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www.taxpublishers.in Income Tax Act, 1961, Section 154 Rectification under section 154--*Rejection of application--No mistake apparent from record* Conclusion: Where intimation issued by CPC was based on revised return of income filed by assessee, whereby returned income was accepted as such and no adjustment was carried out, therefore, in absence of any mistake apparent from record, application filed by assessee under section 154, would not be sustainable. Assessee-firm filed its return of income for relevant assessment year. Thereafter, the assessee revised its return of income. The revised return was processed by CPC under section 143(1), wherein the returned income was accepted as such. Subsequently, assessee filed application under section 154 contending that CPC in the intimation issued under section 143(1) wrongly took its income under the head "Profit and gains from business or profession" at Rs. 35,09,675 instead of Rs. Nil and raised consequential demands towards tax and interest under sections 234B and 234C. AO rejected the said application alleging that assessee itself showed profit from business from sale of fixed assets at Rs. 35,09,675 and therefore, there was no mistake apparent on record. CIT (A) was of the view that as CPC processed the returned income of assessee as was so disclosed by it, thus, no mistake was apparent from record. *Held:* Admittedly, assessee revised its return of income declaring an income of Rs. 74,54,460 and CPC vide intimation under section 143(1) accepted the said income. Considering the fact that assessee itself filed its revised return declaring an income of Rs. 74,54,460, it was unable to understand as to on what basis the acceptance of said returned income by CPC could be held as mistake apparent from record rendering the same amenable for rectification under section 154. Further, as rightly observed by CIT (A) that since intimation issued by CPC was based on revised return of income filed by assessee, and no adjustment was carried out, therefore, in absence of any mistake apparent from record, AO rightly rejected assessee's application under section 154. *Decision:* Against the assessee IN THE ITAT, RAIPUR BENCH RAVISH SOOD, J.M. & ARUN KHODPIA, A.M. Vitrag Enterprises v. Asstt. CIT ITA No. 129/RPR/2023 7 March, 2024 Assessee by: R.B Doshi, C.A. Revenue by: Satya Prakash Sharma, Sr. D.R. ORDER *Ravish Sood, J.M.* The present appeal filed by the assessee firm is directed against the order passed by the Commissioner (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 21-3-2023, which in turn arises from the order passed by the assessing officer under section 154 of the Income Tax Act, 1961 (in short 'the IT Act') dated 18-10-2019 for the assessment year 2011-12. The assessee firm has assailed the impugned order on the following grounds of appeal: "1 In the facts and circumstances of the case, learned Commissioner (Appeals) erred in upholding action of the assessing officer in rejecting the rectification application filed by the appellant under section 154, without appreciating the facts of the case properly. 2. Learned Commissioner (Appeals) erred in dismissing the appeal and upholding action of the assessing officer who assessed the total income of appellant at Rs. 74,54,460 in place of Rs. 39,44,780 declared in the original return. 3. Without prejudice to above grounds, learned Commissioner (Appeals) erred in confirming the action of assessing officer without appreciating the fact that the rectification order passed by assessing officer was illegal inasmuch as it was passed after the expiry of limitation period. 4. The appellant reserves the right to amend, modify or add any of the ground/s of appeal." 2. Succinctly stated, the assessee firm had filed its return of income (original) on 21-7-2011, declaring its net taxable income at Rs. 39,44,780. Thereafter, the assessee revised its return of income on 3-9-2011 at Rs. 74,54,460. The return of income (revised) filed by the assessee on 3-9-2011 was processed by Centralized Processing Centre, Bengaluru under section 143(1) of the Act on 24-2-2012, wherein the returned income of Rs. 74,54,460 (supra) was accepted as such. 3. On 18-10-2019, the assessee firm filed an application under section 154 of the Act. As is discernible from the record, it was the claim of the assessee that the Centralized Processing Centre, Bengaluru in the intimation issued under section 143(1) of the Act dated 24-2-2012 had wrongly taken its income under the head "Profit and gains from the business or profession" at Rs. 35,09,675 instead of Rs. Nil and raised a consequential demand towards tax and interest(s) under sub-section 234B and 234C of the Act. Also, it was stated in the aforesaid application that though a rectified return had been uploaded on 8-2-2013, however, the same was yet not processed. The application filed by the assessee firm was, however, rejected by the assessing officer vide his Order dated 18-10-2019, wherein it was observed by him as under: "The Assessee has filed an application for passing the rectification order under section 154 of the Act on 18-10-2019 in the office of the undersigned. On going through the revised return filed by the assessee on 3-9-2011, it is found that the assessee has itself shown the profit from business and profession from sale of fixed assets is Rs. 35,09,675 and income from long-term capital gain at Rs. 41,15,460 thus total income shown in its return of income is Rs. 74,54,460 and tax computed on it is true. The mistake is not apparent from record hence the application for passing the order under section 154 of the Act is hereby rejected. You are hereby directed to please pay your tax within 7 days of receipt of this letter otherwise the action will be taken as per Act." 4. Aggrieved the assessee carried the matter in appeal before the Commissioner (Appeals) but without success. As is discernible from the order of the Commissioner (Appeals), it transpires that he was of the view that as the Centralized Processing Centre, Bengaluru vide its intimation under section 143(1) of the Act had processed the returned income of the assessee firm as was so disclosed by it, therefore, no mistake was apparent from record. Accordingly, the Commissioner (Appeals) approved the view taken by the assessing officer by observing as under: "The facts of the case are that the assessee claims that original return of income was filed on 21-7-2011 declaring income of Rs. 39,44,780. Revised return of income was filed on 3-9-2011 wherein assessee disclosed profit from business and profession from sale of fixed assets of Rs. 35,09,675 and income from long-term capital gains at Rs. 41,15,460 thus total income was shown at Rs. 74,54,460 which was processed on 24-2-2012 by Centralized Processing Centre. Appellant filed a rectification application dated 18-10-2019 seeking "rectification" of the "mistake" showing total income at Rs. 74,54,460. The assessing officer has rejected the application citing that "mistake is not apparent from the record". The appellant has taken the Ground in appeal that assessing officer has erred in rejecting the application. Since the intimation is based on revised return filed by the assessee there is no mistake apparent from the record and application has been rightly rejected. The appellant's contention is misplaced and bereft of merit. The appellant has taken an alternative ground that the order under section 154 dated 18-10-2019 is illegal since it has been passed after the expiry of limitation period. It is seen that the assessee has himself filed rectification application on 18-10-2019. Order under section 154 has been passed on 18-10-2019. The appellant's application on which order has been passed is itself made after the expiry of limitation period. Thus, even on this ground, rejection of application under section 154 is warranted. Accordingly, the rejection of application under section 154 is correct. Appellant cannot get any relief. 5. As a result, the appeal is dismissed." 5. The assessee firm being aggrieved with the order of the Commissioner (Appeals) has carried the matter in appeal before us. 6. We have heard the learned Authorized Representatives of both the parties and perused the material available on record, as well as considered the orders of the lower authorities. 7. Shri R.B Doshi, learned Authorized Representative (for short 'AR') for the assessee at the threshold submitted that the Commissioner (Appeals) had grossly erred in approving the order passed by the assessing officer under section 154 of the Act. Elaborating on his contention, it was submitted by the learned Authorized Representative that the assessee firm during the year under consideration was only in receipt of income from sale of land situated at Mathpurena that was offered for tax in the original return of income under the head "Long-Term Capital Gain" (LTCG) aggregating to Rs. 41,15,460. The learned Authorized Representative had drawn our attention to the computation of income pertaining to the original return of income that was filed by the assessee firm on 21-7-2011. The learned Authorized Representative had also drawn our attention to the "Profit and loss account" of the assessee firm wherein gain on sale of the aforesaid land was credited, Page 5 of APB. Carrying his contention further, the learned Authorized Representative submitted that inadvertently at the stage of filing of the revised return of income, the LTCG of Rs. 41,15,460 (supra) and "net profit" (as per profit and loss account) of Rs. 35,09,675.19 both were disclosed as income of the assessee firm, as a result whereof, the latter's revised income was jacked up to Rs. 74,54,455 (supra). It was submitted by the learned Authorized Representative that though the income arising from sale of the aforesaid land was correctly disclosed by the assessee as LTCG of Rs. 41,15,460 in its revised return of income but on account of a technical snag the "net profit" (as per profit and loss account) of Rs. 35,09,675.19 as disclosed by the assessee on sale of the aforesaid land was wrongly included in its income disclosed in aforesaid return of income (revised). In sum and substance, it was submitted by the learned Authorized Representative that the assessee firm on account of a technical snag had been made to suffer double taxation on the profit on sale of land. Carrying his contention further, it was submitted by the learned Authorized Representative that as the aforesaid mistake was glaring, patent, obvious and apparent from record, therefore, the assessing officer was obligated to have rectified the same under section 154 of the Act. Based on his aforesaid contention, the learned Authorized Representative submitted that the assessing officer had grossly erred in declining the assessee's application for rectification filed under section 154 of the Act. 8. Per contra, the learned Departmental Representative (for short 'DR') relied on the orders of the lower authorities. 9. We have thoughtfully considered the issue involved in the present appeal in the backdrop of the contentions of the learned Authorized Representatives of both the parties. Admittedly, the assessee firm had revised its return of income on 3-9-2011 declaring an income of Rs. 74,54,460. As is discernible from record, the Centralized Processing Centre, Bengaluru vide intimation under section 143(1) of the Act dated 24-2-2012 had accepted the income disclosed by the assessee firm in its revised return of income. Considering the fact that the assessee firm had itself filed its return of income (revised) declaring an income of Rs. 74,54,460 (supra), we are unable to comprehend as to on what basis the acceptance of the said returned income by Centralized Processing Centre, Bengaluru could be held as suffering from a mistake apparent from record rendering the same amenable for rectification under section 154 of the Act. As observed by the Commissioner (Appeals), and rightly so, as intimation issued by the Centralized Processing Centre, Bengaluru was based on the revised return of income filed by the assessee firm, and no adjustment had been carried out, therefore, the assessing officer in absence of any mistake apparent from record had rightly rejected its application under section 154 of the Act. 10. We, thus, in terms of our aforesaid observations, finding no infirmity in the view taken by the Commissioner (Appeals) who had rightly approved the order passed by the assessing officer under section 154 of the Act, uphold the same. 11. In the result, appeal of the assessee is dismissed in terms of our aforesaid observations. Order pronounced in open court on 7-3-2024.

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Income Tax Act, 1961, Section 154

Rectification under section 154--Rejection of application--No mistake apparent from record

Conclusion: Where intimation issued by CPC was based on revised return of income filed by assessee, whereby returned income was accepted as such and no adjustment was carried out, therefore, in absence of any mistake apparent from record, application filed by assessee under section 154, would not be sustainable.

Assessee-firm filed its return of income for relevant assessment year. Thereafter, the assessee revised its return of income. The revised return was processed by CPC under section 143(1), wherein the returned income was accepted as such. Subsequently, assessee filed application under section 154 contending that CPC in the intimation issued under section 143(1) wrongly took its income under the head "Profit and gains from business or profession" at Rs. 35,09,675 instead of Rs. Nil and raised consequential demands towards tax and interest under sections 234B and 234C. AO rejected the said application alleging that assessee itself showed profit from business from sale of fixed assets at Rs. 35,09,675 and therefore, there was no mistake apparent on record. CIT (A) was of the view that as CPC processed the returned income of assessee as was so disclosed by it, thus, no mistake was apparent from record. Held: Admittedly, assessee revised its return of income declaring an income of Rs. 74,54,460 and CPC vide intimation under section 143(1) accepted the said income. Considering the fact that assessee itself filed its revised return declaring an income of Rs. 74,54,460, it was unable to understand as to on what basis the acceptance of said returned income by CPC could be held as mistake apparent from record rendering the same amenable for rectification under section 154. Further, as rightly observed by CIT (A) that since intimation issued by CPC was based on revised return of income filed by assessee, and no adjustment was carried out, therefore, in absence of any mistake apparent from record, AO rightly rejected assessee's application under section 154.

Decision: Against the assessee

IN THE ITAT, RAIPUR BENCH

RAVISH SOOD, J.M. & ARUN KHODPIA, A.M.

Vitrag Enterprises v. Asstt. CIT

ITA No. 129/RPR/2023

7 March, 2024

Assessee by: R.B Doshi, C.A.

Revenue by: Satya Prakash Sharma, Sr. D.R.

ORDER

Ravish Sood, J.M.

The present appeal filed by the assessee firm is directed against the order passed by the Commissioner (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 21-3-2023, which in turn arises from the order passed by the assessing officer under section 154 of the Income Tax Act, 1961 (in short 'the IT Act') dated 18-10-2019 for the assessment year 2011-12. The assessee firm has assailed the impugned order on the following grounds of appeal:

"1 In the facts and circumstances of the case, learned Commissioner (Appeals) erred in upholding action of the assessing officer in rejecting the rectification application filed by the appellant under section 154, without appreciating the facts of the case properly.

2. Learned Commissioner (Appeals) erred in dismissing the appeal and upholding action of the assessing officer who assessed the total income of appellant at Rs. 74,54,460 in place of Rs. 39,44,780 declared in the original return.

3. Without prejudice to above grounds, learned Commissioner (Appeals) erred in confirming the action of assessing officer without appreciating the fact that the rectification order passed by assessing officer was illegal inasmuch as it was passed after the expiry of limitation period.

4. The appellant reserves the right to amend, modify or add any of the ground/s of appeal."

2. Succinctly stated, the assessee firm had filed its return of income (original) on 21-7-2011, declaring its net taxable income at Rs. 39,44,780. Thereafter, the assessee revised its return of income on 3-9-2011 at Rs. 74,54,460. The return of income (revised) filed by the assessee on 3-9-2011 was processed by Centralized Processing Centre, Bengaluru under section 143(1) of the Act on 24-2-2012, wherein the returned income of Rs. 74,54,460 (supra) was accepted as such.

3. On 18-10-2019, the assessee firm filed an application under section 154 of the Act. As is discernible from the record, it was the claim of the assessee that the Centralized Processing Centre, Bengaluru in the intimation issued under section 143(1) of the Act dated 24-2-2012 had wrongly taken its income under the head "Profit and gains from the business or profession" at Rs. 35,09,675 instead of Rs. Nil and raised a consequential demand towards tax and interest(s) under sub-section 234B and 234C of the Act. Also, it was stated in the aforesaid application that though a rectified return had been uploaded on 8-2-2013, however, the same was yet not processed. The application filed by the assessee firm was, however, rejected by the assessing officer vide his Order dated 18-10-2019, wherein it was observed by him as under:

"The Assessee has filed an application for passing the rectification order under section 154 of the Act on 18-10-2019 in the office of the undersigned. On going through the revised return filed by the assessee on 3-9-2011, it is found that the assessee has itself shown the profit from business and profession from sale of fixed assets is Rs. 35,09,675 and income from long-term capital gain at Rs. 41,15,460 thus total income shown in its return of income is Rs. 74,54,460 and tax computed on it is true. The mistake is not apparent from record hence the application for passing the order under section 154 of the Act is hereby rejected.

You are hereby directed to please pay your tax within 7 days of receipt of this letter otherwise the action will be taken as per Act."

4. Aggrieved the assessee carried the matter in appeal before the Commissioner (Appeals) but without success. As is discernible from the order of the Commissioner (Appeals), it transpires that he was of the view that as the Centralized Processing Centre, Bengaluru vide its intimation under section 143(1) of the Act had processed the returned income of the assessee firm as was so disclosed by it, therefore, no mistake was apparent from record. Accordingly, the Commissioner (Appeals) approved the view taken by the assessing officer by observing as under:

"The facts of the case are that the assessee claims that original return of income was filed on 21-7-2011 declaring income of Rs. 39,44,780. Revised return of income was filed on 3-9-2011 wherein assessee disclosed profit from business and profession from sale of fixed assets of Rs. 35,09,675 and income from long-term capital gains at Rs. 41,15,460 thus total income was shown at Rs. 74,54,460 which was processed on 24-2-2012 by Centralized Processing Centre.

Appellant filed a rectification application dated 18-10-2019 seeking "rectification" of the "mistake" showing total income at Rs. 74,54,460. The assessing officer has rejected the application citing that "mistake is not apparent from the record". The appellant has taken the Ground in appeal that assessing officer has erred in rejecting the application.

Since the intimation is based on revised return filed by the assessee there is no mistake apparent from the record and application has been rightly rejected. The appellant's contention is misplaced and bereft of merit.

The appellant has taken an alternative ground that the order under section 154 dated 18-10-2019 is illegal since it has been passed after the expiry of limitation period. It is seen that the assessee has himself filed rectification application on 18-10-2019. Order under section 154 has been passed on 18-10-2019. The appellant's application on which order has been passed is itself made after the expiry of limitation period. Thus, even on this ground, rejection of application under section 154 is warranted.

Accordingly, the rejection of application under section 154 is correct. Appellant cannot get any relief. 5. As a result, the appeal is dismissed."

5. The assessee firm being aggrieved with the order of the Commissioner (Appeals) has carried the matter in appeal before us.

6. We have heard the learned Authorized Representatives of both the parties and perused the material available on record, as well as considered the orders of the lower authorities.

7. Shri R.B Doshi, learned Authorized Representative (for short 'AR') for the assessee at the threshold submitted that the Commissioner (Appeals) had grossly erred in approving the order passed by the assessing officer under section 154 of the Act. Elaborating on his contention, it was submitted by the learned Authorized Representative that the assessee firm during the year under consideration was only in receipt of income from sale of land situated at Mathpurena that was offered for tax in the original return of income under the head "Long-Term Capital Gain" (LTCG) aggregating to Rs. 41,15,460. The learned Authorized Representative had drawn our attention to the computation of income pertaining to the original return of income that was filed by the assessee firm on 21-7-2011. The learned Authorized Representative had also drawn our attention to the "Profit and loss account" of the assessee firm wherein gain on sale of the aforesaid land was credited, Page 5 of APB. Carrying his contention further, the learned Authorized Representative submitted that inadvertently at the stage of filing of the revised return of income, the LTCG of Rs. 41,15,460 (supra) and "net profit" (as per profit and loss account) of Rs. 35,09,675.19 both were disclosed as income of the assessee firm, as a result whereof, the latter's revised income was jacked up to Rs. 74,54,455 (supra). It was submitted by the learned Authorized Representative that though the income arising from sale of the aforesaid land was correctly disclosed by the assessee as LTCG of Rs. 41,15,460 in its revised return of income but on account of a technical snag the "net profit" (as per profit and loss account) of Rs. 35,09,675.19 as disclosed by the assessee on sale of the aforesaid land was wrongly included in its income disclosed in aforesaid return of income (revised). In sum and substance, it was submitted by the learned Authorized Representative that the assessee firm on account of a technical snag had been made to suffer double taxation on the profit on sale of land. Carrying his contention further, it was submitted by the learned Authorized Representative that as the aforesaid mistake was glaring, patent, obvious and apparent from record, therefore, the assessing officer was obligated to have rectified the same under section 154 of the Act. Based on his aforesaid contention, the learned Authorized Representative submitted that the assessing officer had grossly erred in declining the assessee's application for rectification filed under section 154 of the Act.

8. Per contra, the learned Departmental Representative (for short 'DR') relied on the orders of the lower authorities.

9. We have thoughtfully considered the issue involved in the present appeal in the backdrop of the contentions of the learned Authorized Representatives of both the parties. Admittedly, the assessee firm had revised its return of income on 3-9-2011 declaring an income of Rs. 74,54,460. As is discernible from record, the Centralized Processing Centre, Bengaluru vide intimation under section 143(1) of the Act dated 24-2-2012 had accepted the income disclosed by the assessee firm in its revised return of income. Considering the fact that the assessee firm had itself filed its return of income (revised) declaring an income of Rs. 74,54,460 (supra), we are unable to comprehend as to on what basis the acceptance of the said returned income by Centralized Processing Centre, Bengaluru could be held as suffering from a mistake apparent from record rendering the same amenable for rectification under section 154 of the Act. As observed by the Commissioner (Appeals), and rightly so, as intimation issued by the Centralized Processing Centre, Bengaluru was based on the revised return of income filed by the assessee firm, and no adjustment had been carried out, therefore, the assessing officer in absence of any mistake apparent from record had rightly rejected its application under section 154 of the Act.

10. We, thus, in terms of our aforesaid observations, finding no infirmity in the view taken by the Commissioner (Appeals) who had rightly approved the order passed by the assessing officer under section 154 of the Act, uphold the same.

11. In the result, appeal of the assessee is dismissed in terms of our aforesaid observations.

Order pronounced in open court on 7-3-2024.