Appeal Fee to be paid to ITAT on appeal against Rectification order u/s 154– Residual clause of section 253(6)(d) not applicable says ITAT
ABCAUS Neutral Case Law Citation:
ABCAUS 3679 (2023) (02) ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) / NFAC in confirming the dismissal by the Assessing Officer (AO) of the rectification application u/s 154 of the Income Tax Act, 1961 (the Act).
The total income of the assessee was assessed by the AO u/s 143(3) read with Section 147 of the Act. The AO while passing the assessment order inter alia treated the sale and purchase of shares as business income.
The assessee filed application for rectification of mistake apparent from record u/s 154 of the Act before the AO, stating that assessed income include income arising from transfer of equity shares which is not liable to be included in the total income of the assessee, as the same is exempt u/s 10(38) of the Act.
The said rectification application filed by the assessee u/s 154 was rejected by the AO by holding that the assessee’s appeal against reassessment order was pending with CIT(A) and also that the assessee did not filed evidences to substantiate its rectification application.
The CIT(A) dismissed the appeal on the grounds that the appeal filed by the assessee against the reassessment order was pending before CIT(A).
The Division Bench of the Tribunal observed that the appeal fee of Rs. 500/- deposited by the assessee was deficient in view of the provisions of Section 253(6) of the Act.
On the issue of deficient appeal fee, the assessee argued that since the appeal filed by the assessee with ITAT had arisen from dismissal of rectification application u/s 154 of the Act, it shall fall within residuary clause (d) of Sub-section (6) of Section 253.
The assessee also differentiated between the appeal filed by the assessee from dismissal of application filed by the assessee u/s 154 of the Act wherein it was claimed that appeal fee of Rs. 500/- shall be deposited under residuary clause (d) to Section 253(6), while in the case of invocation of Section 154 at the behest of the AO then in that case appeal fee shall be payable u/s 253(6)(a) to (c),keeping in view total income as computed and assessed by the AO.
The assessee also referred to appeals arising out of orders passed u/s 263 of the Act, wherein Rs. 500/- appeal fee for filing appeal is paid under Section 253(1)(d).
The Tribunal observed that the reassessment was framed by the AO u/s 143(3) read with Section 147 of the Act computing total income of the assessee at more than Rs. 50 lakhs/-. The rectification application filed by assessee u/s 154 before the AO sought relief by seeking to treat long term capital gains arising on sale of shares was nearly Rs. 40 lakhs as being exempt from income-tax u/s 10(38) of the Act.
The Tribunal opined that the subject matter of the rectification application filed by the assessee had a directly nexus to the computation of total income of the assessee.
The Tribunal opined that had the contentions of the assessee as sought in the rectification application filed u/s 154 been accepted by AO, CIT(A) or even by the ITAT, the total income of the assessee computed by the AO u/s 147 read with Section 143(3), would have reduced to the extent of relief granted.
The Tribunal opined that since the rectification application had a direct bearing on the computation of total income of the assessee the residual clause (d) of Section 253(6) shall not have any application, but rather Section 253(6)(a) to (c) of the Act have direct applicability as it deals with computation of total income of the assessee by the AO to which this appeal relates.
The Tribunal stated that since the total income computed by the AO was more than Rs. 50 lakhs, the relevant Section under which appeal fee shall be payable will be Section 253(6)(c), and hence appeal fee of Rs. 10000/- shall be payable by the assessee.
As a result, the Tribunal directed the assessee to deposit the differential appeal fee amount of Rs. 9,500/-.
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