M/s. Chandrakant & Sons HUF, CHENNAI V. DCIT, CHENNAI

ITA 227/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4734 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-07-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 26-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: A K VENUGOPAL
• Keywords: Rectification of order
• Section: 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI (BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER) .. I.T.A. NO. 227/MDS/2010 ASSESSMENT YEAR : 2003-04 M/S CHANDRAKANT & SONS (HUF), NO.18 (OLD NO.10), MAHAVEER COLONY, EVK SAMPATH ROAD, VEPERY, CHENNAI 600 007. PAN : AABHC3736Q (APPELLANT) V. THE DEPUTY COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE VI, CHENNAI 600 034. (RESPONDENT) APPELLANT BY : SHRI A.K. VENUGOPAL RESPONDENT BY : SHRI P.B. SEKARAN, CIT - DR O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL OF THE ASSESSEE, DIRECTED AGAINST T HE ORDER DATED 10.12.2009 OF THE COMMISSIONER OF INCOME TAX (APPEA LS)-IX, CHENNAI, IT HAS RAISED ELEVEN GROUNDS IN TOTO. OF THESE GROUNDS, GROUND NO.2 ASSAILS THE ORDER OF THE A.O. PASSED UN DER SECTION 154 OF INCOME-TAX ACT, 1961 (IN SHORT THE ACT), FOR A REASON THAT IT WAS BARRED BY LIMITATION. I.T.A. NO. 227/MDS/10 2 2. SHORT FACTS APROPOS ARE THAT RETURN OF THE ASSES SEE FOR THE IMPUGNED ASSESSMENT YEAR WAS INITIALLY PROCESSED UN DER SECTION 143(1) OF THE ACT ON 19.3.2004. A.O. ISSUED A NOTI CE UNDER SECTION 154 OF THE ACT FOR RECTIFYING A MISTAKE REGARDING R ENTAL INCOME BEING CONSIDERED UNDER THE HEAD INCOME FROM BUSINESS WH EN IT OUGHT HAVE BEEN CONSIDERED UNDER THE HEAD INCOME FROM HO USE PROPERTY. ASSESSEE RESPONDED TO THE NOTICE AND SUBMITTED THAT CHANGE OF HEAD COULD NOT BE DONE ON A PROCEEDING UNDER SECTION 154 OF THE ACT. NEVERTHELESS, THE ASSESSING OFFICER PROCEEDED WITH RECTIFICATION AND BY AN ORDER DATED 23.4.2008, EFFECTED A RECTIFICATI ON. 3. BEFORE LD. CIT(APPEALS), ONE OF THE GROUNDS TAKE N BY THE ASSESSEE WAS THAT THE ORDER PASSED UNDER SECTION 15 4 OF THE ACT WAS BARRED BY LIMITATION IN VIEW OF SUB-SECTION (7) OF SECTION 154 OF THE ACT. HOWEVER, LD. CIT(APPEALS) WAS NOT APPRECIA TIVE. ACCORDING TO HIM, THE NOTICE UNDER SECTION 154 OF THE ACT WAS ISSUED TO THE ASSESSEE WITHIN FOUR YEARS AND THEREFORE, ORDER PAS SED UNDER SECTION 154 OF THE ACT BY THE ASSESSING OFFICER, WAS VALID. 4. NOW BEFORE US, LEARNED A.R. SUBMITTED THAT SUB-S ECTION (7) OF SECTION 154 OF THE ACT CLEARLY MANDATED THAT AN AME NDMENT COULD NOT BE DONE AFTER EXPIRY OF FOUR YEARS. AS PER LEA RNED A.R., THE I.T.A. NO. 227/MDS/10 3 RECTIFICATION UNDER SECTION 154 OF THE ACT WAS EFFE CTED ON A RETURN PROCESSED UNDER SECTION 143(1) OF THE ACT AND SUCH PROCESSING WAS ADMITTEDLY DONE ON 19.3.2004. THEREFORE, ACCORDING TO HIM, THE LAST DATE ON WHICH RECTIFICATION COULD HAVE BEEN EFFECTE D WAS 31.3.2008. THE A.O. HAD FAILED TO DO SO. HENCE, AS PER THE LE ARNED D.R., THE ORDER PASSED ON 23.4.2008 WAS OUT OF TIME AND THERE FORE, INVALID. 5. PER CONTRA, LEARNED D.R. STRONGLY SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. IT IS NOT DISPUTED THAT THE ORDER RECTIFIED WAS ON THE PROCESSING CARRIED OUT ON 19.3.2004 UNDER SECTION 143(1) OF THE ACT. HENCE, FOUR YEARS TIME FROM THE END OF THE RELEVANT FINANCIAL YEAR EN DED ON 31.3.2008. THERE IS NO DISPUTE THAT THE RECTIFICATION ORDER WA S PASSED ON 23.4.2008. THEREFORE, CLEARLY IT WAS AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH ORIGINAL ORD ER SOUGHT TO BE AMENDED WAS PASSED. RELEVANT SUB-SECTION (7) OF SE CTION 154 IS REPRODUCED HEREUNDER:- SAVE AS OTHERWISE PROVIDED IN SECTION 155 OR SUB-SE CTION (4) OF SECTION 186 NO AMENDMENT UNDER THIS SECTION SHALL BE MADE AFTER THE EXPIRY OF FOUR YEARS [FROM THE END OF I.T.A. NO. 227/MDS/10 4 THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE AMENDED WAS PASSED]. THERE IS NO CASE FOR THE REVENUE THAT THE ACTION OF THE A.O. WAS SAVED EITHER UNDER THE PROVISIONS OF SECTION 155 OR SECTION 156(4) OF THE ACT. IN FACT, ON ACCOUNT OF SUBSTITUTION OF SE CTIONS 184, 185 AND 186 BY SECTIONS 184 AND 185 BY FINANCE ACT, 1992, W ITH EFFECT FROM 1.4.93, THERE IS NO SECTION 186 IN THE ACT AT ALL. THIS BEING SO, THE ORDER PASSED UNDER SECTION 154 WAS BEYOND THE TIME LIMIT PRESCRIBED UNDER SUB-SECTION (7) OF SECTION 154 OF THE ACT. W E, THEREFORE, ALLOW THE APPEAL OF THE ASSESSEE AND QUASH THE IMPUGNED O RDER PASSED UNDER SECTION 154 OF THE ACT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON THE NINETEENTH DAY OF JULY, 2011. SD/- SD/- (U.B.S. BEDI) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 19 TH JULY, 2011. KRI. COPY TO: APPELLANT/RESPONDENT/CIT(A)-IX, CHENNAI-3 4/ CIT-VII, CHENNAI/D.R./GUARD FILE