2018 (1) TMI 1635 - AT - Income Tax

Tribunal affirms CIT(A) on income chargeability, rejects assessee's arguments on section 11(1) & implied option. No rectifiable mistake under section 254(2)

The tribunal upheld the CIT(A)'s order regarding income chargeability, rejecting the assessee's arguments on section 11(1) application and implied option ... Rectification of mistake u/s 254 - Exemption u/s 11 - assessee has not exercised any option u/s. 11(1) - HELD THAT:- We find that this Tribunal in the aforesaid order has passed an elaborate and well reasoned order. The issue in that case was chargeability of income in the hands of the assessee which the assessee has claimed that the same had not accrued to the assessee. As merit the assessee that the tribunal should have recorded that there was such an implied exercise of option by the assessee - tribunal has properly appreciated the concerned section and the entire facts and circumstances. The tribunal had clearly noted that the assessee has sold the property - The assessee had not offered the same for taxation. When confronted in this regard, the assessee came up with an addendum to the agreement by which the sale was registered. This addendum was an unregistered document and totally self-serving document by way of which the assessee intended to defer the accrual of the income. All along assessee and the Counsel had been pleading that the said income had not accrued. Authorities below had to refer in the case of Sumati Dayal [1995 (3) TMI 3 - SUPREME COURT] to reject this contention of the assessee. Hence, it is clear that the assessee was found to have entered into an activity which was colorable in nature. As observed that the assessee has not followed the relevant mandate of law. The reference of amended section as pointed out by the assessee does not point out any error whatsoever, as there is no material difference. Hence, in our considered opinion, there is no mistake apparent from the record liable for rectification u/s. 254(2). In our considered opinion, what the assessee is seeking is re-appreciation of the facts which is not mandated under the provisions of section 254(2). Assessee’s miscellaneous petition dismissed. Issues involved:Rectification of mistake under section 254(2) of the Income Tax Act, 1961 regarding order in ITA No. 1097/Mum/2016 for assessment year 2011-12.Analysis:1. The assessee sought rectification of mistake under section 254(2) of the Income Tax Act, 1961, claiming that the tribunal did not record vital submissions made by the assessee. The tribunal had disposed of the appeal based on provisions of section 11(2) instead of section 11(1) as contended by the assessee for the assessment year under appeal. The issue revolved around the chargeability of income in the hands of the assessee, with the assessee claiming that the income had not accrued. The tribunal considered the arguments presented by both parties and upheld the order of the CIT(A) rejecting the assessee's contentions.2. The assessee emphasized on the application of Explanation 2 to section 11(1) of the Income-tax Act, 1916, regarding the non-accrual of income and the necessity of intimating the Assessing Officer before filing the return. The tribunal noted that the assessee failed to exercise the option under the said provision and did not provide any explanation for accumulating or setting apart the income. The tribunal concurred with the CIT(A) that there was no merit in the assessee's submissions and upheld the order.3. The tribunal rejected the assessee's plea that the Assessing Officer should have inferred the implied exercise of option under section 11(1) from the facts and circumstances of the case. It was observed that the assessee's actions, including presenting an unregistered addendum to defer income accrual, were colorable in nature. The tribunal concluded that there was no mistake apparent from the record for rectification under section 254(2) of the Act and dismissed the Miscellaneous Application filed by the assessee.In conclusion, the tribunal upheld the order of the CIT(A) regarding the chargeability of income in the hands of the assessee and rejected the assessee's contentions related to the application of section 11(1) and the implied exercise of option under the provision. The tribunal found no error warranting rectification under section 254(2) of the Income Tax Act, 1961, and dismissed the assessee's Miscellaneous Application.