2023 (4) TMI 246 - HC - Income Tax

Rectification of mistake - jurisdiction of the AO u/s 154 - Debatable issue - allowing of book loss or unabsorbed depreciation while computing the book profit u/s 115JB - HELD THAT - Sub-section (1) of Section 154 says that with a view to rectify any mistake apparent from the record, an Income Tax authority referred to in Section 116 may do any one of the Acts as mentioned in Clauses (a) to (d) of Section 154(1). The other Sub-sections deal with matters where the issue has been considered and decided in a proceeding by way of an appeal or revision relating to the orders referred in Sub-section(1) of Section 154 - Thus, the Section empowers the authority only to rectify mistakes by amending an order passed by it or amending any intimation or deemed intimation under Sub-section (1) of Section 154 or amending an intimation under Section 200A(1) or amending an intimation under Section 206CB. However, in the instant case the Assessing Officer sought to invoke the said power and revise the entire assessment. The assessee carried the matter on appeal to the learned Tribunal and the Tribunal after noting the issue involved in the case and having examined the evidences and records and the income tax return of the assessee in respect of the earlier years, found that the claim made by the assessee is correct to the extent and the finding of the Commissioner of Income Tas (Appeals) cannot be sustained. More importantly, the Tribunal, in our view, rightly held so far as the issue of allowing of book loss or unabsorbed depreciation while computing the book profit under Section 115JB, the issue being a debatable issue, cannot be subject matter of proceedings under Section 154 - Decided against revenue.

Summary

Issues:
The judgment involves the delay in filing the appeal, substantial questions of law raised by the revenue, and the jurisdiction of the Assessing Officer under Section 154 of the Income Tax Act.

Delay in Filing Appeal:
The Court allowed the application for condonation of delay of 69 days in filing the appeal under Section 260A of the Income Tax Act, 1961.

Substantial Questions of Law:
The revenue raised three substantial questions of law for consideration. The Tribunal examined the issues related to the claim of the assessee while computing net profit under Section 115JB, the set off of book profit against book loss on unabsorbed depreciation, and the order under Section 154 of the Act nullifying the assessee's claim. The Tribunal found that the claim made by the assessee was correct and that the issue of allowing book loss or unabsorbed depreciation is a debatable issue not subject to proceedings under Section 154 of the Act.

Jurisdiction of Assessing Officer under Section 154:
The Assessing Officer sought to revise the entire assessment, which was beyond the scope of Section 154. The Tribunal referred to a previous decision and highlighted that a decision on a debatable point of law is not a mistake apparent from the record. The Tribunal concluded that the Assessing Officer's actions were not justified, and the appeal was dismissed. Substantial questions of law (B) and (C) were answered against the revenue, leading to the dismissal of the appeal.

Conclusion:
The judgment addressed the delay in filing the appeal, substantial questions of law raised by the revenue, and the jurisdiction of the Assessing Officer under Section 154 of the Income Tax Act. The Tribunal found in favor of the assessee on the issues related to computing net profit, set off of book profit against book loss, and the Assessing Officer's actions. As a result, the appeal was dismissed, and the connected application for stay was closed.