Tribunal restores original order, allows appeal on rectification validity.

The Tribunal set aside the rectification order passed by the CIT(A) and restored the original order, allowing the appeal of the assessee regarding the validity of the rectification order. The Tribunal found the rectification order lacked basis as the facts were akin to the previous year. The decision was pronounced on 22nd August 2022.

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Issues:
Validity of rectification order passed by Ld. CIT(A)

Analysis:
The appeal was filed by the assessee against the rectification order passed by the Learned Commissioner of Income Tax (Appeals) for the Assessment Year (AY) 2009-10. The assessee, engaged in wholesale trading in Copra and Sugar, had initially admitted a total income of Rs. 1,22,030. However, the Assessing Officer (AO) made an addition of Rs. 7,57,765 towards profit derived from unaccounted business transactions in Copra. Subsequently, the CIT, Vijayawada invoked Section 263 of the Income Tax Act and directed the AO to adopt a gross profit rate of 40.25% on the undisclosed purchases, resulting in a total income of Rs. 17,46,110. The assessee then appealed to the CIT(A), who directed the AO to adopt a gross profit rate of 15% on the unaccounted turnover, following a decision by the ITAT in the assessee's own case for the AY 2007-08.

The crux of the issue in this case pertained to the validity of the rectification order passed by the CIT(A). The Authorized Representative argued that while the assessee did not contest the order under Section 263, they did challenge the assessment order passed under Section 143(3) read with Section 263 before the CIT(A). The CIT(A) allowed the appeal based on the ITAT's decision in the assessee's previous case for the AY 2007-08. On the other hand, the Departmental Representative relied on the orders of the lower authorities.

After hearing both parties and examining the records, the Tribunal found that the rectification order passed by the CIT(A) did not have a basis as the facts were similar to the previous year. Therefore, the Tribunal set aside the rectification order and restored the original order of the CIT(A), thereby allowing the appeal of the assessee. The Tribunal pronounced the decision on 22nd August 2022, allowing the appeal of the assessee.

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