2014 (7) TMI 305

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....r: "1. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) erred in dismissing the appeal of your appellant against order u/s 154 passed by Ld. AO on frivolous grounds. 2. On the facts and circumstances of the case, the learned Commissioner of Income Tax (A) erred in affirming the decision of Assessing Officer for rejecting the claim of Rs. 2,61,358/- on account of inflated purchase of Jadibuties without considering the fact that there is corresponding inflated closing stock countervailing the effect of inflated purchases and accordingly has no effect on taxable income and the same constitutes mistake apparent from record. 3. On the facts and circumstances of the case, the learned Commissione....

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....e ld. CIT(A) observed that the assessee itself had filed letter dt.05.12.2006 requesting the A.O. to disallow the above items and the assessment was completed based on the above letter, hence it could not be said that there was a mistake apparent from record. He, therefore, upheld the order of the A.O. and dismissed the appeal of the assessee. The assessee is thus in appeal before us. 5. The ld. AR, before us, has submitted that the books of accounts were audited and tax audit report was filed along with the return of income. As per stock register the purchase of Jadibuties was included in the closing stock and, therefore, the inflated purchase could not have any effect on the taxable income. He has further contended that even if the asses....

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..... 7. However, we may observe that the assessee was under the bonafide belief that the said finding of the AO could be corrected/rectified under section 154 of the Income Tax Act. It is also again a settled position of the law that if a litigant is found pursuing a remedy under the wrong provision of the Act or the law under bonafide belief, which the courts ultimately found to be not maintainable under that provision or law and that the assessee should have pursued his remedy under another provision of the law, then the period consumed in pursuing such litigation under bonafide belief should be excluded for the purpose of calculation of limitation period, if the litigation chooses to pursue the remedy under the correct provision of the law....