Madhya Pradesh H.C : There was no error apparent from the record while disposing of the miscellaneous petition on 7th Sept., 1975

Counsel Appeared

K.B. Joshi, for the Assessee : R.C. Mukati, for the Revenue

K.N. SHUKLA, J. :

This is an application by the assessee under s. 256(2) of the IT Act, 1961, praying that the Tribunal, Indore, be directed to state the case and refer to this Court question of law said to be arising out of the Tribunal’s order dt. 7th Sept., 1976, passed under s. 254(2) of the IT Act, 1961, partly rectifying their earlier order.

The assessee-applicant was assessed to income-tax in the status of “individual” for the asst. yr. 1971-72. The assessee had not furnished an estimate of advance tax in accordance with s. 212(3) of the IT Act. The ITO initiated penalty proceedings under s. 273(b) of the Act. In response to the notice issued by the ITO as to why penalty be not levied, the assessee pleaded that he had not committed any default as he had paid the advance tax. The ITO, on the basis of the record, found that the advance tax had not been paid and, therefore, levied penalty.

The assessee appealed before the AAC. The AAC dismissed the appeal and confirmed the levy of penalty amounting to Rs. 5,315 under s. 273(b) of the Act. Second appeal was filed before the Tribunal. Copy of the grounds of appeal has been filed wherein the assessee raised only two grounds. First was that there was no justification in confirming the penalty imposed by the ITO and the second was that the penalty imposed was excessive, illegal and contrary to the provisions of law.

The Tribunal, vide its order dt. 24th April, 1976, dismissed the appeal. The contention raised by the assessee’s counsel before the Tribunal on this issue was that “the assessee had returned an income of only Rs. 902 in the assessment year in question and that he was under a bona fide belief that his income was below the taxable limit and as such he did not file the estimate of advance tax”. (See para 5 of the Tribunal’s order). This submission was made to show that there was reason on the part of the assessee in not furnishing the estimate of advance tax in accordance with s. 212(3) of the Act. This contention was rejected on the ground that, firstly, no such plea was taken before the ITO or AAC, and, secondly, according to the Tribunal, there could not be any honest belief by the assessee about his return of income, because finally he was assessed on an income of Rs. 85,460.

The assessee thereafter filed an application purporting to be under s. 254(2) of the Act for a rectification of the order on the ground that there was a mistake apparent on the record and, therefore, the order should be rectified. It was submitted in his application that the “regular assessment of the assessee had been completed on 11th March, 1971”, and as such the petitioner was assessed prior to the last date for filing the estimate for advance tax under s. 212(3) and this fact should be taken into consideration for quashing the penalty. It was submitted that this fact was available on the ITO’s record and the Tribunal should take note of that for deciding the application for rectification. Another point made in this application was that the Tribunal had not considered the alternative submission of the assessee that the penalty was excessive.

This application was contested by the Department on the grounds that, firstly, the assessment for the asst. yr. 1958-59 (sic) was not a regular assessment, but only a provisional assessment and, therefore, s. 212 (3) was applicable to the case of the assessee. It was also contended by the Department that the assessee’s income was his share income from the firm and the accounting year of the firm was the assessee’s accounting year also. In that event the last instalment of the advance tax was payable on 15th Dec., 1970. The assessment made on 11th March, 1971 was subsequent in time to the last instalment of advance tax payable under s. 211/212(3) of the Act.

The Tribunal observed that the question raised in the miscellaneous application by the assessee for rectification was controversial and contentious and, therefore, there was no such error apparent on the record which could be rectified under s. 254(2) of the Act. The Tribunal, however, reduced the quantum of penalty from Rs. 5,315 to Rs. 3,140 on the alternative submission of the assessee.

The assessee sought the reference under s. 256(1) of the Act but the same was dismissed on the ground that no question of law arose either out of the main order or out of the order passed rejecting the assessee’s application for rectification in respect of his liability for levy of penalty.

The assessee has, therefore, filed this application and desires that the Tribunal be directed to refer the following question for our opinion:

“1. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that there was no error apparent from the record while disposing of the miscellaneous petition on 7th Sept., 1975 ?

Whether, the Hon’ble Tribunal was justified in rejecting the request for bringing on record the important fact that the first assessment was completed on 11th March, 1971, and as such it was a case of hitherto assessed and when this fact was already on record of the IT Department ?

Whether, on the facts and in the circumstances of the case, the Tribunal did not err in law in holding that there was no merit in the applicant’s rectifying the earlier order of the Tribunal dt. 24th June, 1976 ?”

The facts narrated in detail above clearly show that the point which the assessee tried to raise in his miscellaneous application under s. 254(2) of the Act for rectification of the order passed by the Tribunal in appeal, was altogether a new point which was neither raised before the Tribunal nor the attention of the Tribunal was ever invited to this fact. The Tribunal, therefore, was justified in holding that there was no error apparent on the face of the record with respect to the assessee’s liability for penalty under s. 273(b) of the Act, which needed rectification.

In T.S. Balaram, ITO vs. Volkart Brothers (1971) 82 ITR 50 (SC), their Lordships of the Supreme Court made the following observations: “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 reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record.”

In the instant case, it is obvious that a new question of fact was raised before the Tribunal after the order was passed dismissing the assessee’s appeal against the AAC’s order. This fact was disputed by the Department and, therefore, in the garb of an application for rectification the assessee sought a fresh finding on a question of fact which was not raised at any time before the Tribunal. Thus, it is clear that the Tribunal was right in holding that there was no error apparent from the record which needed rectification. No question of law thus arises out of the Tribunal’s order dt. 7th Sept., 1976, disposing of the assessee-applicant’s miscellaneous petition under s. 254(2) of the IT Act. The application under s. 256(2) of the Act is, therefore, dismissed. Costs on the applicant. Advocate’s fee Rs. 100.

[Citation : 141 ITR 589]