1995 (1) TMI 130 - AT - Income Tax

Appeal To Tribunal Assessing Officer Dispose Of Jurisdiction Of Tribunal Mistake Apparent From Record

Issues Involved:
1. Adjustment of Rs. 40,000 towards work-in-progress under section 143(1)(a).
2. Application for rectification under section 154.
3. Jurisdiction of the Deputy Commissioner(Appeals) under section 154.
4. Maintainability of the appeal before the Tribunal after waiver of the right to appeal under section 264.
5. Merits of the adjustment under section 143(1)(a).

Issue-wise Detailed Analysis:

1. Adjustment of Rs. 40,000 towards work-in-progress under section 143(1)(a):
The Income-tax Officer (ITO) made an adjustment of Rs. 40,000 towards work-in-progress debited to the profit and loss account, which was deemed inadmissible based on the material available in the return and accompanying statements. The assessee contended that the work-in-progress was the opening stock as of 1-4-1988 and requested rectification under section 154, which was rejected by the ITO. The Deputy Commissioner(Appeals) upheld the ITO's decision, stating that the assessee was not maintaining any books of account for the assessment year 1988-89, thus the claim for opening work-in-progress for 1989-90 was inadmissible.

2. Application for rectification under section 154:
The assessee filed an application under section 154 to rectify the alleged mistake in the ITO's order. The Deputy Commissioner(Appeals) rejected this application, stating that the disallowance of the opening work-in-progress was justified as it was an item of deduction under section 143(1)(a). The Deputy Commissioner(Appeals) noted that the profit and loss account and balance-sheet for the previous year were not filed with the return for the assessment year 1988-89 and that the work-in-progress did not qualify for deduction based on the facts and records.

3. Jurisdiction of the Deputy Commissioner(Appeals) under section 154:
The Tribunal examined whether the Deputy Commissioner(Appeals) had the jurisdiction to entertain the assessee's petition under section 154. It was noted that the Deputy Commissioner(Appeals) had already dealt with the issue of adjustment under section 143(1)(a) in his original order dated 1-2-1991. Therefore, the Tribunal concluded that the Deputy Commissioner(Appeals) could not reconsider the same issue under section 154, as it was not a matter of rectification but rather an attempt to review the original order, which is not permissible under the Act.

4. Maintainability of the appeal before the Tribunal after waiver of the right to appeal under section 264:
The Tribunal addressed the preliminary issue of whether the appeal was maintainable after the assessee waived his right to appeal to the Tribunal by filing a declaration under section 264(4). The Tribunal held that once the assessee submitted to the jurisdiction of the Commissioner of Income-tax (CIT) under section 264 and waived his right of appeal to the Tribunal, he could not later pursue the appeal. The Tribunal emphasized that the declaration given by the assessee was valid and binding, and the CIT's order under section 264 could not be challenged on the ground of alleged procedural violations.

5. Merits of the adjustment under section 143(1)(a):
On the merits, the Tribunal noted that the adjustment made by the ITO under section 143(1)(a) was not in accordance with law. However, since the appeal was dismissed on jurisdictional grounds, the Tribunal did not delve into the substantive merits of the adjustment. The Tribunal concluded that the assessee's attempt to seek rectification under section 154 was not justified, as the original order of the Deputy Commissioner(Appeals) had already addressed the issue.

Conclusion:
The Tribunal dismissed the appeal, holding that the assessee, having waived his right of appeal under section 264, could not pursue the appeal before the Tribunal. Additionally, the Tribunal found that the Deputy Commissioner(Appeals) had no jurisdiction to reconsider the issue under section 154, as it was not a matter of rectification but an attempt to review the original order. The Tribunal did not address the merits of the adjustment under section 143(1)(a) due to the jurisdictional dismissal.

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