TMI Blog2011 (4) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... of an Assessment year should be the opening stock of the next Assessment year and thus, there was a glaring mistake apparent on the record - Decided in favor of the assessee - I.T.A. No.65 of 2003 - - - Dated:- 29-4-2011 - Mr. Justice Bhaskar Bhattacharya, Mr. Justice Sambuddha Chakrabarti, JJ. For the Appellant: Mr. J. P. Khaitan. For the Respondent: Mr. Prabir Bhowmick. Bhaskar Bhattacharya, J.: 1. This appeal under Section 260A of the Income-tax Act, 1961 is at the instance of an assessee and is directed against an order dated October 24, 2002, passed by the Income-tax Appellate Tribunal, A Bench, Kolkata, in ITA No. 466(Cal)/90 and ITA Nos.1337 and 1338(Cal)/91 for the Assessment Years 1986-87, 1987-88 and 1988-89 dismissing the said appeal. 2. Being dissatisfied, the assessee has come up with the present appeal. 3. The facts giving rise to filing of this appeal may be summed up thus: a) The assessee company is a Central Government Undertaking deriving income from the execution of contract works that includes construction of Bridge etc. It is also engaged in the business of fabrication of steel structure due to specialization in structural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tually accrued, the action of the appellant in adopting the method of accounting for valuing the work-in-progress was contrary to the principles of mercantile systems of accounting. In other words, the Assessing Officer found no justification in the change of the method of accounting adopted by the appellant with regard to the valuation of the work-in-progress. He also found that such method of accounting was not in conformity with the mercantile system of accounting. d) The appellant submitted before the Assessing Officer that the method of accounting for valuing the work-in-progress was in conformity with the National Accounting Standard. It was further alleged that such method had been approved by the Institute of Chartered Accountant. e) The Assessing Officer examined the documents furnished by the appellant to show that the change in the method of accounting was in pursuance of National Accounting Standard. After examining the documents, the Assessing Officer observed that there was no specific direction in those documents for valuing the work-in-progress in the manner that has been done by the appellant. The Assessing Officer was of the view that the National Accounting Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7th August, 1990 rejected such application on the ground that Assessment Year would show that the returned income had been accepted without any modification and as such, there was no scope of any rectification under Section 154 of the Income-tax Act. h) Being dissatisfied, the appellant preferred an appeal before the Commissioner of Income-tax (Appeals) and the said appellate authority dismissed the appeal with the following observations: The ground of appeal/statement of facts only says that the assessing officer rejected the petition u/s. 154 that had been moved for rectification of mistake apparent from record. The mistake, if any, was however, not specified. In reply to the query in appeal the A/R. refers to the persisting conflicting between the Department and the appellant regarding the method of accounting that is being followed by the appellant which has not been accepted conclusively by the Department. The appellant sometime in the past adopted the International Accounting Standard 7 and gave up the earlier method of accounting. Such adoption was rejected as it was not in tandem with the charging sections of the Act read with section 145 of the Act. Thus, and qui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Mills Ltd. vs. Appellate Assistant Commissioner of Income-tax Anr., reported in (1975) 99 ITR page 135 in support of his contention that the record showing the closing stock of the earlier year found a part of evidence relevant to the assessment for the subsequent year to the extent that for ascertaining the closing and opening stock positions, the two assessments telescoped into each other. According to Mr. Khaitan, the authorities below erred in law in not taking into consideration the fact that in this case, there was a mistake apparent on the face of record inasmuch as the valuation of the closing stock of the previous year did not result in the same opening stock for the subsequent year. According to Mr. Khaitan, the aforesaid error was one apparent on the face of record and thus, the authorities below should have rectified the said mistake in terms of Section 154 of the Act. 7. Mr. Bhowmick, the learned counsel appearing on behalf of the Revenue, has, on the other hand, opposed the aforesaid contention of Mr. Khaitan and has supported the assessment orders passed by the Assessing Officer, and the orders passed by the CIT (Appeals) and the Tribunal. 8. Mr. Bhowmic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year was taken into consideration for arriving at that year s income. However, if the contract showed a loss on completion, the total loss was accounted for by adjusting the value of the work-in-progress. The said changed method was consistently followed by the assessee with effect from the Assessment Year 1986-87. 10. By the order of Assessment made on February 7, 1989 for the Assessment Year 1986-87, the Assessing Officer did not accept the changed method and increased the closing value of the work-in-progress by Rs.1,31,88,000/- by adding back the adjustment made for the losses. It appears from record, that the assessee preferred an appeal against such order, but was unsuccessful up to the Tribunal. The Committee on disputes did not permit the assessee to pursue the matter before this Court under Section 260A of the Act and, thus, the order dated February 7, 1989, passed by the Assessing Officer for the Assessment Year 1986-87 has since attained finality. 11. For the Assessment Year 1987-88 and 1988-89, the assessee had prepared its accounts according to the changed method and submitted its income-tax return accordingly and in respect of the said returns, on March 23, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of detecting the said mistake. As pointed out by the Supreme Court in the case of Mahendra Mill (supra), such mistake should be treated to be apparent on the face of record as would appear from the following observations of the Supreme Court: This Court then noticed Venkatachalam's case, 1959 SCR 703 = (AIR 1958 SC 875) and Khem Chand's case 6 ITR 414 = 65 Ind App 236 = (AIR1938 PC 175) (supra) in support of the view taken by it. Counsel for the then appellant sought to distinguish those cases on the ground that the record there considered was the assessment record of that year and the Income-tax Officer did not have to go to the records of the previous year. This argument was repelled in these terms: "That is a distinction without a difference. If, for instance, the Income-tax Officer had found that in the assessment year 1952-53 there was an apparent arithmetical mistake in the account of the Written Down Value of the properties which resulted in a corresponding mistake in the assessment of the year in controversy could he not take the corrected figure for the purposes of the assessment and could it be said that the mistake was not apparent from the record. A fortiori if he di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of correcting the mistake by the Appellate Assistant Commissioner. (Emphasis supplied by us). 15. We find that all the authorities below ignored the aforesaid point in their respective orders and thus, there was apparent error on the face of record justifying rectification. Merely because in the original return, there was a mistake on the part of the assessee, such fact cannot be a ground for refusing the prayer of rectification, when the mistake is apparent from the record and the dispute is also not debatable in view of the law settled by the Supreme Court long ago. As pointed out by the Supreme Court in the case of Commissioner of Income Tax. Madras vs. V. MR. P. Firm Muar reported in AIR 1965 SC 1216, if a particular income is not taxable under the Income-tax Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Equity is out of place in tax law and if a particular income is not taxable, the Income-tax Officer has no power to impose tax on the said income. 16. We now propose to deal with the decisions cited by Mr. Bhowmick. 17. In the case of Mepco Industries Ltd. (supra), the Supreme Court was dealing with a case of rectification un ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
