TMI Blog2011 (6) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... es covered by the order u/s 154 were clearly debatable issues on the date of passing the order u/s 154/155 and could not be termed as a mistake apparent from record. 3.2. The learned CIT(A) ought to have held that order u/s 154/155 passed on debatable issues was bad and untenable in law and the assumption of jurisdiction of power of rectification was in excess of authority vested under the Act. 3. At the time of hearing the ld. Counsel appearing on behalf of the assessee argued on the legal issue i.e. order passed by the ld. AO on 10.03.2000 is beyond the limitation period as specified u/s 154(7) of the IT Act. 4. The brief facts of this issue are that the AO while passing order u./s 251/154/154/143(3) of the IT Act, 1961 has observed as under : Consequent to order of CIT(A)-VI in I.T.Appeal No.21/CIT(A)-VI/98-99/DC.Spl.R-2 dated 16-6-99 against order u/s 154/143(3) dt.28-01-97 wherein applicability of sec.34A was involved, the assessment is revised as under : Furthermore, in this case regular assessment u/s 143(3) was last rectified u/s 154 on 5.12.97 computing the total income at ₹ 39,47,00,000/-. This rectification was for withdrawing the excess inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reproduced as under : since the word order in the expression from the date of the order sought to be amended in section 154(7) was not qualified in any way, it did not necessarily means the original order, it could be any order including amended or rectified order The same view has been reiterated by the Apex Court in the case of Waldies Ltd V.CIT (1997) 223 ITR 163. It is clear from these judicial decisions that such rectification is \possible with reference to the last such order, where the mistake has occurred. It is relevant to quote the Apex Court s reasoning given in a sales tax case in International Cotton Corporation (P) Ltd V. CTO (1975) 35 STC l that the original order is no longer extant with the result that the lime limit can not be counted from the date of the original order. In the present case, the original order was passed on 29.4.95 and thereafter two rectifications orders were passed. As soon as the second rectification order was passed on 5.12.97, the earlier orders stood superseded and the only order which was in force was the order dt. 5.12.97 passed by the A.O. Thus I am of the view that the order of rectification passed on 10.3.2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to demonstrate this, he further referred to the decision of the Apex Court in the case of Waldies Ltd. vs CIT. He further referred to the decision of the Hon ble Apex Court in the case of Hind Wire Industries Ltd. vs CIT . Thirdly he referred to the decision of the Hon ble Apex Court in the case of CIT, Chennai vs Alagendran Finance Ltd. He further relied on the decision of the Hon ble Madras High Court in the case of CIT vs Shriram Engineering Construction Company Ltd. and the decision of the Hon ble Bombay High Court in the case of Ashoka Buildcon Ltd. vs ACIT wherein both the High Courts have followed the Hon ble Apex Court s decision in the case of CIT,Chennai vs Alagendran Finance Ltd. Though all these cases are relating to the limitation period u/s 263 the limitation period as prescribed u/s 154(7) and 263 are synonymous. Therefore, the law laid down by the Hon ble Apex Court and other various High Courts on the limitation proceedings are applicable to the proceedings of section 154 also. Therefore, he contended that order passed by the AO which was confirmed by the ld. CIT(A) is barred by limitation. 6. On the other hand, the ld. DR appearing on behalf of the Revenue h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.4437.61 Less: Business loss from KGF Ltd. ₹ 848.91 Rs.3588.70 7.2. Further vide rectification order u/s 154 of the Act vide order dated 5.12.1997 AO disallowed excess allowance of unabsorbed depreciation to the extent of 631.30 lakhs and the same was the subject matter of appeal before CIT(A) which was quashed by CIT(A) in Appeal no.21/CIT(A)-VI/98-99/SE-2 vide order dated 16.6.1999. In view of this fact we are of the view that in original assessment, unabsorbed depreciation of KGFC aggregating to ₹ 1853.22 lacs was allowed for computing business income in terms of Sec.72-A of the Act as current depreciation u/s 32(1)of the Act. This allowance was subsequently revised in order u/s 154 of the Act dated 29.9.1995 at ₹ 1893.90 lacs and in para-15 of assessment order dated 29.3.1995 while dealing with computation of claim u/s 80-HHC of the Act, AO gave finding that depreciation of KGFC to be allowed in terms of Sec.72-A of the Act was current depreciation u/s 32(1) of the Act and accordingly, he, deducted the same in arrivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the order passed by AO u/s 143(3) dated 29.3.1995 while passing order u/s 251/154/154/143(3) of the IT Act, therefore the limitation has to be seen from the original order dated 29.3.1995. 7.4. In view of the above facts and circumstances, now we have to see the legal position as enunciated by Hon ble Apex Court and Hon ble High Courts. For this, ld. Counsel distinguished the case law of Hon ble Apex Court relied on by CIT(A) in the case of Waldies Ltd. vs CIT (1997) 223 ITR 163 (SC), according to Ld. Counsel as far the ratio laid down in this judgment was that for rectification, limitation has to be reckoned from the date of the order sought to be amended . The result is that such rectification is possible with reference to the last such order, where the mistake had occurred. But in the present case, Ld. Counsel stated that the mistake actually has occurred is that the deduction u/s. 80HHC of the Act was allowed even on unabsorbed losses in original assessment order framed u/s. 143(3) of the Act dated 20.03.1995 and facts before Hon ble Apex Court were that before the AO the original assessment order was rectified on 16.09.1968, which was dated 30.03.1965 and this recti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as passed . In the instant case, the original order of assessment was rectified on 16.9.1968. This rectified order gave relief to the assessee by deducting the additional amount of income-tax levied by the order passed under section 147. This relief has to be taken out when the order under section 147 was set aside by the AAC and the income-tax liability of the assessee stood reduced. What the ITO was trying to do in effect was to nullify the order of rectification which was passed on 16.9.1968. The assessee is right in his contention that this order was a good order when it was passed. But that was the time when the order under section 147 was subsisting and the assessee s income-tax liability was larger. But hat order under section 147 was set aside on appeal. The assessee s income-tax liability became smaller and consequently, the chargeable profits could not be treated as validly computed when deduction had been made for income-tax which was not actually payable. Therefore, the ITO was justified in invoking the provisions of section 13 and correcting the error in the order passed on 16.9.1968. The ITO by the second order of rectification was not trying to rectify the original o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act in respect of income which has escaped assessment, the Income-tax Officer's jurisdiction is confined to only such income which has escaped assessment or has been under assessed and does not extend to revising, re-opening or reconsidering the whole assessment or permitting the assessee to re-agitate questions which had been decided in the original assessment proceedings. It is only the underassessment which is set aside and not the entire assessment when reassessment proceedings are initiated. When the assessment is reopened, the original assessment under section 143(3) of the Act remains and it could not be said that the original assessment is non-est on account of the reopening of the assessment. When the original assessment remains the Commissioner of Income-tax had every right to revise the order if it was erroneous and prejudicial to the interests of the Revenue. But the original assessment was made on November 18, 1985, and the reassessment under section 147 of the Act was made on January 8, 1987 and the Commissioner of Income-tax revised the original assessment order under section 263 on March 8, 1988, directing the Income-tax Officer to charge interest under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. CIT and CEPT [1970] 75 ITR 373, the Supreme Court took the view that the entire assessment was within the purview of the Assessing Officer during reassessment. In a later decision in CIT v. Sun Engineering Works P. Ltd. [1992] 198 ITR 297 (SC), it was decided that the Assessing Officer s jurisdiction was confined to the income that has escaped assessment and that it cannot justify revision, reopening or reconsideration of the entire assessment. Reconciliation was sought between these two views before a Bench of three judges of the Supreme Court in ITO v. K. L. Srihari (HUF) [2001] 250 ITR 193 on a reference by the Bench, which initially heard the case. But in the case before Ho ble Supreme Court in the facts of the case after perusal of both the assessment and reassessment orders was satisfied and found that the High Court was right on the dispute involved in the case before it in that the earlier assessment order had been effaced by the subsequent order and closed the case with the observation in these circumstances, we do not consider it necessary to go into the question that is raised and the same is left open . The decision of the Supreme Court in the case of Alagendran Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der in the expression from the date of the order sought to be amended in s. 154(7) was not qualified in any way, it would not necessarily mean the original order. It could be an order including the amended or rectified order. In the provision under consideration also, 263(1) refers to any order . The word any order would only mean any order under this Act, and if he considers that any order passed therein by the AO is erroneous insofar as it is prejudicial to the interest of the Revenue, the section definitely gives power to the CIT. The deciding factor in the present case is that the complaint of the CIT refers to the order passed under s.143(3) and not the amended order under s.154. Hence the decision of the Supreme Court in 212 is no way applicable to the facts of the case. For the foregoing reasons and in the light of the Supreme Court judgement in the case of CIT vs. Alagendran Finance Ltd. (supra) referred to above, we are of the view that there is no question of law much less substantial question of law for determination in this case and hence the appeal is dismissed as such. No costs. 7.7. And also on Hon ble Bombay High Court in the case of Ashoka Buildcon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in respect of other independent issues, the order of the AO can be construed to be erroneous and to be prejudicial to the interest of the Revenue within the meaning of s. 263. The submission cannot be accepted in the facts of the present case. The substantive part of s. 147 as well as Expln. 3 enables the AD to assess or reassess income chargeable to tax which he has reason to believe had escaped assessment and other income which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under the section. There is nothing on the record of the present case to indicate that there was any other income which had come to the notice of the AD as having escaped assessment in the course of the proceedings under s. 147 and when he passed the order of reassessment. The CIT, when he exercised his jurisdiction under s. 263, in the facts of the present case, was under a bar of limitation since limitation would begin to run from the date on which the original order of assessment was passed. We must however clarify that the bar of limitation in this case arises because the revisional jurisdiction under s. 263 is sought to be exercised in respect of issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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