Relation-back of statutory order validated rectification under section 154 after later affirmation of the earlier withdrawal order.

A rectification order under section 154 was not infructuous merely because the earlier order under section 155(5) had not then attained finality. Once the withdrawal of development rebate under section 155(5) was later affirmed and restored by the apex court, that order operated from the date it was originally made and related back to its inception. On that basis, the rectification order had a valid foundation when passed and remained effective.

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Issues: Whether the Appellate Tribunal was justified in holding that the rectification order under section 154 of the Income-tax Act was infructuous merely because the earlier order under section 155(5) had not then attained finality.

Analysis: The order under section 155(5) withdrawing the development rebate was later affirmed and restored by the apex court, with the result that the withdrawal operated as a valid order from the date it was originally made. Once the earlier order was finally upheld, it related back to its inception, and the assessee could not contend that there was no valid foundation for the rectification order when it was passed.

Conclusion: The rectification order under section 154 was not infructuous and was valid. The issue is answered against the assessee and in favour of the Revenue.

Ratio Decidendi: When an earlier statutory order is subsequently restored or affirmed, its effect relates back to the date of the original order, and a rectification founded on that order cannot be treated as infructuous on the ground that finality had not then been reached.

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