2022 (9) TMI 1319

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....te a prima facie mistake apparent from the records. 4. The impugned order of rectification u/s 154 passed to levy the taxes u/s 115BBE on the addition of Rs.4,28,85,414/- is bad in law: (i). Because, Section 69 or 69A is not invoked with respect to the additions made in the assessment order. (ii) Because, Section 271AAC is not invoked which should have been invoked if section 69 or 69A read with section 115BBE were to apply. (iii) Because, invoking of section 270A alleging under-reporting of income in the assessment order and non-initiation of penalty proceedings u/s 271AAC has placed the issue beyond the scope of prima facie mistake apparent from the records u/s 154 of the Act. (iv) Because, section 271AAC cannot be invoked in rectification order u/s 154, the question of invoking sections 69/69A r.w.s 115BBE did not arise. (v) Because, the learned AO has invoked section 69A as well as section 271AAC with respect to the addition of Rs.9,72,500/- and therefore it is not an inadvertent omission with respect to invoke these sections with respect to addition of Rs.4,28,85,414/- so as to bring it within the scope of section 154 of th....

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....n 115BBE of the Act. 4. Aggrieved assessee preferred an appeal before the CIT(A) contending that the addition of Rs.4,28,85,414/- is added not under Sections 69 to 69A of the Act and therefore the AO cannot pass rectification order revising the tax on the impugned addition under Section 115BBE of the Act. The CIT(A) did not accept the contention of the assessee and proceeded to uphold the levy of tax u/s.115BBE by stating that - "4.3 The submissions of the appellant have duly been considered. The initiation of penalty is subsequent to the determining of undisclosed income. The penalty initiated would be relevant to the nature of addition made but an incorrect mentioning of the Section under which penalty is initiated would not change the nature of the undisclosed income. So the argument of the appellant that the AO had initiated penalty under Section 270A of the Act rather than under Section 271AAC of the Act and so the additions for undisclosed income were not under Section 69/69A of the Act, deserves to be rejected. 4.4 Although the AO has not indicated the relevant Section while making the additions; however the discussion relating to the additions itself sh....

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....4 cannot be extended to an issue which require recording of satisfaction by the assessing officer. The learned AR also submitted that the scope of section 154 is limited and confined to mistakes prima facie apparent from the record and in the given case taxing the addition is not prima facie apparent since the proposed addition is not done under 69 / 69A by the assessing officer. In any case the ld AR submitted that whether the income assessed is to be taxed applying section 115BBE is debatable i.e. being capable of interpretation and therefore, it falls outside the scope of section 154. 7. The learned DR argued that the entire addition is made based on the incriminating material found during the course of search and on the statement recorded from the assessee. The learned DR also submitted that it is an admitted fact that the income is not recorded in the books and the source for the principle and interest amount was not substantiated by the assessee and therefore the addition can be made under Sections 69 of 69A of the Act only. The learned DR further submitted that mere omission on the part of the AO to mention the section cannot take away the nature of income and the AO has ....

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....e 57[Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income56 of the assessee for such financial year.] 9. In the given case it is an admitted fact that the source for the money lending business is agricultural income and the interest income earned by the assessee. In the light of these factual findings we see merit in the argument by the learned A.R. that the decision of the AO to make addition without invoking section 69 /69A and also initiation of penalty proceedings under Section 270A of the Act is taken consciously. It cannot therefore be said that invocation of Section 69A and consequently Section 115BBE of the Act is accidental omission by inadvertence to be termed as prima facie mistake apparent from record for the purpose of rectification under Section 154 of the Act. 10. We also notice that the assessee during the course assessment has denied the ownership of the loose sheets found in the course of search and has also submitted that these have already been considered in the assessment of the earlier assessment year. The AO has made the addition by relying on the fact that some addi....