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TMI Blog2006 (7) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 'A' Bench. On 21.1 0.2003, this Court admitted the appeal and formulated the following question of law. "1. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the assessment could be rectified u/s 154 of the IT Act to ensure that the statutory provisions of Sec.44AE were complied with or it would amount to a redoing of the assessment?" 2. The facts leading to the above question of law are as under 3. The relevant assessment year is 1994-95 and the accounting year ended on 31.03.1994. The assessee is a registered firm. The assessee is a dealer in fertiliser and also derived income from plying 3 lorries. The assessee filed return of income for the said assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer rectified the order making additions, and held as follows: Total loss as per A.O. dt.13.9.96 RS. Rs. 1,64,712 Add: (1) Losses of 2 lorries debited in P L Account 78,684 (2) Interest on hire-purchase loan 65,095 (3) Depreciation claimed for 3 lorries 3,22,708 4,66,487 3,01,775 Less: Income offered in respect of lorry TN-47-7216 36,535 2,65,240 Add : Income estimated u/s 44AE in respect of above lorry 24,000 Revised t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o support his contention. 6. Learned counsel appearing for the assessee submitted that the Assessing Officer admitted the loss return by the assessee and further to the acceptance of the loss return, he also made addition estimating income from lorries. Eventhough the said estimated addition is not warranted in law, the assessee accepted the estimated addition due to the smallness of the amount and also in order to purchase peace with the Department. 7. Heard the counsel. Section 44AE of the Act, was introduced by the Finance Act of 1994 with effect from 01.04.1994. The relevant provision of Section 44AE, stands during the accounting year reads as follows: "44AE . Special Provision for computing profits and gains of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been already given full effect to and no further deduction under those sections shall be allowed: (4) The written down value of any asset used for the purpose of the business referred to in sub-section(1) shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years. (5) The provisions of sections 44AA and 44AB shall not apply in so far as they relate to the business referred to in sub-section(1) and in computing the monetary limits under those sections, the gross receipts or, as the case may be, the income from the said business shall be excluded. (6) Nothing contained in the foregoing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer should proceed to make the assessment and determine the total income or loss under Section 143(3) of the Act. The said option is given to the assessee under Section 44AE (6) of the Act. 9. In this case, the assessment was made under Section 143(3) of the Act and the Assessing Officer accepted the return of loss filed by the assessee. Further he estimated the income by way of addition of Rs.48,000/- from lorries under Section 44AE of the Act. From the records it is seen that the assessee maintained books of account and filed profit and loss account, which was considered by the Assessing Officer in determining the income. Once the books of account were accepted, it is wrong on the part of the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above Supreme Court observation, it is clear that only apparent mistake and non-debatable issue, would be the subject matter of rectification under Section 154 of the Act. In the present case, the issue as to whether Section 44AE will apply or not, is itself a debatable one and hence, the Assessing Officer has no jurisdiction to rectify under Section 154 of the Act. The Madhya Pradesh High Court judgment relied on by the learned counsel for the revenue reported in Northern Air Products 274 ITR 225 is not relevant to the facts of the present case. In that judgment, no statutory provision was followed when completing the assessment. Later, the revenue rectified the assessment by following the statutory provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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