2024 (11) TMI 311 - AT - Income Tax

AO power either to withdraw or modify or substitute one assessment order passed by him earlier with another assessment order - AO issued a corrigendum correcting the total income - HELD THAT - As corrigendum issued in rectifying the error in preamble of the assessment order as legal and valid. Considering the facts of the present case before us, we noted that the AO while issuing original assessment order has wrongly noted the details of some other assessee as is apparent from the assessment order issued on 20.12.2019. The fact is that the corrigendum issued thereafter i.e., immediately on next day on 21.12.2019 carries the correct assessment order which was issued as a correct assessment order. Admittedly, the assessment order issued vide corrigendum is matching with the computation sheet and demand notice issued along with the original assessment order dated 20.12.2019. The decision of Hon ble Supreme Court Kalyankumar Ray 1991 (8) TMI 291 - SUPREME COURT rather support the case of Revenue for the reason that the ITNS 65 and ITNS 50 i.e., Form for determination of tax payable and demand notice (in old scheme), now in computerization the computation sheet and demand notice is generated on the system which was created itself on 20.12.2019. In our view, the AO has made mistake in issuing original assessment order and subsequently rectified the mistake by issuing corrigendum which is a valid assessment order and hence, we reverse the finding of CIT(A) on this issue. Since the CIT(A) has not adjudicated the issues on merits, the matter is restored back to the file of the CIT(A) for adjudication on merits after allowing reasonable opportunity of being heard to the assessee.

Issues Involved:

1. Authority of the Assessing Officer (AO) to withdraw, modify, or substitute an assessment order.
2. Legality of the corrigendum issued by the AO to correct typographical errors in the original assessment order.
3. Application of principles of natural justice in the issuance of the corrigendum.
4. Precedents and legal principles regarding the issuance of corrigenda in assessment orders.

Detailed Analysis:

1. Authority of the AO to Withdraw, Modify, or Substitute an Assessment Order:

The primary issue in this appeal was whether the AO had the power to withdraw, modify, or substitute an assessment order once it had been issued. The Commissioner of Income Tax (Appeals) [CIT(A)] held that the AO lacked such authority, effectively quashing the corrigendum issued by the AO. The CIT(A) referenced the decision of the Delhi Bench of the Tribunal in the case of DCIT Vs Mondon Investments Ltd., which held that an AO does not have the power to cancel, recall, or withdraw an assessment order or declare it null and void. The Tribunal, however, found that the AO did not withdraw or cancel the original assessment order but merely corrected errors through a corrigendum, which did not constitute a withdrawal or substitution of the original order.

2. Legality of the Corrigendum Issued by the AO:

The Tribunal examined whether the corrigendum issued by the AO was legally valid. The corrigendum was issued to correct errors in the original assessment order dated 20.12.2019, which contained incorrect information regarding the date of filing of the return and the income returned by the assessee. The AO issued the corrigendum on 21.12.2019, which aligned with the computation sheet and demand notice that had been issued on 20.12.2019. The Tribunal noted that the corrigendum did not alter the assessed income or the demand raised but merely rectified clerical errors, thereby deeming it a valid part of the assessment process.

3. Application of Principles of Natural Justice:

The assessee challenged the corrigendum on the grounds that it violated the principles of natural justice. The Tribunal considered whether the issuance of the corrigendum prejudiced the assessee. It was noted that the corrigendum was based on issues already raised in the show cause notice dated 26.11.2019, and the total income determined in the corrigendum matched the computation sheet dated 20.12.2019. Therefore, the Tribunal concluded that no prejudice was caused to the assessee, and the corrigendum was a legitimate correction of the assessment order.

4. Precedents and Legal Principles Regarding Issuance of Corrigenda:

The Tribunal referenced several legal precedents to support its decision. It cited the decision of the Hon'ble Supreme Court in Kalyankumar Ray vs. CIT, which recognized that assessment is an integrated process involving both the assessment of total income and the determination of tax payable. The Tribunal also referred to the Hon'ble Madras High Court's decision in Prathyusha Educational Trust, which upheld the validity of a corrigendum correcting an error in an assessment order. These precedents reinforced the view that corrigenda could be issued to correct clerical errors without constituting a withdrawal or substitution of the original assessment order.

Conclusion:

The Tribunal reversed the CIT(A)'s decision, holding that the AO's issuance of the corrigendum was valid and did not constitute a withdrawal or substitution of the original assessment order. The matter was remanded back to the CIT(A) for adjudication on merits, allowing the Revenue's appeal for statistical purposes. The Tribunal emphasized that the corrigendum was a legitimate correction of clerical errors and did not prejudice the assessee, thereby upholding the AO's actions within the legal framework.

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