2021 (12) TMI 931 - AT - Income Tax

Rectification of mistake - invoking section 154 rectification thereby seeking to recompute section 234B interest - HELD THAT -Whether the learned lower authorities would invoke section 154 rectification in such an instance, in our considered opinion, goes in assessee s favour and against the department. Hon ble apex court s landmark decision in T.S. Balram Vs M/s. Volkart Brothers 1971 (8) TMI 3 - SUPREME COURT has settled the law that a mistake apparent on record must be an obvious and patent one than something which could be established by a long drawn process of reasoning involving more than one opinions. The factual position is no different before us wherein the assessee s case all along has sought to treat the cash seized as self-assessment and not advance tax covered u/s 132B Explanation 2 of the Act. We accordingly hold that the learned lower authorities have erred in law in invoking section 154 jurisdiction in the very terms as per strict interpretation of principles invoked in Commissioner of Customs Vs. Dilip Kumar 2018 (7) TMI 1826 - SUPREME COURT - Decided in favour of assessee.

Summary

Issues:
Appeal against Commissioner of Income Tax (Appeals)-11, Hyderabad's orders for A.Y. 2018-19 involving proceedings u/s. 154 of the Income Tax Act, 1961.

Analysis:
1. Adjustment of Seized Cash: The lead assessee's appeal raised the issue of adjusting seized cash towards self-assessment tax for charging interest u/s 234B. The appellant contended that the seized cash should be treated as self-assessment tax, not subject to interest u/s 234B. The CIT(A) upheld the Assessing Officer's rectification action, emphasizing that advance tax cannot be adjusted against seized cash. The CBDT's circular clarified that advance tax is not included in existing liability under Section 132B. The Explanation 2 to Section 132B excludes advance tax from existing liability. The appellate tribunal held in favor of the assessee, citing the mistake apparent on record and strict interpretation of legal principles.

2. Application of Section 154 Jurisdiction: The tribunal analyzed whether the lower authorities correctly invoked section 154 rectification to recompute interest under section 234B. Referring to legal precedents, including T.S. Balram Vs M/s. Volkart Brothers, the tribunal concluded that the lower authorities erred in invoking section 154 jurisdiction. The tribunal accepted the assessee's appeal, emphasizing the distinction between self-assessment tax and advance tax under Section 132B Explanation 2.

3. Prospective Application of Explanation 2 to Section 132B: The CBDT's circular clarified that Explanation 2 to Section 132B has prospective application from 01.06.2013. The tribunal noted that the Explanation was in force during the seizure on 21.11.2017. Legal precedents supported the prospective nature of the Explanation. The tribunal upheld the assessee's position, highlighting the unambiguous provisions of Section 132B and its explanations.

4. Final Decision: The tribunal allowed the appeals of all three assesses, following the decision in the lead assessee's case. The tribunal emphasized the distinction between self-assessment tax and advance tax, ruling in favor of the assessee based on legal principles and precedents. The orders were pronounced on 29th November 2021, granting relief to the assesses in all three cases.

This detailed analysis highlights the key legal arguments, interpretations of relevant sections, and the tribunal's decision in favor of the appellants based on the specific circumstances and legal principles involved in the case.