2022 (11) TMI 410 - AT - Income Tax

Rectification u/s 154 - Capital gain computation - assessee had sold land which was ancestral land acquired by him - HELD THAT - The contents of the order passed by the CIT(A) both in quantum proceedings and u/s 154 of the Act on rectification application filed by the assessee ,we agree with the assessee, itself are self-speaking and loud and clear that the ld.CIT(A) was aware that the decision of the jurisdictional High Court cited by the assessee was applicable in the facts of the case before him. In his order passed in quantum proceedings, we find, he dismisses assessee s contention of the reference made to DVO by the AO being bad in law relying on a decision of the Hon ble Delhi High Court, this despite the fact that the assessee cited decision of the jurisdictional High Court in favour of the assessee. CIT(A) did so without distinguishing the decision of the jurisdictional High Court cited by the assessee. In fact, he on the contrary implicitly accepted the applicability of the said decision to the facts of the case when he dismissed assesses plea stating in his order with due respect to the order of the jurisdictional high court . This shows that he was aware that the decision of the jurisdictional High court applied to the issue before him Even when the assessee filed a rectification application before him for not following the jurisdictional High Court decision, the Ld.CIT(A) did not distinguish the said decision while dismissing assesses application, but again on the contrary stated that accepting assesses application would tantamount to changing the decision . This again is an implicit acceptance by the Ld.CIT(A) of the mistake in his order passed in quantum proceedings by not following the ratio laid down by the jurisdictional High Court on the issue before him. Having admitted to this mistake in his order, there was no other recourse available in law to the Ld.CIT(A) other than allowing assessee s rectification application. His dismissal of the rectification application on the ground that it would change the CIT(A) s order is in blatant disregard and against all settled principles of law. If a mistake is admitted to have occurred in an order, the same needs to be rectified. There are no two ways about it. Therefore, without going into the merits of the case, on the basis of the admission of the ld.CIT(A) itself that jurisdictional High Court decision applied in the case of the assessee which he repeatedly implied in his order passed both in quantum proceedings and u/s 154 of the Act, we set aside the order of the ld.CIT(A) passed under section 154 of the Act and direct him to allow the assessee s rectification application.

Summary

Issues:
Challenge against order dismissing rectification application under section 154 of the Income Tax Act, 1961.

Analysis:
The appeal was filed against the order of the ld. Commissioner of Income-Tax(Appeals)-4, Ahmedabad, dismissing the rectification application under section 154 of the Income Tax Act, 1961. The counsel for the assessee argued that the ld.CIT(A) had admitted to the mistake in the order but refused rectification, claiming it would change the decision. The grounds of appeal raised by the assessee challenged the order on legal and judicial grounds. The counsel contended that the mere admission of a mistake warranted setting aside the ld.CIT(A)'s order and allowing the rectification application.

The factual background involved the valuation of ancestral land sold by the assessee for computing capital gains. The assessee's valuation was rejected by the Assessing Officer, who referred the valuation to the Department's valuer. The valuation discrepancy led to an addition to the capital gain returned by the assessee. The ld.CIT(A) upheld the AO's decision, citing a different High Court's ruling despite the assessee's reliance on the jurisdictional High Court's decision. The assessee filed a rectification application, emphasizing the ld.CIT(A)'s failure to follow the jurisdictional High Court's decision in the case. The ld.CIT(A) dismissed the application, stating that rectification would change the decision.

The Tribunal found that the ld.CIT(A) was aware of the jurisdictional High Court's decision's applicability, as evident from his orders. Despite this, he did not follow the said decision in the quantum proceedings and rejected the rectification application. The Tribunal held that the ld.CIT(A)'s refusal to rectify the admitted mistake was against established legal principles. The Tribunal emphasized that if an error is acknowledged in an order, rectification is necessary. Therefore, the Tribunal set aside the ld.CIT(A)'s order and directed the allowance of the assessee's rectification application. The appeal of the assessee was allowed, emphasizing the importance of following legal precedents and rectifying admitted mistakes.

In conclusion, the Tribunal's decision highlighted the significance of adhering to legal precedents and rectifying acknowledged errors in orders. The judgment emphasized the necessity of following established legal principles and ensuring fairness in tax proceedings.