TaxTMI 
TaxTMI 
2022 (11) TMI 467
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....ide notice u/s 154/155 dated 18.06.2018 to the assessee. 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/....
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....sed in order passed u/s. 143(3) nor in order u/s. 154. The appellant has 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 ap....
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.... 1.1 Appeal of the department infructuous: At the very outset it is submitted that the appeal of the department 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....
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....at the assessee has submitted the complete information and documents in the original proceedings itself. Now before initiating of reassessment proceedings the ld. AO has not bring anything on record to suggest that 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 ....
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....on 54F do not speak of any proportionate deduction in case there is mix property like in the present case. 1.5.3 No mechanism of calculation in case of mix property - whether to be on cost basis, area basis, sale value basis or any factor? We may also submit 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: ....
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....as available till 31-3-2021i.e. within the expiry of four years from the end of the financial year in which the order sought to be rectified has been passed. Therefore, there was adequate time available with the ld. AO for carrying out rectification proceedings instead of being hurry in creating demand ex parte. 1.7.3 One single 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 th....
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.... Rule 27 does not require to make an application in writing. Similarly, rule 27 does not prescribe any time limit to make such an application on the issue decided against the assessee. And therefore he has prayed to considered the additional ground under rule 27 and in support of the same the ld. AR of the assessee submitted as under : "Brief Facts: The assessee in this 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....
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.... the Act while disallowing exemption claimed by the assessee u/s 54 of the Act in part, as the same is not amenable to rectification proceedings u/s 154 and the ld. CIT(A),though accepting the plea of assessee, erred in not specifically mentioning it while accepting the ground of appeal of the assessee" Submission: 1.1 All the conditions set out in Rule 27 of ITAT Rules fulfilled: At the outset, it is submitted that the Rule 27 of ITAT Rules read as under: "Respondent may 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 ....
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....ard was granted to the assessee. 1.1.3 Legal ground of appeal with all facts already on record: It is also submitted that the ground being raised by the assessee is purely a legal ground and the complete facts and information is already on record. This ground of appeal was already before the ld. CIT(A) and as such all the relevant facts and circumstances required for disposing of above ground of appeal is already on record. A paper book has been submitted containing the documents which were before the lower authorities. In such circumstances it will be completely lawful to admit 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....
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....ings. We are, therefore, of the considered opinion that the impugned order passed by the ITAT suffers from perversity in so far as it refused to allow the Appellant - assessee (Respondent before the Tribunal) to urge the grounds by way of an oral application under Rule 27. The question of law as framed is answered in favour of the Appellant - assessee and resultantly the impugned order is set aside. The matter is remanded back before the ITAT with a direction to hear the matter afresh by allowing the Appellant- assessee to raise the additional grounds, under Rule 27 of the ITAT Rules, pertaining to issues relating to 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 b....
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....e taken by way of an appeal. In case of Virdhachalam Pillai vs. Chaldean Syrian Bank Ltd, Trichur and anr reported in AIR 1964 SC 1425 in context of the said Rule the Supreme Court observed as under:"32. Learned Counsel for the appellant raised a short preliminary objection that the learned Judges of the High Court having categorically found that there was an antecedent debt which was discharged by the suit mortgage loan only to the extent of Rs. 59,000/- and odd and there being no appeal by the Bank against the finding that the balance of the Rs. 80,000/- had not gone in discharge of an antecedent debt, the respondent was precluded from putting 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 ho....
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....on(1), an assessee is granted right to file an appeal; under sub-section(2), the Commissioner is granted a right to file appeal by issuing necessary direction to the assessing officer; sub-section (3) prescribes the period of limitation within which an appeal could be preferred. Section 253(4) of the Act lays down that either the assessing officer or the assessee, on receipt of notice that an appeal against the order of Commissioner (Appeals) has been preferred under subsection (1) or subsection (2) by the other party, may, notwithstanding that no appeal had been filed against such an order or any part thereof, within 30 days of the notice, file a memorandum of cross objections verified 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 ....
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.... of the mistake apparent on record and thus effectively there is no opportunity to the assessee to so as to submit the submission on merits and thus, the order passed against the assessee by the assessing officer rightly cancelled by the NFAC. The ld. AR of the assessee further submitted that revenue has also not demonstrated as to what is the mistake apparent on record and under the guise of the mistake reviewing his own order is not permitted under the law. 9. On the other hand, revenue supported the order of the ld. AO and submitted that the assessee was already given an opportunity of being heard and to substantiate their claim as the same was not allowed properly in the original order passed under section 143(3) of the Act and as the issue 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 ....
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....lowed the claim after making all the necessary enquiry. The dispute is only about the amount of the claim allowable to the assessee which has already reached to finality once the order of the assessment is passed under section 143(3) of the Act. The ld. DR did not controvert the arguments of the ld. AR of the assessee that considering the present set of fact the ld. AO did not bring anything in the notice issued to him so as to demonstrate that in fact there is a mistake apparent on record. The claim of the assessee is already considered which is based on the submission on merits in the scrutiny assessment and order has been passed which is based on the evidences and submission made by the assessee. Merely there is an observation of the revenue audit party it is not a mistake apparent on record. The ld. AO is in error of reviewing his own order under section 154 of the Act. Considering the facts placed on record the bench noted that the issue noted by the ld. AO is not a mistake apparent on record and is not subjected to revision under the guise of provision of section 154 of the Act and therefore, order passed under section 154 of the Act lacks jurisdiction as ld. AO did not demon....
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....4AB and thus audited statements are not available. 4. Copy of bank account statement maintained with Punjab National Bank for the relevant previous year is enclosed. 5. Investment of Rs. 1,92,375/- has been made as share application in public issue of M/s Power Grid Corporation Limited in which shares of Rs. 87979.50 were alloted and balance 104395.50 was refunded. Copy of Allotment Advise cum Refund Intimation is enclosed. The investment has been made from Bank maintained by the assessee. 6. During the relevant previous year the assessee has sold its long term capital asset being house property and purchased a new house property for which deduction U/s 54 has been claimed. Copy of Sale Deed and Purchase deed enclosed. Document 3 जो कि जयपà¥à¤° नगर, चौकडी विशà¥à¤µà¥‡à¤¶à¥à¤µà¤° जी बारह गणगौर रासà¥à¤¤à¥‡ की पशà¥à¤šà¤¿à¤®à¥€ लाइन में à¤à¤• मकà¤....