2018 (3) TMI 380 - AT - Income Tax

Scope of rectification of mistake order - Disturbing the value of sale consideration in the proceedings u/s 154 by CIT-A - CIT(A) authorization as per law to pass an order u/s 154 by withdrawing the relief already granted to the assessee - correct adoption of the sale consideration - Held that - CIT(A) is also one of the Income Tax authorities referred to in section 116 and accordingly he is entitled to amend his order passed by him under the provisions of the Act. However, the rider has been placed in section 154(1A) of the Act, wherein, it stipulates that an order earlier passed by Income Tax authorities could be subject matter of amendment/rectification in terms of section 154(1), only in relation to matter other than the matter which has been so considered/decided by such authority earlier in his order. In the instant case, CIT(A) had accepted the sale consideration reported by the assessee and also appreciated the fact that it was a distress sale made by the assessee after taking into account the existence of the dispute for 28 years and that the assessee was forced to sell subject mentioned properties to the existing persons who was occupying the subject mentioned properties itself. Hence, CIT(A) has categorically given his finding in his original order dated 30.12.2015 with regard to the adoption of the sale consideration of the subject mentioned properties for the purpose of capital gains and also after appreciating the fact that the valuation officer had not considered the existing disputes over the subject mentioned properties , while valuing the property. Hence, the entire gamut of consideration of the subject mentioned properties has been duly considered and decided by the Ld. CIT(A) earlier in his order dated 30.12.2015. Hence, the said finding of facts cannot be disturbed by him by way of seeking recourse to section 154 in view of specific rider or prohibition provided in section 154(1A) as enumerated supra. Thus with reference to specific provisions of Section 154(1A) CIT(A) was not authorized as per law to pass an order u/s 154 of the Act by withdrawing the relief already granted to the assessee in the instant case. - Decided in favour of assessee.

Summary

Issues:
1. Jurisdiction of CIT(A) to rectify order under section 154 of the Income Tax Act.
2. Mistake apparent from the record justifying rectification under section 154.
3. Authority to alter fundamental decision when no mistake is apparent.
4. Interpretation of provisions of section 154(1) and 154(1A) of the Act.

Issue 1: Jurisdiction of CIT(A) to rectify order under section 154:
The appeal questioned whether the CIT(A) had the authority to rectify his order under section 154 of the Income Tax Act after passing the original order. The Tribunal analyzed the provisions of section 154(1) and 154(1A) to determine the scope of authority granted to the CIT(A) for rectification. The Tribunal concluded that while the CIT(A) is entitled to amend his order under the Act, the restriction under section 154(1A) prohibits altering a matter already considered and decided in the original order. As the CIT(A) had already addressed and decided the issue of sale consideration in the original order, he was not authorized to withdraw the relief granted to the assessee through a rectification order under section 154.

Issue 2: Mistake apparent from the record justifying rectification under section 154:
The Tribunal examined whether there was a mistake apparent from the record to justify the rectification under section 154. The original order of the CIT(A) had considered the facts of the case, including the distress sale of properties and the existence of a long-standing dispute over the properties. The Tribunal found that the CIT(A) had thoroughly analyzed the sale consideration and the circumstances surrounding the transaction in the original order. Consequently, the Tribunal determined that there was no mistake apparent from the record that warranted rectification under section 154.

Issue 3: Authority to alter fundamental decision when no mistake is apparent:
The appeal raised concerns regarding the authority to alter a fundamental decision when no mistake is apparent from the record. The Tribunal clarified that the CIT(A) could not alter a matter already decided in the original order, especially when no mistake was evident. The Tribunal emphasized that the CIT(A) had already considered and decided the issue of sale consideration in the original order, and therefore, altering this fundamental decision without a valid reason was not permissible under the law.

Issue 4: Interpretation of provisions of section 154(1) and 154(1A) of the Act:
The Tribunal provided a detailed interpretation of the provisions of section 154(1) and 154(1A) of the Income Tax Act to determine the scope of authority granted to income tax authorities for rectification. By analyzing the specific language of the provisions, the Tribunal concluded that while income tax authorities, including the CIT(A), could rectify orders under section 154, there were limitations set forth in section 154(1A) regarding altering matters already decided in the original order. This interpretation guided the Tribunal's decision in the case, emphasizing the importance of adhering to the statutory provisions governing rectification of orders under the Act.

In conclusion, the Tribunal allowed the appeal of the assessee, highlighting that the CIT(A) had exceeded his jurisdiction by attempting to rectify the original order under section 154 without a valid reason or mistake apparent from the record. The detailed analysis of the provisions of the Income Tax Act provided clarity on the limits of authority for rectification and emphasized the need for adherence to statutory provisions in such matters.