2024 (8) TMI 693 - HC - Income Tax

Rectification of mistake u/s 154 - AO, receipt of the audit objections, issued a notice u/s 154 and passed order by adding waiver of principal amount and revised the book profit was calculated - Tribunal, dismissed the appeal of the Revenue based on the tax effect - HELD THAT - It is not in dispute that the audit objection was raised in respect of the assessment framed u/s 143 (3) read with Section 147 of the Act and not against the order giving effect to the CIT (A) s order and the order passed by the AO on 23rd August, 2012. The order u/s 154 of the Act is, therefore, quashed and set aside by the CIT (A) on the very ground. CIT (A) allowing the appeal filed by the assessee, the revenue preferred 2021 (4) TMI 1383 - ITAT AHMEDABAD - CIT (A) has quashed and set aside the audit objection, admittedly pertaining to the assessment order, which has merged into the order of CIT (A). Therefore, CIT (A) has rightly quashed the order u/s 154 passed by the AO on the ground that there cannot be any mistake apparent on the record in order giving effect dated 23rd August, 2012. In such circumstances, the Tribunal has rightly dismissed the Miscellaneous Application of the petitioner holding that the appeal preferred by the revenue against the appellate order before the Tribunal was not in lieu of the audit objection being accepted by the department. Therefore, the case would not fall in the exceptions as provided in clause 10(c) of the CBDT Circular No. 3/2018 requiring withdrawal of the appeal of the petitioner where the tax effect fall below the threshold limit.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal under Article 227 of the Constitution of India based on audit objection and tax effect falling below threshold limit.

Analysis:
The petitioner challenged the order of the Income Tax Appellate Tribunal, which dismissed the appeal of the Revenue based on the tax effect being below the prescribed monetary limit and the provisions of Section 268A of the Income Tax Act. The Tribunal allowed the Revenue to approach for recall if tax effect was more. The Revenue filed a Miscellaneous Application citing audit objections and incorrect tax effect calculation. However, the Tribunal rejected the application, stating that the appeal was not related to audit objections and did not fall under the exceptions provided in the CBDT Circular. The petitioner contended that the order under Section 154 was based on audit objections and should be reconsidered. The Court noted that the audit objection was against the assessment under Section 147, not the order giving effect to the CIT (A) order. The order under Section 154 was set aside by the CIT (A) as there was no mistake apparent on record. The Tribunal rightly dismissed the Miscellaneous Application, as the appeal was not related to the audit objection accepted by the department.

The CIT (A) allowed the appeal of the assessee, quashing the order under Section 154 passed by the Assessing Officer. The Tribunal upheld the dismissal of the Miscellaneous Application, as the appeal did not pertain to the audit objection accepted by the department. The Court found no merit in the petition and dismissed it.