification u/s. 154 of the Act. Considering the facts of the case and the law we set aside the findings of the CIT(A) and quash the rectification order dated 05.05.2016 framed u/s.154 of the Act. - Decided in favour of assessee.

Summary

Issues:
Rectification order u/s. 154 of the Act - Applicability of section 115BBE - Deletion of addition u/s. 68 - Prospective or retrospective nature of amendment.

Analysis:
The appeal before the Appellate Tribunal ITAT DELHI was against the order of the Commissioner of Income Tax [Appeals]-9 for Assessment Year 2013-14. The grievance of the assessee was regarding the sustaining of the order of the Assessing Officer framed u/s. 154 of the Act. The Assessing Officer had initially made an addition of ?4.50 crores u/s 68 of the Act in the assessment. Subsequently, it was found that there was a mistake in the tax computation, where the net taxable income was calculated incorrectly. The Assessing Officer rectified the assessment u/s. 154, taxing the addition made u/s 68 at a flat rate of 30% without allowing any deduction or set off under section 115 BBE of the Act.

The assessee contended that the provisions of section 115 BBE did not apply during the relevant year as the amendments were effective from 01.04.2017, making them inapplicable for the year under consideration. The Tribunal noted that they had already deleted the addition of ?4.50 crores in a prior order, rendering the rectification order irrelevant on this issue. Additionally, the Tribunal analyzed the amended provisions of section 115BBE and the pre-amended section to determine the applicability of the amendment. The Tribunal concluded that the amendment was effective from 01.04.2017, and the nature of its prospective or retrospective application was a debatable issue, making it unsuitable for rectification under section 154 of the Act.

Based on the facts of the case and the legal analysis, the Tribunal set aside the findings of the CIT(A) and quashed the rectification order dated 05.05.2016 framed u/s.154 of the Act. Consequently, the appeal filed by the assessee was allowed by the Tribunal. The judgment was pronounced in the open court on 03.06.2019.