2022 (1) TMI 790

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....on 260A of the Income Tax Act, 1961 ('Act' for short) challenging the order dated 03.07.2020 passed in ITA No.1948/Bang/2018 by the Income Tax Appellate Tribunal, Bangalore Bench "A", Bangalore ('Tribunal' for short) relating to the assessment year 2014-15. 2. The respondent - assessee, a private limited company engaged in rendering Software Development Services and Information Technology support services, filed its return of income relating to the assessment year 2014-15 which is under consideration. The assessee's case for the year under consideration was selected for scrutiny assessment and notice under Section 143(2) of the Act was issued by the Assessing Officer and an order was passed under Section 143(3) of the Act accepting the i....

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.... order passed under section 154 of the Act even though the said order satisfied all the conditions for invoking section 154 of the Act?"   4. Learned counsel for the Revenue argued that the Assessing Officer as well as CIT(A) have rightly considered the matter in invoking Section 154 of the Act to rectify the assessment order wherein the quantum of disallowance made by the assessee at Rs. 3,55,660/- was accepted instead of Rs. 41,48,681/- which is a mistake apparent on the face of the record and the same is amenable to the rectification under Section 154 of the Act. The Tribunal ignoring the material aspects of the matter vis-à-vis the provisions of Section 14A of the Act and Rule 8D of the Income Tax Rules, 1962 ('Rules' for....

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....in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act."   8. Section 154 of the Act reads thus:- "Rectification of mistake. 154. [(1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to,....

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....ention so to do and has allowed the assessee or the deductor or the collector a reasonable opportunity of being heard. (4) Where an amendment is made under this section, an order shall be passed in writing by the income- tax authority concerned. [(5) Where any such amendment has the effect of enhancing the assessment or otherwise reducing the liability of the assessee or the deductor or the collector, the Assessing Officer shall make any refund which may be due to such assessee or the deductor or the collector. (6) Where any such amendment has the effect of enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee or the deductor or the collector, the Assessin....

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....tion to income which does not form part of the total income under the Act for such previous year, he shall determine the amount of expenditure in relation to such income in accordance with the provisions of sub-rule (2). (2) The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts, namely.- (i) the amount of expenditure directly relating to income which does not form part of total income; and (ii) an amount equal to one per cent of the annual average of the monthly averages of the opening and closing balances of the value of investment, income from which does not or shall not form part of total income. Provided that the amount referred ....