2024 (6) TMI 942 - AT - Income Tax

Tribunal Upholds Reduction in Deduction Disallowance to Rs. 37,16,384, Dismissing Appeals on Sec. 154 Rectification.

Shri Shivabodharang Urban Cooperative Credit Society Limited Versus The Income Tax Officer, Ward-1, Karnataka

The Tribunal dismissed the assessee's appeals, I.T.A.No.52 and 53/PAN./2024, and related stay applications, S.A.Nos.9 & 10/PAN./2024, regarding sec. 154 ... Assessment framed u/s 144B declining sec. 80P deduction - assessee chose to file sec. 154 rectification seeking the very deduction u/sec. 80P - A perusal of the AO's detailed discussion in his sec. 154 rectification reveals that he recomputed the very disallowance on “netting” basis as reduced by the proportionate expenses - HELD THAT:- We have given our thoughtful consideration to the vehement rival stands against and in support of the impugned disallowance(s). Suffice to say, we see no reason to interfere with the learned lower authorities action for the precise reason that purpose of a sec. 154 is to correct apparent mistakes only than carrying-out roving enquiries as held in T S Balram ITO vs. Volkart Bros. [1971 (8) TMI 3 - SUPREME COURT] - We accordingly reject the assessee’s instant “lead” appeal for the very reason of maintainability of sec. 154 rectification proceedings. It’s corresponding stay application has also follows the suit. Same order to follow in assessee’s latter as well as in stay application since raising the question of sec. 154 rectification only in principle. These assessee’s appeals with stay applications are dismissed in above terms. A copy of this common order be placed in the respective case files. Issues involved:The issues involved in the judgment are related to the assessment years 2020-2021 and 2021-2022, concerning the denial of sec. 80P deduction by the Assessing Officer and subsequent rectification proceedings u/s. 154 of the Income Tax Act, 1961.Assessment of sec. 80P deduction:The Assessing Officer had initially denied the sec. 80P deduction of Rs. 3,77,60,800/- to the assessee in a sec. 143(3) r.w.s. 144B assessment. Subsequently, the assessee filed a rectification u/s. 154 seeking the same deduction. The Assessing Officer, in the rectification dated 30.03.2023, recalculated the disallowance on a 'netting' basis, resulting in a reduced amount of Rs. 37,16,384/-. The National Faceless Appeal Centre affirmed this decision in the lower appellate discussion, leading to the assessee's dissatisfaction.Judicial decision:After considering the arguments presented by both parties, the Tribunal found no grounds to interfere with the lower authorities' actions. The Tribunal emphasized that the purpose of a sec. 154 rectification is to correct apparent mistakes and not to conduct extensive inquiries, citing the case of T S Balram ITO vs. Volkart Bros. [1971] 82 ITR 50 (SC). Consequently, the Tribunal rejected the assessee's appeal and the corresponding stay application on the grounds of the maintainability of sec. 154 rectification proceedings.Dismissal of appeals:The Tribunal issued a common order dismissing both of the assessee's appeals, namely I.T.A.No.52 and 53/ PAN./2024, along with their respective stay applications S.A.Nos.9 & 10/PAN./2024. The decision was based on the lack of grounds to interfere with the lower authorities' actions regarding the sec. 154 rectification proceedings. The order was pronounced in open court on 19.06.2024.