TMI Blog2007 (9) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... he construction of industrial plants. A return of income for the assessment year 1995-96 declaring total income of is 5,27,63,150 was filed before the Assessing Officer on 30-11-1995. This return was accepted under section 143(1)(a) on 27-3-1996. The return was thereafter selected for scrutiny vide notice under section 143(2) issued to the assessee-company. During the assessment proceedings, the assessee-company was called to prove the genuineness of its claim of purchase of Gas Cylinders during the relevant accounting year and thereby to prove its claim for depreciation therein at the rate of 100 per cent amounting to Rs. 3,05,05,0 14. The assessee-company submitted following documentary evidence during the assessment proceedings in order to prove the genuineness of purchases of Gas Cylinders and use of such assets during the relevant accounting year:- (a) Copy of the purchase bills, (b) Copy of the purchase order, (c) Copies of the transportation documents, (d) Copy of the documents for having received the assets at various sites located in various parts of the country wherein the assessee is carrying on its work of executing the project, (e) Photographs evidencing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard of Direct Taxes from time to time to clarify and explain the applicability and provisions of KVSS. The learned Chief Commissioner of Income-tax, Pune, in his letter dated nil, November, 1998 addressed to Shri Vijay Mallya, Chairman of UB Group and also assessee's Company, outlining the scope of the scheme as well as inviting the Company to settle the unresolved differences and disputes. The contents of the said letter are extracted hereunder:- November, 1998 "...... Mr. Vijay Mallya, U.B. Engineering Ltd. Sahyadri Sadan, Tilak Road, Pune - 30 Sub: Kar Vivad Samadhan Scheme 1998 Dear Sir/Madam, The Income-tax Department recognises your contribution towards the nation's progress in the form of payment of taxes. Yet, some unresolved differences have led to a few cases being locked in appeals causing you and us mutual concern. Revenue isn't collected in time while you have to divert time and resources to appellate proceedings which can be avoided. As you are probably aware the Government has proposed a remedy for the settlement of such cases in the form of Kar Vivad Samadhan Scheme, 1998. Arrears of income-tax or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment is the allowance of depreciation on Gas Cylinders purchased by the assessee amounting to Rs. 305 lakhs. According to the assessee, the Authorities prevailed upon the assessee-company to cover the issue under KVSS. The assessee all along maintained that the original claim of depreciation was genuine. But, according to the assessee, the Assessing Officer insisted that consequent upon certain information in his possession which, according to him, received subsequent to the assessment, was of the opinion that allowance of depreciation was incorrect as the entire transaction was suspected as bogus. According to the assessee, it with an intention to buy peace and to settle its disputes on all issues agreed with the Assessing Officer to cover this issue under KVSS. Accordingly, the assessee-company filed a petition for rectification on 13-1-1999 before the Joint Commissioner of Income-tax. It is worthwhile to reproduce this application as follows:- "Jt. Commissioner of Income-tax 13-1-1999 Special Range-3, Pune Sir, Sub: Rectification of mistake apparent from record under section 154 of the Income-tax Act-Assessment year 1995-96 We refer to the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the original assessment by disallowing depreciation which was originally allowed. In line with the understanding, the assessee also filed the second Declaration on the same day including this income of Rs. 305 lakhs, as multiple declarations were permitted under the KVSS. 5. The Assessing Officer did not act upon the petition for rectification filed by the assessee. In the meantime, the learned Commissioner of Income-tax who was the Designated Authority under the KVSS issued a Certificate in Form 2A marked as page No. 112 of the Paper Book accepting the first Declaration filed by the assessee and while doing so, he made the following remarks:- "** Note- (1) The relief has been calculated, as per the Form 1A filed on 31-12-1998 vide No. 282. (2) The declaration in second Form 1A filed on 13-1-1999 vide receipt No. 339 indicates the demands based on order under section 154 that may be made. Such demand did not exist on 31-3-1998 as well as on the date of declaration. No such demand has been raised so far. Hence, the declaration dated 13-1-1999 is redundant and is, therefore, filed....." On payment of the amount indicated in Form 2A, a Certificate of full and final settlemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of the assessee as there were many decisions directly on the subject in favour of the assessee and the assessee had a good chance of success before the Tribunal. 7. Consequent upon the direction of the Hon'ble High Court, the Assessing Officer issued a letter dated 14-2-2000 wherein he outlined his objections for rectification as prayed by the assessee. A summary of the objections by the Assessing Officer is as under: "1. According to the Assessing Officer, the order under section 143(3) does not exist after notice under section 148 dated 17-8-1998. He was of the view that no rectification can be carried out as no assessment order exists. 2. That having validly initiated proceedings under section 148 provisions of section 154 cannot be taken recourse too. 3. That section 148 and section 154 overlaps against each other and in such circumstances it is the choice of the Assessing Officer to proceed under which ever section he chooses and that the assessee cannot compel him to take recourse to any particular section. 4. There is no mistake apparent on record based on the assessment proceedings and even if the information collected to issue notice under section 148 is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be rectified exists nor there is any mistake apparent from records. It has already been clarified from this office that no order under section 154 can be passed merely to enable you to avail the benefit of KVSS. In view of this, your rectification application dated 13-1-1998 is hereby filed." Thereafter, in pursuance of a Writ Petition filed by the assessee, the Hon'ble High Court of Bombay directed as under: "...At the outset, we do not wish to express any opinion on the merits. The only ground why we are inclined to stay the reassessment proceedings is that the petitioner has a right to file an appeal under section 246(A)(1)(c) and till the appeal is heard, the D.A. should not reject the petitioner's application under K.V.S.S. and secondly pending appeal if the reassessment proceedings were to proceed, it would nullify the appeal under section 246. Hence, the following Order is passed: (a) Petitioner to file an appeal under section 246 within 2 weeks. (b) A.A. to decide the matter within 4 weeks from the receipt of the appeal. (c) Within 4 weeks from today Petitioner will deposit with the Department Rs. 1.10 crore subject to the result of appeal. If the amount becomes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer had not passed any order under section 143(3) read with section 147, the CIT(A) held in para 14 of his order that "the proceedings initiated by the Assessing Officer under section 147 are valid proceedings." 9. Aggrieved by the orders of the authorities below, the assessee is in appeal before this Tribunal. Shri K.R. Pradeep, the learned counsel for the assessee, first of all drew our attention to the salient features of KVSS announced by the Government of India. He further drew our attention to the various circulars issued by the CBDT from time to time to clarify and explain the applicability and provisions of KVSS. He submitted that in pursuance of the KVSS, the then learned Chief Commissioner of Income-tax, Pune, had written a letter to Mr. Vijay Mallya, Chairman of UB Group and also of assessee-company, which we have reproduced in para (4) supra. He submitted that the said letter was received by the Chairman of the assessee-company on 2-12-1998 and soon on receipt of the said letter, the Chairman of the Company instructed the Executives to hold discussions with the income-tax authorities, i.e. Chief Commissioner of Income-tax, Commissioner/Designated Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities to avail of the KVSS, the learned counsel filed a sworn Affidavit of Shri A.S. Bhide, who is the General Manager (Finance) of the Company. The Affidavit reads as follows: "Affidavit I, Mr. A.S. Bhide, S/o Shankar Purushottam Bhide aged 54 years residing at A/3, Moghul Gardens, Koregaon Park, Pune 411 001 solemnly affirm on oath and state as under: In pursuance of the letter written by CCIT to our CMD Shri Vijay Mallya, I along with my colleagues met the CIT the JCIT on number of occasions and in particular on these dates: 1. 7-12-1998 2. 23-12-1998 3. 31-12-1998 4. 12-1-1999 5. 13-1-1999 6. 14-1-1999 to discuss the issue of availing of KVS Scheme for the assessment year 1995-96. I further state that the department insisted and prevailed on the Company to settle all the issues including the issue of depreciation. There was extensive discussion between the Company, CIT JCIT on the modalities of availing the benefit. It was in line with the discussion and understanding that petition under section 154 was filed before the JCIT. It has been the expectation of the company that the department would carry out the rectification and accept the petition under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the various issues and have held that in reassessment proceedings the entire assessment would not be open for review or reconsideration and the reassessment proceedings would be confined only to the escaped income. The learned counsel further placed reliance on the Hon'ble Andhra Pradesh High Court decision in the case of Nawab Mir Barakat Ali Khan Bhadur v. ITO [1988] 172 ITR 13 and the judgment of the Delhi High Court in Sharada Trading Co. v. CIT [1984] 149 ITR 19 wherein it has been held that just because a notice under section 148 is issued the order of the original assessment does not become void ab initio or non est The learned counsel further submitted that in view of the above judgments, it is incorrect for the authorities below to contend that the order of original assessment does not exist after issue of notice under section 148. 11. Coming to the finding of the learned CIT(A) that the proceedings initiated by the Assessing Officer under section 147 are valid proceedings, the learned counsel submitted that the inference drawn by the CIT(A) is contrary to the evidence available on record and also contrary to his own findings on this issue. At this stage, the Bench rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned counsel concluded that the assessee must succeed on both, the issues. 12. Shri A.P. Srivastava, the learned senior D.R. strongly supported the orders of the authorities below. He submitted that the contention of the assessee that there was agreement with the department and rectification application dated 13-1-1999 proposing withdrawal of depreciation claim of Rs. 305 lakhs and the second KVSS declaration dated 13-1-1999 were in pursuance of the discussion and agreement with the department was without any basis and there was nothing on record of the Assessing Officer or the CIT(A) to suggest any such agreement. In support of this contention and as a rejoinder to the affidavit filed by the assessee, the learned senior D.R. filed a sworn affidavit of the present Jt. CIT, Spl. Range 3, Pune which is reproduced as under: "Affidavit I, Surinder Jit Singh, Joint Commissioner of Income-tax, Special Range-3, Pune of 12, Sadhu Vaswani Chowk, Pune-411 001 solemnly affirm/make oath and state as follows: 1. I have discussed the issue of discussion and agreement with the department prior to filing of application under section 154 by the applicant with the then, Commissioner of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent address and is registered with the Sales Tax Commissioner at a different sales tax No. and total sale shown by M/s. Gargi Trading Corporation is only Rs. 6,000 for the whole year. On this basis notice under section 148 was issued to the assessee on 17-8-1998 after recording reasons. Thus in this case it is clear that the assessee has made a false claim for depreciation in the return of income furnished on 30-11-1995. It is not a case of where there is any mistake apparent from records therefore provision of section 154 will not be applicable in this case. In addition to above it is found that for the purpose of section 154, the record is to be taken as record as on the date of passing the order. All information as stated above has been gathered by the Assessing Officer subsequent to the passing of order under section 143(3) of the Income-tax Act on 31-3-1998. There was nothing on record as on 31-3-1998 which goes to prove that depreciation to the assessee has been erroneously allowed. Any information gathered after the date of passing of order cannot be taken into account for the purpose of invoking the provision of section 154. Reliance is placed on the decision of Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n followed by second KVSS, the assessee wanted to avail of a benefit which was legally not available to the assessee and, accordingly, the Assessing Officer rightly rejected the rectification application and since after rejection of the application for rectification, no proceedings were pending, second application filed under KVSS was rightly rejected. 13. On the validity of proceedings under section 147, the learned D.R. submitted that the same were rightly initiated because after the assessment was completed under section 143(3), the Assessing Officer came across some information which had not been disclosed by the assessee at the time of original assessment. He, however, admitted that the proceedings initiated under section 147 have not been completed by the Assessing Officer so far and the same are pending before the Assessing Officer. But notwithstanding this fact, the order of the CIT(A) on this issue deserves to be upheld. At the end, the learned D.R. drew our attention to the well-known decision of the Hon'ble Supreme Court in the case of T.S. Balaram, ITO v. Volkart Brothers [1971] 82 ITR 50 where it has been held that a mistake apparent on the record must be an obvious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been under-assessed and does not extend to revising, reopening or reconsidering the whole assessment or permitting the assessee to reagitate questions which had been decided in the original assessment proceedings. It has further been held by the Apex Court that it is only the under assessment which is set aside and not the entire assessment when reassessment proceedings are initiated. The ITO cannot make an order of reassessment inconsistent with the original order of assessment in respect of matters which are not the subject-matter of proceedings under section 147. The Hon'ble Andhra Pradesh High Court in Nawab Mir Barakat Ali Khan Bahadur's case has held as under: "Just because a notice under section 148 is issued the order of the original assessment does not become void ab initio or non est. The original assessment order remains good, valid and effective till it is substituted by the reassessment order. The mere insurance of a notice under section 148 does not affect the validity or efficacy of the original assessment order, or the appeals or other proceedings arising therefrom, or other proceedings, if any, taken in pursuance of such original assessment order." Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke by filing an application under section 154. Sub-section (2) of section 154 clarifies that the power of rectification may be exercised by the Authority concerned on his own initiative, on discovery by him of any mistake apparent from record and the power is similarly to be exercised if the assessee concerned points out such mistake. So, the assessee had a right to file an application under section 154 taking into consideration its own perception of its records. If a statute invests a public officer with authority to do an act in a specified set of circumstances, it is imperative upon him to exercise his authority in a manner appropriate to the case when a party interested and having a right to apply moves in that behalf and circumstances for exercise of authority are shown to exist. Even if the words used in the statute are prima facie enabling, the courts will readily infer a duty to exercise power which is invested in aid of enforcement of a right - public or private - of a citizen. The power to rectify the order of assessment conferred on the ITO by section 154 is to ensure that injustice to the assessee or to the revenue may be avoided. It is implicit in the nature of the pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lities apart if the Court is satisfied of the injustice then it is its constitutional and legal obligation to set it right by recalling its order." In para 17, the Special Bench went on to add, "Rectification of an order stems from the fundamental principle that justice is above all. It is exercised to remove error and not for disturbing finality." In para 18, the Spl. Bench went on to add further, "The purpose of the Tribunal is to render justice and not to negate it. We are approaching this problem keeping the above wholesome principle in view." 21. While deciding this issue, we cannot ignore the background in which the application for rectification under section 154 was filed before the Assessing Officer. The background is "Kar Vivad Samadhan Scheme" - a scheme for settlement of various disputes under the various statutes. This scheme was brought by the Government of India with great expectations and the purpose was to bring down number of appeals etc. and to collect tax quickly. Under the said scheme, various clarifications were issued by the Central Board of Direct Taxes from time to time to clarify and explain the applicability of provisions of KVSS. The learned Chief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that the assessee held discussions with the departmental authorities after Shri Vijay Mallya received letter referred to in para 4 supra is confirmed by Shri A.S. Bhide, General Manager (Finance) by way of a sworn Affidavit. Revenue has not placed any evidence before us to rebut the contents of the sworn Affidavit. No doubt, revenue has filed a sworn Affidavit from Shri Surinder Jit Singh, Jt. CIT, Spl. Range 3, Pune, who is the present Assessing Officer, but the contents of the said Affidavit do not throw any light on the controversy. Shri Surinder Jit Singh was not the Assessing Officer at the relevant time and in the Affidavit, he has made a summary statement that he had discussed the issue of discussion and arrangement with the department prior to filing of application under section 154 by the applicant with the then CIT-I, Pune Shri J.G. Pendse and the Assessing Officer Shri R.K. Gupta, Jt. CIT and stated that there was no discussion or agreement with the assessee prior to filing of application under section 154 by the assessee dated 13-1-1999. It is significant to note that the revenue has not filed any Affidavit from Shri J.G. Pendse, the then CIT-I, Pune and Shri R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Kerala High Court in Mrs. Gladys S. Koder's case. But, it is also a settled proposition of law that the course which favours the assessee should be adopted. Reference in this connection is invited to the judgment of the Hon'ble Supreme Court in CIT v. Nagal Hills Tea Co. Ltd. [1973] 89 ITR 236 and CIT v. Vegetable Products Ltd. [1973] 88 ITR 192. In our view, especially in a case like that of the assessee where the assessee suo motu filed an application under section 154 to settle all its disputes under KVSS which was brought by the Government of India with great expectations, the course of rectification under section 154 should have been favoured against the course of action under section 147, especially when the assessee had filed return in response to notice under section J48 under protest, in a situation like this, it is always desirable to follow a pragmatic and more practical path. 23. Coming to the reliance placed by the learned senior D.R. on the well-known decision of the Hon'ble Supreme Court in the case of Volkart Bros., we do agree that section 154 applies to a mistake apparent on the record, but at the same time, we find that the said expression, i.e. "mistake ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Assessing Officer was application under section 154 and the CIT(A) ought to have confined to an adjudication on application under section 154 of the Income-tax Act. 25. In the light of above discussion, we hold that the assessee rightly filed an application under section 154 pointing out therein suo motu mistake about the claim of depreciation on Gas Cylinders; the Jt. CIT was not justified in filing/rejecting the said application. We reverse the findings of the CIT(A) and allow the application under section 154. 26. In the result, the appeal is allowed. Per K.C. Singhal, Judicial Member- 27. The proposed order of my Learned Brother appears to be very attractive, but after giving my deep thoughts to the issue before us, it is not possible for me to agree with the conclusion arrived at by him that the impugned order of assessment dated 31-3-1998 could be rectified under section 154. The reasons for dissent are given hereafter. 28. The question for our consideration is whether on the facts and in the circumstances of the case, the impugned order of assessment dated 31-3-1998 could be rectified by the Assessing Officer under section 154. The facts of the case and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the proposed order. The relevant portion of that judgment appearing at page 56 of the said, report is reproduced below:- "The expression "record" has not been defined in the Act. It has, therefore, to be construed and understood in the context in which it appears. Section 154 empowers the income-tax authorities to rectify mistakes which are "apparent from the record". "Record" in such a case would mean record of the case comprising the entire proceedings including documents and materials produced by the parties and taken on record by the authorities which were available at the time of passing of the order which is the subject-matter of proceedings for rectification. They cannot go beyond the records and look into fresh evidence or materials which were not on record at the time the order sought to be rectified was passed." The other binding decision on this issue is the decision of the Hon'ble Supreme Court in the case of Maharana Mills (P.) Ltd., wherein it has been held that record means the material or evidence on the basis of which the assessment was made. The relevant observations of their Lordships are reproduced as below: "'The record' contemplated by section 35 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee under section 32 was in order. Consequently, it cannot be said that any mistake apparent from the record was committed by the Assessing Officer. Accordingly, it is held so. 32. The reliance placed by the ld. counsel for the assessee on the decision of Supreme Court in the case of CIT v. Sree Manjunathesware Packing Products Camphor Works [1998] 231 ITR 53 and the decision of Madras High Court in the case of CIT v. M.R.M. Plantations (P.) Ltd. [1999] 240 ITR 660 is misplaced. The Supreme Court was concerned with the interpretation of the provisions of section 263, the scope of which, is entirely different from the provisions of section 154. Section 263 allows the CIT to cause an enquiry before holding the order of Assessing Officer being erroneous. That means, the CIT can use the material obtained in the course of such enquiry. It is, therefore, clear that scope of section 263 is of wide amplitude and the meaning of the word "record" cannot be restricted to the record which was before the Assessing Officer. It is because of this context the Hon'ble Supreme Court held that for the purpose of section 263, the word "record" would include the material available before the CIT. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g section 154 and, therefore, there are no compelling reasons to take the same meaning of the word "record" while defining the scope of section 154. Scope of section 154 in this regard is fully covered by the earlier Supreme Court judgment in the case of Maharana Mills (P.) Ltd. Hence, the decision of the Supreme Court relied on by the ld. counsel for the assessee is fully distinguishable. The decision of Madras High Court has followed the said decision of the Supreme Court in Shree Manjunathesware Packing Products Camphor Works' case without noting the difference in the language employed by the Legislature in section 154 and section 263. This decision, though favours the assessee, cannot be applied in the present case being contrary to the decision of Bombay High Court Gammon India Ltd.'s case and the decision of Supreme Court in Maharana Mills (P.) Ltd.'s case. 33. There is another reason for rejecting the stand of the assessee. The Supreme Court in the case of Volkart Bros. has held clearly that mistake apparent from record must be an obvious and patent mistake and not something which is established by long drawn process of reasoning. Therefore, a disputable point cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parting with my order it is mentioned that answers given by CBDT in response to question Nos. 8 and 31 as reproduced in the application under section 154 do not permit the assessee to compel the Assessing Officer to rectify an order unless there is a patent mistake. These answers presume a valid application under section 154. KVSS is applicable only where the demand is raised on the basis of a valid application under section 154 and not otherwise. The provisions of section 154 cannot be availed of to cover the possible dispute, even though no mistake existed in the impugned order. 35. In view of the above discussion, it is held that there was no mistake apparent from the record in the impugned assessment order and, therefore, no rectification could be made under section 154. Consequently, the Assessing Officer was justified in filing the application of the assessee. Hence, the appeal of the assessee is dismissed. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 As there is a difference of opinion between the Accountant Member and the Judicial Member, the matter is being referred to the President of the Income-tax Appellate Tribunal with a request that the following ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal assessment. The original assessment completed by the Assessing Officer resulted in determining the income at Rs. 10,29,54,140. Assessee carried the matter before the CIT(A). Dissatisfied with the CIT(A)'s order, assessee carried the matter before the Tribunal. 5. On receipt of notice under section 148, assessee filed the return along with a covering letter dated 16-9-1998. The return was filed under protest. The returned income in response to notice under section 148 was the same as was in the original return. 6. In the meantime, the Government of India announced a scheme for settlement of various disputes under the Income-tax Act, named "Kar Vivad Samadhan Scheme" (for short "KVSS"). While the Scheme was in force, the Chief Commissioner of Income-tax, Pune, addressed a letter dated nil, November 1998, to Shri Vijay Mallya, Chairman of UB Group and assessee company, pointing out the benefits and settling the tax disputes. The letter has been reproduced by the learned AM vide Para 4 of his order. On receipt of this letter on 2-12-1998, the Chairman of the assessee-company instructed his Executives to hold discussion with Tax authorities, i.e., to say, Chief Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A), the Designated Authority was empowered to pass order even under section 154, and such order even if passed after the Scheme of KVSS ended, it will automatically revert back to the period of the period of KVSS and assessee could thus avail the benefit of KVSS according to CBDT's clarification. Since no order was passed on assessee's application under section 154, assessee approached the Hon'ble Bombay High Court by way of Writ Petition to expedite the order under section 154. The Hon'ble High Court directed the Assessing Officer to dispose off the petition under section 154, time bound. 8. Consequent to the direction of the Hon'ble Bombay High Court, Assessing Officer issued a letter dated 14-2-2000, wherein he outlined his objections for rectification as prayed for by the assessee. Assessing Officer held, firstly, that the order under section 143(3) does not exist after notice issued under section 148 (dated 17-8-1998). Hence, no rectification could be carried out. Secondly, having validly initiated the proceedings under section 148, provisions of section 154 cannot be taken recourse too. Thirdly, section 148 and section 154 overlaps against each other and it is the choice of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation was genuine, revenue authorities prevailed over the assessee to avail the KVSS benefit on this amount as well. Assessee filed rectification petition after prolonged discussion with the revenue authorities. General Manager (Finance) of the assessee-company filed an affidavit, which is evidenced at Page 16 of the order of the learned AM. Assessee submitted, on the basis of clarification issued by CBDT regarding KVSS that if the assessee files a rectification petition during the period of KVSS and if it is decided in assessee's favour after the Scheme came to a close, it could relate back to the period of declaration. Relying upon the decisions of the Hon'ble Supreme Court V. Jagmohan Raos case and H.M. Esufali H.M. Abdulali's case and the decision of the Hon'ble Allahabad High Court in Sir Shadilal Sons' case, learned counsel submitted that the original order do exists even after reopening under section 148. Merely because notice has been issued under section 148, the original order does not become void ab initio or non est. 11. The Bench, while the proceedings were on before it, directed the revenue authorities to file an affidavit with regard to assessee's assertion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove, he relied upon the decision of the Hon'ble Madras High Court in the case of T.S. Rajam. He further held that the word "record" contemplated under section 154 does not mean only the order of assessment, but it comprises all the proceedings on which the assessment is based. Assessing Officer is entitled, for the purpose of exercising rectification jurisdiction, to look into the whole evidence and the law applicable to ascertain whether there was an error. According to the learned AM, after going through the records, assessee came to the conclusion that there had been a mistaken claim of depreciation and accordingly the assessee filed an application under section 154. He held, the power vested in Assessing Officer is not discretionary. If the conditions for exercise were shown to exist, then the Assessing Officer cannot decline to exercise it. Learned AM also relied upon the Special Bench decision of the Tribunal in the case of Rahulkumar Bajaj, wherein the Tribunal held: "rectification of an order stems from the fundamental principle that justice is above all. It is exercised to remove error and not for disturbing finality." 14. In this background, learned AM held, the Scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder. The tax arrears would accordingly stand modified and in such cases the modified tax arrears will constitute the tax arrears for the purposes of declaration under the Scheme." According to the learned AM, where only certain additions are disputed, even then the assessee could take advantage of the Scheme for the entire demand. Impliedly, if the assessee or by suo motu revenue rectifies the order under section 154, on or before 31-3-1998, it will relate back to the period of original order even if the rectification order was passed under section 154 much later. 16. Learned AM held that the expression "mistake apparent from the record" has a wider meaning than the expression "error apparent on the face of the record" occurring in Order 7, Rule 1 of the Civil Procedure Code. 17. On the other hand, learned Judicial Member held that a mistake can be said to have been committed by revenue authorities if either a relevant material or evidence has not been taken into consideration or some irrelevant factor has been taken into consideration or relevant provisions of the statute have not been applied or the binding decisions of the Apex Court or jurisdictional High Court have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the relevant year as genuine, but on the other hand to avoid possible controversy the assessee agrees for rectification order and ready to forego depreciation and thereby consenting to avail the benefit of KVSS. The stand of the assessee itself, learned JM held, makes it clear that there is no obvious or apparent mistake in the order. Learned JM held, the view taken by the learned AM that there is an apparent mistake in the order does not stand to reason for the reason that on the one hand the assessee is challenging the validity of notice issued under section 148 on the ground that ail material facts regarding the claim of depreciation were disclosed to the Assessing Officer at the time of assessment and thereby defending the order of assessment granting depreciation and on the other hand assessee is seeking rectification and agrees to forego the claim of depreciation. He held, the contradictory stand goes against the assessee. Hence, he held, there is no apparent mistake to be rectified under section 154 and consequently upheld the order of the Assessing Officer. 21. I heard the rival submissions, gone through the records and the decisions cited. From the above it is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he authority and the jurisdictional power passes on the assessee. Assessee cannot insist one course favourable to him - if at all - could not be chosen. Assessing Officer is empowered to adopt either of the two methods. The discretion is of the Assessing Officer. After resorting to one recourse, if on a specific point of dispute two legal views are possible as held hereinabove, the one favourable should be adopted. 24. From the records it is clear that the assessee was informed through letters, like any other assessees. advantages of going for KVSS, which was an ambitious Scheme of the Government. Subsequently there were discussions between assessee and the revenue authorities. I am unable to agree with the view expressed by the learned AM that by filing an application under section 154 what the assessee intended was to settle all its disputes in 'one go' under a package deal under KVSS, with great expectations and it cannot be said to be a back door entry. By filing the rectification application, in fact, assessee was trying to pre-empt the revenue, proceeding any further under sections 147/148. This does not tantamount to settling the disputes in 'one go'. 25. The Hon'ble Cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rising the entire proceedings including documents and materials produced by the parties and taken on record by the authorities which were available at the time of passing of the order which is the subject-matter of proceedings for rectification. They cannot go beyond the records and look into fresh evidence or materials, which were not on "record" at the time of passing the order that sought to be rectified. 29. In the instant case of the assessee, notice under section 148 was issued much later and assessee's rectification petition was even later. Even while filing the return in response to notice issued under section 148 for reopening, assessee contended that the assessee had all evidences in its record to prove that the assessee claimed the depreciation rightly. This amounts to an admission that the first order in which depreciation allowed was correctly allowed and there is no apparent mistake. However, assessee's reason for resorting to section 154 is that the assessee intends to avail KVSS in respect of all items connected with the assessment. In other words, assessee is trying to rely upon the documents/records which came into revenue's possession subsequent to passing of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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