1988 (2) TMI 117 - AT - Income Tax

Tribunal restores deduction under Section 80U, criticizes tax authority's jurisdiction overreach.

SMT. GOPI DEVI. Versus INCOME TAX OFFICER.

The Tribunal allowed the appeals, restored the original order granting the deduction under Section 80U, and criticized the ITO's subsequent action to ... - Issues Involved:1. Applicability of Section 154 of the Income Tax Act for rectification.2. Validity of the withdrawal of deductions under Section 80U.3. Role of Income Tax Officers in guiding taxpayers.4. Jurisdiction and legality of subsequent actions under Section 154.5. Adherence to judicial hierarchy and precedents.Detailed Analysis:1. Applicability of Section 154 of the Income Tax Act for RectificationThe judgment begins by discussing the facts of the case, highlighting that the appellant, who was totally blind, did not claim the deduction under Section 80U in previous years but did so for the first time in the assessment year 1981-82. The Income Tax Officer (ITO) allowed the claim but later issued notices to withdraw the deduction, citing judgments from the Allahabad High Court (Anchor Pressing (P) Ltd. vs. CIT and Sharda Prasad vs. CIT).The Tribunal noted that Section 154 is not meant for preferring a claim omitted during assessment proceedings and can only operate on facts already on record. The Tribunal found that the facts of the appellant's case were undisputed and on record, making the earlier decisions of the Allahabad High Court distinguishable.2. Validity of the Withdrawal of Deductions under Section 80UThe Tribunal emphasized that the appellant was undeniably blind during the relevant accounting periods, making her eligible for deductions under Section 80U. The Tribunal reasoned that the facts were clear, and there was no controversy or scope for two opinions. Therefore, the withdrawal of the deduction by invoking Section 154 was not warranted.The Tribunal further noted that the ITO's action to withdraw the deduction was not tenable in law, as it did not align with the ratio laid down by the jurisdictional High Court. The Tribunal concluded that the original order granting the deduction was correct and should be restored.3. Role of Income Tax Officers in Guiding TaxpayersThe Tribunal referenced administrative instructions issued by the Central Board of Direct Taxes (CBDT) in 1965, which emphasize that ITOs should assist taxpayers in claiming and securing reliefs. The Tribunal criticized the ITOs for not guiding the appellant properly and noted that the responsibility for claiming refunds and reliefs rests with the assessee, but officers should help them.The Tribunal highlighted that the appellant, being blind and from a rural background, could not be expected to know tax laws thoroughly. It cited the Supreme Court's observation that there is no presumption that every person knows the law, reinforcing the duty of tax authorities to guide taxpayers.4. Jurisdiction and Legality of Subsequent Actions under Section 154The Tribunal held that the ITO's subsequent action to withdraw the deduction under Section 154 was outside his jurisdiction and void. The Tribunal reasoned that the assessments were framed without allowing the appellant the relief she was entitled to, making the original assessments erroneous. The Tribunal concluded that the ITO's action to rectify the assessment by granting the deduction was correct and legal.The Tribunal also cited the Supreme Court's observation that authorities exercising statutory powers cannot act contrary to law or take advantage of their own illegality. The Tribunal emphasized that it is a judicial compulsion to rectify one's own mistakes.5. Adherence to Judicial Hierarchy and PrecedentsThe Tribunal criticized the first appellate authority for not adhering to the decisions of higher judicial authorities. It cited the Supreme Court's observation that lower tiers in the judicial hierarchy must accept the decisions of higher tiers loyally.The Tribunal concluded by reversing the impugned order of the first appellate authority and restoring the original order granting the deduction under Section 80U. The Tribunal allowed the appeals and emphasized that state governments should avoid unnecessary and futile litigation, quoting Justice Bhagwati's observation on the matter.Conclusion:The Tribunal allowed the appeals, restored the original order granting the deduction under Section 80U, and criticized the ITO's subsequent action to withdraw the deduction as void and outside his jurisdiction. The Tribunal emphasized the duty of tax authorities to guide taxpayers and adhere to judicial precedents.