Karnataka H.C : “When the appeal filed by the assessee before the Commissioner of appeals was allowed in part, whether the Tribunal was justified in quashing the entire assessment order in an appeal fled by the revenue being aggrieved by the order of the Commissioner of Appeals

High Court Of Karnataka

CIT, Central Circle vs. Mysore Breweries Ltd.

Assessment Years : 1988-89 To 1998-99

Section : 154

Kumar And B. Manohar, JJ.

IT Appeal No. 72 Of 2007

April  9, 2013

JUDGMENT

N. Kumar, J. – The Search and Seizure operations were mounted on the assessee M/s. Mysore Breweries Limited, Jalahalli Camp Road, Yeswantpur, Bangalore and their sister concerns. Simultaneously, the surveys were conducted under section 133A of the Income-tax Act, 1961 (for short, hereinafter referred to as ‘the Act’) at the assessee’s Units at Tumkur, Peenya, Bangalore. The assets that were found, seized and were adjusted against the tax liability of the assessee as set out in the original assessment order.

2. After hearing the assessee, the assessment order came to be passed declaring the undisclosed income of Rs.2,25,15,157/-. Subsequently, the proceedings were initiated under section 154 of the Act, for rectification of the said order. The/assessee objected for the same. Over-ruling the said objections, the rectification order came to be passed on 27-3-2002. Aggrieved by the said rectification order, the assessee preferred an appeal before the Commissioner for Income-tax (Appeals). The appeal was partly allowed. The assessee did not prefer any appeal. It is the Revenue which preferred an appeal to the Income-tax Appellate Tribunal (hereinafter referred to as ‘the Tribunal’) against the order of the First Appellate Authority. The Tribunal dismissed the appeal holding that the order of the Assessing Officer was reappraisal of the facts and evidences and he has come to a different conclusion. It is held that rectification is permissible in the proceedings with regard to total mistakes, under section 154 of the Act. Therefore, the appeal filed by the Revenue came to be dismissed. Aggrieved by the said order, the present appeal is filed.

3. This appeal was admitted on 30-10-2007 to consider the following substantial question of law:

“When the appeal filed by the assessee before the Commissioner of appeals was allowed in part, whether the Tribunal was justified in quashing the entire assessment order in an appeal fled by the revenue being aggrieved by the order of the Commissioner of Appeals”

4. We have heard the learned counsel for the parties.

5. The opening words of section 154 of the Act, gives an indication of the scope of rectification proceedings. It is only with a view to rectify the mistake apparent from the record. The Income-tax authority may amend any order passed by it under the provisions of this Act or amend any intimation or deemed intimation under sub-section (1) of section 143. Therefore, this Section is very much limited. The error should be apparent from the record. If there exists a debatable issue, if two views are possible, it is not open to the authorities under this proviso to initiate proceedings and revise its opinion. All that it can do in these proceeding is to rectify the mistake apparent from the record. In the instant case, what the Assessing Authority has done is that it has re-appreciated the entire material on record and has come to a different conclusion than the conclusion which it had arrived at in the original Block Assessment order. Therefore, it is not a case of rectifying the error apparent from the record, it is only a case of reframing of the assessment giving reasons. Though the Appellate Authority partly allowed the appeal, merely because the assessee did not, challenge that portion of the order which is against him, would not render the appeal filed by the Revenue maintainable and findings recorded by the Tribunal are vitiated.

6. In that view of the matter, we do not see any merit in this appeal. Accordingly, the appeal is dismissed.

However, we make it very clear that the order of the Commissioner of X) Income-tax (Appeals) stands restored. The substantial questions of law framed is held in favour of the assessee and against the revenue.

[Citation : 356 ITR 346]