Kerala H.C : Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the orders passed under s. 36 of the Agrl. IT Act is to be read with the original order under s. 18 and that orders under s. 36 of the Agrl. IT Act can be treated only as part of the original orders?

Counsel Appeared

T. Karunakaran Nambiar, for the Applicant : Roy Chacko (Amicus curiae), for the Respondent

K.S. PARIPOORNAN, J.:

At the instance of Revenue, the Kerala Agrl. Tribunal, Additional Bench, Kottayam has referred the following questions of law, under s. 60(1) of the Agrl. IT Act, for the decision of this Court :

“1. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the orders passed under s. 36 of the Agrl. IT Act is to be read with the original order under s. 18 and that orders under s. 36 of the Agrl. IT Act can be treated only as part of the original orders?

2. Whether the Tribunal is justified in holding that orders under s. 36 of the Agrl. IT Act are appealable?”

The respondent was assessed for and on behalf of her late husband in the years 1973-74, 197475 and 1975-76, by order dt. 14th March, 1988, 28th March, 1990 and 10th May, 1981. On scrutiny, it was found that the yield estimated from some property was lower than that conceded by the assessee. The assessment orders for the years

1973-74 and 1974-75 were rectified by the Agrl. ITO, under s. 36 of the Act by order dt. 24th March, 1981. Similarly, certain other errors which had crept in the assessment orders, for all the three years, were rectified as per a common order dt. 4th Jan., 1982, under s. 36 of the Act, by the Agrl. ITO. The rectified assessment orders were challenged by the assessee in first appeals before Appellate Commissioner of Agrl. IT and Sales-tax. By order dt. 26th March, 1987, he rejected the appeals. He held that the orders were passed under s. 36 of the Act and no appeal would lie against such an order. The matter was challenged in second appeals by the assessee. The Tribunal, by its common order dt. 14th March, 1988, held that the orders passed under s. 36 have to be read with the original orders passed under s. 18 of the Act and so viewed the orders passed under s. 36 of the Act can be treated only as part of the original orders and so the orders are appealable. The decision rendered by the AAC was reversed. The matter was remitted to him for a fresh disposal. It is aggrieved by this common order passed by the Tribunal, dt. 14th March, 1986, holding that the appeals filed before the AAC are maintainable, the Revenue filed applications before the Tribunal for referring certain questions of law for the decision of this Court and accordingly the questions, formulated hereinabove, have been referred by the Agrl. Tribunal, for the decision of this Court.

We heard counsel. In the light of the decision of the Supreme Court in S. Sankappa vs. ITO (1968) 68 ITR 760 (SC), the proceedings taken for rectification of assessment to tax under s. 36 of the Agrl. IT Act should be held to be “proceedings for assessment”. The above decision was followed by the Supreme Court in Kishanlal Harichand vs. ITO 1973 CTR (SC) 388 : (1972) 86 ITR 141 (SC). The legal effect flowing from an order passed rectifying the original assessment came up for consideration before the Supreme Court in International Cotton Corpn. (P) Ltd. vs. CTO 35 STC1. Delivering the judgment of a four member Bench, Alagiriswamy, J., at page 12 of the report, stated the law thus : “The other attack that the rectification order is beyond a point of time provided in r. 38 of the Mysore Sales-tax Rules is also without substance. What was sought to be rectified was the assessment order rectified as a consequence of this Court’s decision in Yaddalam’s case 16 STC231. After such rectification the original assessment order was no longer in force and that was not the order sought to be rectified.”

The above decision was followed by the Supreme Court in Dy. CTO vs. Sri H.R. Ramulu 1977 CTR (SC) 118 : (1977) 39 STC177 (SC). It is fairly clear that once a rectification order is passed the original assessment order is no longer in force. It ceases to have any legal validity. After the rectification proceedings, neither the original assessment order nor the order passed in the rectification proceedings have any legal validity. It is only the assessment order passed giving effect to the rectification proceedings that will be the assessment order for the year in question. This position is fairly settled by the following decisions : Vedantham Raghaviah vs. Third Addl. ITO (1963) 49 ITR 314 (Mad); S. Arthanari vs. ITO (1972) 83 ITR 828 (Mad) and Jeevanlal (1929) Ltd. vs. Addl. CIT 1976 CTR (Cal) 391 : (1977) 108 ITR 407 (Cal). In Jeevanlal’s case, Sabhyasachi Mukherji, J., as he then was, followed the two Madras decisions Vedanthan Raghaviah and S. Arthanari. Ramaprasad Rao, J., delivering the judgment in S. Anthanari’s case (supra) stated the law thus : “But once it is invoked and an order of rectification is made, the order of assessment becomes merged in the order corrected by rectification. The corrected order is then the “statutorily deemed order of assessment” for it would be anomalous to hold that even after correction, a mistaken order ought to prevail. In cases where assessment orders are rectified, the original orders whose mistakes and errors are corrected no longer can hold the field. As pointed out in Vedantham Raghaviah vs. Addl. Third ITO (1963) 49 ITR 314 (Mad) : ‘Once an order of rectification is passed the assessment itself is modified and what remains is not the order of rectification, but only the assessment as rectified.”’

In view of the above statement of the law, we have no doubt in our mind that the Agrl. Trinubal was justified in holding that the appeals filed from the rectified assessment orders are maintainable. The AAC was in error in holding that the appeals are not maintainable. We, therefore, hold that the Agrl. Tribunal was justified in reversing the order passed by the AAC and remitting the matter for fresh disposal.

We answer both the questions referred to this Court in the affirmative—against the Revenue and in favour of the assessee.

Before this Court, the respondent/assessee was not represented. We requested Mr. Roy Chacko, Advocate to assist us as amicus curiae. Counsel took enormous pains to find out authorities and place them before us. We place our appreciation of the services rendered by Mr. Roy Chacko.

[Citation : 201 ITR 408]