TMI Blog2006 (4) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... the figures of losses or depreciation to be carried forward and adjusted against the profits of a subsequent year or years under sections 72 to 74A. Such adjustments alone can be carried out through an order of amendment. There is no specific power conferred upon the Assessing Officer to amend the assessment of a later year to give effect to the change in the figure of loss in respect of an industrial undertaking arising out of a rectification order passed for the earlier year, purely for the purpose of adjusting the figure of deduction available u/s 80-I in the later year. As we have already noticed in the earlier part of our order while narrating the facts, even in the notice u/s 154 for the year under appeal the Assessing Officer has stated that he proposed to amend and recompute the claim for deduction u/s 80-I in respect of the Anola unit for the year under appeal consequent upon passing of order u/s 154 dated 10-2-2003 in the assessment year 1993- 94 regarding claim of 80-I of the Income-tax Act, 1961 on Anola Unit. There is no reference to any order of reassessment passed u/s 147 as required by sub-section (4) of section 155 for the assessment year 1993-94. This sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer u/s 154. The appeal is allowed with no order as to costs. - Member(s) : R. V. EASWAR., N. S. SAINI. ORDER Per R.V. Easwar, Vice President . - This appeal by the assessee involves 14 grounds but they all relate to a single issue and the gist thereof is that the order passed by the Assessing Officer on 28-2-2003 purporting to be an order passed under section 147/143(3)/154 of the Income-tax Act is bad in law, without jurisdiction, time-barred and at any rate the issue sought to be rectified is a debatable one not amenable to rectification under section 154. 2. The facts giving rise to the appeal is as follows. An assessment was first made for the assessment year 1994-95 on 29-11-1996 under section 143(3) of the Act. Later, the assessment was reopened under section 147 and the reassessment was completed on 28-3-2002. In this reassessment, the Assessing Officer observed that the assessment was reopened on the ground that the assessee had been allowed deduction under section 80-I in respect of the Anola unit on dividend income. However, it appears from the reassessment order that the assessee had clarified before the Assessing Officer in the course of the reassessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectification or amendment is passed the original order gets merged with the subsequent order with the result that the date of such order 'shifts to that date on which the subsequent order has been passed' and the 'limitation for rectification under section 154 is to be counted from that date'. He therefore held that the proposed rectification would be within the period of limitation, reckoning the period of limitation from the date of passing the reassessment order, i.e., 28-3-2002. He proceeded to reduce the losses of the Anola unit computed at Rs. 42,29,23,313 for the assessment year 1993-94 from the profits of the Anola unit for the assessment year 1994-95 (year under appeal) and correspondingly reduced the deduction under section 80-I. This order was passed on 28-2-2003. 6. The assessee challenged the rectification order before the CIT(A) on several grounds including the ground that the issue sought to be rectified was a debatable one. All of them having been rejected by the CIT(A), the assessee has filed a further appeal to the Tribunal. 7. We have carefully considered the issue in the light of the rival arguments ably presented before us. We may straightaway say that we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the notice of demand attached with the reassessment order (creating nil demand) is dated 17-5-2002 which has to be taken as the date of passing the reassessment order according to the judgment of the Calcutta High Court in Mohendra J. Thacker Co. v. CIT [1983] 139 ITR 793. Under section 153(2), as substituted by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1-4-1989, the reassessment order ought to have been passed on or before the expiry of one year from the end of the financial year in which the notice under section 148 was served. The notice is dated 26-5-2000 and the period of one year from the end of the financial year 31-3-2001 expired on 31-3-2002. The reassessment having been completed, according to the assessee, only on 17-5-2002, the date which the demand notice bears, is barred by limitation. We are unable to accept the contention. The Assessing Officer has to serve a demand notice on the assessee under section 156 of the Act only if any tax etc. is payable in consequence of any order passed under the Act. It is not denied that reassessment order passed on 28-3-2002 did not raise any demand of tax. The Assessing Officer was therefore not liable to ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviso to section 147 is not applicable. But the present case is not of this type. The reasons recorded show that there is no allegation that income chargeable to tax had escaped assessment because of the failure of the assessee to disclose fully and truly all material facts. On the contrary, the assessee had disclosed the dividend income and interest income in the profit and loss account and is alleged to have claimed deduction thereon under section 80-I in respect of the Anola unit. That is only a legal position taken by the assessee after furnishing all the material facts. It is open to the assessee to put forth a legal contention or claim after furnishing all the material particulars. The assessee cannot be shut out from doing so. He cannot be said to have furnished untrue particulars or incomplete particulars for having raised a legal plea. The inference from the facts is for the Assessing Officer to draw, as held by the Supreme Court in Calcutta Discount Co. Ltd. v. ITO [1931] 41 ITR 191. The duty of the assessee, even under the proviso to section 147, extends only to the furnishing of the material facts. It is not for him to advice the Assessing Officer as to what inference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction vested in the Assessing Officer under section 147/148. The order may be voidable when challenged, but till it is set aside on a successful challenge, it remains effective and all consequential proceedings based on the effective order are beyond challenge. 13. We have carefully considered the matter. In Kiran Singh v. Chaman Paswan AIR 1954 SC 340 it was held by the Supreme Court that a decree passed by a court without jurisdiction is a nullity and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at die stage of execution and even in collateral proceedings. A defect in jurisdiction, it was held, whether it is pecuniary or territorial or in respect of the subject-matter of the action, 'strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of the parties'. The principle was reiterated in Sunder Dass v. Ram Prakash AIR 1977 SC 1201 and Chiranjilal Shrilal Goenka v. Jasjit Singh [1993] 2 SCC 507. In Raja Jagadambika Pratap Narain Singh v. CBDT [1975] 100 ITR 698, the Supreme Court held that 'merely because an order has been passed by the Officer and has not been ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the validity of the reassessment order. Then the assessee has to step in and protect its interests and the liberty to question even the validity of the reassessment proceedings ought to be given to it. 14. Mr. Rajnish Kumar, the learned CIT(DR), with his usual thoroughness, invited our attention to the judgment of the Allahabad High Court in the case of Bharat Rice Mill v. CIT [2005] 278 ITR 599 and submitted that on facts it is close to the present case and hence ought to govern it. In that case an addition of Rs. 37,548 had been made to the value of the closing stock in the reassessment proceedings which the assessee did not challenge. The reassessment order became final between the parties, but its validity was sought to be set up by the assessee when penalty proceedings were initiated for concealment of income. The High Court did not permit the same. It is significant to note that the High Court examined the contention of the assessee that no reasons were recorded for issuing the notice under section 148 but found the same to be incorrect, as the assessee had filed a revised return showing higher income which was considered to be sufficient reason for reopening the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have already touched this aspect. 16. The learned CIT(DR) finally argued that in any case the rectification order passed by the Assessing Officer can be sustained as an order of amendment under section 155(4), if the power of the Assessing Officer can be traced to this provision. This sub-section provides for a situation where a loss has been recomputed by the Assessing Officer in reassessment proceedings for a particular year. In the assessment for the subsequent year or years the loss originally computed, which would normally have been higher than the loss recomputed in the reassessment proceedings, would have been brought forward from the earlier year and set off against the profits of the subsequent year or years. But by virtue of the reassessment for the earlier year and the recomputation (normally a reduction) of the loss to be carried forward, consequential amendments have to be carried out in the assessments of the subsequent year or years. The figures of loss to be brought forward and adjusted against the income of the subsequent year or years have to be mended. This exercise is permitted to be carried out by sub-section (4) of section 155. By the time the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t impinges upon issues that are debatable, an argument which would be available against a rectification order passed under section 154. Applying respectfully these principles, we find that in the present case it is not open to the assessee to argue that the order passed by the Assessing Officer, if it is considered to be one under section 155(4), seeks to amend debatable issues. In fact no such attempt was made before us on behalf of the assessee. What was argued before us, as we have already noticed, is that the power of amendment has to be traced to a specific power in the various sub-sections of section 155 and that there is no specific power conferred upon the Assessing Officer to pass the type of amendment order which he did on 28-2-2003. The provisions of section 155(4) refer specifically only to the adjustment of the figures of losses or depreciation to be carried forward and adjusted against the profits of a subsequent year or years under sections 72 to 74A. Such adjustments alone can be carried out through an order of amendment. There is no specific power conferred upon the Assessing Officer to amend the assessment of a later year to give effect to the change in the figure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the order of reassessment passed on 28-3-2002. It may be useful to recall the observations of the Privy Council in CIT v. Khemchand Ramdas [1938] 6 ITR 414, followed by the Supreme Court in ITO v. S.K. Habibullah [1962] 44 ITR 809 that an assessment once made is final and it is not open to the department to keep on modifying the same by issuing notices to the end of all time. In particular, it was held by the Supreme Court that 'The provisions relating to assessments and rectification or reopening thereof are exhaustive, and may not be extended by analogies. The right to rectify an assessment may therefore be exercised in strict compliance with conditions prescribed by the statute in that behalf'. Any assessment or other order made by the Assessing Officer can be modified only by a process known to law and it is for the Assessing Officer to trace the power to the specific provision of law which authorises him to do so. In the absence of any such power, the assessment or other order cannot be tampered with. In Kanumarlapudi Lakshminarayana Chetty v. First Addl. ITO [1956] 29 ITR 419 (AP), a judgment which was approved by the Supreme Court in S.K. Habibullah's case, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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