TaxTMI 
TaxTMI 
2018 (11) TMI 1933
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.... up for scrutiny and after calling for details and examination thereof, the assessing officer ('AO') concluded the order of assessment u/s 143(3) of the Act vide order dated 26.03.2014 accepting the returned income of Rs.10,53,220, after observing that that the assessee had shown the additional income of Rs.16,61,954/- it had voluntarily declared in the survey on 26.03.2012 in the return of income filed for Assessment Year 2012-13. 2.2. Subsequently, the 'AO' (viz., a new incumbent) initiated rectification proceedings for Assessment Year 2012-13 by issue of notice u/s 154 of the Act dated 09.03.2016 putting the assessee on notice that he sought to enhance its assessed income for Assessment Year 2012-13. The assessee vide its reply dated 16.03.2016 objected to the proposed rectification and also put forth submissions that there was no mistake apparent from the record as suggested by the AO and therefore no rectification is to be made. The AO brushed aside the submissions/reply put forth by the AO and passed the rectification u/s 154 of the Act vide order dated 17.03.2016 enhancing the assessee's assessed income to Rs.23,93,260/-; in view of an addition of Rs.13,40,040/- on account ....
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....me in the hands of the appellant amounts to double taxation, which is not permissible on the facts and circumstances of the case. 10. Without further prejudice and not conceding that the appellant has accounted the additional income correctly in its books by claiming salary expenditure, the addition in confirmed in the hands of the appellant, the partners salary was to be deleted on the facts and circumstances of the case. 11. The appellant denies the liability to pay interest U/s 234B and 234C of the Act in view of the fact that there is no liability to additional tax as determined by the learned assessing officer. Without prejudice the rate, period and on what quantum the interest has been levied is not discernable from the order and hence deserves to be cancelled on the facts and circumstances of the case. 12. The Appellant craves leave to add, alter, modify, delete or substitute any of the grounds urged above and to file a paper book at the time of hearing of the appeal. 13. In view of the above and other grounds that may be urged at the time of hearing the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity. 4. Ground ....
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....d and ought to be set aside and the income as per the order of assessment dated 26.03.2014 restored. 5.1.3 In support of the assessee's plea, the learned AR placed reliance on the following judicial pronouncements: (i) T. S. Balaram, ITO Vs. Volkart Brothers (1971) 82 ITR 50 (SC). (ii) K. S. Venkatesh Vs. DCIT (2015) 63 taxman.com 343 (Karnataka); which followed the aforesaid decision of the Hon'ble Apex Court (supra). According to the learned AR, the rectification undertaken by the AO is in respect of debatable issues with regard to the computation of partners' salary and also as to whether the claim made was allowable in respect of complete incomes as arrived before computing salary; which itself is sufficient to establish that the rectification carried out was debatable. In view of the above, the learned AR prayed that since there could be no application of section 154 of the Act for rectifying the order of assessment, the order u/s 154 of the Act dated 17.03.2016 be set aside as it is bad in law. 5.2 Per contra, the learned DR for Revenue prayed that the orders of the authorities below be upheld. According to the learned DR, the addition of Rs.13,40,040/- made by the A....
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....ught to have been separately offered to tax and hence the rectification was justified. In our considered view, the contention of Revenue that the claim of expenditure by way of partners' salary on application of the provisions of Section 40(b) of the Act is not an allowable claim, merely because additional income admitted is reduced, is devoid merit as the assessee firm is entitled to compute salary in accordance with the provisions of section 40(b) of the Act. It is settled position of law that the scope of rectification u/s 154 of the Act is restricted to mistakes apparent from the record, like mathematical or typographical errors, and not something that has to be established by way of a long drawn out process of reasoning on which there are two opinions as in the case on hand, where both the AOs involved hold different views. In this regard, the Hon'ble Apex Court in the case of T. S. Balaram, ITO Vs., Volkart Brothers (1971) 82 ITR 50 (SC) held as under: "From what has been said above, it is clear that the question whether section 17(1) of the Indian Income-tax Act, 1922, was applicable to the case of the first respondent is not free from doubt. Therefore, the Income-tax Offi....