2023 (3) TMI 921 - AT - Income Tax

Rectification of mistake u/s 154 - mismatched contract receipts - HELD THAT - As per settled legal proposition in T.S. Balram, ITO vs. Volkart Bros 1971 (8) TMI 3 - SUPREME COURT section 154 of the Act is attracted only in case of an apparent mistake than those requiring long drawn process of detailed enquiry(ies). Assessee s stand all along as per it s statement of facts filed before the NFAC is that the impugned sum involving S/Shri Dilip N Bharne proprietor of M/s. Trimurti Enterprises and Clincy Constructions Pvt. Ltd. is in the nature of service tax component which already stands assessed as the AO had framed the scrutiny assessment dated 26.10.2016 after carrying-out his detailed investigation qua the alleged excess turnover declared, ITS data and 26AS, as the case may be. All what the learned NFAC has done is to simply harp upon sec.154 jurisdiction exercised by the Assessing Officer than rebutting the said clinching averments. We conclude in this factual and legal backdrop that the impugned sec.154 rectification for the purpose of assessing the instant taxpayer s receipts @ 9% falls beyond the purview of sec.154 jurisdiction. Assessee appeal allowed.

Summary

Issues involved:
The appeal against the National Faceless Appeal Centre's order under Section 154 of the Income Tax Act, 1961 for assessment year 2014-15.

Grounds Pleaded by Assessee:
1. The Assessing Officer erred in passing the order under Section 154 when submissions for turnover mismatch were already made and recorded in the assessment order under Section 143(3). The addition made under Section 154 should be deleted.
2. Authorities erred in confirming additions for gross profit on mismatch in 26AS data. The order should be cancelled.
3. Request to be allowed to amend or raise any ground of appeal.

Summary of Judgment:

The assessee challenged the correctness of the lower authorities' action in invoking Section 154 for assessing a mismatch in contract receipts. The dispute revolved around the addition of Rs. 86,236 as gross profit on the mismatched contract receipts of Rs. 9,58,176. The Tribunal considered the legal proposition that Section 154 is applicable only for apparent mistakes not requiring detailed inquiries. The assessee contended that the impugned sum was related to a service tax component already assessed during scrutiny assessment. The Tribunal found that the rectification under Section 154 to assess the taxpayer's receipts at 9% was beyond the scope of jurisdiction. Therefore, the rectification was reversed, and the appeal was allowed.

Separate Judgment:
No separate judgment was delivered by the judges.