1991 (12) TMI 77 - AT - Income Tax

Summary

Issues:
Assessment of cash amount as income from undisclosed sources for the assessment year 1980-81, jurisdiction of ITO to rectify the order under section 154 of the Act after dismissal of revision petition by the Commissioner.

Analysis:
The appeal pertains to the assessment year 1980-81, where the assessee's explanation regarding the possession of a cash amount of Rs. 41,000 found during a raid was deemed unsatisfactory by the Income Tax Officer (ITO). The ITO added this amount as income from undisclosed sources under section 69A of the Act. The assessee, after withdrawing an appeal before the AAC, filed a revision petition under section 264 before the Commissioner of Income-tax, Rajkot. The Commissioner upheld the ITO's decision, stating that the amount represented income from undisclosed sources and was rightly added to the assessment for the year 1980-81.

Subsequently, the assessee filed a rectification application under section 154, arguing that the addition should have been made in the assessment year 1979-80 instead of 1980-81. The ITO rejected the rectification, citing that the Commissioner had already confirmed the original assessment order under section 264, and thus, there was no apparent mistake for rectification under section 154. The CIT(A) also upheld the ITO's decision, leading the assessee to appeal to the Tribunal.

The crux of the matter revolves around the jurisdiction of the ITO to rectify the order under section 154 after the Commissioner dismissed the revision petition. Section 154(1A) allows for amendment of an order in relation to any matter not already considered and decided in a proceeding by way of appeal or revision. In this case, since the Commissioner had already decided on the addition of Rs. 41,000 as income from undisclosed sources, the ITO could not rectify the order under section 154.

The assessee contended that the question of whether the amount should be assessed in the year 1979-80 or 1980-81 was not specifically addressed by the Commissioner and could be considered under section 154. However, the Tribunal held that this question was part of the same subject matter considered by the Commissioner and, therefore, could not be rectified separately under section 154.

Ultimately, the Tribunal dismissed the appeal, affirming the decision that the ITO was justified in refusing to rectify the order under section 154, as the matter had already been decided by the Commissioner under section 264.