ITAT can allow amends in I-T return if appeal filed within 4 years of its order
June, 05th 2008
The Supreme Court has ruled that the Income-Tax Appellate Tribunal is empowered to allow an assessee to rectify a mistake in his income-tax return within a stipulated time from its order. Overturning a Madras High Court order, the apex court said that under section 254 (2) of the Income-Tax Act, the tribunal is empowered to allow the rectification of tax return of the assessee at any time within four years from date of its order. The court pointed that the tribunal cannot reject an application if the application was moved within the stipulated time, but was pending before the tribunal for more than four years. The court allowed the appeal of an assessee, Sree Ayyannar Spinning & Weaving Mills, whose taxable income for the assessment year 1989-90, was in dispute.
On December 9, 1996, the tribunal had passed an order upholding the order of Commissioner Income-Tax (CIT) (Appeals) on computation of income under Section 115J of the I- T Act. The tribunal had dismissed the appeal of the assessee on the ground that the profit and loss account of the assessee did not reflect correct picture for the assessment year in question. On August 2, 2000, the assessee had moved an application for recall of the order. The tribunal on January 31, 2003, allowed the rectification application filed by the assessee against which the revenue department carried the matter in appeal to the high court.
Allowing the revenue departments plea, the high court had said that under section 254(2)of the I-T Act, the tribunal is not empowered to allow rectification beyond four years. And that the tribunal had no power to rectify the mistake after four years which is the time set out in Section 254(2) itself for passing an order of rectification either suo motu or an application filed either by the assessee or by the assessing officer, the high court had said.