2023 (8) TMI 1112 - AT - Income Tax

Appeal allowed due to timely rectification application and mistake on record. Revenue Officer to recalculate income.

The Tribunal allowed the appeal, finding that the rectification application was timely and there was a mistake apparent on record. The Revenue Officer was ... Rectification application u/s 154 - period of limitation - assessee has wrongly filled one income at two different places - AR submitted that the assessee while filing Income-tax return, speculative income has been entered at two different columns and while processing the return this has been considered twice by the CPC - HELD THAT:- The assessee itself accepted that it was a mistake on their part then it will also come u/s 154 of the Act for rectifying the mistake as per records. CIT(A) has dismissed the appeal of the assessee by observing that the rectification application filed by the assessee is time barred, this view is also not correct. The assessee filed rectification applications first, second and third time within the time. The Hon’ble Supreme Court interpreted the word ‘order’ sought to be amended used in Sec. 154(7) as relied by the ld.AR in his return submission at para No.7.4. Therefore, considering the judgment of Hindwire Industries (1995 (1) TMI 2 - SUPREME COURT] the assessee filed rectification application within the time, to which the AO ought to have considered. In view of this, we hold that the rectification application field by the assessee is well in time and it is a mistake apparent on record which should have been rectified by the Revenue Officer on the request made by the assessee .Appeal of the assessee is allowed and the AO is directed to compute the correct income as per law. Issues Involved:1. Limitation period for filing appeal.2. Rejection of rectification application under Section 154 of the Income-tax Act, 1961.3. Alleged mistake apparent from the record.4. Time limit for filing rectification application under Section 154.5. Filing rectification application versus filing an appeal.6. Validity of the appeal filed within the extended limitation period.Summary:1. Limitation Period for Filing Appeal:The Commissioner of Income Tax Appeals (CIT(A)), National Faceless Assessment Centre (NFAC), Delhi, erred in observing that the appeal filed by the Appellant is barred by limitation as it was filed beyond the prescribed period. The Appellant argued that, as per the Hon'ble Supreme Court's order in Miscellaneous Application No. 21 of 2022 & Others, the period between 15.03.2020 till 28.02.2022 shall be excluded for computation of limitation. Therefore, the appeal filed on 26.02.2022 should be treated as within the limitation period.2. Rejection of Rectification Application under Section 154:The CIT(A) erred in confirming the action of the Assessing Officer (AO) in rejecting the rectification application under Section 154 of the Income-tax Act, 1961, against the intimation order passed under Section 143(1). The AO assessed the income at Rs. 48,78,460/- against the declared income of Rs. 35,41,368/-.3. Alleged Mistake Apparent from the Record:The CIT(A) erred in confirming the AO's rejection of the rectification application on the ground that there is no mistake apparent from the record. The Appellant argued that the income under the head 'Income From Business or Profession' of Rs. 13,37,089/- was considered twice, which constitutes a mistake apparent from the record rectifiable under Section 154.4. Time Limit for Filing Rectification Application under Section 154:The CIT(A) erred in confirming the AO's rejection of the rectification application on the ground that it was filed beyond the time limit of four years from the date of the order passed under Section 143(1). The Appellant contended that the limitation period should be computed from the last rectification application filed on 03.10.2019, and hence the application was within the four-year period.5. Filing Rectification Application versus Filing an Appeal:The Appellant argued that the rectification application dated 28.02.2015 was against the second rectification order passed by CPC under Section 154. The Appellant relied on the Supreme Court judgment in Hindwire Industries, which held that the word 'order' in Section 154(7) includes amended or rectified orders.6. Validity of the Appeal Filed within the Extended Limitation Period:The Appellant filed the appeal before NFAC on 26.02.2022, which is within the extended period of limitation as per the Supreme Court's order. The Tribunal accepted the submissions and held that the appeal was filed within the limitation period.Conclusion:The Tribunal concluded that the rectification application filed by the assessee was within time and constituted a mistake apparent on record, which should have been rectified by the Revenue Officer. The appeal of the assessee was allowed, and the AO was directed to compute the correct income as per law. The order was pronounced in the open court on 22nd August 2023.