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2023 (2) TMI 960 - AT - Income TaxRectification u/s 154 - Addition u/s 68/69 - unexplained cash deposit - apply section 115BBE of the Act for tax calculation of at specific rate of tax instead of slab rate of tax as per normal provision of the Act - HELD THAT - On going through the order passed u/s. 143(3) r.w.s. 147 we are of the considered view that the ld. AO has not invoked any under which provision he has added a sum of Rs. 2 lac. In the absence of any specific finding the ld. AO cannot charge the said income within the provision of section 115BBE as specific rate of tax for this addition therefore, action of charging the specific tax u/s.115BBE in the proceeding u/s. 154 of the Act is not correct considering the peculiar fact of the case on hand. See case of ACIT vs. Shri Sudesh Kumar Gupta 2020 (6) TMI 463 - ITAT JAIPUR Thus there is no finding in the assessment order that the income added is under which provision of the act and therefore, charging the specific tax rate u/s. 115BBE is not in accordance with the provision of law and the same is quashed. In terms of these observation the appeal of the assessee is allowed.
Issues Involved:
1. Invocation of Section 115BBE without initial application of Sections 68 and 69. 2. Applicability of Section 154 for rectification of an apparent mistake. 3. Issuance of show-cause notice for invoking provisions of Section 69. 4. Change of opinion vs. apparent mistake under Section 154. Detailed Analysis: 1. Invocation of Section 115BBE without Initial Application of Sections 68 and 69: The primary contention of the assessee was that the Assessing Officer (AO) erred in invoking Section 115BBE for tax calculation without initially applying Sections 68 or 69 during the original assessment under Sections 147/143(3). The original assessment added Rs. 2,00,000 as undisclosed income without specifying the application of Sections 68 or 69. The assessee argued that since Section 68/69 was not invoked initially, invoking Section 115BBE later was unjustified. The Tribunal agreed with this contention, noting that the AO did not specify the provision under which the addition was made, thus making the application of Section 115BBE incorrect. 2. Applicability of Section 154 for Rectification of an Apparent Mistake: The assessee argued that the AO's action to rectify the assessment order under Section 154, by invoking Sections 68/69 and applying Section 115BBE, was a change of opinion rather than rectification of an apparent mistake. The Tribunal observed that Section 154 is applicable for rectifying mistakes apparent from the record, but in this case, the AO's action was more of a review of his earlier order. The Tribunal cited the case of ACIT vs. Sudesh Kumar Gupta, where it was held that provisions of Section 115BBE could not be applied through rectification under Section 154 if Sections 68/69 were not invoked initially. 3. Issuance of Show-Cause Notice for Invoking Provisions of Section 69: The assessee contended that the AO did not issue a show-cause notice for invoking the provisions of Section 69. The AO had issued a notice under Section 154 for applying Section 115BBE but did not provide a specific notice for invoking Section 69. The Tribunal found that the AO's failure to issue a specific show-cause notice for Section 69 was against the principles of natural justice, as the assessee was not given an opportunity to explain the source of the income before the addition was made. 4. Change of Opinion vs. Apparent Mistake under Section 154: The assessee argued that the AO's action constituted a change of opinion rather than rectification of an apparent mistake, which is not permissible under Section 154. The Tribunal agreed, stating that the AO's action to apply Section 115BBE through rectification was indeed a change of opinion. The Tribunal reiterated that rectification under Section 154 is only permissible for mistakes apparent from the record and not for reviewing or changing the original assessment order. Conclusion: The Tribunal concluded that the AO's action to apply Section 115BBE through rectification under Section 154 was incorrect, as it constituted a change of opinion and not a rectification of an apparent mistake. The AO did not initially invoke Sections 68/69, and the subsequent application of Section 115BBE was unjustified. The appeal of the assessee was allowed, and the order of the AO under Section 154 was quashed.
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