High Court Of Kerala
Sea Pearl Enterprises vs. DCIT
Sections 154, Art. 226
Asst. Year 1996-97, 1997-98, 1998-99
M. Ramachandran, J.
OP No. 29648 of 2000
1st November, 2000
Premjit Nagendran, for the Petitioner : George C. George, for the Respondent.
M. RAMACHANDRAN, J. :
In respect of the asst. yrs. 1996-97, 1997-98 and 1998-99, the assessment of the petitioner, a sea food exporter, stood completed overlooking the objections of the petitioner. Reliance had been placed on the principles laid down by the Tribunal in Baby Marine Eastern Exportsâ case. The petitioner submits that for the asst. yr. 1998-99, the addition of interest on fixed deposits had not been allowed, in spite of the legal position explained to the Tribunal. He submits that the premium received in the course of the export was sale consideration, and it could at the most be treated as part of the sale proceeds, and therefore, it deserved deduction. The income from the business, though from different sources, had to be aggregated, according to the petitioner, for quantifying the relief under s. 80HHC of the Act since it had the characteristics of turnover of business and could not have been excluded.
As the petitioner felt that these were overlooked, he had filed rectification applications envisaged under s. 154 of the IT Act. The complaint of the petitioner is that without affording him an opportunity the petitions had been rejected. Exts. P7 to P9 are the orders and the petitioner challenges these orders complaining that the principles of natural justice stand violated. He ought to have been heard in the matter, and it was improper for the AO not to advert to most relevant decisions of the Tribunal which had been placed before him.
The question is whether there is justification for this Court to interfere at this stage. The assessment orders are normally subjected to appeals at the instance of the assessee. It is submitted that appeals have already been filed. But nonetheless the petitioner is aggrieved that his contentions are rejected without justification, and when the errors/omissions had been pointed out, the AO should have heard him, as it would have been possible for him to correct the mistakes.
I had heard the standing counsel for the Department. He opposes the application, and submitted that the original petition is not only misconceived, but also is not maintainable. He had referred to s. 154 of the Act. It is possible for the authority to amend an order passed by it, only for exceptional reasons, it is submitted.
Being judicial proceedings, an assessing authority has power for rectification of mistakes, both of fact as well as law. But for the only reason that the issue is debatable, proceedings under s. 154 could not be taken. It is shown that errors in assessment due to non-inclusion of income from an entire source, or non-inclusion of certain items are not errors rectifiable under s. 154 of the Act See T. Manickavasagam Chettiar vs. ITO (1958) 33 ITR 482 (Mad). The mistake pointed out is not an apparent mistake, but only a point of view of the AO. The counsel also pointed out the decision laid down in 1982 ITR 50 (sic). A debatable point is outside the purview of s. 154. There was also a suggestion that it was delaying tactics. But this was stoutly opposed by the counsel for the petitioner.
A right of hearing in all matters could not be read into s. 154. Only when there is enhancement or reduction, or increase in liability, proposed by the order, a hearing is contemplated. Of course, the points urged by the petitioner may be logical, or acceptable at a later stage. But it could not be held that he ought to have been heard before passing of the impugned orders. The petitioner has all his rights reserved for agitating the matter before the appellate forum, and in that sense he cannot be considered as aggrieved by this order. In the circumstances, the original petition is dismissed in limine.
[Citation : 249 ITR 146]