TMI Blog2013 (12) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... me of initiation of the rectification proceedings, and not merely the record available at the time of passing the original order - As per Board Circular No. 689 dated 24.09.1994 the A.O. is permitted to admit subsequent material brought on record and to rectify the assessment consistent with such evidence, except where statutory evidence required to be submitted had not been submitted. The assessment as made in the instant case would tantamount to it being made subject to the result of the reference as made during the course of assessment to the valuation officer, and thereby exceeding the time limitation prescribed by law - A subsequent report at a variance may, in the facts and circumstances of a case, exhibit the assessment as framed to be erroneous and prejudicial either to the Revenue or the assessee, validating action u/s. 263 or, as the case may be, sec. 264, but would not by itself make the order 'mistaken', so as to be liable for rectification u/s. 154 - Decided against Revenue. - I.T.A. No. 4813/Mum/2011, Cross Objection No. 63/Mum/2012 - - - Dated:- 20-11-2013 - Shri B. R. Mittal, JM And Shri Sanjay Arora, AM,JJ. For the Petitioner : Shri P. K. Singh For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing successful qua the Revenue's appeal. We are, however, afraid that this is not for any of the reasons that found favour with the ld. CIT(A). That is, our approval of his conclusion is for separate reason/s. We are, however, obliged to and shall discuss each of the three reasons on which the first appellate authority found the A.O.'s action as unsustainable in law. 3.1 As regards the first issue, without doubt notice u/s. 154(3) is mandatory. However, in the given facts and circumstances of the case, where the A.O. is bound to accept the DVO's report, in the framing of which the assessee has been admittedly allowed due opportunity to state its case on merits, it cannot be said to be a case of gross breach of a principle of natural justice, audi alterm, warranting a quashing of the rectification proceedings. Reference in this regard may be made to section 16A of the Wealth Tax Act, 1957, to which the reference u/s.55A of the Act is subject, as also the decision by the tribunal in the case of Suresh C. Mehta v. ITO [2013] 144 ITD 427 (Mum). This is also the Revenue's case in substance. The assessee, at the time of the reference to the DVO, and subsequently through opportunity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion being in fact available with the A.O. in the matter, i.e., for charge of penal interest u/s.18A(8) r/w.s 18A(6) of the Income Tax Act, 1922, as against the contrary view by hon'ble Madras high court, in whose view no such discretion was available with the assessing authority, and which formed the basis of the decision by the said court. In view of the hon'ble apex court, the A.O. clearly had a discretion (i.e., for reduction of waiver of the said penal interest) under sub-rule (5) of Rule 48 of the Income Tax Rules, 1922. Thus, the right of the assessee in obtaining the decision of the A.O. had been lost by the non-issue of notice and, thus, not affording opportunity of hearing as required u/s.35 of the 1922 Act (corresponding to section 154 of the Act). As such, though by its said decision, the apex court annulled the amended assessment, the basis of the same was only the availability of the discretion with the A.O. and, thus, a vested right with the assessee, which was thus lost, overruling the decision to the contrary in the case of Lata Mangeshkar vs. Union of India [1959] 36 ITR 527 (Bom), holding of no such discretion being available with the A.O. The very fact that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack to the file of the assessing or the first appellate authority on finding an absence or lack of proper opportunity having been granted to the assessee in the matter. 3.2 The second ground assumed by the ld. CIT(A) is with respect to the valuer's report being not available at the time of framing the assessment, so that it cannot form part of the record. In this regard, in our view, the 'record' would be that available with the A.O. at the time of initiation of the rectification proceedings, and not merely the record available at the time of passing the original order, as held in CIT vs. M. R. M. Plantations Pvt. Ltd. [1989] 240 ITR 660 (Mad). As explained by the hon'ble court, the object of the provision of rectification would be ill-served if the authorities are compelled to preserve such mistakes in the order by asking them to wear blinkers and not look into unimpeachable material, which in that case was the rectification order of assessment for a preceding year, in light of which the mistake/s in the order sought to be rectified was apparent. Reference in this context may also be made to the Board Circular No. 689 dated 24.09.1994 (reported at [1994] 209 ITR (St.) 75) permit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is incumbent on him to make a reasonable estimate of the same in assessing the income. This is also for the reason that there is another aspect to the matter; the time limit, to which the assessment is subject, and which cannot be breached either directly or indirectly. The assessment as made in the instant case would tantamount to it being made subject to the result of the reference as made during the course of assessment to the valuation officer, and thereby exceeding the time limitation prescribed by law, and which cannot be. A subsequent report at a variance may, in the facts and circumstances of a case, exhibit the assessment as framed to be erroneous and prejudicial either to the Revenue or the assessee, validating action u/s. 263 or, as the case may be, sec. 264, but would not by itself make the order 'mistaken', so as to be liable for rectification u/s. 154. The Revenue's action is misconceived in law and, thus, cannot be sustained. We decide accordingly. 4. Coming to the assessee's CO, the same is in part supportive (of the impugned order) and in part assails the reference u/s. 55A of the Act by the AO, claiming the same to be not in satisfaction of the mandatory condi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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