Rectification of wrong penalty section. Notice was not required as assesseee was aware of offence

For rectification of wrong penalty section no notice u/s 154(3) was required to assessee as he was aware of offence and could not controvert the findings recorded – Allahabad High Court

ABCAUS Case Law Citation:
ABCAUS 2271 (2018) (04) abcaus.in HC

The instant petition was filed under Article 226 of the Constitution of India challenging the order of rectification passed by the Assessing Officer (AO) under Section 154/143(3) of the Income Tax Act, 1961 (Act).

The original assessment order clearly mentioned that the assessee had refunded deposits/advance in cash exceeding the prescribed amount and therefore, the provisions of Section 269T of Income Tax Act were applicable.

However erroneously, while directing initiation of the penalty proceedings, the reference was made to section 271D instead of section 271E which was the section applicable. Subsequently, on noticing the error, the AO rectified it u/s 154 and passed the revised order.

Before the Hon’ble High Court the appellant submitted that the rectification made by the revised assessment order was beyond the scope of Section 154 and even otherwise as it resulted in enhancement of the penalty amount or liability upon the petitioner, therefore, the statutory requirements of Sub-section 3 of Section 154 ought to have been adhered by affording a reasonable opportunity of being heard before passing the rectification order.

However, on being asked the petitioner fairly acknowledged the finding relating to the violation of section 269T.

The Hon’ble High Court opined that when it was not in dispute that the provisions of section 269T were applicable, the reference to Section 271D in the subsequent line in the Assessment order initiation of penalty proceeding was clearly a typographical error.

The Hon’ble High Court opined that this fact was obvious as the relevant provision applicable was 271-E and not Section 271D, as, on a bare reading of the provision contained in Section 271E it revealed that it was related to Section 269T, whereas, Section 271D relates to Section 269SS.

The Court held that in these circumstances the order passed under Section 154 of the Income Tax Act rectifying this error can not be faulted. Accordingly, Accordingly, the writ petition was dismissed.

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