TMI Blog2007 (9) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... ely connected with the subject-matter of appeal? 3. For the sake of putting on record the amounts involved and also for the sake of completeness, the grounds are reproduced below verbatim: "1. CIT(A) has erred in confirming addition of Rs. 5,19,445 AO and in turn CIT(A) has reduced the deduction under s. 32AB from Rs. 7,24,430 to Rs. 2,04,985 while giving effect to Tribunal order. Appellant prays that Tribunal has only directed to reduce the addition of Rs. 25,97,224 on account of sales-tax refund and as there is no other direction in the order nor the disallowance/addition is consequential, addition of Rs. 5,19,445 may please be cancelled. 2. CIT(A) erred in not giving the finding that order to the extent of addition of Rs. 5,19,445 is without jurisdiction. 3. If the mistake was in allowing excess deduction under s. 32AB in original order under s. 143(3) dt. 29th March, 1989, rectification of said mistake has been time-barred, hence mistake sought to be rectified while passing order giving effect to Tribunal order is not justified as time-barred. Appellant prays for deletions of addition of Rs. 5,19,445." 4. The alleged order was passed under s. 250/254 for asst. yr. 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been the basis for granting higher deduction under s. 32AB by the AO has been wiped off because of the relief allowed by the Hon'ble Tribunal. If the AO had not added any amount in the assessment order, whether rightly or wrongly, he would not have allowed any further deduction under s. 32AB than what was claimed by the appellant. As the very basis of granting higher deduction under s. 32AB no more exists because of the order of Hon'ble Tribunal, the AO was justified in bringing the deduction under s. 32AB to the correct figure which was claimed by the appellant as per the audit report. Giving of the appeal effect is linked up with the assessment order passed by the AO under s. 143(3) which was the subject-matter of appeal before the Hon'ble Tribunal. The AO had given enhanced deduction under s. 32AB based on the additions made in the assessment order and when that order was challenged before the Hon'ble Tribunal and those additions were deleted. The AO has therefore in consequence and on the same analogy reduced the deduction under s. 32AB which was linked up with the additions made by the AO in the said order. Even otherwise, the claim of the appellant is mala fide and wants to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,224 and the revised total income was computed at Rs. 5,05,036. However, the AO has made an addition of Rs. 5,19,445 in the revised assessed income in brackets mentioned by us at this juncture for the sake of clarity with the caption "Add: Excess deduction allowed under s. 32AB" [Originally allowed in the assessment order at Rs. 7,24,430 (-) Rs. 2,04,985 claim of the assessee]. The assessee has not disputed before us the mistake committed by the AO. Learned Authorised Representative has in all fairness informed us that genuinely there was a mistake in granting excessive deduction under s. 32AB. But, the grievance was that the manner in which the mistake was rectified while giving effect of an appellate order was wrong ab initio. 6.2 The first plank of the argument of learned Authorised Representative, Mr. Puranik was that the right recourse left to the AO for rectification of a patent mistake was to invoke provisions of s. 154 of IT Act or alternatively, the Administrative CIT has powers prescribed under s. 263 of IT Act to rectify the mistake within the time prescribed under the statute. He has mentioned that for rectification of mistake under s. 154, the limitation prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... setting aside an assessment order in its entirety. In a situation, falling under second category, since the direction is de novo assessment, on account of set aside of an order in totality, the AO has to complete the assessment afresh as prescribed under law. Naturally, consequence is that the AO has got jurisdiction of fresh assessment as if framing it anew, hence the jurisdiction lies with the AO at par with the fresh assessment. Again, we want to make ourselves clear that if a rider is provided by the appellate authority, then the AO is judicially duty-bound to refrain himself not to exceed his jurisdiction and to reframe the assessment within the prescribed limits following the rider. 7.2 We are expressing our view in the line of the settled principle that the AO cannot assume jurisdiction to tax a new source of income while making an assessment in pursuance of an order of remand applies where there is a specific direction given in the order of remand. Where, however, the remand is an open one, the AO shall not be restricted to any particular source and all the relevant aspects can be taken into consideration by him including any new source of income which was not the subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n during giving effect to an appellate order since the impugned assessment order had already merged in the appellate order. Also, in the case of setting aside of an assessment order in its entirety, the fresh assessment is nothing but a second assessment in substitution of the one so set aside. 10. Before we part with it is also worth to examine the reasons assigned by learned CIT(A) for rejecting this legal claim. According to him, the rectification was consequential of giving effect of the Tribunal order. It is not true because the determination of deduction under s. 32AB is not dependent upon the final income assessed but based upon the investment prescribed under s. 32AB. This deduction is not on proportionate basis of the assessed income or having any nexus with the finality of the assessed income. Rather, this deduction is an independent deduction the quantum of which depends upon the deposits in the scheme prescribed or investment towards purchase of new plant or machinery, etc. Next, learned CIT(A) has observed that giving effect of an appellate order is linked up with the assessment order passed by the AO under s. 143(3) which was the subject-matter of appeal. This is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
