2020 (9) TMI 1130 - AT - Income Tax

Rectification u/s 254 - part of income which was not accounted on the basis of accrual system of accounting had been offered to tax in the very same assessment year i.e., AY 2012-13 - plea of assessee that the sum added by the AO on the basis of mercantile system of accounting was offered by the assessee to tax in a later assessment year as income and therefore the addition made will amount to taxation of the same income twice - HELD THAT - We are of the view that the words either in this year or should be added to line 6 of para 14 of the order of Tribunal, after the words how the income offered so that the 6th line of para 14 reads as under - how the income offered either in this year or in a later assessment year was income which was We hold and order accordingly. Absence of insertion of the aforesaid words in the order of Tribunal would give rise to an interpretation, which may not be in tune with the intent of para 14, which is that, the same income cannot be taxed twice.

Summary

Issues:
1. Rectification of errors in the order of Tribunal dated 08.02.2016 regarding addition of income under the Income-tax Act, 1961.
2. Whether the same income can be taxed twice due to differences in accounting systems.
3. Interpretation of para 14 of the Tribunal's order and the need for modification.

Analysis:
1. The miscellaneous petition under section 254(2) of the Income-tax Act, 1961 sought rectification of errors in the Tribunal's order dated 08.02.2016. The Assessee contended that the revenue authorities unjustly added a sum to the total income, which was already offered for taxation in a later assessment year, potentially resulting in double taxation of the same income.

2. The central issue revolved around the taxation of the same income twice. The Tribunal, in its order, acknowledged the Assessee's plea that the sum added based on the mercantile system of accounting had already been offered for taxation in a subsequent assessment year. However, the Tribunal emphasized that income recognition postponed by the Assessee cannot be taxed twice. The burden lay on the Assessee to demonstrate that the income offered in a later assessment year was not recognized in the earlier year due to accounting principles.

3. In the miscellaneous petition, the Assessee raised concerns about the Tribunal's order only referencing a later assessment year, leading to the Assessing Officer not accepting the claim regarding the same income being accounted for in the same assessment year. The Assessee sought a modification in the Tribunal's order to clarify this aspect.

4. During the hearing, the ld. DR supported the Tribunal's order, asserting the absence of any apparent error. However, upon deliberation, the Tribunal found merit in the Assessee's request for modification. It was observed that adding the words "either in this year or" after a specific phrase in para 14 of the Tribunal's order would align with the intent that the same income cannot be taxed twice.

5. The Tribunal, therefore, allowed the miscellaneous petition to the extent indicated, emphasizing the importance of clarifying the language in the order to prevent misinterpretation. By inserting the suggested words in para 14, the Tribunal aimed to ensure consistency with the principle that income should not be subject to double taxation, thereby addressing the Assessee's concerns effectively.