Tribunal grants appeals, orders reassessment under section 154 in line with High Court ruling

Shriram Fibres Limited. Versus Inspecting Assistant Commissioner.

Shriram Fibres Limited. Versus Inspecting Assistant Commissioner. - ITD 039, 204, TTJ 042, 121, Issues:
Appeals against rejection of application for rectification under section 154 claiming relief under section 40A(5) of the Income-tax Act.

Analysis:
The appeals involved four cases where the assessee contested the rejection of their application for rectification under section 154, seeking relief under section 40A(5) of the Income-tax Act. The primary issue revolved around the treatment of cash allowances as perquisites by the Income-tax Officer. The assessee argued that the decision of the Delhi High Court in a specific case should be followed, which the revenue authorities had failed to do. The Income-tax Officer rejected the rectification application, citing that the issue was debatable and outside the purview of section 154.

The Commissioner of Income-tax (Appeals) upheld the rejection, stating that the matter was debatable and not a mistake apparent from the record. The assessee contended that the revenue authorities were bound to follow the decision of the jurisdictional High Court, and their failure to do so constituted a mistake apparent from the record. The assessee highlighted various High Court decisions favoring their stance and argued that the Income-tax Officer's refusal to follow the Delhi High Court's decision was erroneous.

The Tribunal considered the conflicting views of different High Courts on the matter but emphasized that the revenue authorities and the Tribunal under the jurisdiction of the Delhi High Court were bound by the decisions in specific cases. The Tribunal held that the Income-tax Officer's failure to adhere to the jurisdictional High Court's decision constituted a mistake apparent from the record. Citing precedents and legal principles, the Tribunal concluded that the decision of the jurisdictional High Court was binding on all authorities under its purview, and any deviation amounted to a rectifiable mistake under section 154.

In light of the above analysis, the Tribunal allowed all the appeals filed by the assessee, directing the Income-tax Officer to reconsider the application under section 154 in accordance with the decision of the Delhi High Court. The judgment underscored the importance of following jurisdictional High Court decisions and reiterated that such decisions were binding on all authorities within their jurisdiction.