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TMI Blog2010 (10) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... your appellant asked for the same vide letter dated 20,04.2005. Even the said copy of the order which was provided on 4.5.2005 was without the Notice of Demand u/s 156 read with section 154(6) of the Act. In fact, the AO in his remand report confirmed that there was no notice of demand on assessment records. Without prejudice to the aforesaid ground (b) the CIT(A) erred in confirming the disallowance of depreciation of Rs. 5,53,080/- on leased assets i.e. plant & machinery without considering your appellant's submission in its proper perspective that whether the AO legally and/or otherwise entitled to carry out the above rectification which was not within the purview and powers of section 154. However, any such rectification and/or adjustments if any, would have been possible only under section 147 read with Explanation 2(c)(iii) or (iv) and/or both, read with section 148. (c) The CIT(A) erred in confirming the interest charged u/ss 234A, 234B and 234C in the order u/s 154 of the Act without considering the submission / Explanation in its proper perspective that whether the AO was legally and/or otherwise was entitled to carry out such rectification in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96,500/- as against the returned income of Rs.39,88,680/-, The assessee had filed appeal against the additions to the CIT(A) and subsequently to the Tribunal. However, in the meantime, the Assessing Officer found that the depreciation claimed by the assessee for the year under appeal was incorrect and that the assessee had not attached the depreciation chart along with the return. The Assessing Officer had accordingly issued a letter dated 7th of December 1998, to the assessee company, pointing out that the depreciation permissible to the assessee works out to Rs. 4,16,497/- as against Rs. 16,95,926/- wrongly allowed under section 143(3) of the Act. The assessee had been asked to file objection, if any, to the proposed rectification, for correctly working out the depreciation. The assessee replied vide letter dated 21st of December 1998 and also enclosed Schedule of depreciation as per Income Tax Rules for the assessment years 1994-95 and 1995-96. After taking the figures from the charts furnished by the assessee, the Assessing Officer found that as per the Schedule of depreciation filed by the assessee along with the letter dated 21st of December 1998, the total value of the plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2000. 4. The Assessing Officer also erred in charging interest u/ss 234A, 234B and 234C of the Act without considering the fact that the order u/s 154 dated 24.01.2000 is not a regular assessment within the meaning of section 2(40) of the Income Tax Act. 5. The CIT(A) held that there was proper opportunity afforded to Assessing Officer before passing an order under section 154 of the Act. The CIT(A) also held that charging of interest under sections 234A, 234B & 234C is mandatory and, therefore, the objection of the aasessee that interest cannot be charged in an order u/s. 154 was rejected. 6. Aggrieved by the aforesaid order of the CIT(A) the assessee has preferred the present appeal before the Tribunal. 7. Ground No.(a) raised by the assessee is with regard to the order u/s. 154 not having been passed by the Assessing Officer within the period of limitation. In this regard we called for the original record and the same were produced at the time of hearing. Under the provisions of section 154(7) or the Act the period of limitation for passing an order under section 154 is four years from the end of the financial year in which the order sought to be amended was passed. The or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. (d) Despite a huge demand, no steps were ever taken to recover the demand. 9. His further submission was that u/s.143(3) of the Act, the AO after considering the evidence produced by the Assessee and after taking into account all relevant material which he has gathered, shall by order in writing, make an assessment of the total income or loss of the Assessee and determine the sum payable by him or refund of any amount due to him on the basis of such assessment. According to him an order u/s. 154 which modifies the order u/s.143(3) of the Act, and which has the effect of enhancing the assessment has to be made in writing and should also determine the tax payable. In this regard, he also drew our attention to the provisions of section 154 (4) which provides that where an amendment is made under this section, an order shall be passed in writing by the Income-tax authority concerned. He also drew our attention to the provisions of section 154 (6) which provides that where any such amendment has the effect of enhancing the assessment or reducing a refund already made, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder u/s.154 was not passed as required by law or before the period of limitation specified in Sec. 154(7) of the Act. 11. He again referred to the decision of the Hon'ble Madhya Pradesh High Court in the case of CIT v. Miss. Swarn Taneja (supra). In the aforesaid case, an order of assessment for AYs 1976-77 and 1977-78 were passed u/s. 143(l) of the Act on29-10-1977. Later on certain mistakes in the said orders were noticed and notices for rectification were issued. The Assessee filed reply on24-10-1981 and was heard on the same day. The AO purported to have passed an order on24-10-1981. The time limit for passing the order of rectification was25-10-1981. The rectification resulted in an enhancement of tax payable by the Assessee, But notice of demand was served on the Assessee only on27-3-1982. The stand of the Assesaee was that rectification formed part of assessment which requires determination of tax liability of the Assesses and since such tax calculation was not done on or before 25-10-1981, which is the time limit for passing order u/s.154, the order u/s. 154 is void and it has to be presumed that the order was passed only in March, 1982 and not on 24-10-1981. Factually th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not come to the rescue of the revenue. 13. The learned D.R, on the other hand submitted that the order u/s.154 is dated 34-01-2000. The order also mentions "Copy issued to the Assessee along with ITNS 150", The record of assessment has a copy of Tax calculation in ITNS 150 which is signed by the AO. According to him the fact that the order u/s.154 was served on the Assessee only on 24/5/2005 should not be a reason to come to a conclusion that the order u/s.154 was not passed within the period of limitation. The fact that there is a tax calculation in ITNS 150 signed by the AO also goes to show that the order u/s.154 had been passed in accordance with law within the time, i.e., on 24/01/2000, the time specified in the order u/s.154 of the Act. It was his further submission that the AO originally issued notice u/s.154 of the Act dated 7.12.1998 proposing to rectify the depreciation allowed in the order u/s.143(3) of the Act. The Assessee by its letter dated 21/12/1998 gave a reply and the AO again addressed a letter dated 29/6/1999 giving a figure of excess depreciation allowed in the order u/s. 143(3) of the Act as Rs. 5,52,080/-. The Assessee vide letter dated 7/7/1999 informed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order u/s. 154 and the tax payable pursuant thereto i.e., the calculation of tax in Form No. ITNS 150 had been passed/determined within the period of limitation laid down u/s. 154(7) of the Act. 16. We have called for and perused the records. A remand report had also been filed by the AO before CIT(A) on the issue with regard to service of the order of assessment u/s. 154 of the Act and the service of notice of demand u/s.156 of the Act. There is no dispute that the order u/s.154 of the Act purported to have been passed on24/01/2000 was not served on or before24/5/2005. There is no notice of demand u/s.156 of the Act- The tax calculation in Form No. ITNS 150 is on the file. The same is not dated but signed by the AO. The fact that the order u/s.154 mentions Copy issued to the Assessee along with ITNS 150 is not conclusive in the matter, especially when admittedly the order u/s.154 as well as the calculation of tax payable in Form No. ITNS 150 have been first served on the Aasessee only on24/5/2005 and6/6/2005 respectively. There have been no recovery proceedings by the Revenue despite a huge demand for tax and interest pursuant to the order u/s.154 of the Act. There has been no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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