Madhya Pradesh H.C : On the facts and circumstances of the case, though the assessee had not claimed relief under s. 35B of the IT Act in the original assessment proceedings, if it is apparent from the record that the assessee was entitled to relief admissible under s. 35B of the IT Act, can the relief be granted by an order under s. 154 of the IT Act by rectifying the assessment ?

Counsel Appeared

B. K. Rawat, for the Revenue : Y. S. Dharmadhikari, for the Assessee

G. P. SINGH, C.J.:

This is a reference made to us by the Tribunal at the instance of the Department referring for our answer the following question of law :

“On the facts and circumstances of the case, though the assessee had not claimed relief under s. 35B of the IT Act in the original assessment proceedings, if it is apparent from the record that the assessee was entitled to relief admissible under s. 35B of the IT Act, can the relief be granted by an order under s. 154 of the IT Act by rectifying the assessment ?”

The facts briefly stated are that in the assessment proceedings for the asst. yr. 1972-73 the assessee did not claim export markets development allowance under s. 35B of the IT Act, 1961. The ITO started rectification proceedings under s. 154 for correcting an error in the grant of rebate under s. 80J. In those proceedings the assessee contended that there was an apparent error in not allowing to it the relief under s. 35B. The ITO refused to go into this question on the ground that no such claim was made in the return or in the assessment proceedings by the assessee. The AAC, however, held in favour of the assessee that there was an apparent error in not granting the relief under s. 35B even though it was not claimed in the return. In further appeal before the Tribunal, the argument of the Department was that the assessee having omitted to claim the relief under s. 35B in the return, it was not open to it to claim that relief under s. 154 after the assessment was made. This argument was not accepted by the Tribunal. In the opinion of the Tribunal, the jurisdicion to interfere under s. 154 arose when it was found that there was a mistake apparent from the record in the relevant order and in deciding whether there was an apparent mistake the ITO was not confined to the return and he could look to the entire material available in the record of the assessment. The Tribunal, therefore, held that it was open to the ITO to assume jurisdiction under s. 154 if it was apparent from the record of assessment that there was a mistake in not granting relief under s. 35B although the said relief was not claimed in the return. It is the correctness of this view which we have to examine in this reference.

2. The learned standing counsel for the Department placed reliance upon Anchor Pressings (P.) Ltd. vs. CIT (1980) 17 CTR (All) 57 (1975) 100 ITR 347 (All), Sharda Prasad vs. CIT (1975) 100 ITR 373 (All) and Paramount Trading Corporation vs. ITO (1980) 124 ITR 55 (All), in support of his submission that as no relief under s. 35B was claimed by the assessee in the return, the mistake in not granting the relief could not be apparent and could not be corrected under s. 154. These cases which were decided by the Allahabad High Court do supportb the submission of the learned counsel. But, with great respect, we are unable to agree with the view taken in them. The record of the assessment is not confined to the return. Sec. 154 which confers jurisdiction for rectifying mistake enables the ITO to assume jurisdiction when he finds “any mistake apparent from the record”. The Word “record” as used in s. 154 will include all that material which forms part of the assessment proceedings and not only the return. It is also not correct to say that if the assessee omits to claim a relief allowable to him under the provisions of the IT Act, he is not entitled to get that relief. It is the duty of the ITO and other officers administering the Act to inform the assessee that he is entitled to a particular relief if it is apparent that he is so entitled from the material available in the proceedings of assessment. This duty has been highlighted by a circular issued by the CBR. For these reasons, the Gujarat High Court in Chokshi Metal Refinery vs. CIT (1977) 107 ITR 63 (Guj), dissented from the view taken by the Allahabad High Court in the aforesaid cases and held that if it is apparent from the record of assessment that the assessee was entitled to a particular relief, the ITO can rectify that mistake under s. 154 although the said relief was not claimed by the assessee in the return. We respectfully agree with the view taken by the Gujarat High Court.

4. The learned counsel for the Department submitted before us that even otherwise the conclusion that the assessee was entitled to the relief under s. 35B was not apparent from the record. We cannot examine this submission because the question referred has to be answered on the assumption that it was apparent from the record that the assessee was entitled to the relief under s. 35B.

5. For the reasons given above, we answer the question as follows : “If it is apparent from the record that the assessee was entitled to relief admissible under s. 35B, that relief can be granted to him by an order under s. 154 by rectifying the assessment even though relief under that section had not been claimed by the assessee in the original assessment proceedings.”

6. There will be no order as to costs of this reference.

[Citation : 142 ITR 13]