Rajasthan H.C : The respondent- assessee is a public religious and charitable trust and was claiming exemptions in respect of its income under ss. 11 and 12 of the Act of 1961.

High Court Of Rajasthan

CIT vs. Shri Eklingji Trust

Sections 13, 154

Asst. year 1974-75

Rajesh Balia & Sunil Kumar Garg, JJ.

IT Ref. No. 16 of 1987

23rd February, 2001

Counsel Appeared

L.M. Lodha, for the Petitioner : Rajendra Mehta, for the Respondent

JUDGMENT

RAJESH BALIA, J. :

Heard learned counsel for the parties.

2. This is a reference made at the instance of the Revenue in connection with proceedings under s. 154 of the IT Act, 1961 (for short ‘the Act of 1961’) for rectifying assessment order for the asst. yrs. 1974-75. The respondent- assessee is a public religious and charitable trust and was claiming exemptions in respect of its income under ss. 11 and 12 of the Act of 1961. The original assessment order in respect of asst. yr. 1974-75 was completed on 27th Sept., 1976, by ITO on a total income of Rs. 13,125.

It was found by the ITO that the part of income was not applied to the charitable purposes in view of the applicability of s. 13(3). The reasons for this rejection of claim to exemption and subjection of aforesaid sum to tax was that the assessee had carried forward a sum of Rs. 3.50 lacs advanced to M/s Lake Palace Hotels and Motels (P) Ltd., Udaipur at an interest of 5 per cent per annum and had further advanced a sum of Rs. 1.50 lacs during the previous year on interest at 10 per cent p.a. w.e.f. 1st Jan., 1974, the rate of interest on the advance of Rs. 3,50,000 was also enhanced to 10 per cent p.a. In the said company Maharana Bhagwat Singh was having substantial interest and he also happened to be the managing trustee of the assessee-trust.

In view of these facts the ITO was of the view that the amount of Rs. 3,50,000 lent by the trust was to a person referred to in sub-s. (3) of s. 13 and the interest being inadequate the market rate of interest was applied at 10 per cent and the difference of the estimated income, which was considered to be applied for benefit of such trustee, was accordingly taxed. However, the claim of the assessee for exemption under ss. 11 and 12 in respect of other income was accepted. Denial of exemption in respect of certain income because of investment made in M/s Lake Palace Hotels and Motels (P) Ltd., Udaipur, was subjected to appeal before the AAC who by his order, dt. 15th Jan., 1977, agreed with the finding of the ITO so far as inadequacy of interest charged for the period of nine months on advance of Rs. 3,50,000 to M/s Lake Palace Hotels and Motels (P) Ltd. in the period upto 31st Dec.,1973, was concerned. Deposit with the company at the rate of 5 per cent was held to be inadequate and to that extent income only was held to be taxed in view of the provisions of s. 13. The appeal in respect of other additions on account of Jagir compensation amount was allowed by the AAC.

3. It can be noticed here that the factual matrix on the basis of which additions have been made by the ITO was the assessee-trust had advanced a sum of Rs. 3.50 lacs to the M/s Lake Palace Hotels and Motels (P) Ltd. Udaipur. At the beginning of the year the pending balance was Rs. 3.50 lacs which was lent at the interest rate of 5 per cent per annum. During the year under reference the assessee gave further loan of Rs. 1,50,000. This loan was advanced at interest rate of 10 per cent per annum. Subsequently w.e.f. 1st Jan., 1974, the interest rate was increased to 10 per cent on existing loan of Rs. 3,50,000 advanced to M/s Lake Palace Hotels & Motels (P) Ltd., Udaipur. Thus, in nine months the interest of Rs. 3.50 lacs has been charged at the rate of 5 per cent and further remaining three months interest at the rate of 10 per cent. Thereafter, the ITO invoked power under s. 154 of the Act of 1961 for rectifying assessment for the year 1974-75 in respect of the alleged mistake apparent from the record in disallowing exemption in respect of income referable to investment made in M/s Lake Palace Hotels and Motels (P) Ltd. only and subjected to tax only the part of interest to the extent benefit has been deemed to have been transferred to company in which the managing trustee of the trust has substantial interest in terms of s. 13(3), in order to disallow all other incomes received by way of donations in different funds which was held to be exempted under ss. 11 and 12 of the Act.

4. The plea of the assessee against the said action that the issue of exigibility of the entire income to tax was highly debatable, and mistake, if any, was not rectifiable and secondly because the order of ITO, dt. 27th Sept.,1976, in respect of assessment of income arising to the trust on account of investment made in company in which Maharana Bhagwat Singh has substantial interest having been subjected to appeal and affirmed by the appellate authority, the order of ITO on the subject-matter merged with the order of AAC, thereafter the ITO was left with no jurisdiction to initiate proceedings under s. 154, were not accepted by the ITO. An order of rectification was passed on 17th July, 1980 bringing the alleged income of the trust. from donation stated to be as per the original assessment, subject to charge of tax. However, comparative reading of the two orders do not support this statement. It appears that only the income donation was subject to tax and such income was earlier not at all included in the total income. How, the amount of income for donations have been computed is neither discernible from the original assessment order nor from the rectification order, both of which have been made part of statement of case as separate annexures.

5. On appeal before the CIT(A) the assessee raised the same two-fold contentions that there was no mistake apparent from the record and that matter has already been considered by the learned AAC and merged into appellate order, the ITO had no jurisdiction. The learned CIT(A) agreed with the first contention of the assessee and did not go into the second objection raised by the assessee and allowed the appeal by setting aside the order of rectification of assessment order. On further appeal by the Revenue, order of CIT(A) was affirmed. The Tribunal held that the issue raise by the AO in rectification proceedings in the circumstances being highly debatable. The jurisdiction has wrongly been exercised. The Tribunal was of the view that power or rectification is not power of reviewing its order on the same matter.

6. It is in the aforesaid circumstances, the Tribunal on an application being made by the CIT has referred the following question of law arising out of its appellate order to this Court for its opinion : “Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that notwithstanding the findings arrived at by the ITO in the course of original assessment that the provisions of ss. 13(1)(c) or 13(2)(a) of the Act were applicable, the ITO’s failures to deny exemption in terms of ss. 11 and 12 with respect to the assessee-trust’s income was not a mistake rectifiable under s. 154 of the IT Act, 1961 ?”

7. Learned counsel for the Revenue has strongly contended as has been stated by the ITO in his order that since the provisions of s. 13(1)(c) or 13(2)(a) were not taken into consideration at the time of original assessment which was made merely on the basis of provision of s. 13(3), it cannot be said that this issue was ever subject-matter of the appeal and non-consideration of legal provisions which are applicable to the case amounts to mistake apparent on the face of record. Therefore, the order passed by the learned ITO was in valid exercise of his jurisdiction and has been correctly made.

8. Learned counsel for the respondent reiterated both the contentions raised throughout before the Revenue authorities namely, that issue involved is highly debatable which could not be subject-matter of rectification proceedings and that order of ITO having merged in the order of AAC, the ITO lost jurisdiction to resort to the power of rectification under s. 154 of the Act.

9. The contours of jurisdiction under s. 154 are well settled. Sec. 154 authorises every IT authority to amend any order passed by it under the provisions of the Act with a view to rectifying any mistake apparent from the record. Mistake apparent from the record is an expression, which has received judicial interpretation time and again and the Courts have held that any mistake which is not an obvious, or self-evident or which is to be discovered by effort, or is plausibly debatable cannot be considered to be a mistake apparent from the record. In T.S. Balaram ITO vs. Volkart Bros. & Ors. (1971) 82 ITR 50 (SC) : TC 53R.165 the principle was laid bare. It was said : “The power of the officers mentioned in s. 154 of the IT Act, 1961 to correct ‘any mistake apparent from record’ is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an error apparent on the face of the record.” The Court explained what can be termed as a mistake apparent from the record. It said :

“A mistake apparent on 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.” In coming to this conclusion principle enunciated by the Court earlier in spelling out the scope of the powers of High Court under Art. 226 to issue a writ of certiorari in the case of Satyanarayan Laxmi Narayan Hegde vs. Mallikarjun Bhavanappa Tirumale AIR 1960 SC 137 was reiterated. It is also now well settled that a mistake apparent from the record must be one which is discernible from the existing record and not dependent on discovering new facts after holding enquiry in new proceedings. Therefore, question which requires investigation into facts not emanating from the record or issues which was not raised and decided by the authority at the inception, cannot be considered to be a mistake apparent from the record nor s. 154 confers jurisdiction of reviewing one’s own order, akin to power conferred on a Civil Court under O. 47, r. 1, CPC. It is only the mistake which can be said to be self-evident and discernible without arguments or on which plausible there cannot be two opinions can be said to be a mistake which fall within the ambit of power of rectification. May be the power of s. 154 is not confined to correct arithmetical or clerical mistake only but it does not extend either or raise some other contentions by the very same authority which were not raised in original order.

The Supreme Court in Master Construction Co. (P) Ltd. vs. State of Orissa & Anr. 17 STC 360 (SC) while considering the expression used ‘mistake apparent from the record’ under the provisions of Orissa ST Rules, 1947 said : “The error should not be an error which depends for its discovery, elaborate arguments on questions of fact or law. The accidental slip or omission is an accident slip or omission made by the Court. However, wide the expressions in the rule are construed, they cannot countenance a reargument on merits on questions of fact or law, or permit a party to raise new arguments which he has not advanced at the first instance”.

The similar view was expressed by the Supreme Court in connection with powers of rectification under s. 154 of the IT Act, 1961, with which we are concerned recently in CIT vs. Hero Cycles (P) Ltd. & Ors. (1997) 142 CTR (SC) 122 : (1997) 228 ITR 463 (SC) : TC S53.4162. Referring to the provisions of s. 154 of the Act of 1961 in Civil Appeal No. 7665/96 out of which batch of petitions decided by the Court, it was held that rectification is not possible if the question is debatable. Moreover, the point which was not examined on fact or in law cannot be dealt with as a mistake apparent on the record. It was a case in which in the original proceedings, the Tribunal has not considered the claim of the assessee under s. 35B of the Act of 1961. On an application for rectification made by the assessee. Tribunal had restored to the provisions of rectification and allowed the assessee’s claim in respect of matters like coloured albums, export staff under s. 35B of the Act of 1961. It is in those circumstances, the Court further said : “Rectification under s. 154 can only be made when a glaring mistake of fact of law committed by the officer passing the order becomes apparent from the record. Rectification is not possible if the question is debatable. Moreover, the point which was not examined on fact or in law cannot be dealt with as a mistake apparent on the record.” If on the anvil of aforesaid principles the contention of the learned counsel for the revenue is tested it must fail on both alternative grounds. If the contention of the learned counsel is accepted that issue of exemption under s. 13(1)(c) and 13(2)(a) was not at all considered in earlier proceedings, therefore, could not have been examined by the appellate order, then the power under s. 154 cannot be resorted to raise and decide an altogether new issue because that cannot be considered to be a mistake apparent from the record on the principle enunciated in Master Construction Co.’s case (supra) and Hero Cycles case (supra).

On the other hand if the AO is taken to have addressed himself to those questions explicitly or impliedly and decided the question of denial of exemption on account of investment in a concern in which managing trustee had substantial interest, for an inadequate rate of return, then the claim to exemption in respect of the income of the assessee as decided by the order of ITO was subsequently subjected to appeal by the assessee. On decision of the appeal, the order of ITO merged with the order of the AAC and thereafter the ITO could not have exercised any jurisdiction to amend the order passed by the AAC in exercise of his power under s. 154 of the Act of 1961. In such event splitting the question of applicability of ss. 13, 11 and 12 could not have been made which form component part of the whole scheme, to get over the binding nature of appellate order on ITO.

In this connection attention may be invited to a Bench decision of this Court in Rajputana Mining Agencies vs. ITO (1979) 10 CTR (Raj) 127 : (1979) 118 ITR 585 (Raj) : TC 53R.589. The Division Bench of this Court was dealing with group of petitions of which Writ Petition No. 132/63 gives rise to this very question. It was a case in which the dividend income received by the petitioner from the company was grossed up and credit for the tax was given to them as a result of the decision of the AAC of IT in their appeals. After the appeal was decided by the AAC, the ITO resorted to powers under s. 35 of the Indian IT Act, 1922 for amending his own original order in respect of grossing up of the dividends. Against the exercise of jurisdiction under s. 35 of the Indian IT Act, 1922 (the corresponding provision to s. 154 of the 1961 Act), the assessee has contended that in view of merger of order of ITO, in the case of grossing up the dividend income, in the order of AAC, the ITO had no jurisdiction to resort to s. 35 of the Act of 1922.

The Court upheld the contention of the assessee and held : “the whole purpose of creating a hierarchy of authorities having appellate or revisional jurisdiction would be frustrated if the ITO who had passed the original assessment order, can set aside any order passed in appeal or revision, more particularly in respect of such questions which were expressly raised and decided by the appellate or revisional authority. Once the matter has been decided by the appellate or revisional authority, the order of the ITO would merge with the order of the AAC or CIT, at least in respect of these questions which were expressly raised and decided by the appellate or revisional authority.”

We are in agreement with the aforesaid view and may notice that the said principle now finds statutory recognition inasmuch as sub-s. (1A) has been inserted in s. 154 of the Act of 1961 which reads as under : “Sub-s. (1A) : Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-s. (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided.”

The aforesaid provision envisages that where any matter has been considered by way of appeal or revision relating to an order referred to in sub-s. (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided. It may be noticed here that sub-s. (1A) also does not permit rectification of the original order in respect of which appeal has been taken to the superior authority and that matter has been subjected to appellate decision.

15. In the present case it cannot be doubted that only question which has been decided by the ITO at the time of original assessment namely denial of exemption in respect of income arising from the investment of the trust funds with M/s Lake Palace Hotels & Motels (P) Ltd. with reference to the provisions of s. 13 has been subjected to appeal before the AAC and the order was affirmed by the AAC. It would make no difference whether the appellate authority affirms or reverses or modifies the order passed by the lower authority. On such decision by the appellate authority, the order of the lower authority would stand merged in the order of appellate authority and only order which thereafter could be amended is the order of appellate authority accepted or decided. That has been also the view taken by the Allahabad High Court in Krishna Rice & Oil Mills vs. Commr. of ST (1987) 67 STC 195. It was a case where the appellate authority has modified the order of AO which affirmed the order passed by the AAC in appeals filed by the Revenue. Thereafter the Commr. of ST sought to invoke the power of rectification in the original order of appellate authority for the purpose of levy of surcharge. The application was opposed by the assessee on the main ground that as the order passed by the appellate authority dt. 3rd Feb., 1981, has merged now in the subsequent order of the Tribunal, dt. 23rd Oct., 1982, the rectification of the said order was not possible by the lower appellate authorities. However, the appellate authority rejecting objection rectified its earlier order which was affirmed by the Tribunal. The High Court in revision held that as the order, dt. 3rd Feb., 1981, passed by the appellate authority is to be merged in the Tribunal’s order, dt. 23rd Oct., 1982, which confirmed the said order, the same cannot be rectified by the appellate authority under the provisions of s. 22 of the UP ST Act.

16. In the present case the only object of contention between the parties was about investment made with M/s Lake Palace Hotels and Motels (P) Ltd. and its effect on the exemption to the income of the trust having been considered by the ITO and subjected to appeal, it merged in the order of AAC and thereafter any further consideration of applicability of s. 13 of the Act, on income of the assessee, in our opinion would not fall within the domain of ITO to consider in exercise of jurisdiction under s. 154 of the Act of 1961.

17. We do not rest our decision on that alone. Apart from the aforesaid, the alleged error which is said to be rectified by the AO for the reasons stated in the order as well as contended by the learned counsel, in our opinion does not fall within the purview of power of rectification. Firstly, the only contention raised by learned counsel and disclosed in the order of rectification is that the AO has not in the initial stage considered the question of exemption in the light of s. 13(1)(b) and s. 13(2)(a) but merely on the basis of provisions of s.13(3).

18. To test this contention on the touch stone of its self-evident mistake or debatable issue on which possibly there can be two opinions, the provision of s. 13 in extenso : Sec. 13. (1) (Nothing contained in s. 11 or s. 12 shall operate so as to exclude from the time income of the previous year in receipt thereof : (a)……. (b)……. (bb) …….

(c) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof : (i) if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income ensures, or (ii) if any part of such income or any property of the trust on the institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in sub-s. (3) : Provided that in the case of a trust or institution created or established before the commencement of this Act, the provisions of sub-cl. (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of the trust or institution for the benefit of any person referred to in sub-s. (3), if such use or application is by way of compliance with a mandatory term of the trust or a mandatory rule governing the institution : Provided further that in the case of a trust for religious purposes or a religious institution (whenever created or established) or a trust for charitable purposes or a charitable institution created or established before the commencement of this Act, the provisions of sub-cl. (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of the trust or institution for the benefit of any person referred to in sub-s. (3) insofar as such use or application relates to any period before the 1st June, 1970; (d) …….. (2) Without prejudice to the generality of the provisions of cl. (c) and cl. (d) of sub-s. (1), the income or the property of the trust or institution or any part of such income or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a person referred to in sub-s. (3) : (a) if any part of the income or property of the trust or institution is, or continues to be lent to any person referred to in sub-s. (3) for any period during the previous year without either adequate security or adequate interest or both : (b) to (h) ……… (3) The persons referred to in cl. (c) of sub-s. (1) and sub-s. (2) are the following, namely : (a) ……… (e) any concern in which any of the persons referred to in cl. (a), (b), (c), (cc) and (d) has a substantial interest. (4) Notwithstanding anything contained in cl. (c) of sub-s. (1) but without prejudice to the provisions contained in cl. (d) of that sub-section, in a case where the aggregate of the funds of the trust or institution invested in a concern in which any person referred to in sub-s. (3) has a substantial interest, does not exceed five per cent of the capital of that concern, the exemption under s. 11 or s. 12 shall not be denied in relation to any income other than the income arising to the trust or the institution from such investment, by reason only that the funds of the trust or the institution have been invested in a concern in which such person has a substantial interest.

19. The perusal of aforesaid provision goes to show that s. 13(3) cannot at all be invoked without having recourse to provision of s. 13(1)(c) or sub-s. (2). As a matter of fact, s. 13(3) of the Act only identifies the person referred to in cl. (c) of sub-s. (1) and sub-s. (2) of s. 13 and does not provide any substantive provision independent of sub- s. (1) and sub-s. (2). It is only s. 13, sub-s. (1) and sub-s. (2) which provide substantive provision on which rest denial of exemption under ss. 11 and 12 in the case of application of certain income of the trust is to certain specified prohibited persons envisaged under sub-s. (3). Clause (c) of s. 13(1) envisages that where any income of a trust for charitable or religious purposes or a charitable or religious institution is not to be included from the part of ss. 11 and 12 if any part of such income or any property of the trust or institution is during the previous year used directly or indirectly for the benefit of any person referred to in sub-s. (3). Likewise sub-s. (2) of s. 13 creates legal fiction. The provision of cl. (c) of sub-s. (1) that for the purposes of sub-s. (1)(c) the application of income or part of income in the manner enumerated in various sub-clauses is deemed to have been used or applied for the benefit of a person referred to in sub-s. (3) which inter alia deems to include in terms of sub-s. (2) of s. 13, if any part of the income or property of the trust or institution is, or continues to be, lent to any person referred to in sub- s. (3) for any period during the previous year without either adequate security or adequate interest or both.

Thus, sub-s. (1)(c), sub-s. (2) and sub-s. (3) of s. 13 are integral part of same scheme and sub-s. 13 are integral part of same scheme and sub-s. (3) does not operate and cannot be applied without reference to the provisions of s.

13(1)(c) and 13(2)(a). These are the only two provisions which the Assessing Authority is said to have ignored while considering the additions made at the time of original assessment while making additions on account of investment made in M/s Late Palace Hotels & Motels (P) Ltd., Udaipur, in which Maharana Bhagwat Singh, the managing trustee of the assessee Trust had substantial interest in terms of s. 13(3) during the previous year. Sub-s. (3) merely defines who are the persons who can be said to be a person for whose benefit whole or part of income of a property of the assessee has been used or applied in terms of s. 13(1)(c) and because of sub-s. (2)(a) r/w sub-s. (3)(c) that investment made in the said company could be brought within the mischief. Merely by reading sub-s. (3), it is not possible to make any additions. It is only by conjoint reading of sub-s. (1)(c), (2) and (3) that any addition could be made in respect of income derived by such investments accruing or arising to a charitable and religious trust to which ss. 11 and 12 apply. In fact it is to be noticed that sub-s. (3) has been enacted only to identify person referred to in sub-s. 13(1)(c) and it refers to no other purpose for which it is enacted. Therefore, sub-s. (3) cannot be read without reading sub-s. (1)(c). So also sub-s. (2) only creates a legal fiction in aid of s. 13(1)(c) or 13(1)(d) only. It is not even the case set up by the assessing authority that sub-s. 13(1)(d) was invoked so as to attract application of s. 13(3). On the contrary sub-s. (3) only refers to define persons for the purpose of s. 13(1)(c). Persons referred in sub-s. (3), and sub-s. (2) also created legal fiction as to which of the investment made can be deemed to be investments made for the benefit of persons mentioned in sub-s. 13(1)(c) which in turn only refers to persons referred in sub-s. (3). It is only because of this clause the investments which were continuing with M/s Lake Palace Hotels & Motels Co. Ltd. in which managing trustee of the trust had substantial interest was deemed to be for the benefit of the person referred in sub-s. (3) in terms of s. 13(1)(c). The addition made in original assessment itself was not possible without recourse to sub-s. 13(1)(c) and 13(2)(a), which refers to ‘inadequacy’ of interest.”

It may be pertinent to notice it is only on the finding that the income part of the funds of the trust has continued to be lent to M/s Lake Palace Hotels & Motels (P) Ltd. in which managing trustee of the trust has substantial interest for a period of nine months during the previous year if adequate interest on finding of that the reasonable right of interest chargeable was 10 per cent whereas money has been lent to the company for a period of nine-months only at the rate of 5 per cent. merely because the provision has not been referred to. It cannot be said that the additions in the income has been made without reference to these provisions. Thus, in our opinion the very basis for invoking jurisdiction in respect of order passed by the ITO do not exist. Moreover, in the totality of scheme of s.

13 sub-s. (4) too deserves consideration. It is a non obstante clause envisaging anything contained in s. 13(1)(c) if aggregates of the funds invested in a concern in which any person referred to in sub-s. (3) of s. 13 has a substantial interest, does not exceed 5 per cent of the total capital of the concern in which such investment is made, then disentitlement to exemption under ss. 11 and 12 is to be confined to the income arising to the trust from such investment by reason only that the funds of the institution has been invested in a concern in which such person has a substantial interest. Obviously whether the exemption shall be confined to income derived from the investment made in M/s Lake Palace Hotels & Motels (P) Ltd. only in breach of provision of s. 13(1)(c) r/w s. 13(2) and s. 13(3) or shall extents to whole of income depends on finding the facts about the ratio of investment made by the trust with the capital of the company. This enquiry was never before the AO and cannot be said to be apparent from the record nor the AO could come to this conclusion even prima facie that sub-s. (4) is not attracted. The fact only discloses that funds continued to remain invested @ 5 per cent interest p.a. with M/s Lake Palace Hotels & Motels (P) Ltd., only for nine months during the relevant previous year which was considered to be inadequate. The ratio of interest was enhanced to 10 per cent w.e.f. 1st Jan., 1974, which was considered to be adequate and not in violation of s. 13(1)(c) r/w s. 13(2). The additions made in the income of the trust in original assessment was a sum equal to interest of Rs. 3,50,000 @ 5 per cent p.a. for a period of nine months. That was equal to income arising from such investment to Trust. This addition fits in the scheme of sub-s. (4) of s. 13 of the Act. Reference in this connection may be made to CIT vs. Trustees of Tekchand Chandiram Trust (1989) 80 CTR (Bom) 161 : (1990) 184 ITR 537 (Bom) : TC 23R.1367.

23. It may be noticed that neither reference to s. 13(1)(c) and s. 13(2) has been made, the alleged ground taken by the AO for supporting his action, nor sub-s. (4) has been referred. It has been demonstrated that no action could have been taken without reference to sub-ss. (1)(c) and (2) by merely reading sub-s. (3). So also it cannot be doubted that sub-s. (4) provides provision in which undoubtedly the order passed by ITO fits in to be unmistakably correct. In the absence of any material it cannot be said that the order was not passed by taking into consideration relevant provision. If there is any ground to support the reasoning given by the AO about non- consideration of sub-s. (1)(c) or (2) on the basis of no reference to such provision in the order for initiating proceedings for complete denial of exemption, there is equal probability of ITO having considered all the provisions including sub-s. (1)(2) and (4) before making order particularly when it is apparent that the original order was fully justified if made with the aid of sub-s. (4) when none of the provisions have been specifically referred to and the order is supportable under one of such provision which is part of the total scheme of s. 13, it cannot be said the mistake alleged is obvious or self-evident which could be discovered without establishing necessary facts. In these circumstances there is nothing to presume that the additions made in the assessment of the trust by disallowing exemption to the extent of income derived from M/s Lake Palace Hotels & Motels Ltd. was in ignorance of provision of sub-s. (4) of s. 13.

In these circumstances it is not only a case where the AO wants to decide a new point which he has not considered and decided in the original assessment, but shall also require investigation into new fact to discover mistake, if any, in the original assessment order. Such an error if it exists, in our opinion falls outside the scope of s. 154 which confers jurisdiction to rectify apparent mistakes only on the principles enunciated by the Supreme Court in T.S. Balaram, ITO vs. Volkart Bros (supra) and in CIT vs. Hero Cycles (P) Ltd. (supra), as discussed hereinabove.

24. Thus, in the present case not only the discovery of mistake depends on discovery of new material yet to be made but it also raises an debatable issue on interpretation of statutory provisions. As a result of aforesaid discussion, we are of the opinion that question referred by the Tribunal is required to be answered in affirmative that is to say in favour of the assessee and against the Revenue and it is held that in the facts and circumstances Tribunal was right in holding that the AO could not have invoked jurisdiction under s. 154 of original assessment. There shall be no order as to costs.

[Citation : 250 ITR 699]

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