High Court Of Calcutta
I.T.C. Ltd. vs. Inspecting Assistant Commissioner & Ors.
Asst. year 1964-65
Ashim Kumar Banerjee, J.
C.R. No. 5671 of 1977
8th March, 2001
Dr. Debi Prasad Pal, Pranab Kumar Pal & Ms. Manisha Seal, for the Petitioner : Ram Chandra Prasad, for the Respondents.
ASHIM KUMAR BANERJEE, J. :
The income of the petitioner for the asst. yr. 1964-65, was assessed by the AO by his order dt. 20th March, 1969, allowing a rebate at 20 per cent by considering the assessee as a limited company without having substantial interest of the public at large. Such order of assessment was taken on appeal and the appellate authority reversed the order of the AO and held the petitioner as a company having substantial interest of the public at large and thereby directed rebate of 30 per cent instead of 20 per cent allowed initially by the AO.
In terms of the direction of the appellate authority the AO by his order dt. 19th April, 1972, revised his own order by granting rebate at 30 per cent instead of 20 per cent. The order of the appellate authority was impugned by the Revenue before the Tribunal wherein the Tribunal upheld the order of the appellate authority by its order dt. 21st Sept., 1973. The reference application made by the Revenue on the said score was also dismissed for non- prosecution as the Department did not wish to proceed any further in the matter.
After the said issue having been resolved by the ultimate order of the Tribunal the AO issued a notice for correction of some mistakes which was accepted by the petitioner and accordingly the order was revised.
On 17th Oct., 1977, the IAC, Special Range-I, issued a notice under s. 154/155 of the IT Act, 1961, for correction of a mistake for calculation of tax amount for the self-same assessment year and asked the views of the assessee in the said regard. The assessee asked for clarification of the said notice indicating as to the nature of mistakes wherein the Revenue by its letter dt. 15th Nov., 1977, appearing at p. No. 60 of the writ petition indicated that the mistake is in respect of withdrawal of rebate of super tax under the provisions of the Finance Act, 1964. The said notice has been impugned before me by the assessee in this writ petition.
Mr. Pranab Kumar Pal led by Dr. Debi Prasad Pal appearing for the assessee has submitted that the nature of mistake indicated in the said notice cannot be termed as a “mistake” under s. 154 of the said Act, 1961. According to Mr. Pal the issue of granting rebate and the rate had been decided finally by the Tribunal and the order of the Tribunal had been accepted by the parties.
6. Mr. Pal contended that the applicability of the Finance Act is a question of law which is deemed to have been decided ultimately by the Tribunal. The AO by issuing the said notice wanted to rectify the alleged mistake in calculation in the revised order of assessment which was correct in terms of the order of the appellate authority which had reached its finality before the Tribunal by the order of the Tribunal dt. 21st Sept., 1973. According to Mr. Pal the revised order was passed by the AO on the basis of the direction given by the appellate authority. Hence, it is presumed that the question of payment of rebate and the rate of rebate had been decided by the ultimate authority once for all by taking into consideration all aspects of the matter including the legal aspects. Applying the doctrine of merger Mr. Pal has contended that the rectification of mistake in effect amounts to rectification of the order of the appellate authority which has merged in the order of the Tribunal and as such the same cannot be done at the AOâs end.
In support of his contention, Mr. Pal has cited three decisions which are as follows : (i) T.S. Balaram, ITO vs. Volkart Brothers (1971) 82 ITR 50 (SC) : TC 53R.165; (ii) Oil India Ltd. vs. CIT (1982) 27 CTR (Cal) 259 : (1982) 138 ITR 836 (Cal) : TC 57R.665; and (iii) CIT vs. Method Trading & Investment Ltd. (2001) 165 CTR (Cal) 541 : (2000) 246 ITR 588 (Cal)
7. Mr. Ram Chandra Prasad, appearing for the Revenue, has submitted that the writ petition is not maintainable as merely a show-cause notice has been given by the Revenue authority and the assessee is given an opportunity to oppose such attempt and would be entitled to make its submission before the authority and this Court should not interfere at this stage.
With regard to the scope of rectification Mr. Prasad has submitted that even if it is a mistake of law it can be rectified relying on the decisions in Zdzizlaw Skakuz vs. CIT (1986) 50 CTR (AP) 39 : (1986) 158 ITR 420 (AP) : TC 32R.599, Sirsa Industries vs. CIT (1983) 36 CTR (P&H) 130 : (1984) 147 ITR 238 (P&H) : TC 13R.372 and Sait Nagjee Purusthotham & Co. Ltd. vs. Third Addl. ITO (1964) 51 ITR 33 (Ker). Mr. Prasad has also cited various decisions which show that if there are mistakes apparent on the face of the record the Revenue authority is entitled to correct such mistake. Since this proposition is not in dispute, I do not intend to discuss in detail about those decisions.
Let me now discuss about the cases, cited by the parties to find out the applicability of those in the facts and circumstances of this case. Sait Nagjee Purushotam & Co. (P) Ltd. vs. Third Addl. ITO (supra). In this case a single Judge of the Kerala High Court decided an issue with regard to rectification on the basis of a provision of law which was later on repealed. The point in issue before the Kerala High Court was whether the assessment done prior to repeal of the said provision can be modified even after repeal following the old provision. In my view, this case has no application in the facts and circumstances of this case. T.S. Balaram, ITO vs. Volkart Brothers (supra). This case has been cited by both the parties. Here the apex Court held that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of the reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent on the face of the record. This case squarely supports the assessee. The applicability of the Finance Act is a question of law. The interpretation of the same requires a long drawn process of reasoning on points and might result in two opinions hence it cannot be said to be a mistake that can be rectified under s. 154 of the said Act, 1961.
11. Oil India Ltd. vs. CIT (supra). In the instant case, the Division Bench held that where an appeal is preferred before the AAC and a subject is particularly raised, the CIT cannot revise such an order taking into account an aspect not dealt with by the AAC. It has been held in the said case that as the quantum of depreciation was the subject-matter of appeal, the CIT had no jurisdiction under s. 263 to revise the order with reference to this aspect. This case also supports the contention of the assessee. The subject of rebate was an issue decided ultimately by the Tribunal. The rate has also been fixed by the appellate authority and affirmed by the Tribunal. Hence, by way of rectification such rebate cannot be decreased or increased by way of rectification.
12. Sirsa Industries vs. CIT (supra). A single Judge of the Punjab & Haryana High Court held that if a mistake of fact is apparent on the record of the assessment the same could be rectified under s. 154. Similarly, a mistake of law which was glaring and obvious could also be similarly rectified. In this case the ITO initially did not include the sales-tax payable to the Government in the total income of the assessee, later on he has issued notice under ss. 154 and 155 for rectification of mistake. This case also has no application in the instant case as the AO himself upon realising the fact that he had committed an error in not including the amounts reserved for sales-tax on the basis of the mercantile system of the accounting and rectified his own mistake by application of s. 154/155. The facts are not at all similar to the present facts and hence it has no application. Zdzizlaw Skakuz vs. CIT (supra). This case has also dealt with a situation similar as of Sirsa Industries vs. CIT (supra) and the AO rectified his own mistake which was held to be justified by the Division Bench of the Andhra Pradesh High Court. .Hence, this case has no application in the present facts. CIT vs. Method Trading & Investment Ltd. (supra). Here the Division Bench of this Court held that the subject-matter or issue which was before the CIT(A) could not be made the subject-matter of revision under s. 263 relying on the doctrine of merger. In this case the Tribunal held that there was no merger of the order of the ITO in the order of the CIT(A) and rejected the contention on that point. The Division Bench held that such view of the Tribunal was not correct. Applying the aforesaid decisions in the instant case it appears to me that since the question of payment of rebate and the rate of rebate had once been decided and reached its finality before the Tribunal it is not open for the AO to revise his order which he has passed in compliance with the direction of the appellate authority affirmed by the Tribunal. I also feel that even if such issue can be reopened such can only be reopened by the Tribunal and none else. The Revenue accepted the order of the Tribunal, did not proceed with the reference application and allowed the same to be dismissed for non- prosecution. Having done so, the order of assessment passed by the AO in compliance with the direction of the appellate authority has been accepted by the Revenue and the same cannot be reopened at this stage in the manner it has been attempted.
In the result, the writ petition succeeds. Notice bearing No. PA(II)-000-CY-6086/Cal/C-III/I.S.C. relating to the asst. yr. 1964-65 appearing at p. 57 of the writ petition is quashed and set aside. This order of setting aside and/or cancellation of the said impugned notice would not in anyway preclude the Revenue authority from taking any other step if they are so entitled to in law.
The writ petition is thus disposed of. Rule is accordingly made absolute. There would be no order as to costs in the instant case.
[Citation : 249 ITR 104]