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TMI Blog2022 (2) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... e true and correct fact, in our considered view, the AO himself ought to have made inquiry from the Tax Auditor of the assessee. Undisputedly, it is the Assessing Officer who wanted to amend the concluded assessment. Therefore, he was required to verify the facts by making requisite inquiry. We, therefore, set aside the impugned order and direct the AO to decide the issue afresh after making necessary inquiry and verification of facts related to issue under consideration. The grounds raised by the assessee are allowed for statistical purposes only. - ITA No.5326/Del/2018 - - - Dated:- 10-2-2022 - Shri Kul Bharat, Judicial Member And Shri Pradip Kumar Kedia, Accountant Member For the Appellant : Shri Ved Jain, Adv. And Shri Aditya Chhajed, Adv. For the Respondent : Ms. Princy Singla, Sr.DR ORDER PER KUL BHARAT, JM : This appeal filed by the assessee for the assessment year 2011-12 is directed against the order of Ld. CIT(A)-22, New Delhi dated 26.06.2018. The assessee has raised following grounds of appeal:- 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax(Appeals) CIT(A) is bad both in the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrectly exercised the jurisdiction u/s 154 of the Act under the facts and circumstances of the present case. Ld. Counsel for the assessee reiterated the submissions as made in the written synopsis. The submissions of the assessee are reproduced as under:- 1. This is an appeal filed by the assessee against the order passed by the learned CIT(A) confirming the addition of ₹ 3,06,32,000/- made by the AO in the rectification order passed under section 154/250/143(3) of the Income Tax Act ( The Act ). 2. The brief facts of the present case are that the assessee filed its original return of income declaring total loss of ₹ 14,76,94,22,781/- [PB Pg.1] Thereafter, the assessment was completed under section 143(3) of the Act vide order dated. 18.03.2014 at the net loss of ₹ 14,48,28,78,030/-. The assessee went before CIT(A) against the order passed by the AO and learned CIT(A) had given the partial relief and thereby the assessed loss was reduced to ₹ 14,72,18,51,211/-. 3. Subsequently, the learned AO passed the order under section 250/143(3) of the Act dated. 01.07.2016 giving effect to the order passed by the CIT(A). 4. Thereafter, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed by the assessee in the profit loss account which is also disallowed in the return of income thus, there is no mistake apparent on record in the order passed under section 143(3) of the Act sought to be rectified by the AO. 8. Now the assessee is in appeal before this Hon'ble Tribunal. 9. It is a well settled law that for rectification of the mistake under section 154 of the Act shall be the mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. 10. The AO passed the original assessment order after scrutiny under section 143(3) of the Act after examining the books of account produced before him. AO did not dispute the mismatch of the figures of provisions of leave encashment at the assessment stage. 11. In this regard it is submitted that the learned AO made the addition on the basis of the mismatch of figures in the Tax Audit report and audited financial statements. The assessee has number of times submitted before AO and CIT(A) that there is a typographical error in tax audit report and there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to documents outside the record and the law is impermissible when applying the provisions of section 154. The appeal is dismissed. No order as to costs. 16. Your Honors, reliance in this regard is also placed on the following judgments- Balaram, Income-Tax Officer, Company Circle IV, Bombay Vs. Volkart Brothers and Others,- 1971 (8) TMI 3 - Supreme Court, Dated: - 05 August 1971 From what has been said above, it is clear that the question whether Section 17(1) of the Indian Income-tax Act, 1922 was applicable to the case of the first respondent is not free from doubt. Therefore the Income-tax Officer was not justified in thinking that on that question there can be no two opinions. It was not open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under Section 154 of the Income-tax Act, 1961. A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the question was as to whether such an action could be taken by the Assessing Officer in 154 proceedings. Since the dispute, whether the Air- conditioners and refrigerators were articles falling in the list of Schedule-XI, namely, whether they were domestic or electric appliances or it was a controversial question, rectification proceedings under Section 154 could not be initiated. This is so held by the Supreme Court in T.S. Balram, Income Tax Officer, Company Circle IV, Bombay Vs. Volkart Brothers And Others, 82 ITR 50 in the following manner:- From what has been said above, it is clear that the question whether Section 17(1) of the Indian Income-tax Act, 1922 was applicable to the case of the first respondent is not free from doubt. Therefore the Income-tax Officer was not justified in thinking that on that question there can be no two opinions. It was not open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under Section 154 of the Income-tax Act, 1961. A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f law that rectification is a process by which a mistake is set at right. It thus means correcting an error which was apparent from record and not deciding the matter over and again on merits and that the rectified order does not supersede the original order but continues with the incorporated changes. 12. Moreover, we have come across two judgments of the Hon'ble Apex Court in 'S.Nagaraj v. State of Karnataka' [(1993) Supp. 4 SCC 5951 and 'Ammonia Supplies Corporation Pvt. Ltd. v. Modern Plastic Containers Pvt. Ltd.' [AIR 1998 SC 3153]. by which it was held in the former judgment that rectification of an order stems from fundamental principle that justice is above all. It is exercised to remove the error and not for disturbing finality. In the latter judgment, it was held that rectification connotes something what ought to have been done but by error is not done and what ought not to have been done was done requiring rectification. Rectification, in other words, is the failure to comply with the directions under the Act. Therefore, it is apposite and clear that the power under Sec. 154 can be invoked only to correct an error and not to disturb a conclude f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. In support of this contentions, Ld. Counsel for the assessee placed reliance on the judgement of the Hon ble Supreme Court in the case of CIT vs Keshri Metal Pvt. Ltd. [1999] (3) TMI 11 (SC). Further, reliance was placed on the judgment of Hon ble Supreme Court in the case of TS Balaram, ITO Company Circle IV, Bombay vs Volkart Brothers and Others [1971] (8) TMI 3 (SC). Ld. Counsel for the assessee also placed reliance on the judgement of Hon ble Delhi High Court in the case of CIT vs Mr. Fedders Lioyed Corpn. (P.) Ltd. [2010] (9) TMI 63 (Del.). To buttress the contention that the action of the assessing authority is beyond the scope of section 154 of the Act. 7. On the contrary, Ld. Sr. DR opposed these submissions and supported the orders of the authorities below. Ld. Sr. DR submitted that there is no dispute with regard to the fact that there was discrepancy regarding the figure disclosed in Profit Loss Account regarding leave encashment and the figure stated and certified by the Auditor in his audit report. Ld. Sr. DR submitted that case laws as relied by the Ld. Counsel for the assessee are not applicable under the facts and circumstances of the present case. She furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or by the deductor or by the collector, and where the authority concerned is the Commissioner (Appeals), by the Assessing Officer also. (3) An amendment, which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee or the deductor or the collector, shall not be made under this section unless the authority concerned has given notice to the assessee or the deductor or the collector of its intention so to do and has allowed the assessee or the deductor or the collector a reasonable opportunity of being heard. (4) Where an amendment is made under this section, an order shall be passed in writing by the income-tax authority concerned. (5) Where any such amendment has the effect of reducing the assessment or otherwise reducing the liability of the assessee or the deductor or the collector, the Assessing Officer shall make any refund which may be due to such assessee or the deductor or the collector. (6) Where any such amendment has the effect of enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee or the deductor or the collector, the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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