2013 (2) TMI 476 - HC - Income Tax

Jurisdiction under section 154 An order was passed under section 264 by CIT, in revision against an order under section 143(3) - claim of the assessee to the extent of contribution towards the payment of gratuity was allowed to the extent of Rs. 6.80 lakhs while the balance amount of Rs. 31.25 lakhs was disallowed The assessee applied under section 154 for rectification The CIT declined to entertain the application Held that - In the present case, the revisional authority had passed an order in revision. The application for rectification was not made before the Assessing Officer who passed the assessment order which was the subject-matter of revision but the application was made before the revisional authority itself for rectification. Such an application was maintainable and was not barred by section 154(1A) Order set aside and restored the proceedings arising out of the application for rectification under section 154 to the Commissioner of Income-tax In favour of assessee.

Summary

Issues:
1. Jurisdiction of the Commissioner of Income-tax under section 154 of the Income-tax Act, 1961.

Analysis:
The judgment by the High Court of Bombay pertains to a case challenging the order of the Commissioner of Income-tax-1, Nashik, who refused to exercise jurisdiction under section 154 of the Income-tax Act, 1961. The Commissioner had declined to rectify an order passed under section 264 in revision against an assessment order for the assessment year 2007-08. The dispute arose regarding the allowance of the assessee's contribution towards the gratuity fund, with only a portion being permitted. The assessee applied for rectification under section 154, which was rejected by the Commissioner invoking section 154(1A).

The crux of the issue revolved around the interpretation of section 154(1A) of the Income-tax Act. The petitioners argued that section 154(1A) restricts the authority from rectifying an order if the matter has already been considered and decided in an appeal or revision. However, the High Court found merit in the petitioner's contention that in the present case, the rectification application was made before the revisional authority itself, not the original assessing officer. Since the application for rectification was made to the revisional authority, it was deemed maintainable and not barred by section 154(1A).

The High Court held that the Commissioner of Income-tax erred in refusing to entertain the application for rectification under section 154. The Court set aside the order declining rectification and directed the proceedings back to the Commissioner of Income-tax for further consideration. It was clarified that the judgment did not delve into the merits of the rectification case. The petition was disposed of without any costs being imposed, emphasizing the procedural aspect of the rectification application and the jurisdiction of the Commissioner under section 154 of the Income-tax Act, 1961.