The Tax Publishers2020 TaxPub(DT) 0519 (Kol-Trib)

INCOME TAX ACT, 1959

Section 154

Where both lower authorities have erred in taking recourse to section 154 rectification proceedings, despite the fact that show cause notice had made it clear that it was an instance of under-assessment of income than that of an apparent error and that such rectification proceedings do not involve a long drawn process of arguments or reasoning but an error apparent from records, therefore, action of both lower authorities in invoking section 154, was reversed.

Rectification under section 154 - Validity - Disallowing / adding cost of construction -

Assessee filed appeal before this Tribunal in the instant case sought to reverse the action both lower authorities in disallowing / adding cost of construction amounting to Rs. 27,88,995 in exercise of their rectification jurisdiction vested under section 154. Held: During the course of hearing both lower authorities have erred in law and on facts in taking recourse to section 154 rectification proceedings despite the fact that show cause notice had made it clear that it was an instance of under assessment of income than that of an apparent error. Action of lower authorities invoking section 154 proceedings was not liable to be concurred with. High court's decision in CITT v. M/s J.L. Morison India Ltd. ([ITAT No. 180 of 2014 & GA No. 4075 of 2014, dt. 11-6-2018]) holds that such rectification proceedings do not involve a long drawn process of arguments or reasoning but an error apparent from records. Therefore, action of both lower authorities in invoking section 154 for rectification jurisdiction for the purpose of partly disallowing assessee's cost of construction, was reversed.

REFERRED : CIT v. Smt. PK Noorjahan (2000) 237 ITR 570 (SC) : 1999 TaxPub(DT) 0080 (SC) TS Balaram, ITO v. Volkart Brothers & Ors. (1971) 82 ITR 50 (SC) : 1971 TaxPub(DT) 0355 (SC) Dhakeswari Cotton Mills Ltd. v. CIT (1954) 26 ITR 775 (SC) : 1954 TaxPub(DT) 0123 (SC) CIT v. J.L. Morison India Ltd. [ITAT No. 180 of 2014 GA No. 4075 of 2014, dt. 11-6-2018] Bata India Ltd. v. Inspecting Asstt. CIT & Ors. (2001) 249 ITR 491 (Cal) : 2001 TaxPub(DT) 0921 (Cal-HC) CIT v. Satyanarayan Bhalotia (1994) 74 Taxman 34 (Cal) Star Rolling Mills Pvt. Ltd. v. CIT (1988) 174 ITR 396 (Cal) : 1988 TaxPub(DT) 1207 (Cal-HC)

FAVOUR : In assessee's favour

A.Y. :

IN THE ITAT, KOLKATA BENCH

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