2021 (12) TMI 1195 - AT - Income Tax

Rectification of application u/s 154 rejected - what the assessee has done is being aggrieved with the rejection of rectification petition by the AO he has filed another rectification petition before the Pr. CIT which is not permitted within the framework of the Income-tax Act - HELD THAT - As totality of the facts and circumstances that against the rejection of the rectification application of the assessee by the AO, as correctly pointed out by the ld. D/R, the proper recourse available to the assessee is to file an appeal before the ld. CIT(A). That filing another rectification application before the Pr. CIT against the rejection of rectification application u/s 154 of the Act by the AO is not the proper procedure within the framework of the Act. This appeal preferred by the assessee before us is directed against the order passed by the Pr. CIT wherein the assessee has filed a rectification application before him against the order of the rectification passed by the AO. This action of the assessee is legally not maintainable within the purview of the Act and only remedy available to them is to file an appeal before the first appellate authority. In view thereof we do not find any infirmity with the findings of the Pr. CIT which is upheld. Appeal of the assessee is dismissed.

Summary

Issues:
1. Maintainability of rectification application under Section 154 of the Income Tax Act.
2. Proper recourse available to the assessee against rejection of rectification application by the Assessing Officer.

Issue 1: Maintainability of Rectification Application under Section 154:
The appeal before the Appellate Tribunal ITAT Kolkata arose from the order of the Principal Commissioner of Income Tax-13, Kolkata, rejecting the rectification application of the assessee under Section 154(8) of the Income Tax Act, 1961 for the Assessment Year 2011-12. The Principal Commissioner concluded that the rectification application was not maintainable as per law. The Tribunal analyzed the provisions of Section 154 and emphasized that an Income-tax authority can rectify any order passed by them. However, it clarified that one Income-tax authority cannot rectify an order passed by another Income-tax authority. The Tribunal highlighted that if an assessee is aggrieved by the rejection of a rectification application by the Assessing Officer, the proper recourse is to file an appeal before the Commissioner of Income Tax (Appeals). Filing another rectification application before a different Income-tax authority is not permitted under the Income Tax Act. The Tribunal upheld the finding of the Principal Commissioner in this regard, dismissing the appeal of the assessee.

Issue 2: Proper Recourse Against Rejection of Rectification Application:
The Tribunal considered the arguments presented by the counsel for the assessee, who requested the matter to be restored to the file of the Assessing Officer for verification based on new evidence obtained after the rejection of the rectification application. However, the Tribunal reiterated that the correct course of action for the assessee, upon rejection of the rectification application by the Assessing Officer, is to appeal before the Commissioner of Income Tax (Appeals). The Tribunal emphasized that filing a fresh rectification application before a different Income-tax authority is not in line with the legal framework of the Income Tax Act. Therefore, the Tribunal upheld the decision of the Principal Commissioner and dismissed the appeal of the assessee, maintaining that the only remedy available was to appeal before the first appellate authority.

In conclusion, the Appellate Tribunal ITAT Kolkata ruled on the maintainability of a rectification application under Section 154 of the Income Tax Act and the proper recourse available to an assessee against the rejection of such an application by the Assessing Officer. The Tribunal clarified that filing a fresh rectification application before a different Income-tax authority is not permissible under the Act, and the correct procedure for the assessee is to appeal before the Commissioner of Income Tax (Appeals) in such cases. The Tribunal upheld the decision of the Principal Commissioner, ultimately dismissing the appeal of the assessee.