Re: Rectification of assessment .

An order was passed by the AO u/s 154 for rectification of the assessment order passed u/s 143(3) for the withdrawal of an allowance which in the opinion of the AO was apparently not allowable. The assessee has filed an appeal by the specified date against the order of rectification stating that the assessment order did not suffer from any mistake. The appeal is pending for disposal by the Commissioner(Appeals). The assessee’s declaration under the scheme is rejected by the authorities as not maintainable as no appeal was filed by the assessee against the withdrawal of allowance on merits.

It is not in dispute that an order of rectification was passed and such an order had the effect of determining the total income at a figure higher than the assessed income.  It is also a fact that the tax payable increased due to such an order and such tax  is well within the meaning of the tax arrear. It is also true that the assessee has filed an appeal in time to dispute the action of the AO . However, the assessee in the appeal has not contested the quantum of addition or the merit thereof but has instead challenged the power of the AO  to pass such an order.  The case of the assessee is the fit case which should be entertained for relief under scheme without being unduly technical and in case of need, the authorites should seek a   clarification to confer the benefit of the scheme to the assessee. The assessee may also explore the possibility of filing an additional ground in the appeal already filed which ground if admitted would be taken to have been filed as a part of the appeal filed by the specified date.

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