TaxTMI 
TaxTMI 
1982 (3) TMI 136
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....p; 20-3-1971 1967-68 20-3-1971 1968-69 9-6-1971 1969-70 9-6-1971 1970-71 9-6-1971 3. It appears that the business and the residential premises of th....
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....; 32,900 1969-70 6,800 39,500 1970-71 7,000 34,400 1971-72 10,248 &....
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....bsp; 25,600 1966-67 29,800 1967-68 33,600 1968-69 28,030 ....
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....come purported to have been declared under section 14(1) of the aforesaid Ordinance. The said declaration, according to the ITO, was not valid. He, therefore, issued show cause notices to the assessee as to why the above mistake be not rectified. In reply, the stand taken by the assessee was that there was no mistake apparent on the face of the record for any of the years, i.e., 1966-67 to 1970-71 and 1973-74, that there was no mention of the penalty or charging of interest in the assessment orders for those years and that the conclusion by him, in this behalf, was arrived at after detailed discussion in the assessment orders. These arguments of the assessee were rejected and the ITO came to the conclusion that the present case was a case of mistake apparent from record, and he by his consolidated order dated 12/18-2-1980 for the assessment years 1966-67 to 1970-71 and 1973-74 directed as under: "The mistake being apparent from record is rectified by starting penalty proceedings under sections 271(1)(a) and (c) for all the years, 273(b) for the assessment years 1965-66, 1966-67 and 1967-68 and section 273(c) for the assessment year 1973-74. Penalty interest under sections 139(8)....
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....y of filing the same returns again. This would defy the very purpose of this scheme. Thus, if any assessee ever sought immunity under the scheme in the above manner and even if the ITO allowed it, it would remain ab initio void. It would have no legal force as it is legally impossible to grant immunity in above circumstances. Nothing could be done by the ITO which had not been provided in the law. Still if the ITO allows immunity in the above specified circumstances it would merely constitute a mistake apparent from records, the patent mistake of law which could be rectified suo moto or on the attention of the ITO being drawn by the appellant himself realising the mistake committed by himself and the ITO. In the instant case also the returns of income were already pending before coming into operation of the Voluntary Disclosure Scheme. The appellant merely sought immunity on these returns without declaring any extra income. This was legally not possible and the mistake is simply a mistake apparent from records. It has rightly been rectified by the ITO." 8. In the appeals filed by the assessee before the Tribunal, the departmental representative has raised a preliminary objection....
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....54 or section 155 having the effect of enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the assessee under either of the said section: (o) an order imposing a penalty under--- (i) section 140A, or (ia) section 221, or (ii) section 270, or (iii) section 271, or (iiia) section 271A, or (iv) section 272, or (iva) section 272B, or (v) section 273;" The first controversy before the revenue, on one hand, and the assessee on the other hand, centres round the meaning to be given to the words 'having the effect of enhancing the assessment or reducing a refund' appearing in section 246(f). It may be added, as is clear from section 154 as reproduced above, that identical words appear in section 154(3) of the Act. As to the exact meaning to be given to the aforesaid words, 'having the effect of enhancing the assessment', in section 246(f) which also appear in section 154(3), I would do no better than refer to the decision of the Supreme Court in the case of M. Chockalingam & M. Meyyappan v. CIT [1963] 48 ITR 34. The facts of this case are that Chockalingam and Meyyappan were the sons of Meyyappa Chettiar. At first, the ....
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....e rate given in the Finance Act but the total amount which the assessee is required to pay. The proviso applies whenever the effect of the order is to touch the pocket of the assessee and in our opinion this was such a case." 10. The ratio of the above decision of the Supreme Court is on all four in the present case. By the impugned orders, notices of demand charging interest under section 139(8)/217 have been issued, there is no other order by the ITO in this behalf. These orders of the ITO under section 154, are the orders levying interest under section 139(8)/217. Since, by the said orders, the total amount which the assessee in the present case was required to pay was more than that originally raised as a result of the original assessments for the years under consideration, these orders have the effect of enhancing the assessment. The effect of these orders by the ITO is to touch the pocket of the assessee. That having happened, the assessee would be perfectly justified to file the appeals before the AAC, being aggrieved from the aforesaid orders under section 154 having the effect of enhancing the assessment for the years under consideration. Secondly, the appeals by the as....
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....ble by him, a sum equal to two per cent of the assessed tax for every month during which the default continued ;" "273. If the Income-tax Officer, in the course of any proceedings in connection with the regular assessment for assessment year commencing on the 1st day of April, 1970 or any subsequent assessment year, is satisfied that any assessee--- (b) has without reasonable cause failed to furnish an estimate of the advance tax payable by him in accordance with the provisions of sub-section (3) of section 212, or (c) has without reasonable cause failed to furnish an estimate of the advance tax payable by him in accordance with the provisions of sub-section (3A) of section 212, he may direct that such person shall, in addition to the amount of tax, if any, payable by him, pay by way of penalty a sum--- (i) which, in the case referred to in clause (a), shall not be less than ten percent but shall not exceed one and a half times the amount by which the tax actually paid during the financial year immediately preceding the assessment year under the provisions of Chapter XVII-C falls short of--- (1) seventy-five per cent of the assessed tax as defined in sub-section (5) ....
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....ment proceedings, and the levy of the penalties had to be set aside. The said decision was affirmed by the Delhi High Court. It agreed with the Tribunal that the action for imposition of penalty must be initiated in the course of the assessment proceedings. 12. Keeping in view the above decision, let us come to the facts of the present case. Admittedly, the ITO did not initiate penalty proceedings under section 271(1)(a)/(c)/273(b)/(c) of the Act, in the course of the original assessment orders of the assessee for each of the years under consideration. Having not done so, a right had come to be vested in the assessee, whereby the ITO was debarred from initiating those penalty proceedings after making of the original assessment orders for the years under consideration. Having failed to initiate those penalty proceedings in the course of the original assessment orders, the ITO cannot arm himself with the authority to do something in the shape of initiating the penalty proceedings by passing the impugned orders under section 154, which he could not otherwise do in law, having failed to do so in the course of the assessment proceedings. This will be tantamount to abuse of the proces....
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....wing effect: "139. (1) Every person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall furnish a return of his income or the income of such other person during the previous year in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed--- (a) in the case of every person whose total income, or the total income of any other person in respect of which he is assessable under this Act, includes any income from business or profession, before the expiry of four months from the end of the previous year or where there is more than one previous year, from the end of the previous year which expired last before the commencement of the assessment year, or before the 30th day of June of the assessment year, whichever is latter; (b) in the case of every other person, before the 30th day of June of the assessment year: Provided that, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, extend the date for furnishing the re....
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....ase of L. Hazari mal Kuthiala v. ITO [1961] 41 ITR 12. 14. Having come to the above conclusion, the next point for our consideration is as to whether the mistake in the matter of non-charging of interest under section 139(1) read with section 139(8) of the Act as reproduced in para 13 above by the ITO in the original assessments for the years under consideration, is a mistake apparent from record. We after hearing both the learned counsel for the assessee, Shri O.P. Vaish, and the departmental representative, find that a similar question had come up for consideration of the Allahabad High Court in the case of Raja Hari Chand Raj Singh v. CIT [1978] 114 ITR 727, as is the position in the present cases for charging of interest for delayed submission of the returns by the assessee for each of the assessment years 1965-66 to 1970-71. Therein, the Allahabad High Court after referring to the decision of the Supreme Court in T.S. Balaram, ITO v. Volkart Brothers [1971] 82 ITR 50, has laid down that the question whether under section 139(1) interest was chargeable for delayed submission of the return by the assessee, when he had not applied for extension of time, is one on which there i....