2023 (4) TMI 475 - AT - Income Tax

Rectification u/s 154 - two different opinions possible - enhancing the income of the assessee on the ground that there was an error in computation of the MAT during the course of proceedings u/s. 143(3) on the quantum amount as claimed by the assessee as deduction u/s. 80IB of the Act on the surrendered income during the course of search/survey - HELD THAT - On going through the order of the CIT(Appeals), we note that there is no basis on the material available on record so that it could be said that there was a mistake apparent from the record and if there are two possible opinions, the same cannot be subject of rectification u/s. 154 of the Act. The case law relied on by the ld. DR is not applicable to the facts of the present case. Issue decided in favour of assessee as decided in assessee own case 2022 (10) TMI 340 - ITAT BENGALURU as held that invoking section 154 would be untenable when the matter requires adjudication upon the issue which is debatable issue - AO is not correct in enhancing the book profits u/s.115JC by passing an order under Section 154 - Decided against revenue.

Summary

Issues involved:
The judgment addresses the rectification order passed by the Assessing Officer (AO) under section 154 of the Income-tax Act, 1961, and the subsequent appeal allowed by the Commissioner of Income Tax (Appeals) regarding the computation of Minimum Alternate Tax (MAT) taxable income and deduction claimed under section 80IB of the Act.

Rectification Order under Section 154:
The AO initially assessed the taxable income and book profits of the assessee, allowing a deduction under section 80IB. Subsequently, the AO observed an error in the MAT computation related to the deduction claimed, leading to an order under section 154 to enhance the income and determine the net tax payable. The CIT(Appeals) allowed the assessee's appeal, contending that the AO wrongly invoked section 154, which the revenue challenged before the Tribunal.

Contentions of the Parties:
The Departmental Representative (DR) argued that the AO's correction of the MAT taxable income was valid under section 154, emphasizing a mistake in the computation. In contrast, the Authorized Representative (AR) for the assessee cited precedents where similar rectification orders were deemed incorrect by the Tribunal, highlighting the impermissibility of adjusting book profits as per the Act.

Tribunal's Analysis and Decision:
Upon reviewing the arguments and case law, the Tribunal found that the AO's rectification order lacked a basis for claiming a mistake apparent from the record. Citing a previous decision in the assessee's favor for preceding assessment years, the Tribunal emphasized the limited scope of rectification to correct factual or legal errors based on available material. Referring to relevant legal principles and High Court decisions, the Tribunal concluded that the AO's action to enhance book profits under section 115JC through a section 154 order was untenable. Consequently, the Tribunal dismissed the revenue's appeal, aligning with the precedent and legal interpretations provided in the judgment.

Conclusion:
In line with the legal analysis and precedents cited, the Tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal against the rectification order issued under section 154. The judgment emphasizes the importance of adhering to legal principles and the limited scope of rectification under the Income-tax Act, 1961.