2023 (9) TMI 1215 - AT - Income Tax

Rectification of mistake - Addition u/s 68 towards cash receipts - whether is there any mistake apparent on record from the order passed by the AO u/s. 254 r.w.s. 143(3) which can be rectified u/s. 154 of the Act or not? - HELD THAT - We ourselves do not subscribe to the reasons given by the AO for simple reason that, in the order to give effect to the appellate order, the scope and power of the AO is limited to the extent of findings or directions given by any appellate authorities. AO cannot travel beyond the directions or findings given by the appellate authorities. In the present case, if you go through the additions made by the AO towards cash found and seized during the course of search with reasons given by the AO for making said additions, in our considered view, the AO has not followed specific directions or findings given by the Tribunal in their order on the issue of cash found and seized during the course of search. No doubt, the issue before the Tribunal was addition made by the AO towards cash receipts as per scribbling pad u/s. 68 of the Act. Just because cash found and seized, it cannot be concluded that the assessee has received unaccounted cash from various authorities. Since, there is specific directions from the Tribunal on the issue of addition made towards cash receipts and consequent cash seized during the course of search, in our considered view, there is no other option to the AO but to follow the directions or findings of the Tribunal while passing order u/s. 254 r.w.s. 143(3) of the Act. In the present case, the AO trying indirectly to do what he cannot do directly. In our considered view, once the main gate is closed, then the AO cannot take back door entry and further he cannot do indirectly what he cannot do directly. In our considered view, there is other provisions provided to deal with the situation where the AO can take other remedies available in the Act and consider the issue appropriately in accordance with law, but he cannot overlook the directions or findings of the appellate authorities and take a different view. AO has completely erred in making additions towards cash found and seized during the course of search, in order giving effect to Tribunal order u/s. 143(3) r.w.s. 254 of the Act. The CIT(A), without appreciating relevant facts simply sustained the additions made by the Assessing Officer. Decided in favour of assessee.

Summary

Issues Involved:

1. Jurisdiction of the Assessing Officer (AO) while giving effect to the Tribunal's order.
2. Rectification of mistakes under Section 154 of the Income Tax Act.
3. Addition of unexplained seized cash under Section 69A of the Income Tax Act.

Summary:

Issue 1: Jurisdiction of the Assessing Officer (AO) while giving effect to the Tribunal's order

The assessee argued that the AO exceeded his jurisdiction while giving effect to the Tribunal's order under Section 254 r.w.s 143(3) of the Income Tax Act. The Tribunal had previously deleted additions made by the AO towards cash receipts. However, the AO, while giving effect to this order, made additional additions towards unexplained seized cash of Rs. 3,68,74,080/- under Section 69A. The Tribunal noted that the AO cannot travel beyond the directions given by the appellate authorities and must adhere strictly to those directions.

Issue 2: Rectification of mistakes under Section 154 of the Income Tax Act

The assessee filed a petition under Section 154, claiming that the AO's failure to follow the Tribunal's directions constituted a "mistake apparent on record" that needed rectification. The AO rejected this petition, arguing that only obvious and patent mistakes could be rectified under Section 154, and the issue at hand was debatable. The Tribunal disagreed, stating that the AO's actions were a clear mistake apparent on record, as the Tribunal had specifically addressed the issue of cash found and seized during the search, noting it tallied with the assessee's books of accounts.

Issue 3: Addition of unexplained seized cash under Section 69A of the Income Tax Act

The Tribunal found that the AO had erred in making additions towards cash found and seized during the search in the order giving effect to the Tribunal's previous order. The Tribunal had already discussed and resolved the issue of the cash found and seized, concluding that it was accounted for in the assessee's books. The Tribunal held that the AO's attempt to add the same amount under a different head was a mistake apparent on record, which needed rectification under Section 154. Consequently, the Tribunal directed the AO to delete the additions made towards cash found and seized amounting to Rs. 3,79,00,000/- under Section 69A.

Conclusion:

The Tribunal allowed the assessee's appeal, setting aside the order of the CIT(A) and directing the AO to delete the additions made towards cash found and seized. The Tribunal emphasized that the AO must strictly follow the directions of the appellate authorities and cannot make additions beyond those directions.