TMI Blog1997 (3) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no scope for rectification in terms of section 154 of the Act. The assessee's appeal before the Commissioner of Income-tax (Appeals) also failed on the ground that there was no mistake apparent on the records. The Appellate Tribunal, on the assessee's appeal, also came to the conclusion that there was no patent or apparent mistake in the original order of assessment of the Income-tax Officer which required rectification under section 154 of the Act. The facts leading to the assessment for the years 1975-76 and 1976-77 are as under :---The original assessments for the assessment years 1975-76 and 1976-77 were completed under section 143(3) of the Act on February 28, 1978 and September 13, 1978, respectively. The Income-tax Officer issued notices to reopen the assessments under section 148 of the Act on the score that he had information which led to him to believe that the income had escaped assessment. The assessee did not file any return for the assessment years 1975-76 in response to the notice issued under section 148 of the Act. The assessee, however, wrote a letter dated October 20, 1980, stating that the assessee would be entitled to further relief and, therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Tribunal, in the assessee's appeal, in so far as the refusal to rectify the mistake for 1976-77 is concerned, held that there was no apparent mistake in the original order of assessment of the Income-tax Officer which required rectification in terms of section 154 of the Act, and therefore, the assessee's appeal for rectification of mistakes under section 154 of the Act was rejected. In so far as the claim of the assessee that once the assessment is reopened, the entire assessment is set aside and the assessee can make a claim for the deduction which was neither claimed nor allowed in the original order of assessment is concerned, the Appellate Tribunal held that the Commissioner (Appeals) was justified in his view that the assessee was not entitled to claim in the reassessment proceedings higher depreciation and extra shift allowance so as to reduce the total income in the reassessment than what was determined in the original order of assessment computed under section 143 of the Act. The net result of the order of the Appellate Tribunal is that for the assessment years 1975-76 and 1976-77, the Appellate Tribunal held that it was not open to the assessee to claim in the reassess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neither claimed nor allowed in the assessment, and it is impermissible to the assessee to claim certain deductions in the reassessment proceedings which would reduce the total income that may be computed in the reassessment proceedings to a figure lower than what was determined in the order of original assessment. The position is well settled by a decision of the Supreme Court in the case of CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297, wherein the Supreme Court held that in reassessment proceedings, it was not open to the assessee to seek a review of concluded items unconnected with the escapement of income for the purpose of computation of the income escaping assessment. Following the said decision of the Supreme Court, we are of the view that the Tribunal has come to the correct conclusion that the assessee is not entitled to deduction which was not claimed in the original assessment in the reassessment proceedings and the income for purposes of reassessment cannot be reduced beyond the income originally assessed. Accordingly, we answered the first question of law referred to us in the affirmative and against the assessee. In so far as the second question is conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner (Appeals), on the merits of the case, which has become final, there is certainly a mistake in the order of the Income-tax Officer which is apparent from the records. The finding of the Commissioner (Appeals) has become final. Therefore, when the Appellate Tribunal took up the matter on appeal, it was apparent that there were mistakes in the original order of assessment which called for rectification under section 154 of the Act. The assessee has challenged the finding of the Commissioner (Appeals) to the effect that there was no mistake apparent from the records. But, when the records disclosed the same, the Appellate Tribunal should have directed the Assessing Officer to rectify the mistakes. The Supreme Court in Maharana Mills (Pvt.) Ltd. v. ITO [1959] 36 ITR 350, held that the record contemplated by section 154 of the Act does not mean only the order of assessment, but it comprises all proceedings on which the assessment order is based and the Income-tax Officer is entitled for the purpose of exercising his jurisdiction under section 154 of the Act to look into the whole evidence and the law applicable to ascertain whether there was an error. The Supreme Court also held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not have the benefit of the order of the Commissioner (Appeals), when the Appellate Tribunal heard the matter, it had before it the order of the Commissioner (Appeals) which established clearly that the assessee was entitled to higher rate of depreciation on some machinery as well as on roads which was not granted at the time of original assessment. Therefore, the Appellate Tribunal, when it heard the appeal, should have considered the order of the Commissioner (Appeals) on the merits of the case, in considering the question whether there was a mistake apparent from the records or not. Hence, we hold that the order passed by the Appellate Tribunal without considering the order of the Commissioner (Appeals) on the merits of the case is not legally sustainable in law. The Supreme Court in Anchor Pressings (P.) Ltd. v. CIT [1986] 161 ITR 159 held that the jurisdiction of the Income-tax Officer under section 154 of the Act for rectifying a mistake is wider than what was provided under Order 47, rule 1, of the Code of Civil Procedure and where there are materials to support the claim of the assessee which are found in the records, the Income-tax Officer is duty bound to rectify th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to exercise its jurisdiction conferred upon it. The case on hand is peculiar on the facts. After the order of the Commissioner (Appeals) on the merits of the case for the two assessment years, it has become established that there are certain mistakes apparent from the record in the original order of assessment. The Assessing Officer earlier held that there were no mistakes apparent from the record. When the Appellate Tribunal heard the matter against the orders of reassessment as well as against the order rejecting the request for rectification, it had before it both the orders, one holding that there are mistakes found in the original order of assessment, and the other holding that there are no mistakes apparent from the records. The Appellate Tribunal, as the ultimate appellate authority on facts, should have seen that the study of both the orders, juxtaposed to each other, would reveal that there are mistakes apparent in the original order of assessment. The assessee has kept the matter alive by bringing the matter before the Appellate Tribunal. We, therefore, hold that when the Appellate Tribunal, sitting in appeal over the order of the Assessing Officer and having the privil ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
