TMI Blog2004 (7) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... h regard to waiver of interest. - - - - - Dated:- 13-7-2004 - Judge(s) : D. K. SETH., R. N. SINHA. JUDGMENT D.K. Seth J. -Facts: The appellant had submitted its return for the years 1981-82 and 1982-83 which was assessed under section 143(3)/144B. Subsequently, in respect of those two assessments years, the assessee/appellant submitted a return under the amnesty scheme and offered the gratuity liability on the basis of actuarial certification for taxation. The assessments were completed under section 143(3)/231/147 and interest was charged under sections 139(8) and 215 of the Income-tax Act, 1961. This was subjected to certain proceedings and ultimately by an order dated March 17, 1989, the Commissioner of Income-tax (Appeals) held that no interest can be charged either under section 139(8) or under section 215 in a reassessment made under section 147. While giving effect to this order dated March 17, 1989, instead of waiving interest since held not chargeable under section 139(8) and under section 215 by an order dated May 1, 1989, the Assessing Officer fully waived interest under section 139(8) for the year 1981-82 and partially for the assessment year 1982-83; and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only to the error apparent on the face of the record. It cannot stretch to the extent of review of the order sought to be rectified. According to him, the finality of the order dated March 17, 1989, was completely overlooked and omitted to be considered. The finality of the order dated March 17, 1989, was staring on the face of the Tribunal and on the strength of this finality, the Tribunal could not have reopened the issue and decided the question sitting in appeal against the order dated March 17,1989. Therefore, this is amenable to rectification under section 254(2) of the Income- tax Act, 1961. In support of his contention, Mr. Khaitan had relied on the decision in Neeta S. Shah v. CIT [1991] 191 ITR 77 (Karn) to contend that when an earlier order of the Appellate Tribunal is founded on a mistaken assumption and the error is discovered, the power of rectification under section 254(2) of the Income-tax Act, 1961, can be invoked because the very basis of the earlier order requires rectification. He also relied on a decision in Bata India Ltd. v. Deputy CIT [1996] 217 ITR 871 (Cal), to support his contention that when the breach resulting from an order is attributable to the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a reassessment in CIT v. Keshoram Industries Ltd. [2004] 271 ITR 353 (Cal)-I.T.R. No. 184 of 1993 was disposed of on April 7, 2004, by hon'ble Mr. Justice M.H.S. Ansari and hon'ble Mr. Justice Soumitra Pal holding inter alia, that the said question is now concluded in view of the decision in K. Govindan [2001] 247 ITR 192 (SC). He distinguished the decision cited by Mr. Mullick and contended that this was a case fit for rectification. That the order dated March 17, 1989, has reached the finality is not dependent on any long drawn argument nor any two opinions could be formed in respect of the finality of the said decision. It is only the question whether this finality was overlooked or omitted to be considered or whether while dealing with the matter the Tribunal had disturbed the finality and interfered with the matter, which has since attained finality. In case it had purported to interfere with an order attaining finality, it is definitely an error apparent on the face of the record rectifiable under section 254(2). Therefore, the appeal should be allowed. Respondent's contention: Mr. Mullick, learned counsel for the Department, on the other hand, contended drawing our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered and it was held that the mistake contemplated must be a mistake apparent on the face of the record; it must be obvious, clear and patent; it must not be a mistake to establish which a long and elaborate reasoning and argument is required on points on which there may conceivably be two opinions; it must not be a debatable point of law. Appellant's reply: Mr. Khaitan, in reply, however, pointed out that the decision of the Allahabad High Court in Laxmi Electronic Corporation Ltd. [1991] 188 ITR 398 noted in Ramesh Electric and Trading Co. [1993] 203 ITR 497 by the Bombay High Court was considered in a decision by our High Court in Ballabh Prasad Agarwalla [1998] 233 ITR 354 and our High Court had preferred to follow the Allahabad view. Therefore, this High Court need not follow the Bombay view. Scope: Issues to be determined: After having heard learned counsel for the parties, to us it appears that the question to be ascertained in this case is as to whether the finality of the order dated March 17,1989, though noted by the Tribunal and considered by it, yet it would come within the purview of section 254(2) for rectification as an error apparent on the face of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... True, the Tribunal had referred to the contention of the assessee and referred to the fact of the order dated March 17, 1989. But, in our view, such reference or consideration would not change the position in law which was staring on the face of the Tribunal that the order dated March 17, 1989, passed by the Commissioner of Income-tax (Appeals) had become final and the Tribunal was not sitting in appeal on the order dated March 17, 1989. It had no jurisdiction to reopen the order dated March 17,1989, nor it can interfere with the order dated March 17, 1989. Neither it had jurisdiction to pass any order, which will render the order dated March 17, 1989, infructuous or redundant. No appeal against the order dated March 17, 1989, was preferred before the Tribunal. The Tribunal could not assume jurisdiction to deal with the merits of the said order, neither it could pass any order contrary thereto and which could eclipse or could come in conflict with the said order. In order to establish that the order dated March 17,1989, has become final and it was no more open to interference by the Tribunal since the appeal that was preferred before the Tribunal was not an appeal against the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the argument was omitted or not, we find that it was a case of wrong assumption of jurisdiction and proceeding on that basis without looking into the finality of the order which was staring on the face of the Tribunal, and oblivious of the fact that it was not sitting on appeal on the order dated March 17,1989. Therefore, the decision of the Bombay High Court does not help us in the present context. On the other hand in Laxmi Electronic Corporation Ltd. [1991] 188 ITR 398, the Allahahad High Court and in Ballabh Prasad [1998] 233 ITR 354, the Calcutta High Court had taken a view that failure to deal with a preliminary objection amounts to a mistake apparent from the record and omission to deal with an important ground urged but the party is also a ground for rectification under section 254(2). We would prefer to follow the ratio laid down by the Allahabad High Court and the Calcutta High Court in the said two decisions. As already discussed, the order dated March 17, 1989, had reached the finality even on the question of law being a reassessment within the ratio decided in K. Govindan and Sons [2001] 247 ITR 192 (SC) since followed in Keshoram Industries Ltd. [2004] 271 ITR 35 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore open to interference and the learned Tribunal could not have reopened the decision in an appeal against an order attempting: to give effect to the order dated March 17,1989, which was staring at its face and its omission to consider that the Tribunal was not sitting in appeal over the order dated March 17,1989, is an error or omission or mistake which does not require any argument to establish the same nor any two opinions could be formed with regard thereto and as such it is amenable to rectification under section 254(2) of the Income-tax Act. Order: In the result, the appeal succeeds. The impugned order dated March 30, 2000, passed on the application for rectification is hereby set aside only to the extent it had rejected the prayer of the assessee with regard to waiver of interest. Rest of the rectification incorporating the assessment years 1981-82 and 1982-83 shall remain effective. The order dated April 9,1989, is rectified to the extent with regard to the question of interest by affirming the order dated August 19,1993, passed by the Commissioner of Income-tax (Appeals) in respect of the assessment years 1981-82 and 1982-83. Xerox certified copy of this judgment be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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