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TMI Blog2019 (10) TMI 629X X X X Extracts X X X X X X X X Extracts X X X X ..... made addition u/s. 40 (a) (ia) CIT(A) quashed the rectification order passed u/s. 154 on the ground that assessee was not given any opportunity of being heard while enhancing the income u/s. 154 and further the issue is not a mistake apparent from record and is debatable issue and dependent on elaborate arguments and has to be established by a long drawn process of reasoning. No infirmity in the order of the CIT(A) quashing the reassessment proceedings. Admittedly there is no discussion on the issue of disallowance u/s. 40 (a) (ia) on account of non deduction of tax from lorry hire charges. Therefore, only course of action available was order u/s. 263 and the AO could not have assumed jurisdiction u/s. 154. We find the CIT(A) while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income on 30.10.2005 declaring total income of ₹ 9,78,805/-. The AO completed the assessment u/s. 143 (3) on 18.12.2007 wherein he made addition of ₹ 91,920/- being disallowance of 1/8th of the expenses out of telephone vehicle repair and maintenance and depreciation on motor car and ₹ 354/- on account of disallowance u/s. 44B. Subsequently the AO found that assessee has debited lorry hire charges to the extent of ₹ 1,66,43,122/-on which no TDS was deducted by the assessee. He, therefore, issued a notice u/s. 154 of the IT Act. Since there was no compliance from the side of the assessee, the AO following the provisions of section 40 (a) (ia) made addition of ₹ 1,66,43,120/- to the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stake is a mistake which is obvious and not something which has to be established by a long drawn process of reasoning or where two opinions are possible. Decision on debatable point of law cannot be treated as mistake apparent from the record. He accordingly held that the rectification carried out by the AO is bad in law as it was passed without giving a proper opportunity to the assessee of being heard and also because of the fact that rectification carried out falls out of this scope of section 154 as it is a debatable issue and dependent on elaborate arguments and has to be established by a long drawn process of reasoning. 5. Aggrieved with such order of the CIT(A), the revenue is in appeal before the Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the order of the CIT(A) be upheld and the grounds raised by the revenue should be dismissed. 7. We have considered the rival arguments made by both the sides and perused the orders of the authorities below. We find the AO in the instant case passed the assessment order on 18.12.2007 u/s. 143 (3) determining the total income of the assessee at ₹ 10,71,080/- as against the returned income of ₹ 9,78,805/- wherein he disallowed certain expenses on estimate basis and made addition u/s. 43 B. There is absolutely no discussion on the issue of disallowance u/s. 40 (a) (ia) for non-deduction of tax from lorry hire charges. We find the AO passed the order u/s. 154 on 29.03.2010 wherein he made addition of ₹ 1,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mistake apparent from the records. The Income- tax Officer cannot, in such a case, invoke section 154 of the Act. The nature of the mistake as considered by the Income-tax Officer in his order is as follows: On the above explanation and facts on record given by the company at the time of assessment, it is clear that the company was not entitled to any deduction of the expenses and allowances incurred and claimed on account of the bungalows, etc., provided free for use to the employees. The provisions of section 40(a)(v) are very clear in this regard. Then, in computing the expenditure, what is to be included is not the value of the perquisite, benefit or amenity as is assessable in the employees' hands, but the cost in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceed under section 154. The Tribunal should have decided whether the Income-tax Officer was justified in invoking section 154 for disallowing deduction under section 40(a)(v). The Tribunal, instead of doing that, has held that it was necessary to restore the appeals to the Appellate Assistant Commissioner for fresh disposal after examining as to whether the details filed by the assessee are correct and whether the expenses disallowed by the Income-tax Officer under section 40(a)(v) are justified. This direction may be construed to mean that the Tribunal found that there was a mistake apparent from the records. But the Tribunal did not decide although such an issue was raised whether the proceeding under section 154 was v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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