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TMI Blog2022 (12) TMI 877X X X X Extracts X X X X X X X X Extracts X X X X ..... nds that Hon ble Supreme Court in number of cases has held that real income should be assessed which in the Bench view has not been done in this case. Therefore, considering the totality of the facts and circumstances of the case, the Bench feels that the assessee is entitled to deduction u/s 40b of the Act and thus the AO is directed to delete the addition which has been made while relying upon the amount wrongly mentioned by the assessee in the column of inadmissible . Thus the appeal of the assessee is allowed. - ITA No. 279/JP/2021 - - - Dated:- 14-12-2022 - Hon ble Shri Sandeep Gosain, Judicial Member For the Assessee : Shri Ashok Kanodia, CA For the Revenue : Smt. Monisha Choudhary, JCIT ORDER PER: SANDEEP GOSAIN, JM This appeal filed by the assessee is directed against order of the ld. CIT(A) dated 9-09-2021, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2018-19 wherein the assessee has raised the following ground of appeal. 1. Under the facts and circumstances of the case the ld. CIT(A) was not justified while confirming the demand u/s 154 raising the demand of Rs.3,01,650/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 154 of the Act on 20-03-2020 which was rejected by the CPC Bangalore. 3.2 Aggrieved by the order of the AO, the assessee carried the matter before the ld. CIT(A), NFAC, Delhi who dismissed the appeal of the assessee by observing as under:- 5. Decision I have carefully considered the facts and circumstances of the case and statement of facts and grounds of appeal filed by the appellant. I have also carefully gone through the rectification order u/s 154 dated 5-05-2020. 5.1 Ground No. 1 to 3 5.1.1. These grounds of appeal are not related to mistake apparent from record i.e. out of order u/s 143(1) of the Act but all are related to addition of Rs.3,45,419/- on account of salary to partners and Rs.4,69,198/- on account to partners. From form number 35, it is clear that appeal has been filed against order u/s 154 of the Act and not against the original intimation u/s 143(1). 5.1.2 Now the extracts of Section 154 of the Act is reproduced below for appreciating the issue:-. (1) With a view to rectify any mistake apparent from record an income tax authority referred under section 116 may 1. Amend any order passed by it 2. Amend intimation or deemed intimation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has later on, filed a rectification petition u/s 154 and claimed that the said additions were a mistake apparent from the record. In rectification, the most important aspect which needs to be looked into is, whether the claim of the appellant is within the scope of section 154 or not. Scope of rectification is limited to correcting error of fact or error of law, on the basis of material available on record. In the appeal under consideration the appellant has sought rectification on issues which will require fresh investigations of facts. The appellant has tried to use appeal against rejection of rectification application as a method to challenge the intimation u/s 143(1), as it has not filed any appeal against the same. 5.1.5 The addition of Rs. 3,45,419/- on account of salary to partners and Rs. 4.69.198/- on account of interest to partners could have been looked into once the appeal would have been filed against the order u/s. 143(1) of the Act. But, for rectification purpose, issues cannot be examined which are not apparent from the record. The appeal against order u/s. 154 has been filed to agitate the grievances against the order u/s. 143(1) of the Act. It is explicitly cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o approach but it could not be established By the CIT that this was not mistake apparent from record and nothing has been said about ground of appeal similarly there is no restriction to file appeal u/s 154 instead u/s 143 (1)before filling the appeal. Therefore CIT appeal was not justified while confirming the disallowance u/s 40b without considering the facts of case and suggesting that appeal was liable to be file against the order u/s 143 (1) instead of order u/s 154 and rejected the appeal which is not correct decision in the light of the facts narrated above, therefore, it is humbly prayed before yours goodself to allow admissible amount. 3.4 During the course of hearing, the ld. DR supported the order of the ld. CIT(A). 3.5 The Bench has heard both the parties and perused the materials available on record. In this case, it is noted that the issue relates to disallowance of Rs.4,69,198/- on account of interest paid to partners and Rs.3,45,419/- on account of salary paid to partners u/s 40b of the Act. Whereas on the contrary, it was submitted that although the assessee had paid interest of Rs.4,69,198/- and salary of Rs.3,45,419-/- to the partners as are appearing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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