Madhya Pradesh H.C : Whether, on the facts and in the circumstances of the case, the ITO was justified in dismissing the assessee’s application praying for rectification of his earlier order by which the ITO has chosen to charge interest under s. 217(1A) and under s. 139(8) and increase the returned figure of income of the assessee from Rs. 25,575 to Rs. 31,641 in proceedings under s. 143(1) of the IT Act and the Tribunal was correct in law in upholding this order of the ITO ?

Counsel Appeared

Nema, for the Assessee : B.K. Rawat, for the Revenue

G. SOHANI, ACTG. C. J. :

By this reference under s. 256(1) of the IT Act, 1961 (hereinafter referred to as “the Act”), the Tribunal, Indore Bench, Indore, has referred the following question of law to this Court for its opinion :

“Whether, on the facts and in the circumstances of the case, the ITO was justified in dismissing the assessee’s application praying for rectification of his earlier order by which the ITO has chosen to charge interest under s. 217(1A) and under s. 139(8) and increase the returned figure of income of the assessee from Rs. 25,575 to Rs. 31,641 in proceedings under s. 143(1) of the IT Act and the Tribunal was correct in law in upholding this order of the ITO ?”

The material facts giving rise to this reference, briefly, are as follows :For the asst. yr. 1977-78, the assessee filed a return declaring an income of Rs. 29,575. The assessee was a partner in a firm and in view of the fact that while making the assessment of the firm, the ITO had computed the share of the assessee at Rs. 31,640, the assessee was assessed on a total income of Rs. 31,640. The assessee submitted an application for rectification under s. 154 of the Act contending that his income could not be assessed at Rs. 31,640 and that interest could not be levied under s. 139(8) or s. 217(1A) of the Act. That application was rejected by the ITO on the ground that there was no mistake or error apparent on the face of the record. Aggrieved by this order, the assessee preferred an appeal before the AAC but that appeal was dismissed. The second appeal preferred by the assessee before the Tribunal was also dismissed. Aggrieved by the order passed by the Tribunal, the assessee sought reference and it is at the instance of the assessee that the aforesaid question of law has been referred to this Court for its opinion.

Learned counsel for the assessee contended that the Tribunal erred in affirming the order passed by the ITO rejecting the application submitted by the assessee under s. 154 of the Act. It was contended that the ITO could not have computed the total income of the assessee at Rs. 31,640 under s. 143(1) of the Act. It was also contended that interest could not be levied under section 217(1A) of the Act and the Tribunal erred in holding that the ITO was justified in rejecting the application under s. 154 of the Act.

Having heard learned counsel for the assessee, we have come to the conclusion that this reference must be answered in the affirmative and against the assessee. Under s. 143(1) of the Act, the ITO has to make an assessment of the total income after making such adjustments to the income or loss declared in the return as are required to be made under cl. (b) of sub-s. (1) of s. 143 of the Act with reference to the return and the accounts and documents, if any, accompanying it and also with reference to the record of the assessments, if any, of past years. The Tribunal found that there was no material on record to show what documents were filed along with the return and the details furnished by the assessee of the returned income. In the absence of those materials, the Tribunal was right in holding that it could not be said that there was any mistake or error apparent on the face of the record in the order passed by the ITO under s. 143(1) of the Act. As regards levy of interest under s. 217(1A) of the Act, learned counsel for the assessee was unable to point out that the assessee had placed any material on record disclosing the estimate filed by him to substantiate the contention that the provisions of sub-s. (1A) of s. 217 of the Act were not attracted. In these circumstances, the Tribunal cannot be held to have erred in law in upholding the order passed by the ITO rejecting the application filed by the assessee under s. 154 of the Act.

6. For all these reasons, our answer to the question referred to this Court is in the affirmative and against the assessee. In the circumstances of the case, parties shall bear their own costs of this reference.

[Citation : 176 ITR 111]