2007 (5) TMI 266 - AT - Income Tax

Summary

Issues Involved:
1. Assumption of jurisdiction u/s 154 of the IT Act, 1961.
2. Inclusion of Rs. 5 crores as income from vendor financing.
3. Validity of the order passed u/s 154 of the IT Act.
4. Adjustment of Rs. 3 crores deposited by the appellant.

Summary:

1. Assumption of jurisdiction u/s 154 of the IT Act, 1961:
The assessee contested the assumption of jurisdiction u/s 154 by the AO, which was upheld by the CIT(A). The Tribunal confirmed this jurisdiction, stating that the AO is empowered to rectify mistakes apparent from the record.

2. Inclusion of Rs. 5 crores as income from vendor financing:
The AO included Rs. 5 crores as interest income from vendor financing, which was upheld by the CIT(A). The Tribunal confirmed this inclusion, noting that the existence of the clause for charging interest at 18% per annum was not denied and the mere fact that no credit was taken in the account books for the interest cannot stop the accrual thereof as the assessee's income.

3. Validity of the order passed u/s 154 of the IT Act:
The assessee argued that the order passed u/s 154 was bad in law and void ab initio. The Tribunal, however, found that the AO's action of rectifying the mistake apparent from the record was justified and upheld the CIT(A)'s order.

4. Adjustment of Rs. 3 crores deposited by the appellant:
The assessee requested the adjustment of Rs. 3 crores deposited on 5th Sept., 2003 against the demand pending for the assessment years 1997-98 and 1998-99. The CIT(A) did not direct the AO to make this adjustment, and the Tribunal upheld this decision.

Conclusion:
The Tribunal dismissed both appeals of the assessee, confirming the actions of the AO and CIT(A) regarding the assumption of jurisdiction u/s 154, inclusion of Rs. 5 crores as income from vendor financing, validity of the order passed u/s 154, and the non-adjustment of Rs. 3 crores deposited by the appellant.