2022 (12) TMI 938 - AT - Income Tax

Rectification of mistake u/s 154 - seeking amendment in the Intimation u/s. 143(1)(a) in respect of the income claimed as wrongly returned, i.e., by way of a mistake - HELD THAT - AO in the instant case would be required to decide as to whether the mistake in the return furnished by the assessee is, or lies, as claimed by him, in disclosing mistakenly additional income (Rs. 14.05 lacs) or, as inferred by the Revenue, in computing his tax liability incorrectly, i.e., corresponding to the additional tax liability on the said additional income. That the tax amount computed agrees with the income claimed as returned incorrectly, makes it an either or situation, so that, as afore-stated, either could be correct, and the same has to be determined in the conspectus of the case. The insistence of the Revenue on one, in preference to the other, without in any manner stating as to why it considers it as so, cannot be sustained. In fine, the same, i.e., the decision one way or the other ought to be a result of a considered opinion based on material on record, per a speaking order. The assessee in this regard, claims that the impugned income is of a non-existent business, returned by mistake, with his balance-sheet for the current year being in continuation of the closing balance-sheet for the immediately preceding year and, further, and similarly, the balance-sheet for the succeeding year also in agreement with that for that current year, so that all the three represent a continuum, even as additional income is only for the current year. This argument, surely valid and corroborative of his claim, made per submissions before the ld. CIT(A) do not find any mention in the impugned order. The matter, in view of the foregoing, is restored back to the file of the AO for adjudication afresh on merits and in accordance with law per a speaking order, after hearing the assessee, being also the mandate of sec. 154. Needless to add, the AO shall require the assessee to file all the required documents, which must be contemporaneous and proven, in support of his return of income. In this context we find on record (PB-1, pg. 9) a return for the current year reflecting the income claimed as correct, filed on 14/11/2018. How has the same been filed is not clear. Further, it may be, in view of our stating of either of the two mistakes as possible, both of which though simultaneously cannot be, does not make the issue contentious or debatable. We may clarify that we are conscious that the Intimation in the instant case was passed on 09/5/2013, while the rectification application under appeal is that filed on 27/11/2018, so that it is apparently outside the time limit u/s. 154(7). In Hind Wire Industries Ltd. v. CIT 1 995 (1) TMI 2 - SUPREME COURT it stood explained that the expression from the date of the order sought to be amended in section 154(7) was not qualified in any way, and it did not necessarily mean the original order it could be any order including the amended or rectified order. The assessee has in the instant case, as afore-noted, made several applications, the first being on 07/7/2013, with the first responded to by the Revenue being dated 03/12/2015. The proceedings, accordingly, are valid.

Summary

Issues Involved:
1. Maintainability of the rectification application under Section 154 of the Income Tax Act, 1961.
2. The correctness of the tax liability computation and the inclusion of income in the return.
3. The applicability of legal precedents and case laws in the context of Section 154 and Section 139(5).

Issue-wise Detailed Analysis:

1. Maintainability of the Rectification Application under Section 154:
The primary issue was whether the assessee's rectification application under Section 154, seeking an amendment in the Intimation under Section 143(1)(a) regarding the income of Rs. 14,04,956, claimed to have been wrongly returned by mistake, is maintainable. The law under Section 139(5) provides for filing a revised return to correct any omission or wrong statement within a specified time frame, which the assessee failed to do. The law is well-settled that any claim not made per the return of income is not liable to be entertained by the assessing authority, much less under rectification proceedings. The assessee also missed the opportunity under Section 119(2)(b) due to the application being time-barred. The Revenue's stand was that there was no mistake apparent from the record, a sine qua non for assuming jurisdiction under Section 154.

2. Correctness of the Tax Liability Computation and Inclusion of Income:
The assessee argued that the income of Rs. 14.05 lacs was mistakenly returned as it pertained to a non-existent business. The Revenue, however, maintained that there was no evidence on record to support this claim. The Tribunal noted that while the Revenue's inference of correct income return was possible, the assessee's claim of correct tax liability computation was equally plausible. The Tribunal emphasized that the AO should have required the assessee to furnish relevant documents under Section 139(9) to resolve the inconsistency. The Tribunal restored the matter to the AO to adjudicate afresh on merits and in accordance with law, requiring the assessee to file all necessary documents.

3. Applicability of Legal Precedents and Case Laws:
The Tribunal referred to several legal precedents to determine the scope of Section 154. It was noted that a glaring mistake of fact or law apparent from the record could be rectified under Section 154. The Tribunal cited cases like Goetz (India) Ltd. v. CIT, Pr.CIT v. Wipro Ltd., and others to emphasize that an omission or wrong statement could only be corrected under Section 139(5). The Tribunal also discussed the relevance of decisions like Maharana Mills (P.) Ltd. v. ITO and Anchor Pressings (P.) Ltd. v. CIT, which supported the view that rectification under Section 154 requires material evidence on record to support the claim. The Tribunal concluded that the AO must decide based on the material on record and issue a speaking order.

Conclusion:
The Tribunal allowed the assessee's appeal, directing the AO to adjudicate the matter afresh, considering all relevant documents and issuing a speaking order. The decision emphasized the necessity of material evidence to support claims under rectification proceedings and the importance of adhering to the legal framework provided under Sections 139(5) and 154 of the Income Tax Act. The Tribunal's order ensures that the assessee's claim is examined thoroughly, balancing the need for procedural correctness with substantive justice.