2011 (12) TMI 252

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.... under:- "1.  On the facts and circumstances of the case, the Learned CIT(A) has erred, both on facts and in law, in confirming the order passed by the Assessing Officer as the order passed u/s 154 of the Income Tax Act, 1961 is bad and against the provisions of the section in spite of the acceptance that rectification of mistake apparent from record should not be debatable.  2.  The Learned CIT(A) has erred in not considering the facts of the case that the appellant has not bought or sold foreign currency but loss incurred on FCL Loan A/c due to hedging to protect heavy losses by the Bank as per policy of RBI." 2. In this case, the Assessing Officer passed order under sec. 154 of the Act dated 27.03.207 by observing....

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....ecord and should not be having two conflicting interpretations thereon. In the appeal under consideration the appellant has claimed an amount of Rs. 55,55,311/- in its profit and loss account and breakup of this amount is shown in Schedule O to the balance sheet in which foreign exchange fluctuation appears at Rs. 1,96,800/-. However ion the Notes to Accounts it has been specifically mentioned under item nos. 3 & 4 that the company has not incurred expenditure/purchase in foreign currency during the year 2003-04 and that there as no earning in foreign currency during the year 2003-04. In view of the aforesaid there was no alternative with the AO other than rectifying the processing done by him on 15.2.2005. Therefore the order of the AO is ....

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....) of the Act, we find that sec. 143(1) of the Act was amended with effect from June 1, 1999 whereby certain powers available with the AO to make prima facie adjustment against allowable and disallowable claims and deductions while processing the return of income under sec.143(1) of the Act, were done away with, and the power was confined only to make arithmetical calculation of tax, penalty or interest payable on the basis of return of income filed by the assessee. Any arithmetical error in the computation of tax, interest payable or refundable on the basis of return of income could only be corrected by way of rectification under section 154(1)(b) of the Act on and from June 1, 1999. In other words, the provisions of sec. 143(1) effective f....

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....been done directly while making intimation under sec.143(1) on and from June 1, 1999, cannot be done indirectly in the garb of rectification of power given under sec. 154(1)b) of the Act. Therefore, the power of rectification under sec. 154 of the Act should be limited to the scope and power of making intimation under sec. 143(1) of the Act, and as such the power of rectification under sec. 154(1)(b) should be limited to the matters falling within the scope and ambit of sec. 143(1) effective from June 1, 1999. Since in the present case, the AO had no power to make any adjustment to the returned income at the time of processing the return of income under sec. 143(1) of the Act, we hold that the Assessing Officer had no authority or power to ....