2023 (5) TMI 481 - AT - Income Tax

Rectification u/s 154 - tax levied u/s 115BBE - AO recorded that the additional income was to be taxed at flat rate at 30% u/s 115BBE instead of slab rates - HELD THAT - In the absence of such a satisfaction if an order under section 143(3) of the Act is passed accepting the return of income then it is difficult to presume that such an order was passed in respect of any income determined u/s 68 section 69 section 69A section 69B section 69C or section 69D of the Act or that the tax has to be levied u/s 115BBE of the Act. Unless and until such a compliance is there in the assessment order it cannot be said that there was any mistake apparent from record or that the proceedings are amenable to the jurisdiction of the learned Assessing Officer under section 154 of the Act. Having not recorded any such satisfaction as required under law AO cannot be allowed to contend that the provisions of section 115BBE of the Act are applicable to the case of the assessee and therefore the error in respect of leviable rates has to be rectified u/s 154 of the Act. Consistent view taken by the Co-ordinate Benches of this Tribunal referred to above is applicable to the facts of the case on hand on all force. Accordingly hold that exercise of jurisdiction under section 154 of the Act by the learned AO is bad in law and consequently the proceedings under section 154 of the Act are liable to be quashed.

Summary

Issues Involved:
- Challenge to the legality of the order passed under section 154 of the Income Tax Act, 1961, invoking the provisions under section 115BBE of the Act.

Summary:

The judgment pertains to an appeal filed by the assessee against an order passed by the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre, Delhi, for the assessment year 2015-16. The main issue was the invocation of section 154 of the Act and the application of section 115BBE to tax additional income offered during a survey conducted at the assessee's business premises. The Assessing Officer proposed rectification to tax the additional income at a flat rate of 30% under section 115BBE, which was challenged by the assessee.

The Assessing Officer's decision to tax the additional income at a flat rate under section 115BBE was contested by the assessee, arguing that it was a debatable issue not amenable to rectification under section 154. The assessee highlighted inconsistencies in the treatment of similar cases by the CIT(A) and emphasized the need for consistency in quasi-judicial proceedings.

The Tribunal analyzed the facts and legal provisions, noting that the Assessing Officer had not invoked section 115BBE initially but proposed rectification later. The Tribunal referred to precedents where it was held that invoking section 115BBE for rectification without recording satisfaction in the assessment order was legally flawed. The Tribunal emphasized the requirement for the Assessing Officer to determine unexplained income under specific sections before applying section 115BBE.

Ultimately, the Tribunal held that the exercise of jurisdiction under section 154 by the Assessing Officer was legally unsound, as there was no basis to invoke section 115BBE without proper determination of unexplained income under relevant sections. The Tribunal quashed the proceedings under section 154 and allowed the appeal of the assessee.

In conclusion, the Tribunal ruled in favor of the assessee, highlighting the necessity for proper application of tax provisions and the importance of recording satisfaction before invoking specific sections for taxation.