2024 (11) TMI 305 - AT - Income Tax

ITAT denies rectification application under section 254 but allows interest recalculation under section 234A

ITAT rejected assessee's rectification application under section 254. The tribunal found no apparent mistake in its order regarding three claims. First, ... Rectification application u/s 254 - first mistake claimed by assessee is such that the order of first- appeal passed by CIT(A) was without DIN and therefore ‘non-est’ - HELD THAT:- As submitted that if the assessee was aggrieved by CIT(A)’s order not having DIN, it was for the assessee to raise this issue either in Form No. 36 or during hearing of original appeal by ITAT. But the assessee did not raise any such grievance. Therefore, the assessee was not having grievance or alternatively it was a mistake/lapse on the part of assessee in not raising issue before ITAT but certainly there is no mistake in ITAT’s order much less any apparent mistake. Therefore, in the garb of rectification of ITAT’s order, the assessee cannot set right his own mistake or lapse. Ld. DR strongly requested to reject assessee’s claim. On a careful consideration, we find full merit in the submissions of Ld. DR for revenue. We agree that the assessee has not raised any claim before ITAT that the order of first-appeal passed by CIT(A) was ‘non-est’ for want of DIN and therefore the ITAT had no occasion to deal such an issue. Now, the assessee is trying to set right his own lapse/ mistake and for that matter going to upset the impugned order of ITAT. When the issue did not form part of appeal of assessee, how can there be a mistake apparent from record in the impugned order? Therefore, we do not find any merit in the claim of assessee; the same is hereby rejected. ITAT upholding the addition made by AO as ITAT has not considered CBDT Instruction No. 3 of 2017 dated 21.02.2017 read with Press Release dated 18.11.2016 wherein the CBDT allowed household savings of ladies upto Rs. 2,40,000/- - A careful consideration, we find that the ITAT has extensively dealt assessee’s issue and thereafter taken a reasoned decision.assessee’s claim that the ITAT has not dealt Instruction dated 21.02.2017 is wrong. So far as the decision of Chetnaben J. Shah Vs. ITO [2016 (7) TMI 973 - GUJARAT HIGH COURT] there is no quarrel with the proposition that the authorities cannot make any addition on the basis of mere statement. In fact, this view is time and again accepted by various courts and ITAT, Indore Bench itself and we all are very much aware. But in present case, the AO has made addition on the basis of cash found and seized from assessee in the form of demonetized notes and not merely on the basis of statement of assessee. Therefore, there is no merit in Ld. AR’s submission that the AO has made addition on the basis of mere statement. Being so, we do not find any mistake in the impugned order as being projected by assessee. Consequently, this issue is also rejected. ITAT upholding the levy of tax at a higher rate of 60% u/s 115BBE on the undisclosed income - ITAT followed the solitary available decision Maruthi Babu Rao Jadav [2021 (1) TMI 481 - KERALA HIGH COURT] wherein it was categorically held that the amendment though made on 15.12.2016, would apply to the whole previous year 2016-17 relevant to AY 2017-18. Then, Ld. DR also submitted that in Shri Krishan Kumar Verma [2024 (3) TMI 1018 - MADHYA PRADESH HIGH COURT] relied by Ld. AR, the undisclosed income of assessee was found not taxable u/s 69A and consequently section 115BBE itself was not applicable whereas in present case of assessee, the undisclosed income in the form of demonetized currency was found taxable u/s 69A and section 115BBE was also held to be applicable. Therefore, the case of Shri Krishan Kumar Verma (supra) had different facts and the assessee cannot take any benefit out of it. On a careful consideration, we find merit in the submissions made by Ld. DR for revenue. Levy of interest u/s 234A and 234B was challenged but the ITAT has decided the issue of interest u/s 234B only and missed to decide the issue of interest u/s 234A - We agree that the ITAT has missed to decide the issue of interest u/s 234A which needs to be rectified. As per Board Circular No. 2/2015 and case Nitin Kumar [2018 (4) TMI 338 - ITAT KOLKATA] we find that the cash-seized by department in present case on 14.11.2016 and agreed by assessee to be adjusted against tax liability of assessee, is in the nature of self-assessment payment before due date of filing of return for AY 2017-18 which deserves to be allowed in computation of interest u/s 234A. Therefore, we remit this issue also back to the AO with a direction that the AO shall give benefit of cash seized and available with department in calculation of interest and re-compute interest u/s 234A. Issues Involved:1. Non-est status of the CIT(A) order due to absence of DIN.2. Dismissal of the assessee's ground regarding addition of Rs. 2,40,000/-.3. Levy of tax at a higher rate of 60% under section 115BBE.4. Omission to decide on interest under section 234A.Issue-wise Detailed Analysis:1. Non-est Status of CIT(A) Order:The assessee claimed that the order by CIT(A) was non-est due to the absence of a Document Identification Number (DIN), as per the CBDT Circular dated 14.08.2019. The assessee argued that this was a jurisdictional issue that could be raised at any stage, even though it was not part of the original appeal. However, the Tribunal found merit in the Revenue's argument that the scope of section 254(2) is limited to rectifying apparent mistakes from the record. Since the assessee did not raise this issue during the original appeal, the Tribunal concluded that there was no apparent mistake in its order, and thus, rejected the assessee's claim.2. Dismissal of Assessee's Ground on Addition of Rs. 2,40,000/-:The assessee contended that the ITAT failed to consider the CBDT Instruction No. 3 of 2017, which allowed household savings of up to Rs. 2,40,000/-. The Tribunal noted that it had already considered the relevant instruction and press release in its order, which clarified that the CBDT's guidance did not support the assessee's case of transferring a large sum of cash. The ITAT upheld the addition, as the cash was admitted by the assessee to be from undisclosed sources and not household savings. The Tribunal found no merit in the claim and rejected it.3. Levy of Tax at a Higher Rate of 60% under Section 115BBE:The assessee argued that the higher tax rate under section 115BBE, effective from 15.12.2016, should not apply as the requisition of cash occurred on 14.11.2016. The Tribunal referred to the Kerala High Court decision in Maruthi Babu Rao Jadav, which held that the amendment applied to the entire previous year 2016-17. The Tribunal found no merit in the assessee's reliance on the jurisdictional High Court's decision in a different case with dissimilar facts. The Tribunal concluded that the issue was thoroughly dealt with in its order, and the assessee's request for review was not permissible under section 254(2).4. Omission to Decide on Interest under Section 234A:The assessee claimed that the ITAT missed addressing the issue of interest under section 234A, although it had addressed section 234B. The Tribunal acknowledged this omission and noted that the cash seized by the department was akin to self-assessment tax paid before the due date of filing the return. The Tribunal cited the ITAT Kolkata decision and CBDT Circular 2/2015, which supports the non-charging of interest under section 234A on self-assessment tax paid before the due date. Consequently, the Tribunal remitted the issue back to the AO to re-compute the interest under section 234A, allowing the benefit of the seized cash.Conclusion:The Miscellaneous Application was partly allowed, with the Tribunal rejecting the claims regarding the non-est status of the CIT(A) order, the addition of Rs. 2,40,000/-, and the applicability of the higher tax rate under section 115BBE. However, the Tribunal acknowledged the omission regarding the interest under section 234A and remanded the matter to the AO for recalculation.