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2016 (8) TMI 649 - BOMBAY HIGH COURT

2016 (8) TMI 649 - BOMBAY HIGH COURT - TMI - Rectification of mistake - entitlement to the benefit of Section 80HHC - Held that:- In the present facts, we find that the issue of Section 80HHC of the Act was a subject matter for consideration by the Assessing Officer while passing an order dated 31st March, 1995 relating to A.Y. 1992-93. Thereafter, in an appeal filed by the petitioner, the CIT(A) in its order dated 5th October, 1995 also dealt with the issue of Section 80HHC of the Act while all .....

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virtue of Section 154(1A) of the Act. It is not open to the Authority under the Act to rectify an order on an issue of Section 80HHC of the Act which has undisputedly merged with the order of the Appellate Authority. Thus, on the aforesaid ground itself, the impugned notice is without jurisdiction. - Issue of benefit of Section 80HHC of the Act was debatable one and, therefore, could not be a subject matter of rectification proceedings. Any issue that requires debate and is not self evident .....

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by the Assessing Officer under Section 154 of the Income Tax Act, 1961 (the Act). The impugned notice dated 26th September, 2001 seeks to rectify an order dated 5th October, 1998 passed under Section 154 of the Act relating to A.Y. 1992-93. The basis of the impugned notice is the decision of this Court in the petitioner's own case in Income Tax Appeal No.131 of 2001 dated 2nd July, 2001 holding that the benefit of Section 80HHC of the Act is not available to the petitioner for the Assessmen .....

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eted by the Assessing Officer under Section 143(3) of the Act inter alia restricting the claim for deduction under Section 80HHC of the Act to ₹ 1.19 crores. (b) Being aggrieved at the partial denial of the benefit of deduction under Section 80HHC of the Act, the petitioner preferred an appeal to the Commissioner of Income Tax (Appeal) [(CIT(A)]. By an order dated 5th October, 1995, CIT(A) allowed the petitioner's appeal by directing the Assessing Officer to increase the petitioner' .....

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y the petitioner for deduction under Section 43B of the Act were allowed by orders dated 6th March, 1996 and 8th August, 1996. On 23rd August, 1996 the Assessing Officer passed an order rectifying an order dated 6th March, 1996 giving credit for an amount of ₹ 14.72 lakhs to be adjusted in the Assessment Year 1992-93. At the hearing, the petitioner tendered a copy of the order dated 23rd August, 1996 passed under Section 154 of the Act. This as the communication dated 23rd August, 1996 ann .....

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Act. Thus determining the interest payable under Section 244A of the Act. The order dated 5th October, 1998 reads as under : In this case order u/s 154 was passed on 06.03.1996 determining Taxable Income at ₹ 2,16,62,966/resulting in refund of ₹ 33,33,237/after giving credit for ₹ 46,45,943/being the total refundable amount adjusted against the demand of the said assessment year. The assessment was further rectified u/s 154 on 23.08.96 to give credit for on amount of ₹ 14 .....

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he period from 18.10.1995 to 06.08.1996 after adjusting interest u/s 234A, B, C & Int. u/s 220(2) and RO already issued of ₹ 12,418/u/ s 143(1) (a)(32,78,175 x 10M x 1%) : 3,27,810 2 On an amount of ₹ 14,72,940/for the period from 22.11.1995 to 09.10.1996 14,72,940 x 11M 1% : 1,62,019 4,89,829 Total income remains unchanged at ₹ 2,16,62,966/given credit for prepaid taxes and tax paid / adjusted after regular assessment. Allow Interest u/s 244A(1)(b) of ₹ 4,89,829/as d .....

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2nd July, 2001 of this Court, the petitioner carried the issue in appeal to the Supreme Court, being SLP (C) No. 16293 of 2000. The Supreme Court after hearing the petitioner directed its Registry to issue notice to the respondent Revenue on the petitioner's above petition. (f) It is consequent to the order of this Court dated 2nd July, 2001 in relation to A.Y. 1996-97 that the Assessing Officer on 26th September, 2001 issued the impugned notice. By the impugned notice, it sought to rectify .....

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n on the issue of 80HHC deduction in your own case for A.Y. 1996-97. In this regard the last order passed for this assessment year is order u/s 154 dated 5.10.1998 in your case (IT/WT/GT) requires to be amended as there is a mistake apparent from the record within the meaning of Section 154/155 of the Income Tax Act, 1961/35 of WealthTax Act, 1957/34 of Gift Tax Act, 1958. The rectification of the mistake as per details given below will have the effect of enhancing the assessment / reducing the .....

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as pointed out above, admitted on 27th November, 2001. 4. Mr. Irani, learned Counsel appearing in support of the petition submits that the impugned Notice dated 26th September, 2001 is without jurisdiction submits as under : (a) The impugned Notice is barred by limitation as the issue of Section 80HHC of the Act was a subject of consideration in the order of Assessment dated 31st March, 1995. It was not a subject matter of consideration of the order dated 5th October, 1998 passed under Section 1 .....

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Act. The appeal was allowed by order dated 5th October, 1995 by the CIT(A). Therefore, the impugned notice is without jurisdiction being hit by subSection 1(A) of Section 154 of the Act; and (c) The issue sought to be rectified by the impugned notice viz. availability of the benefit of Section 80HHC of the Act is a debatable issue. This is evident from the fact that the very basis of the application viz. the order of this Court dated 2nd July, 2001 in Income Tax Appeal No.131 of 2001 for A.Y. 19 .....

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/ error in granting the petitioner the benefit of Section 80HHC of the Act for A.Y. 1992-93. Thus, the notice is not without jurisdiction; and (b) The impugned notice is not barred by limitation. This is so as even if the order dated 5th October, 1998 did not deal with Section 80HHC of the Act, it modifies the Assessment Order dated 31st March, 1995. Therefore, Assessment Order stood rectified on 5th October, 1998 and the original order stood merged in it i.e. the order dated 5th October, 1998. .....

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rom the record i.e. it must not be an issue on which two views are possible and the mistake need not be apparent from the order itself but could also be evident from the materials i.e. the record upon which the order sought to be rectified is based; (c) Only that portion of the order can be rectified, which has not merged into an order of the Appellate authority; (d) The order on rectification should be made within 4 years from the end of the financial year in which the order sought to be rectif .....

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1 of 2001 for A.Y. 1996-97. However, the jurisdiction to issue a notice for rectification can only arise if the jurisdictional requirements of Section 154 of the Act are satisfied. A rectification cannot be sustained merely on the basis of noble intent. 8. No submissions were made by the Revenue to contest the submissions (b) and (c) above made by the petitioner i.e. issue sought to be rectified has merged into the order of the Appellate Authority and also that the issue is debatable. Therefore, .....

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peal for A.Y. 1992-93 of the petitioner. The order of the CIT(A) has been accepted by the Revenue in respect of the A.Y. 1992-93, as no further appeal from the order of CIT(A) was filed. Thus, the issue of grant of deduction under Section 80HHC of the Act stands settled by the Appellate Authority into which the order of the assessment dated 31st March, 1995 has merged. Therefore, even if we assume that impugned notice is not barred by limitation, yet such a notice would be barred by virtue of Se .....

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