2023 (10) TMI 555 - AT - Income Tax

Revision u/s 263 - suppression of production of 467.32 MT - contention of the assessee that the issue pertains to addition on account of suppression of production was also raised by the assessee while making an application u/s. 154 for rectification of mistake. However, such contention of the assessee was not considered by the CIT(A), was found to be incorrect claim. HELD THAT - Since on perusal of the application of the assessee for rectification of mistake, the assessee has referred to notice dated 22.07.2016 and not order dated 30.09.2016 or original assessment order dated 30.03.2014. Since such contention was not raised in the application for rectification u/s. 154 dated 21.10.2016, the assessee s claim that mistake pertains to yield of raw materials and suppression in the production was not dealt with in the order u/s. 154 of the Act was found to be incorrect. Consequently, we are unable to accept the contention of the assessee with the observation that, whether an issue which is not emerged from the impugned order which was challenged before the CIT(Appeals), can be taken up in an appeal by ITAT, our answer to this question is in negative. Accordingly, the grounds of appeal of the assessee, which are not emerging from order u/s 154 which is the foundation of the disputes raised under appeal before the Ld CIT(A), is liable to be treated as infructuous / non-maintainable. No infirmity in the view taken by the Ld. CIT(Appeals), thus, the same stands upheld.

Summary

Issues Involved:
The appeal concerns the addition of Rs. 1,13,20,940/- made by the Assessing Officer on the grounds of alleged suppression of production of 467.32MT, and the subsequent rejection of rectification application filed by the appellant.

Issue 1 - Alleged Suppression of Production:
The appellant, a company engaged in manufacturing and trading, filed a return declaring income at NIL, leading to assessment under section 143(2) with nil demand. Subsequently, assessment proceedings were initiated under section 263, resulting in an order under section 143(3) r.w.s 263 disallowing Rs 1.13 crores in respect of yield calculation of raw material. The appellant argued that the original assessment order was not considered by the Assessing Officer, and discrepancies in the calculation of raw material yield were highlighted during the proceedings. Despite providing audited balance sheets and relevant details, the Assessing Officer made an addition based on alleged suppression of production, which the appellant contested through a rectification application under section 154.

Issue 2 - Appeal and Dismissal:
The appellant, aggrieved by the assessment order, appealed before the CIT(Appeals) who dismissed the appeal. Subsequently, the appellant carried the matter to the ITAT, raising concerns about the addition made by the Assessing Officer. The appellant argued that the addition was unreasonable and should be deleted, especially considering the rectification application filed and accepted by the department. However, the CIT(Appeals) held that the appeal was barred by limitation and not bonafide, as it related to an assessment order that was not appealed against. The ITAT upheld the CIT(Appeals)' decision, stating that the issue of suppression of production could not be raised in the present appeal as it did not emerge from the order under dispute.

Conclusion:
The ITAT found no infirmity in the CIT(Appeals)' decision and upheld the dismissal of the appellant's appeal. The order pronounced on 10/10/2023 maintained that the grounds of appeal not directly related to the order under consideration were deemed non-maintainable, ultimately affirming the reasonableness of the CIT(Appeals) decision in the matter.