TMI Blog2020 (1) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... isionist and the revenue did not chose to reopen the same by exercising powers relating to reopening the assessment and therefore, the order of the assessing authority attained finality and was not liable to be opened in the manner the revenue has sought to reopen, i.e. by moving an application under Section 22 of the Act, 1948 - The situation would have been different had the issue regarding lease rent been considered and decided by the first appellate authority - the doctrine of merger as canvassed by the learned counsel for the revenue would not apply. The very words rectification of mistake includes due application of mind on a particular set of fact or law which are liable to be corrected under the powers conferred under Section 22 of the Act, 1948 - In the facts of the present case, where an issue was never raised before the Appellate Authority nor considered by it, it cannot be subject matter for correction of a mistake and therefore application under Section 22 of the Act, 1948, preferred by the revenue for correction of mistake in the order of Joint Commissioner (Appeals), was clearly misconceived. The application for rectification under Section 22 of the Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere not liable for payment of any tax, as such. 6. The vires of Section 3F of the Act, 1948 were challenged before this High Court by way of writ petitions and by the this Court by means of judgment in the case of V.K. Singhal Vs. State of U.P., 1995 UPTC 337 (decided on 11.01.1995), the provisions of Section 3F of the Act, 1948 were declared as ultra vires. 7. At the time of assessment for the year 1995-96, the amount received on account of lease rent from the lessee, was disclosed at ₹ 51,84, 382/-, but no liability of tax on the said amount was admitted. The assessing authority for the assessment year 1995-96, did not accepted the contention of the revisionist and levied tax on the aforesaid amount of lease rent at the rate of 5%. The revisionist being aggrieved by the aforesaid assessment order preferred appeal on the ground that this Court in the case of V.K. Singhal (supra) has declared Section 3F of the Act, 1948 ultra vires and therefore, they were not liable to be assessed to any tax on the same and therefore, the order of the assessing authority in this regard was arbitrary and illegal. 8. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore the said application was itself not maintainable. (II) The application seeking rectification of the order of appellate authority was not maintainable inasmuch as the order of the assessing authority stood merged with the order of the appellate authority and the order which is not in existence cannot be rectified and therefore the application filed by the revenue was misconceived. (III) By means of impugned order the Tribunal has upheld the application for rectification which does not amount to rectification of mistake, instead it is a fresh imposition of tax liability which should have been done by the proper assessment and giving opportunity to the assessee, which is a matter of debate, hence fresh assessment could not have been done in the garb of rectification of mistake. 14. Learned counsel for the respondent-revenue on the other hand submits that the order of assessing authority merged with the appellate order and therefore the revenue had no option but to move an application for correction of mistake in the appellate order so as to bring the amount of lease rent to tax in the light of amended provisions of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se rent was not carried by the revisionist to the appellate authority, rather appeal was preferred with regard to other issues from which the revisionist was aggrieved with and the issue regarding taxability of lease rent became final. The revenue also did not seek to reopen the assessment in this regard in exercise of powers as conferred by the provisions contained in Act, 1948. It is only after passing of the final order by the first Appellate Authority on 01.01.2003 that the application for rectification of the said order was moved on 17.05.2004, for rectification of the mistake in the appellate order dated 01.01.2003. 22. A perusal of the application dated 17.05.2004, which is part of the record of the instant revision, would indicate that it has been clearly stated that the assessing authority had assessed the revisionist by means of order dated 07.06.2002 for the assessment year 1995-96 did not imposed any tax with regard to the lease rent, despite the fact that U.P. Act No. 11 of 2001 had come into existence which provides that all the proceedings and assessments from 01.05.1987 to 01.05.1997 had been validated. The application further states that in the lig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here an application under this subsection has been made within such period of three years, it may be disposed of even beyond such period : Provided further that no such rectification as has the effect of enhancing the assessment, penalty, fees or other dues shall be made unless reasonable opportunity of being heard has been given to the dealer or other person likely to be affected by such enhancement. (2) Where such rectification has the effect of enhancing the assessment, the authority concerned shall serve on the dealer a revised notice of demand in the prescribed form and therefrom all the provisions of the Act and Rule framed thereunder shall apply as if such notice had been served in the first instance. 28. Considering the arguments of learned counsel for the parties as well as perusal of the application under Section 22 of the Act, 1948 moved by the revenue, it is clear that the application under Section 22 of the Act, 1948 sought to rectify the mistake committed by the assessing authority who passed the assessment order in ignorance of the amendments made in Section 3F of the Act, 1948 by means of Amendment Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons under the said two heads. It had no occasion to examine the admissibility of the deductions under the remaining six heads obviously because the assessee s appeal did not question the grant of such deductions. Admissibility of the said deductions could have been raised only by the Revenue who had lost its case qua those deductions before the adjudicating authority. Dismissal of the appeal filed by the assessee could consequently bring finality only to the question of admissibility of deductions under the two heads regarding which the appeal was filed. The said order could not be understood to mean that the Tribunal had expressed any opinion regarding the admissibility of deductions under the remaining six heads which were not the subject matter of scrutiny before the Tribunal. That being so, the proceedings instituted by the Commissioner, Central Excise pursuant to the order passed by the Central Board of Excise and Customs brought up a subject matter which was distinctively different from that which had been examined and determined in the assessee s appeal no matter against the same order, especially when the decision was not rendered on a principle of law that could foreclose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The revision being devoid of merit is, accordingly dismissed. 35. Learned counsel for the revisionist has urged that the said judgment would not be binding to decide the controversy raised in the present revision which pertains to the assessment year 1995-96, and that principle of res-judicata are not applicable for subsequent assessment years, and also a binding judgment of the Division Bench of this Court in the case of M.R. Soap (Pvt.) Ltd. (supra) was not considered by the learned Single Judge. The Court in M.R. Soap (Pvt.) Ltd. (supra) , in para nos. 12, 13 and 14 observed as under : 12. It will be seen that the jurisdiction of the Appellate Authority under Section 9(3) is of the widest possible amplitude. The Appellate Authority cannot only confirm, vary or annul the order of assessment but may even enhance the amount of assessment, irrespective of whether such enhancement arises from the points raised in the grounds of appeal or otherwise considered by the Assessing Authority. The appellate power under this provision, is, as observed by the learned Chief Justice Chagla in Narroandas Manordas (supra) in the nature of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vary or annul the order of the assessing authority but may enhance and assess the assessee to tax on the issue which was not taken up before the assessing authority and therefore concluded that in exercise of power under Section 22 of the Act, 1948, the assessment cannot be reopened as has been sought to be done in the present case. 38. It has further been contended by learned counsel for the revisionist that the order of assessment on remand was passed on 07.06.2002, thereby no tax was levied on the proceeds of lease rent taken from M/s Gangeshwar Limited under the belief that provisions of Section 3F of the Act, 1948 were declared ultra vires by this Court in the case of V.K. Singhal (supra) . An appeal was preferred by the revisionist on some other issues but the issue regarding lease rent attained finality. Even if the stand of the revenue is accepted that no tax was levied on the lease rent, taking into account the fact that same had been declared ultra vires and the assessing authority was ignorant about the reintroduction of the same provision by means of subsequent amendment in the Act, 1948, it was always open for the revenue to exercise the power contain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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