TMI Blog2023 (3) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... he issuance of the refund u/s 244A(2) as also on the ground that the issue is highly debatable issue, we are of the view that the order passed u/s. 154 is unsustainable and consequently, the order of the Assessing Officer and that of the Ld. CIT(A) stands quashed. Appeal of the assessee stands allowed. - ITA No. 323/CTK/2019 - - - Dated:- 20-2-2023 - S/SHRI GEORGE MATHAN, JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER For the Petitioner : Ved Jain and P. Venugopal Rao , ARs For the Respondents : M. K. Gautam, CIT, DR ORDER Per Bench This is an appeal filed by the assessee against the order of the Ld. CIT(A)-1, Bhubaneswar, dated 12.7.2019 in Appeal No. 0035/17-18 for the assessment year 2009-2010. 2. S/Shri Ved Jain and P. Venugopal Rao, Ld. ARs appeared for the assessee and Shri M.K. Gautam, Ld. CIT DR appeared for the revenue. 3. It was submitted by Ld. AR that the single issue in assessee's appeal was against the action of the Assessing Officer in withdrawing the interest granted to the assessee u/s. 244A in an order u/s. 154 of the Act on the ground that the delay was attributable to the assessee company and not on the part of the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of the Assessing Officer for re-adjudication. Ld. CIT DR has filed written submission, as follows: i.) This is an assessee's appeal against the rectification order dated 15.05.2017 u/s. 154 of the Act carried out by the ACIT, TDS, Bhubaneswar. ii.) In this case, the CIT(A)-I, Bhubaneswar while adjudicating the appeal in relation to charging of interest u/s. 201(1) had restored the issue to the file of the A.O. with a direction that assessee might file the necessary evidences to show that REC and PGCIL had duly shown interest incomes/wheeling charges in their returns of income for A.Y. 2009-10 and that there was no tax liabilities as such or the recipient had paid taxes on such incomes. iii.) While giving effect to the order of CIT(A)-I, Bhubaneswar on 29.11.2013, the A.O. had inadvertently granted refund of Rs. 42,34,776/- to the assessee company. However delay in issue of refund was solely attributable to the assessee company. In para-3 of the rectification order dated 15.05.2017, the A.O. has highlighted the fact that for giving appeal effect to the order of CIT(A), the hearing was fixed on 17.09.2010, but there was no compliance by the assessee company. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atable was outside the scope of section 154. The Assessing Officer rejected the assessee's objection and made the rectification by allowing deduction under section 80VVA as per statutory limit. On appeal, the Commissioner (Appeals) set aside the order of the Assessing Officer on the ground that rectification did not relate to a 'mistake apparent on record' as required for invoking section 154 and was on a debatable issue. The Tribunal also upheld the order of the Commissioner (Appeals). On appeal, the Hon'ble Punjab Haryana High Court held in para-5 as under: 5. It is clear from the order of the Assessing Officer that depreciation was allowed overlooking section 80VVA of the Act. Overlooking of a statutory provision is clearly a mistake apparent on record and on that basis, rectification under section 154 of the Act was clearly admissible. Impermissibility of deduction is not debatable if section 80VVA is applied. This being so, the CIT(A) as well as the Tribunal erred in law in holding that rectification was beyond the scope of section 154 of the Act. It is clear that the statutory provision having come into force with effect from 1-4-1984, the same could h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th. The creation of a reserve fund from out of the profit and loss account of the relevant previous year is a condition to be satisfied by an assessee. The transfer of the 'reserve fund' has, therefore, to be made at the time of making up the profit and loss account of the relevant previous year. The assessee, in the present case, admittedly did not create the reserve fund at the time of making up the profit and loss account of the relevant year and had, therefore, not fulfilled the conditions prescribed for getting the concession given under section 33. Therefore, the assessee, in the present case, not having complied with or fulfilled one of the conditions prescribed under section 34(3)(a) was not entitled to the development rebate under section 33. Thereafter, the ITO made an order under section I54, holding that as the assessee had created development rebate reserve of Rs. 7172/- only, the maximum development rebate that might be allowed was Rs. 9,563/- in respect of machinery only, disallowing a sum of Rs. 7,201/- out of Rs. 16,751 already allowed by the AAC. On appeal by the assessee, the AAC held that there was effective compliance with the provisions of section 34(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture of Rs. 20,000/- odd was allowed as a deduction. The AAC confirmed the said rectification order. The Tribunal, however, set aside the rectification order on the ground that the provisions of section 154 were not attracted to the facts of the case. On appeal, the Hon'ble Punjab Haryana High Court held that the payment of the expenditure in question was made on 2-5-1969, i.e., after 31-3-1969. Admittedly, the payment exceeding Rs. 2,500 was made otherwise than by a crossed cheque draft on a bank or by a crossed bank draft. In view of the proviso to section 40A(3), the allowance originally made, for the expenditure incurred and paid, would be deemed to have been wrongly made and the Income-tax Officer was in law authorized to re-compute the total income of the assessee for the previous year in which such liability was incurred and the Income-tax Officer was thus entitled to make the necessary amendment in the original assessment order. The proviso specifically makes the provisions of section 154, so far as they may apply thereto, applicable in such cases. It was held that the order of Tribunal that the non-application of the provisions of section 40A(3) by the Income-tax Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee to present its case and to bring on record all the material in support of its claim that its case falls under rule 6DD. Thereafter, Ld. AO shall pass reasoned and speaking order in accordance with law. x.) The Hon'ble Madras High Court in the case of Cuddalore District Central Co-operative Bank vs. DCIT (130 tilonann.com 239) held that where Assessing Officer issued impugned notice under section 154 on ground that deduction claimed under section 36(1)(viia) was to be restricted to provisions of doubtful debt made by assessee in financials, since nature of mistake proposed to be rectified was regarding amount of bad and doubtful debts debited to provision for bad and doubtful debt account, said mistake would be apparent from record and would fall under ambit of section 154 of the Act. It was held in para-19 that in the instant case, the revenue has stated clearly that the provision for bad and doubtful debts is under section 36(1)(viia). Unless amount of bad and doubtful debts is debited to the provision for bad and doubtful debts account and the deduction admissible under section 36(1)(vii) is limited to the amount by which such debt or part thereof exceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsertion of the Explanation to said section by the Finance Act, 2001 with retrospective effect from 1-4-1989 and omission to apply the said statutory provisions was surely a mistake apparent from the record, capable of being rectified under section 154 by the Assessing Officer. Since there was a difference of opinion between the two Members, the matter was referred to the Third Member. The Third member held in para-6 that the Supreme Court in M.K. Venkatachalam, ITO vs. Bombay Dyeing and Manufacturing Co. Ltd. (1958) 34 ITR 143 held that for finding out whether there is a mistake apparent from the record, the authority has to look at the amended law and not the law that existed at the time of making the original record. If an order is plainly or obviously inconsistent with the specific and clear provision, as retrospectively amended, there is a mistake apparent from record, which would be rectifiable under section 154. Therefore, the view expressed by the Accountant Member on the disputed issue was agreed with by the Third member. In view of above facts, the appeal filed by the assessee company is required to be dismissed. 6. We have considered the rival submissions. Coming to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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