ACIT vs. Rupam Impex ITAT, Rajkot bench, Rajkot Before Pramod Kumar (A.M.) and S S Godara (J.M.) I.T.A. No.: 472/RJT/2014 A.Y.: 2008-09 Date of Order: 21st January, 2016 Counsel for Assessee / Revenue : Vimal Desai / Yogesh Pandey and C S Anjaria

Facts
In the assessment order passed by the AO u/s. 143(3) of the Act, the assessee noted that the AO had erred in computing its assessed income on account of the following discrepancies in the order passed:

The AO was, accordingly, urged to rectify the mistake which was apparent on record. However, the AO rejected this request primarily on the ground that the assessee himself had computed the income on the basis of these figures. On appeal, the CIT(A) held the action of the AO as incorrect and directed the AO to rectify the mistakes u/s. 154.

Before the Tribunal, the revenue justified the stand of the AO and submitted that since the claim of the assessee, as made in the income tax return, was accepted, the assessee could not make a fresh claim without a revised return.

Held
According to the Tribunal, a lot of emphasis was placed by the AO on the fact that the mistake was committed by the assessee ignoring the fact of the complete non-application of mind by him to the facts of the case and making a mockery of the scrutiny assessment proceedings. According to the Tribunal who is responsible for the mistake was not material for the purpose of proceedings u/s. 154; what is material is that there is a mistake – a mistake which is clear, glaring and which is incapable of two views being taken. According to the Tribunal, the fact that mistake has occurred was beyond doubt. It is attributed to the error of the assessee does not obliterate the fact of mistake or legal remedies for a mistake having crept in. According to it, the income liable to be taxed has to be worked out in accordance with the law as in force. In this process, it is not open to the Revenue authorities to take advantage of mistakes committed by the assessee. Tax cannot be levied on an assessee at a higher amount or at a higher rate merely because the assessee, under a mistaken belief or due to an error, offered the income for taxation at that amount or that rate. It can only be levied when it is authorised by the law, as is the mandate of Article 265 of the Constitution of India. According to it, a sense of fair play by the field officers towards the taxpayers is not an act of benevolence by the field officers but it is call of duty in a socially accountable governance.

Dismissing the appeal of the revenue the Tribunal made it clear that it was not awarding any costs but put in a word of caution. It pointed out that there has to be proper mechanism to ensure that such frivolous appeals are not filed. And if that does not happen and the frivolous appeals continue to clog the system, it is only a matter of time that the Tribunal would start awarding costs, as a measure to deterrence to the officers concerned.