TaxTMI 
TaxTMI 
2022 (11) TMI 467
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....see. The appellant crave the right to amend alter or add to any of the grounds of appeal given above." 3. The brief facts of the case are that the assessee is an HUF, which derives income from gems stone business, rental and interest income. The assessee sold his share in residential house property and invested the sale proceeds in new residential house property. The assessee e-filed its return of income declaring total income at Rs. 50,09,160/- on 30.07.2014, which was processed u/s 143(1) of the Act. The AO arrived the findings that the assessee derives income from gems stone business, rental and interest income. During the year under consideration, the assessee has shown income from house property at Rs. 2,33,107/- after claiming deduction u/s 24(a) of Rs. 99,903/-. The assessee has declared net profit at Rs. 9,133/- u/s 44AD of the IT Act, 1961 on total turnover of Rs. 1,14,067/-/ Besides, the assessee has declared interest income at Rs. 3,69,437/- under the head income from other sources. Thus, the assessee has shown returned income at Rs. 6,11,677/- after claiming deduction u/s 80C, 80D and 80ITA of Rs. 1,02,520/-. Subsequently, the case was selected for scrutiny. After co....
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.... claimed in the statement of facts that he sold his share in residential house property and invested the sale proceeds in new residential house property. It has been contended that the complete details of land purchased and construction made were submitted during assessment proceeding and checked by the A.O. Subsequently the A.O. rectified the order to only allow the land cost and did not allow the construction cost without assigning any good reason. The allowability of an amount of Rs.24,29,590/- on account of land cost as exemption u/s. 54 instead of the earlier allowance of Rs.61,54,101/- on account of land and building cost does not appear to be a mistake apparent from the record which falls under the purview of section 154. If at all there is a mistake, it has to be brought out and logically discussed in the rectification order, so that it could be determined as to whether it was a mistake apparent from the record or a change of opinion. Since the A.O. has not brought out the mistake apparent from the record, it is held that the disallowance was not amenable to the provision of section 154. The appellant has also contended that it was not given an opportunity to present its ....
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....epartment has become infructuous for the reasons to be submitted during the course of hearing. 1.2.1 Assessment already completed u/s 143(3) taking into consideration all facts and circumstances: At the outset it is submitted that in the present matter the assessment has been completed u/s 143(3) of the Act and the order is placed at PB 1- 2. As would be seen from the assessment order, complete facts and information relating to the income declared by the assessee was duly brought on record. The observation of the ld. AO in para 1 of the order is worth mentioning: ".....In compliance of these notices, Sh. Vivek Chatter CA and AR of the assessee attended from time to time and filed required details. Books of account, bills and vouchers were produced, which were examined on test check basis. The issue was discussed with him" (para 1 page 1 of AO) Therefore, it is clear that the complete details relating to the assessment of the assessee were brought on record. This is also clear from the following submissions which were made before the ld. AO as has been detailed below. 1.2.2.1 Specific details of deduction u/s 54 were brought on record by the assessee: It is also submitte....
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....hat in the original proceedings the ld. AO was not aware the correct nature of the property i.e. residential cum commercial as not only the copy of sale deed but also the architect report which clearly mentions the property details were submitted before the ld. AO 1.3No apparent mistake on record - no rectification proceedings: 1.3.1 AO considered all the relevant facts and circumstances: From above discussion, it is clear that the ld. AO has duly considered all the facts and circumstances. Therefore, it cannot be said that there is any apparent mistake on record and as such initiating of rectification proceedings under the garb of correcting apparent mistake on record is bad in law and on the facts of the present case. At the best the other view which could be possible was to allow exemption u/s 54F of the Act instead of section 54 of the Act which was not resorted to by the ld. AO and as such no rectification proceedings could be initiated u/s 154 of the Act. 1.3.2 Debatable issues cannot be rectified u/s 154 of the Act: It is submitted that whether a proportionate capital gain may be considered in case of residential cum commercial property or not is a highly debatable iss....
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.... there is no mechanism in either in section 54 or 54F to calculate deduction in cases of mix house property as the section itself speaks of deduction on the basis of the house property either being residential or other than residential. The ld. AO on his own tried to apply a new mechanism i.e. to take proportionate exemption on the basis of cost of property, which do not find any mention in the relevant provisions of the income tax. Therefore, action of calculating proportionate capital gain itself is bad in law. Even if presuming that he could have calculated proportionate exemption then there is no justification that why there cannot be other method made basis like proportionate sale consideration, the area of property or any other proper method. Thus the action of the AO in considering its own best suited method is bad in law and rightly quashed by the ld. CIT(A) Without prejudice to above: 1.6.1 Proportionate deduction on the basis of cost of house property itself is flawed - value of property at the time of transfer is relevant not the cost: It is submitted that the ld. AO proceeded to allow proportionate deduction on the basis of cost of the property which was worked ou....
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....le opportunity granted to the assessee - not a reasonable opportunity: In this case the first notice for rectification was issued on dt.18-6- 2018 requiring the assessee to appear on 2-7-2018. On account of non-appearance in response to this single notice, rectification order was passed on dt.3-7-2018 ex parte. By no stretch of imagination, one single opportunity cannot be said to be reasonable opportunity of being heard as there could be many reasons for nonappearance of the assessee and the ld. AO could have issued another notice before proceeding to make ex parte rectification. 1.7.4 No advantage for the assessee in non-appearance: We may also point out that there was no advantage for the assessee in not appearing in response to the rectification notice and it could only for the reasons of genuine issues. Therefore, it was not proper on the part of the ld. AO to proceed in making ex parte rectification. Therefore, where there was time available for the ld. AO till 31-3-2021 for making of rectification, making an ex-parte rectification on 3-7-2018 that too with one single notice, was not a reasonable opportunity of being heard and therefore, the ld. CIT(A) has rightly quashed....
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.... case, filed its return of income (PB 10) declaring total income of Rs.509160/- including long term capital gain on sale of house property which was shown at nil after claiming exemption u/s 54 of the Act. Please refer computation of total income which is placed at PB 11-13 The case of the assessee was taken up for scrutiny and the assessment was completed u/s 143(3) of the Act on dt.28-6-2016 by accepting the exemption claimed by the assessee u/s 54 of the Act and a copy of assessment order is placed at PB 1-2. Later on, the ld. AO on the basis of audit scrutiny, noted that excess exemption u/s 54 of the Act has been allowed to the assessee. Accordingly, a notice dt.18-6-2018 u/s 154 was issued to the assessee, which is claimed to be served on the assessee by speed post on dt.25-6-2018. The notice so issued stated that there is mistake apparent on record in as much as the exemption u/s 54 has been allowed at Rs.6154101/- instead of Rs.2429590/-. The assessee could not respond to the notice so issued and as such the ld. AO without giving any further opportunity carried out rectification in the assessment so completed u/s 143(3) of the Act allowing exemption at Rs.2429590/- only....
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....y support order on grounds decided against him 27. The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him." there are two conditions which need to be fulfilled for invoking of rule 27 of ITAT Rules. a. Ground of appeal is not adjudicated by the CIT(A) or decided against the assessee b. Adjudication of the ground of appeal should have direct impact on the outcome of the appeal Now in the present case, both these conditions have been fulfilled by the assessee as is discussed below: 1.1.1 Ground of appeal duly taken before the ld. CIT(A) and decided against the assessee: In the present case the assessee has taken the following grounds of appeal before the ld. CIT(A): Relevant sections (s) of the Act Issue Ground of appeal 154 The issue is not a mistake apparent from records The ld. AO grossly erred under the facts and circumstances of the case in exercising jurisdiction under section 154 without any mistake apparent from record and without providing opportunity of being heard 154 Disallowance of investment in residential house property For that the ld. AI grossly erred under the facts and cir....
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....dmit the above ground of appeal raised by the assessee. So assessee fulfilling both the conditions as required under the provisions of Rule 27 of the ITAT Rules, the ground of appeal challenging the validity of rectification proceedings on above ground is prayed to be admitted 1.2 Case Laws: Sanjay Sawhney vs. Pr. CIT ITA No.834/2019 dt.18-5-2020 (Del HC) 22. Therefore, the position of law that materialises on a reading of the aforesaid decisions is that the appellant herein, (Respondent before ITAT) could have invoked Rule 27 to assail those grounds that were decided against him if those grounds/issues had a bearing on the final decision of the CIT(A). Revenue was certainly not taken by surprise as the appeal is considered to be continuation of the original proceedings. The ITAT had no discretion to deprive the appellant the benefit of the enabling Rule provision to defend the order of the CIT(A). The question of jurisdiction -which is sought to be urged by the Respondent while supporting the order in appeal, had a bearing on the final order passed by the CIT(A), because if the said issues were to be decided in favour of the appellant herein the assessee, that would have b....
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....the assumption of jurisdiction and the validity of the -reassessment proceedings under Section 153C of the Act. Addl. CIT vs. Ranbaxy Laboratories Ltd. ITA no.3799/Del/2009 dt.29-7-2019 "21. Rule 27 states that the respondent may support the order of the Ld. CIT (A) on any of the ground decided against him. The assessee before the Ld. CIT (A) has challenged the reassessment proceedings initiated under section 147 of the Act on various reasons/ grounds. Thus there was an only a single technical issue before the Ld.CIT (A) which was challenged/ argued by the assessee but from different angles/propositions. The Ld. CIT (A) decided the technical issue in favor of the assessee on other reasons except for the issue on hand, i.e., non-issuance of the statutory notice. Thus the question arises whether the assessee was aggrieved because of non-adjudication of the ground of appeal by the Ld. CIT(A). The answer is certainly in affirmative. But the assessee chose not to appeal as it succeeded on other reasons/ contentions raised before the ld. CIT(A). Accordingly, the Revenue filed an appeal before us on those points which were decided by the Ld. CIT (A) in favor of the assessee. Now the c....
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....ng forward a contention that the entire sum of Rs. 80,000/- covered by Exs. A and B went for the discharge of antecedent debts. We do not see any substance in this objection, because the respondent is entitled to canvass the correctness of findings against it in order to support the decree that has been passed against the appellant." 13. Likewise, in case of S.Nazeer Ahmed vs. State Bank of Mysore and ors reported in 2007 AlR SCW 766 it was held and observed as under:"7. The High Court, in our view, was clearly in error in holding that the appellant not having filed a memorandum of cross-objections in terms of Order XLI Rule 22 of the Code, could not challenge the finding of the trial court that the suit was not barred by Order II Rule 2 of the Code. The respondent in an appeal is entitled to support the decree of the trial court even by challenging any of the findings that might have been rendered by the trial court against himself. For supporting the decree passed by the trial court, it is not necessary for a respondent in the appeal, to file a memorandum of cross-objections challenging a particular finding that is rendered by against him when the ultimate decree itself is in h....
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....erified in the prescribed manner and such memorandum shall be disposed of by the Tribunal as if it were an appeal presented within the period of limitation prescribed under sub-section (3). Therefore, on a plain reading of the provision, it transpires that a party has been granted an option or discretion to file cross objection. 19. In case a party having succeeded before Commissioner (Appeals) opts not to file cross objection even when an appeal has been preferred by the other party, from that it is not possible to infer that the said party has accepted the order or the part thereof which was against the respondent. The Tribunal has, in the present case, unfortunately drawn such an inference which is not supported by the plain language employed by the provision. 20. If the inference drawn by the Tribunal is accepted as a correct proposition, it would render Rule 27 of the Tribunal Rules redundant and nugatory. It is not possible to interpret the provision in such manner. Any interpretation placed on a provision has to be in harmony with the other provisions under the Act or the connected Rules and an interpretation which makes other connected provisions otiose has to be to avo....
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....ue was raised in revenue audit the same was rectified as per provision of section 154 of the Act after giving an opportunity of being heard. The ld. DR also placed on record the proof of service of notice and controvert the finding of the ld. CIT(A). But at the same time ld. DR remain silent and did not controvert the fact that whether there exists a mistake apparent on record or not. Further the ld. DR informed that as the issue was raised by the revenue audit team the same is rightly rectified by passing an order u/s. 154 of the Act. At the same time the ld. DR strongly objected to the additional ground raised by the ld. AR of the assessee and based on the set of arguments he has argued in support of the action taken by the ld. AO. 10. We have considered the rival contentions, perused the material available on record and also gone through the findings of the lower authorities recorded in their respective orders. At the outset we note that the assessee was allowed one opportunity against the proposal of the ld. AO to rectify the order passed u/s. 143(3) of the Act. At the same time ld. DR did not controvert the arguments of the ld. AR of the assessee that the whether the action o....