Rectification u/s 154 for difference of receipt with TDS certificates not permissible – ITAT

Rectification u/s 154 for difference of receipt  with TDS certificates not permissible as the difference in receipts requires investigation and enquiry and not a case of obvious and patent mistake – ITAT

ABCAUS Case Law Citation:
ABCAUS 2389 (2018) 06 ITAT

The instant appeal was preferred by the Revenue against the order of Commissioner of Income Tax (Appeals) in quashing the rectification order passed by the Assessing officer (A) under section 154  of the Income tax Act, 1961 (the Act).

The assessee was an individual, whose assessment had been completed under section 143(3). Thereafter the Assessing Officer noticed that the contractual receipts credited in the Profit & Loss Account of the assessee were lower than the amount paid as appearing in the TDS Certificates 16A / 26AS Statement.

The AO, therefore, held that there was a mistake in the assessment order passed under section 143(3) in taking the lesser amount of contract receipts and the same was corrected by him by rectification order passed under section 154 by making addition to the total income of the assessee.

Aggrieved by the rectification, the assessee preferred appeal before the CIT(Appeals).

The CIT-A observed that in order to invoke section 154 for rectification of mistake, as held by the Hon’ble Supreme Court the mistake apparent on record must be obvious and patent mistake and not something which is established by long drawn process of reasoning.

CIT-A further opined that a decision on a debatable point of law cannot be regarded as a mistake apparent on the face of the record amenable for rectification under section 154 of the Act.

CIT-A observed that the AO had sought to rectify the assessment order on the ground that receipts as shown in the P&L account did not match with the receipts in Form 16A. However, there could be many reasons for such a mismatch. This point should have been scrutinized during assessment proceedings, which was obviously not done. The Income Tax Act provides sections such as 148 to deal with such matters.

Thus holding that the mismatch of turnover with TDS Certificates was not a mistake apparent from record the CIT-A set aside the order passed u/s 154 by the AO

The Tribunal concurred with the CIT-A that there could be many reasons for the difference noted by the Assessing Officer in the contract receipts credited in the Profit & Loss Account of the assessee and the contract receipts as shown in the relevant TDS certificates.

The Tribunal observed that in view of the explanation by the assessee that the said difference was due to the mistake committed by the concerned party, the difference required more investigation and enquiry to find out as to whether there was any escapement of income of the assessee and it was not a case of obvious and patent mistake, which could be rectified under section 154.

The ITAT opined that the issue involved a debatable point which required further enquiry and investigation and the same, therefore, was beyond the scope of rectification permissible under section 154.

The order of the CIT-A was upheld.

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