2021 (12) TMI 927 - AT - Income Tax

ITAT reverses PCIT decision, rules in favor of assessee due to clerical error rectification.

Vodafone Idea Limited, Hyderabad Versus Asst. Commissioner of Income Tax, TDS Circle-2 (1), Hyderabad

Vodafone Idea Limited, Hyderabad Versus Asst. Commissioner of Income Tax, TDS Circle-2 (1), Hyderabad - TMI Issues Involved:1. Erroneous Orders under Section 201(1) and 201(1A) of the Income Tax Act, 1961.2. Prejudice to the Interest of Revenue.3. Clerical Error in the Name of the Assessee.4. Jurisdiction under Section 263 of the Income Tax Act, 1961.Issue-Wise Detailed Analysis:1. Erroneous Orders under Section 201(1) and 201(1A) of the Income Tax Act, 1961:The PCIT identified that the orders under Section 201(1) and 201(1A) for the Assessment Years 2015-16 and 2016-17 mentioned the wrong name of the assessee, 'M/s Vodafone South Limited (VSL - Hyd)' instead of 'M/s Vodafone Mobile Services Limited.' This error was deemed prejudicial to the interest of revenue, necessitating a revision under Section 263 of the Income Tax Act, 1961.2. Prejudice to the Interest of Revenue:The PCIT, after reviewing the proposals from the Assessing Officer and the JCIT, concluded that the erroneous mention of the assessee's name in the orders was prejudicial to the interest of revenue. The substantial demand involved for both assessment years (Rs. 2,09,61,635 for AY 2015-16 and Rs. 3,84,16,393 for AY 2016-17) further justified the need for revision to protect the revenue's interest.3. Clerical Error in the Name of the Assessee:The Assessing Officer acknowledged the clerical error and issued a corrigendum on 22-01-2018 to rectify the name of the company to 'M/s Vodafone Mobile Services Limited.' The ITAT noted that the corrigendum dated back to the original orders of 27-02-2017, indicating that the error was clerical and rectifiable under Section 292B of the Income Tax Act. The ITAT referenced the Supreme Court's decision in Skylight Hospitality LLP Vs. ACIT, which held that such clerical errors could be corrected.4. Jurisdiction under Section 263 of the Income Tax Act, 1961:The PCIT invoked Section 263, which allows for the revision of orders that are erroneous and prejudicial to the interest of revenue. However, the ITAT concluded that the PCIT's directions were not justified, as the error was clerical and had been rectified. The ITAT emphasized that the PCIT did not establish that the Assessing Officer's orders were erroneous in a manner that caused prejudice to the revenue after the corrigendum was issued. The ITAT cited the Supreme Court's ruling in Malabar Industrial Co. Vs. CIT, which requires both error and prejudice to the revenue for invoking Section 263.Conclusion:The ITAT found that the PCIT erred in invoking Section 263 revision jurisdiction, as the clerical error had been rectified, and the orders were not prejudicial to the interest of revenue. Consequently, the ITAT reversed the PCIT's common order for both assessment years, allowing the assessee's appeals.Order:The assessee's twin appeals are allowed, and the order was pronounced in the open court on 26th November 2021.