2005 (2) TMI 491 - AT - Income Tax

Summary

Issues:
Appeal against CIT(A)'s order confirming AO's action under s. 154 applying s. 167B(2)(i) to rectify assessment order for asst. yrs. 1994-95 to 1997-98 taxing income at maximum marginal rates.

Analysis:
The assessee appealed against CIT(A)'s decision confirming AO's action under s. 154 applying s. 167B(2)(i) to rectify the assessment order for the relevant assessment years. The original returns were processed under s. 143(1)(a) assessing the assessee as 'AOP' at ordinary rates. The AO rectified the assessment order taxing the total income at maximum marginal rates after issuing a notice and providing an opportunity to the assessee to file objections. The CIT(A) dismissed the appeal of the assessee, leading to the present appeal before the ITAT.

The ITAT considered the provisions of s. 154, which allow rectification of any mistake apparent from the record by the IT authority. The word 'record' was analyzed, concluding that it refers to the record of the assessee for whom the order is sought to be rectified. The information and documents available at the time of passing the order should form part of the record. The ITAT noted that the record of a different assessee cannot be linked to rectifying the order of a particular assessee. The ITAT referred to case laws supporting this interpretation and highlighted that information from a different record may provide jurisdiction under s. 147 but cannot be used under s. 154.

The ITAT found that the AO's action under s. 154, based on information from the 'HUF' record, was not appropriate as 'AOP' and 'HUF' are distinct assesses. While acknowledging that such information could be relevant for initiating action under s. 147, it cannot be considered a mistake apparent from the record for rectification under s. 154. Consequently, the ITAT set aside the orders of the lower authorities and quashed the AO's order under s. 154, allowing all the appeals of the assessee.