TaxTMI 
TaxTMI 
2025 (1) TMI 1477
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....tified in deleting addition of Rs. 2,30,26,342/- for provisions for expenses ignoring the fact that provision for expenses are created only by debit expenditure in Income and Expenditure Account, and same has not been added back.'' 2.1 Apropos Grounds of appeal of the Department (supra), it is noticed that the ld. CIT(A)/NFAC, Delhi allowed the appeal of the assessee vide its order dated 06-05-2024 raised before him, giving therein following finding : 8.2 Decision 8.2.1 The appellant has challenged the addition of Rs. 2,30,26,342/- in the rectification order u/s. 154 dated 31.10.2023. The appellant has submitted that in the order giving effect to the order of the CIT(A) passed us 250 rw.s.143(3), the A.O. had assessed at Rs. Nil Income. But subsequently in the order u/s 154, the appellant has withdrawn and added back ''provisions of expenses withdrawn'' of Rs. 2,30,26,s342/- 8.2.2 In the original assessment order u/s 143(3) dated 27.03.2015, the A.O. had made an addition of Rs. 2,30,26,342/- on account of disallowance of provision for the expenses. In the appeal before the CIT(A) vide order u/s 250 dated 24.12.2021. CIT. NFAC had adjudicated the ground....
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....he above amount as applied during the year. If the appellant has not daimed any amount as applied, the question of its disallowance naturally does not arise. The AO may verify the same and subject to the same the disallowance is deleted and Ground No. 5 of the appeal is allowed." 15. Before us, the Id. D/R submitted that the ground raised is basically for method of accounting in relation to the provision of expenses as mentioned in the order of the AO, for which the Id. CIT(A) has also mentioned in para 10.3.1, that AD may examine if there is any application claimed of the amount given in the Balance Sheet as provision apart from the expenditure as per the Income and Expenditure Account, this was just to draw the attention of the Hon'ble Bench. 16. On the other hand, the Id. A/R submitted that the method of accounting followed by the assessee Rajasthan Cricket Association is as per provisions of section 145(1) of the Income Tax Act 1961, the income chargeable under the head "Income from Other Sources, shall also be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. The assessee is following the mercan....
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....on on pretext of which the rectification order u/s. 154 has been passed and the A.O. has not pointed out any mistake apparent from record. 8.2.6 As regards the merits of the issue in hand, the appellant had clearly stated that it had made provision for the above expenses but had not claimed the above amount as applied during the year. It was therefore clearly held in the order of the CIT, NFAC that when the appellant has not claimed any amount out of the above amount of provision for expenses as applied, the question of its disallowance naturally does not arise. The A.O. was only directed to verify whether the factual aspect of the above claim but the A.O. has proceeded to again rectify u/s. 154 without specifying as to what documentary evidence was not provided by the appellant to arrive at such conclusion of it being a mistake apparent from record. The appellant has given a ledger account for the above provision of expenses of Rs. 2,30,26,345/- The appellant has also provided the copy of computation of income as per which the amount considered for application of income comprises of: (a) amount applied to charitable purpose during the year of Rs. 22,62,39,303/- (b) amount....
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.... application for charitable purposes of Rs. 22,62,39,308/- and deserves to be disallowed. Thus, she relied on the finding recorded in the order of the assessing officer while adding the provision for expenses to the income of the assessee. 2.3 On the other hand, the ld. AR of the assessee relied upon the order of the CIT(A)/ NFAC dated 06-05-2024 and submitted the following written submission in support of the ld. CIT(A)'s order: OUR SUBMISSION: ''I- It is to submit before your goodself that the provisions of section 154 of the Income Tax Act, 1961, can only deal with the mistake apparent on record and that the law does -not provide any such power to review the order already passed. Such matter of interpretation can only be dealt by the Department by way of appeal before the higher appellate/judicial authorities. It is mentioned at page 9 of the 154 order that, "Replies of the assessee furnished without supporting as relevant documentary evidences, are not found acceptable for the reason that for claiming any expenditure, it should have been incurred and provisions are not the expenditure incurred. It is an estimate for the expenses to be incurred in s....
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....ned in the order that the information available on record is insufficient. That where the ld ITO had already made an assessment in the case under section 143(3) and further under section 147 r.w.s 143(3) of the Income tax act, 1961, it cannot be claimed the ld AO, who also happens to be the jurisdictional AO of the appellant, that "in the absence of the details it cannot be examined whether the assessee has incurred any expenditure for which provision has been made or not" and thereby making an addition to the income of the assessee under section 154 of the Income Tax Act, 1961. It is apparent from the above that such powers can not be used by the Ld assessing officer under Section 154, and even if, the order of Ld CIT (Appeals) is referred, it was clear that the Ld Assessing officer just had to see that whether, the 'Provision of Expenses' was claimed separately in the Income Tax Return. The whole issue was diverted and notices issued itself suggests that the Ld Assessing Officer was keen to review the assessment order already passed and powers to review the order already passed cannot be exercised under section 154. II The learned ITO (Exemptio....
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....of the contention made by the representative of the Department, who had clearly pleaded, is unlawful. Further, in case the intention of the Department was to disagree with the facts of the case and even not to follow the clear decision of the higher appellate authorities binding upon them, the ld AO could have exercised an option to contest the order of Honourable ITAT at the level of Honourable Rajasthan High Court. III- The Ld CIT(A) has categorically mentioned at last para 8.2.6 on page 10 of the order that "It appears that the A.O. has not perused the above documentary evidences filed by the appellant at various stages and the computation of income and the financials of the appellant which would be available in the assessment record and after giving the appeal effect of order of CIT(A) which has also been confirmed by the Hon'ble ITAT, has made the order u/s. 154 withdrawing the appeal effect/making addition of Rs. 2,30,26,342/- without an iota of verification or application of mind about the issue and the facts involved" Hence, here remains no doubt that the contention of the Ld AO is devoid of any merit, which is made very clear by the Ld CIT (A) in....
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...., the AO in view of the facts of the case, the provision for the expenses of Rs. 2,30,26,342/- was disallowed and added to the total income of the assessee. Thus an order was passed by the AO under section 143(3) of the I.T. Act for the assessment year 2012-13 by not allowing application of income under section 11, which was challenged by the assessee before the ld. CIT(A), who allowed it vide order dated 24.12.2021. It is noted that thereafter, the AO passed appeal effect of an order making reassessment of the total income of the assessee after deleting the addition made in the original order. The assessee has filed the order dated 24-01-2022 of the ITO (Exemption) giving appeal effect (PB Page 8 to10). It is noticed that the Department went before the ITAT against the order of ld. CIT(A), where the Department also took the same ground of appeal of provision for expenses and the ITAT allowed the appeal in favor of the Association allowing the mercantile system of accounting and rejecting the ground raised by the revenue. Thereafter, a notice was issued on 20.04.2023 to the appellant Association under section 154, on the basis that ld. CIT(A) had given them the opportunity to verif....