2023 (10) TMI 1278 - AT - Income Tax

Tribunal Condones 24-Day Appeal Delay, Upholds Denial of Deduction Under Section 80P(2)(a)(i) for Co-operative Society

Sidharth Co-operative Credit & Thrift society Limited Versus The Income Tax Officer-2 (1), Bhilai (C.G.)

The Tribunal condoned a 24-day delay in filing an appeal by the assessee due to reasons beyond their control. However, it upheld the denial of deduction ... Rectification u/s 154 of the intimation issued u/s 143(1)(a) - Deduction u/s 80P(2)(a)(i) denied - doctrine of merger - HELD THAT:- Application as per the mandate of sub-section (1A) of Section 154 of the Act was in itself not maintainable for the reason, that as per the doctrine of merger, after the intimation issued u/s 143(1)(a), dated 07.06.2019, had been subjected to appeal before the CIT(Appeals), then, the right of the assessee to seek rectification u/s 154 before the A.O was confined to only such matter/matters other than that which had been considered and decided by the CIT(Appeals). As the issue in the present case, i.e., the entitlement of the assessee for claim of deduction u/s 80P(2)(a)(i) had already been considered and decided by the CIT(Appeals), therefore, the application thereafter filed by the assessee society u/s. 154, on the said count itself was not maintainable. Accordingly, the order passed by the A.O. declining the assessee’s request for rectification vide his order u/s. 154 is approved in terms of our aforesaid observations. ISSUES PRESENTED AND CONSIDERED 1. Whether an application for rectification under Section 154(1) of the Income-tax Act is maintainable in respect of a matter that has been considered and decided on appeal by the Commissioner (Appeals) (doctrine of merger and effect of Section 154(1A)). 2. Whether delay of 24 days in filing the appeal before the Tribunal can be condoned on grounds of engagement/change of counsel and professional pressures (sufficiency of cause for condonation of delay). 3. Ancillary: Whether the assessment intimation under Section 143(1)(a) merged into the appellate order such that subsequent rectification by the Assessing Officer on the same issue is impermissible. ISSUE-WISE DETAILED ANALYSIS Issue 1: Maintainability of Section 154 rectification after the matter was considered and decided on appeal (doctrine of merger / Section 154(1A)) Legal framework: Section 154 provides for rectification of an apparent mistake in an order. Sub-section (1A) (as quoted) restricts amendment under Section 154 where a matter has been considered and decided in any proceeding by way of appeal or revision, permitting amendment only in relation to matters other than those so considered and decided. Precedent treatment: No specific precedent was cited or applied in the judgment; the Tribunal relied on the statutory text and the doctrine of merger embodied in Section 154(1A). Interpretation and reasoning: The Court reasoned that once the intimation under Section 143(1)(a) was appealed and the issue of deduction under Section 80P(2)(a)(i) was considered and decided by the Commissioner (Appeals), the right to seek rectification under Section 154 before the Assessing Officer is confined to matters other than those considered and decided on appeal. The application filed under Section 154 seeking rectification of the same issue (denial of deduction u/s 80P) therefore became not maintainable by virtue of Section 154(1A) and the doctrine of merger. Ratio vs. Obiter: Ratio - Where an assessing officer's intimation/order on a specific issue has been considered and decided in appeal, that same issue cannot subsequently be the subject of a Section 154 rectification application to the assessing officer; Section 154(1A) limits rectification to matters other than those decided on appeal. Obiter - No extraneous observations beyond this statutory interpretation were necessary; the decision rests on statutory mandate rather than broader principles. Conclusion: The rectification application under Section 154 filed to challenge the denial of deduction u/s 80P was not maintainable because the same issue had been considered and decided by the Commissioner (Appeals), and hence the AO could not amend the order in relation to that matter under Section 154. Issue 2: Condonation of delay of 24 days in filing the appeal before the Tribunal Legal framework: The Tribunal has discretion to condone delay in filing appeals if sufficient cause is shown; applicable principles require examination of reasons for delay and whether conduct was deliberate or lax. Precedent treatment: The judgment does not cite precedents but applies established discretionary principles concerning condonation of delay. Interpretation and reasoning: The Tribunal considered the assessee's explanation that an earlier counsel who handled the first appeal was not conversant with appellate proceedings before the Tribunal and that the assessee required time to engage new counsel; further, the new counsel was occupied with time-bound tax audit work and filing returns, causing additional delay. The Tribunal found these circumstances neither attributable to deliberate conduct nor to lackadaisical approach on the part of the assessee. Ratio vs. Obiter: Ratio - Delay arising from bona fide difficulties in engaging suitable counsel and genuine professional time constraints can constitute sufficient cause for condonation where the delay is not due to deliberate or negligent conduct. Obiter - The Tribunal's observations regarding the particularities of counsel engagement and tax-audit scheduling are contextual and not stated as exhaustive guidance. Conclusion: The Tribunal condoned the 24-day delay and admitted the appeal, holding that the delay was caused by circumstances beyond the assessee's control and amounted to sufficient cause for extension. Issue 3 (ancillary): Effect of merger of intimation under Section 143(1)(a) into the appellate order Legal framework: When a tax assessment/intimation is appealed, the appellate order supersedes/merges with the initial order to the extent decided; subsequent actions by the AO on that same subject-matter are constrained by the appellate decision and by Section 154(1A). Precedent treatment: Not separately treated; incorporated into the Section 154(1A) analysis. Interpretation and reasoning: The Tribunal held that the intimation under Section 143(1)(a), insofar as it declined the Section 80P deduction and was appealed, merged into the Commissioner (Appeals) order. Consequently, the AO's scope for rectification under Section 154 did not extend to the issue already determined on appeal. Ratio vs. Obiter: Ratio - An intimation/order that has been appealed and decided by an appellate authority is merged into that appellate order; rectification under Section 154 cannot revisit matters decided in appeal. Obiter - None beyond the statutory merger effect. Conclusion: The intimation's denial of deduction merged into the appellate order; therefore the AO's refusal to entertain rectification on that issue under Section 154 was upheld. Overall Disposition The appeal was dismissed on merits of maintainability of the Section 154 application (doctrine of merger / Section 154(1A)), and the Tribunal separately condoned the 24-day delay in filing the appeal. The AO's order declining rectification under Section 154 was approved in light of these conclusions.