2020 (4) TMI 297 - AT - Income Tax

Tribunal Upholds Denial of Deduction under Income Tax Act

The Tribunal upheld the denial of the deduction claimed under section 154 of the Income Tax Act, 1961 by the CIT(A) and dismissed the rectification ... Rectification u/s 154 - Exemption u/s 54F denied - HELD THAT:- From the sequence of the events, it is apparent that initially the assessee did not choose to contest the dismissal of deduction u/s 54F of the Act either by way of appeal or by way of Cross objections in spite of the fact that the assessee preferred cross objections on other issues. The order of the CIT(A), therefore, on the issue under consideration had become final. The appeal of the Revenue as well as cross objections of the assessee were decided on 30.1.2014, therefore, the order of the Assessing Officer as well as order of the CIT(A) merged with the order of the Tribunal dated 30.1.2014. Now, the assessee through rectification application u/s 154 of the Act wants to play second innings which is nothing but abuse of the process of law. Even otherwise, the assessee has been given opportunity by the Ld. CIT(A) and the assessee, if was aggrieved from the said order, could have filed an appeal against the said order of the CIT(A) and even could have raised the issue through Cross objections along with other grounds which ultimately have been decided by the Tribunal vide order dated 30.1.2014. Even, the Ld. CIT(A) has rightly observed that under the provisions of section 154 of the Act, a mistake apparent on record can be rectified. However, the provisions of section 154 are not meant for re-argument of the case on merits. In view of this, even otherwise, the application of the assessee u/s 154 of the Act has rightly been dismissed by the Ld. CIT(A). - Decided against assessee. Issues:1. Denial of deduction claimed under section 1542. Jurisdiction under section 154 for rectification applicationIssue 1: Denial of deduction claimed under section 154The case involved an appeal by the assessee against the order of the Commissioner of Income Tax (Appeals) regarding the denial of a deduction claimed under section 154 of the Income Tax Act, 1961. The Assessing Officer had framed an assessment order denying the deduction claimed by the assessee under section 54F, resulting in a higher computation of capital gains. The CIT(A) upheld the denial of deduction, emphasizing that exemption under section 54F was available only for one residential house. The CIT(A) concluded that the appellant was not entitled to the claimed exemptions due to non-compliance with the provisions of the Act regarding the purchase of new assets and deposit in Capital Gain accounts. The CIT(A) dismissed the application of the assessee under section 154, stating that it was not a fit case for rectification as there was no apparent mistake on record. The Tribunal upheld the decision, stating that rectification under section 154 is not meant for re-arguing the case on merits.Issue 2: Jurisdiction under section 154 for rectification applicationThe Tribunal highlighted that the rectification application under section 154 was filed by the assessee after the appeal and cross objections had been decided. It was noted that the assessee did not contest the denial of deduction under section 54F in the initial proceedings before the CIT(A) or the Tribunal. The Tribunal emphasized that the provisions of section 154 are not intended for re-arguing the case on merits but are limited to rectifying apparent mistakes on record. The Tribunal concluded that the assessee's rectification application was an abuse of the legal process and lacked merit. The Tribunal upheld the dismissal of the application by the CIT(A), stating that the order had become final after the initial proceedings and subsequent decisions. Consequently, the appeal of the assessee was dismissed by the Tribunal.In summary, the judgment addressed the denial of a deduction claimed under section 154 of the Income Tax Act, 1961, and the jurisdiction under section 154 for rectification applications. The Tribunal upheld the denial of the deduction by the CIT(A) and dismissed the rectification application, emphasizing that section 154 is not meant for re-arguing cases on merits. The decision highlighted the importance of timely and appropriate legal actions in tax matters to avoid abuse of legal processes.