2022 (8) TMI 794 - AT - Income Tax

Rectification of mistake u/s 154 - applicability of period of limitation - intimation or deemed intimation u/s 143(1) - whether no rectification order is permissible to be passed under Income Tax Act 1961 after passage of 4 years from the date of passing of the order under section 154(7)? - HELD THAT - In the present case, if we look into the purpose, object, text, and context of section 154(7) ,then it would be clear that the purpose of providing limitation of 4 years was to give certainties and finality to the order passed by the CPC/A.O. If we read that the limitation provided under section 154(7) is not be available in the case of passing of any intimation to rectify the order, then chaos would happen , and unlimited power would be available to the Assessing Officer/CPC to rectify the mistake even after the lapse of 4 years. In the light of the above, we are of the opinion that limitation for rectification under 154(7) is 4 years even for intimation also.

Issues Involved:

1. Applicability of time limitation under Section 154(7) for rectification of intimation under Section 143(1).
2. Entitlement to credit for surcharge and education cess while computing MAT set off under Section 115JAA.
3. Justification for increase in interest under Sections 234B and 234C.

Issue-Wise Detailed Analysis:

1. Applicability of Time Limitation under Section 154(7) for Rectification of Intimation under Section 143(1):

The main contention was whether the time limitation provided under Section 154(7) of the Income Tax Act, 1961, applies to the rectification of intimation under Section 143(1). The assessee argued that the restriction under Section 154(7) is applicable only to the assessment order and not to intimation. The assessee cited the Supreme Court's decision in Rajesh Javari Stock Brokers (P) Ltd., which distinguishes between intimation and assessment order, stating that intimation under Section 143(1)(a) cannot be treated as an order of assessment. However, the Tribunal held that the term "order" in Section 154(7) includes intimation under Section 143(1). The Tribunal emphasized that the purpose of the four-year limitation is to provide certainty and finality to the orders passed by the CPC/A.O. Allowing rectification beyond this period would lead to unintended results and confer unlimited power on the Assessing Officer/CPC. Therefore, the limitation for rectification under Section 154(7) is four years, even for intimation.

2. Entitlement to Credit for Surcharge and Education Cess while Computing MAT Set Off under Section 115JAA:

The assessee claimed that the CIT (A) erred by not adjudicating the ground of appeal for the allowance of credit for surcharge and education cess totaling Rs. 2,82,548 while computing MAT set off under Section 115JAA. However, as the primary ground regarding the applicability of time limitation was decided against the assessee, the Tribunal did not delve into the merits of this claim. The appeal was dismissed on the ground of being time-barred, rendering this issue infructuous.

3. Justification for Increase in Interest under Sections 234B and 234C:

The assessee also contended that the CIT (A) was not justified in not adjudicating the appeal opposing the increase in interest under Sections 234B and 234C by Rs. 42,803. Similar to the second issue, since the appeal was dismissed on the ground of being time-barred, the Tribunal did not address the merits of this contention. The decision on the primary issue rendered this ground infructuous as well.

Conclusion:

The Tribunal upheld the CIT (A)'s decision, affirming that the rectification application filed by the assessee was beyond the permissible four-year period as stipulated under Section 154(7). The Tribunal emphasized the importance of finality and certainty in tax orders and dismissed the appeal accordingly. The issues regarding MAT credit and interest under Sections 234B and 234C were not adjudicated due to the primary ground of time limitation. The appeal filed by the assessee was dismissed.

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