1990 (3) TMI 34 - HC - Income Tax

Commissioner's rectification power upheld; conflicting views on section 273A interpretation.

Dr. (Mrs.) Beena Rahul Mishra Versus VK. Shrivastava, Commissioner Of Income Tax And Others

The court held that the Commissioner's power to rectify his own order under section 154 was not excluded by section 273A(5) as the Commissioner is not ... Interest, Penalty Issues Involved:1. Whether section 273A(5) excludes the power of the Commissioner under section 154 to rectify an order passed by his predecessor under section 273A.2. Whether the order passed by the predecessor-Commissioner under section 273A suffered from a mistake apparent from the record.Issue-wise Detailed Analysis:1. Exclusion of Power under Section 154 by Section 273A(5):The primary issue was whether section 273A(5) excluded the power of the Commissioner to rectify an order under section 154. Section 273A(5) states: 'Every order made under this section shall be final and shall not be called into question by any court or any other authority.' The court noted that the Legislature intended to make the order final and not subject to questioning by any court or other authority. However, the Commissioner is not considered a court or another authority but the authority that passed the order. Therefore, the Commissioner's power to rectify his own order under section 154 was not excluded by section 273A(5). The court held that the Commissioner could rectify an order if it contained a glaring and obvious mistake of fact or law, and after rectification, only the rectified order would remain.2. Apparent Mistake in the Predecessor-Commissioner's Order:The second issue was whether the predecessor-Commissioner's order under section 273A contained a mistake apparent from the record. The successor-Commissioner believed that the predecessor-Commissioner's reliance on Explanation 2 to section 273A was incorrect. The court examined whether the conditions laid down in section 273A were satisfied based on the facts on record. It was noted that the predecessor-Commissioner's conclusion was based on two reasons: (i) disclosures were found to be full and true, and (ii) Explanation 2 deemed the disclosure voluntary and made in good faith.The court referred to various High Court decisions to interpret the conditions of section 273A, particularly clauses (a) and (c). The Karnataka High Court in several cases held that the dates of filing returns were not very material if full disclosure was made. The Punjab and Haryana High Court also held that the words 'voluntarily and in good faith' qualified the disclosure of income, and merely being asked to file returns did not negate the voluntary nature of the disclosure.Given the conflicting views among High Courts and the possibility of two conceivable views, the court held that the predecessor-Commissioner's finding that the conditions of section 273A were satisfied was supportable. It could not be said to suffer from a mistake of law, let alone a mistake apparent from the record.Conclusion:The court concluded that a mistake about which there could conceivably be two opinions could not be the subject-matter of rectification under section 154, as established by the Supreme Court in T. S. Balaram, ITO v. Volkart Brothers and this court in CIT v. K. Subnani Construction Co. Therefore, the impugned order was quashed, the petition succeeded, and the rule was made absolute in terms of prayer (a), with no order as to costs.