TaxTMI 
TaxTMI 
2007 (9) TMI 339
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....ssessee is a Public Limited Company and is engaged in the construction of industrial plants. A return of income for the assessment year 1995-96 declaring total income of is 5,27,63,150 was filed before the Assessing Officer on 30-11-1995. This return was accepted under section 143(1)(a) on 27-3-1996. The return was thereafter selected for scrutiny vide notice under section 143(2) issued to the assessee-company. During the assessment proceedings, the assessee-company was called to prove the genuineness of its claim of purchase of Gas Cylinders during the relevant accounting year and thereby to prove its claim for depreciation therein at the rate of 100 per cent amounting to Rs. 3,05,05,0 14. The assessee-company submitted following documentary evidence during the assessment proceedings in order to prove the genuineness of purchases of Gas Cylinders and use of such assets during the relevant accounting year:- (a) Copy of the purchase bills, (b) Copy of the purchase order, (c) Copies of the transportation documents, (d) Copy of the documents for having received the assets at various sites located in various parts of the country wherein the assessee is carrying on its work ....
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....he said scheme, various clarifications were issued by the Central Board of Direct Taxes from time to time to clarify and explain the applicability and provisions of KVSS. The learned Chief Commissioner of Income-tax, Pune, in his letter dated nil, November, 1998 addressed to Shri Vijay Mallya, Chairman of UB Group and also assessee's Company, outlining the scope of the scheme as well as inviting the Company to settle the unresolved differences and disputes. The contents of the said letter are extracted hereunder:- November, 1998 "...... Mr. Vijay Mallya, U.B. Engineering Ltd. Sahyadri Sadan, Tilak Road, Pune - 30 Sub: Kar Vivad Samadhan Scheme 1998 Dear Sir/Madam, The Income-tax Department recognises your contribution towards the nation's progress in the form of payment of taxes. Yet, some unresolved differences have led to a few cases being locked in appeals causing you and us mutual concern. R....
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....g to the assessee, thereafter, the Authorities prevailed upon the assessee-company to cover the issues which were subject-matter of reopening under section 148. By this time, consequent upon various hearings during the proceedings under section 148, the assessee was made aware that the issue for reassessment is the allowance of depreciation on Gas Cylinders purchased by the assessee amounting to Rs. 305 lakhs. According to the assessee, the Authorities prevailed upon the assessee-company to cover the issue under KVSS. The assessee all along maintained that the original claim of depreciation was genuine. But, according to the assessee, the Assessing Officer insisted that consequent upon certain information in his possession which, according to him, received subsequent to the assessment, was of the opinion that allowance of depreciation was incorrect as the entire transaction was suspected as bogus. According to the assessee, it with an intention to buy peace and to settle its disputes on all issues agreed with the Assessing Officer to cover this issue under KVSS. Accordingly, the assessee-company filed a petition for rectification on 13-1-1999 before the Joint Commissioner of Income....
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.... we are filing a declaration under KVSS Scheme before the Commissioner of Income-tax, today. We would request you to kindly pass the order under section 154 as requested by us and quantify the demand of tax for the above assessment year. Thanking you, Yours faithfully, for UB Engineering Limited." From the above application, it is clear that the assessee requested the Assessing Officer to rectify the original assessment by disallowing depreciation which was originally allowed. In line with the understanding, the assessee also filed the second Declaration on the same day including this income of Rs. 305 lakhs, as multiple declarations were permitted under the KVSS. 5. The Assessing Officer did not act upon the petition for rectification filed by the assessee. In the meantime, the learned Commissioner of Income-tax who was the Designated Authority under the KVSS issued a Certificate in Form 2A marked as page No. 112 of the Paper Book accepting the first Declaration filed by the assessee and while doing so, he made the following remarks:- "** Note- (1) The relief has been calculated, as per the Form 1A filed on 31-12-1998 vide No. 282. (2) The declaration in....
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....ee-company filed a Writ Petition before the Hon'ble High Court of Bombay. The Hon'ble High Court, after hearing both the sides, directed the Assessing Officer to dispose off the petition filed by the assessee under section 154. 6. In the meantime, based on Form 3 issued by the D.A., the appeal pending before the Tribunal was dismissed by the Tribunal. According to the assessee, most of the issues under appeal were in favour of the assessee as there were many decisions directly on the subject in favour of the assessee and the assessee had a good chance of success before the Tribunal. 7. Consequent upon the direction of the Hon'ble High Court, the Assessing Officer issued a letter dated 14-2-2000 wherein he outlined his objections for rectification as prayed by the assessee. A summary of the objections by the Assessing Officer is as under: "1. According to the Assessing Officer, the order under section 143(3) does not exist after notice under section 148 dated 17-8-1998. He was of the view that no rectification can be carried out as no assessment order exists. 2. That having validly initiated proceedings under section 148 provisions of section 154 cannot be taken recourse....
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....e of rectification on the issue on which notice under section 148 has been issued. Also the mistake pointed out by you cannot be called as mistake apparent from records. Had it been so, you would have definitely returned this income on account of incorrect depreciation claim in the return of income furnished by you in response to notice under section 148 on 16-8-1999 vide receipt No. 000046. Therefore, neither the order sought to be rectified exists nor there is any mistake apparent from records. It has already been clarified from this office that no order under section 154 can be passed merely to enable you to avail the benefit of KVSS. In view of this, your rectification application dated 13-1-1998 is hereby filed." Thereafter, in pursuance of a Writ Petition filed by the assessee, the Hon'ble High Court of Bombay directed as under: "...At the outset, we do not wish to express any opinion on the merits. The only ground why we are inclined to stay the reassessment proceedings is that the petitioner has a right to file an appeal under section 246(A)(1)(c) and till the appeal is heard, the D.A. should not reject the petitioner's application under K.V.S.S. and secondly pending ....
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....1 (SC) and the decision of Allahabad High Court in Sir Shadilal & Sons v. CIT [1973] 92 ITR 453, the original order no longer exists after reopening under section 148. He accordingly held that there was no mistake apparent from record and accordingly, the Assessing Officer was justified in rejecting the assessee's application under section 154. Even though the proceedings under section 147 were pending before the Assessing Officer, and the Assessing Officer had not passed any order under section 143(3) read with section 147, the CIT(A) held in para 14 of his order that "the proceedings initiated by the Assessing Officer under section 147 are valid proceedings." 9. Aggrieved by the orders of the authorities below, the assessee is in appeal before this Tribunal. Shri K.R. Pradeep, the learned counsel for the assessee, first of all drew our attention to the salient features of KVSS announced by the Government of India. He further drew our attention to the various circulars issued by the CBDT from time to time to clarify and explain the applicability and provisions of KVSS. He submitted that in pursuance of the KVSS, the then learned Chief Commissioner of Income-tax, Pune, had writt....
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....before the Joint Commissioner of Income-tax (A.O.). He drew our attention to para 3 of the said application reproduced on page 7 supra and submitted that the assessee filed the rectification application to avail the KVSS in respect of all items connected with the assessment (as clarified in query No. 31 issued by the CBDT). In support of the submission that the rectification petition was filed after prolonged discussions with the Income-tax Authorities to avail of the KVSS, the learned counsel filed a sworn Affidavit of Shri A.S. Bhide, who is the General Manager (Finance) of the Company. The Affidavit reads as follows: "Affidavit I, Mr. A.S. Bhide, S/o Shankar Purushottam Bhide aged 54 years residing at A/3, Moghul Gardens, Koregaon Park, Pune 411 001 solemnly affirm on oath and state as under: In pursuance of the letter written by CCIT to our CMD Shri Vijay Mallya, I along with my colleagues met the CIT & the JCIT on number of occasions and in particular on these dates: 1. 7-12-1998 2. 23-12-1998 3. 31-12-1998 4. 12-1-1999 5. 13-1-1999 6. 14-1-1999 to discuss the issue of availing of KVS Scheme for the assessment year 1995-96. I further state that th....
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....." Shri Bhide appeared before us in person on 7-11-2000 and confirmed the contents of the Affidavit before us. The learned counsel submitted that contrary to the understanding, the Assessing Officer did not act upon the petition for rectification filed by the assessee and it was only when the Hon'ble Bombay High Court directed the Assessing Officer to dispose of the petition filed by the assessee under section 154 the Assessing Officer proceeded in the matter. According to the learned counsel, it was a complete breach of trust reposed by the assessee in the Revenue Department. 10. The Assessing Officer after hearing the assessee, did not reject the application for rectification, but "filed the same", so that the assessee may not be able to avail of the benefits of KVSS and for this, the Assessing Officer held that the order under section 143(3) ceased to exist after issue of notice under section 148 insofar on the issues on which valid notice under section 148 has been issued. According to the learned counsel, the reasons given by the Assessing Officer for filing the application for rectification are factually incorrect and legally erroneous. The learned counsel submitted the....
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....the judgment of the Gujarat high Court in CIT v. Kartikey V. Sarabhai [1981] 131 ITR 42. The learned counsel further submitted that there was sufficient material available to give a finding on the validity of the proceedings under section 148 and the material available in this regard is as follows: 1. The reason sheet for reopening the assessment. 2. The underlying information which came into the possession of the Assessing Officer which prompted him to issue the notice under section 148 consisting of: (a) Letter from postal authority regarding the availability of the supplier of cylinder at the address mentioned in the invoice, (b) The copies of sales tax returns filed by the supplier M/s. Gargi Trading Corporation. These copies were provided to the department by the Sales Tax Authorities at Hajipur, Bihar. According to the learned counsel, all the information required to judge the validity of the proceedings was available and because the department sought to enforce the notice issued under section 148 to defeat the claim of the assessee, the assessee prays that this issue requires to be decided by the Tribunal. Further, the finding given by the CIT(A) being adverse....
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....ared before us in person on 7-11-2000 and confirmed the contents of the Affidavit. The learned D.R. further placed before us the factual Note received from the Assessing Officer which is reproduced hereunder: "Facts of the case on assessee's appeal in ITA No. 934/PN/2000. The appellant is a company in the construction of Industrial Plants. Return of income for this assessment year was furnished by the assessee on 30-11-1995. In the return assessee has claimed depreciation of Rs. 5,93,71,235 which includes depreciation of Rs. 3,05,05,014 at the rate of 100 per cent on gas cylinders purchased by the assessee. During the course of asst. proceeding, the assessee was called upon to furnish a note on its depreciation claim. The same was furnished by the assessee along with the return filed on 6-2-1998 (Annexure-1). The assessee also filed evidence in the form of purchase bill as well as bill of transportation. The claim of the assessee was accordingly allowed in an order under section 143(3) dated 31-3-1998. However after the completion of assessment proceeding, the Assessing Officer wrote a letter to the Addl. DIT (Inv.), Patna requesting him to verify the actual existence, cap....
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....the learned D.R. in fact, the assessee wants a back door entry to ward off the proceedings validly initiated under section 147 which would result in concealment of income and subsequent penal proceedings to avail of KVSS. He submitted that there is no ulterior motive on the part of the revenue to reject the offer of the assessee under KVSS. The offer of the assessee was rejected because the offer did not fall within the parameters of KVSS. He submitted that there is no evidence which shows that the revenue prevailed upon the assessee to avail of KVSS and there was only some routine correspondence which was addressed to most of the assessees and such a correspondence cannot be called as an agreement. The learned D.R. submitted that after the assessment was completed under section 143(3), some material came to the notice of the Assessing Officer and he validly initiated proceedings under section 147 on 17-8-1998. The petition under section 154 was filed much later, i.e., on 3-1-1999. He submitted that the Assessing Officer was free either to act under section 147 or to act under section 154 and when two options are available, the choice is with the Assessing Officer. In support of....
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....all issues in one deal under a package deal under KVSS which was announced by the Government of India with great expectations and it cannot be said to be a back door entry. The assessee was asking for what was due to it. He submitted that the Affidavit filed by the Jt. CIT is inconsistent with the direction of the Tribunal, because the Tribunal had directed the senior D.R. to seek Affidavit from the Chief Commissioner of Income-tax or the then CIT or the then Jt. CIT regarding the issue of filing of application under section 154. In the absence of any affidavit from the aforesaid Authorities, it has to be treated that no Affidavit has been filed as directed by the Tribunal. The learned counsel further submitted that the Affidavit filed by the Jt. CIT is incomplete and does not evidence any fact. The Affidavit refers to merely about some discussion between the present Jt. CIT and earlier Authorities and does not state any fact. He prayed that the Affidavit should be dismissed as hearsay, as the Affidavit has been very cleverly drafted to escape from any adverse consequences. He submitted that the reliance placed by the learned D.R. on the decision of the Hon'ble Bombay High Court in....
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....ove judicial authorities, it is incorrect for the authorities below to contend that the order of original assessment does not exist after the issue of notice under section 148. We accordingly hold that when the assessee filed an application under section 154, the original order of assessment did exist. 16. The word "assessment" is used in the Income-tax Act in a number of provisions in a comprehensive sense and includes all proceedings starting with the filing of the return or issue of notice therefor and ending with determination of the tax payable by the assessee. The proceedings for rectification of assessment of tax are thus proceedings of assessment - S. Sankappa v. ITO [1968] 68 ITR 760 (SC). 17. "Mistake" is an ordinary word, but in taxation law, it has a special signification. It is not an arithmetical or clerical error alone that comes within its purview. It comprehends errors which, after a judicious probe into the record from which it is supposed to emanate, are discerned. The word "mistake" is inherently indefinite in scope, as what may be a mistake for one may not be one for another. It is something which is duly and judiciously instructed mind can find out from ....
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....jaj v. ITO [1999] 69 ITD 1 to which one of us (A.M.) was a party, has held in para 16 of the judgment as follows: "It is the basic principle of jurisprudence that if there is a mistake committed by the Court or the Tribunal, it needs to be rectified as no one should suffer or come to grief on account of the mistake committed by the Court. Even the rules of procedure and technicalities should not come in the way in rendering the justice to parties by correcting the mistakes committed by Court or the Tribunal. In one of the recent cases i.e., S. Nagaraj v. State of Karnataka [1993] Suppl. (4) SCC 595, decided by the Hon'ble Supreme Court, Justice Sahai speaking for the Court explained the law on the subject thus: 'Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order of the Court should not be prejudicial to anyone. Rule of stare decisis is adhered for consistency but it is not as inflexible in Administrative Law as in Public Law. Even the law bends before justice. Entire concept of writ jurisdiction exercised by the higher Courts is founded on equity and fairness. If the Court finds that the ....
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....ettling all the disputes pending on the day. In the meantime, the Jt. CIT, who was pursuing the reassessment proceedings and had issued summons to the Managing Director of the Company and other Executives to record a statement on oath as well as to furnish details, decided to adjourn the case to enable the Company to cover its disputes under the KVSS. Accordingly, the Company filed a Declaration under KVSS on 31-12-1998. This Declaration covered the entire disputes on various issues pending before the Tribunal. Further discussions were held by the Authorities and the Authorities suggested the assessee-company to cover the issues which were subject-matter of reopening under section 148, because by this time consequent upon various hearings during the proceedings under section 148, the assessee was made aware that the issue of reassessment is allowance of depreciation on Gas Cylinders purchased by the assessee amounting to Rs. 305 lakhs. To settle the dispute and to buy peace with the department, the assessee owned up the mistake in the matter of claiming depreciation on Gas Cylinders and, accordingly, filed an application under section 154. In the application, it was made clear that....
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....plication under section 154 pointing out mistake about the claim of depreciation on Gas Cylinders. In our opinion, by filing an application under section 154 what the assessee was doing was to settle all its disputes in one go under a package deal under KVSS which was announced by the Government of India and with great expectations and it cannot be said to be a back door entry. The assessee was asking for what was due to it. In our view, when an assessee comes forward to offer as income something more than what has been assessed, the Administration should not spurn the opportunity to collect more taxes, because such an act would be against the spirit of KVSS. Therefore, if an assessee makes an application for rectification, he has the legitimate expectation that the application would be accepted in quantifying the demand. We further hold that under the Scheme, rejection of a rectification application will not be in public interest. 22. Coming to the arguments of the learned senior D.R., we have already pointed out that we do not agree with his view that by filing an application under section 154 the assessee wanted a back door entry to ward off the proceedings validly initiated ....
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.... of section 154 and it comprehends errors which, after a judicious probe into the record from which it is supposed to emanate, are discerned; it is something which is duly and judiciously instructed mind can find out from the record. In the present case, the assessee judiciously went through its record and came out with the mistake before the Assessing Officer. 24. As regards the findings of the Assessing Officer and the CIT(A) and then supported by the learned senior D.R. that proceedings under section 147 were validly initiated, we hold that such a finding is premature. The Assessing Officer initiated the proceedings under section 147 by issuing a notice under section 147 and the proceedings are still pending before the Assessing Officer and such proceedings have been stayed by the Hon'ble High Court till disposal of application under section 154 by the Assessing Officer, CIT(A) and the Tribunal. How can the proceedings which are still pending be termed as valid proceedings because validity will come into question only after the Assessing Officer passes an order under section 143(3) read with section 147/148. In our view, the CIT(A) was not justified in giving the finding that....
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....t been taken into consideration or some irrelevant factor has been taken into consideration or relevant provisions of statute have not been applied or the binding decisions of the Apex Court or Jurisdictional High Court have been ignored. However, there are two exceptions namely, retrospective amendment by the Legislature and the declaration of the law by Supreme Court after the impugned order passed by the taxing authority. Reason behind these exceptions is that retrospective legislation is deemed to be on the statute on the date when the impugned order was passed. Similarly, the decision of Apex Court is also deemed to be in force on the date of impugned order inasmuch as such decision amounts to declaration of law from the date when the relevant provision was brought on the statute. That means, one has to restrict himself to the material or evidence or the legal position which was available before the Taxing Authority. The words "apparent from the record" in section 154 further strengthen this legal position. Therefore, a person can be said to have committed a mistake apparent from record if the conclusions or findings arrived at by him could not have been arrived at on the basi....
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....e to the present case. The above observations held in clear terms that record is restricted to the entire material available before the Assessing Officer on the basis of which, the assessment was made. Consequently, consideration of any other material, evidence or circumstance extraneous to the assessment record is not permitted to be considered to ascertain a mistake apparent from the record. 31. If the above legal position is applied to the facts of the present case, then in my opinion, it cannot be said that any mistake was committed by the Assessing Officer while allowing the claim of depreciation of the assessee. In order to claim depreciation, two conditions are to be satisfied namely (1) that asset must be owned by the assessee and (2) such asset was used by the assessee in his business. The material/evidence furnished by the assessee and considered by Assessing Officer regarding ownership and user of asset have been enumerated in para 2 of the proposed order and there is no dispute about this factual aspect as is apparent from page No. 15 of the written submissions of the assessee filed before us. These materials/evidences, in my opinion, were more than sufficient to sat....
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....f the object of the provision and the nature and scope of the power conferred, upon the Commissioner. The revisional power conferred on the Commissioner under section 263 is of wide amplitude. It enables the Commissioner to call for and examine the record of any proceeding under the Act. It empowers the Commissioner to make or cause to be made such enquiry as he deems necessary in order to find out if any order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue. After examining the record and after making or causing to be made an enquiry if he considers the order to be erroneous then he can pass the order thereon as the circumstances of the case justify. Obviously, as a result of the enquiry he may come into possession of new material and he would be entitled to take that new material into account. If the material, which was not available to the Income-tax Officer when he made the assessment could thus be taken into consideration by the Commissioner after holding an enquiry, there is no reason why the material which had already come on record though subsequently to the making of the assessment cannot be taken into consideration....
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....ts of our depreciation claim during the year. We have in our record sufficient documentary evidence in respect of purchase of assets made during the relevant year. However, in order to avoid an possible controversy on the issue, we agree for rectification of the assessment order, disallowing the depreciation claim. We are consenting to this course so that we can avail the Kar Vivad Samadhan Scheme (KVSS) in respect of all the items connected with the assessment (as clarified in the query No. 3 issued by CBDT). The above statement of the assessee clearly shows that though there was no obvious or patent mistake in the order of assessment, yet the application was being made under section 154 to avoid possible controversy and to avail KVS Scheme. There was no notice under section 154,issued by the Assessing Officer. The assessee agreed to rectification merely to cover its case under the provisions of KVSS. At this stage, it is pertinent to note that on one hand the assessee is challenging the validity of the notice issued under section 148 on the ground that all relevant material facts regarding the claim of depreciation were disclosed to the Assessing Officer at the time of assessm....
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....referred to a Third Member under section 255(4) of the Income-tax Act, 1961. The Hon'ble President has nominated me as Third Member to adjudicate on the following point of difference of opinion:- "Whether on the facts and circumstances of the case, the Assessing Officer was justified in rejecting the assessee's application under section 154 of the Act?" 2. The facts set out in detail by the learned Accountant Member, who proposed the first order, are recapitulated for easy understanding, briefly, as under: Assessee is a Public Limited Company, engaged in the construction of industrial plants. Assessee filed the return on 30-11-1995 for the year under consideration, disclosing income at Rs. 5,27,63,150. It was processed under section 143(1)(a) on 27-3-1996. The case was selected for scrutiny. In scrutiny assessment, assessee was called upon to establish the genuineness of its claim of purchase of gas cylinders during the relevant accounting year and thereby the claim of depreciation at the rate of 100 per cent amounting to Rs. 3,05,05,014. Assessee submitted various documents as set out by the learned AM vide Para 2 of his proposed order. 3. In scrutiny assessment, Asses....
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....ntire disputes pending. Thereafter, according to the assessee, the revenue authorities prevailed over the assessee-company to cover the issues, which were subject-matter of reopening under section 148 as well. Consequent to various discussions between the revenue authorities and the assessee, assessee became aware that the issue for reassessment was allowance of depreciation on gas cylinders purchased by the assessee amounting to Rs. 305 lakhs. Assessee always claimed that the original claim of depreciation was genuine. Yet, the assessee claimed, Assessing Officer on the basis of certain information in his possession received subsequently, formed the opinion that allowance of depreciation was incorrect as the entire transaction was suspected to be bogus. With an intention to buy peace and to settle the dispute on all the issues, assessee also agreed to include this disputed figure involved under KVSS. Assessee filed a petition for rectification on 13-1-1999 before the JCIT. Assessee's letter for rectification is placed at Pages 7 and 8 of the order of the learned AM. Though the assessee filed the rectification application, it was not acted upon. Meanwhile, the learned CIT, the Desi....
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....s that led to reopening. Lastly, it was stated, assessee only agreed to withdraw the depreciation claim and this agreement has no meaning. There is no proposal and there cannot be proposal from the Department to this effect. Assessing Officer held, order under section 154 cannot be passed in order to enable the assessee to avail the benefit of KVSS. Order under section 154 could be passed only if conditions explained are satisfied. Provisions of section 154 cannot be invoked for any other consideration including availing of benefit under KVSS. Hence, Assessing Officer rejected the assessee's application in the order Assessing Officer also observed that neither the order sought to be rectified exists nor there is any mistake apparent in the order even if the order exists. He held, revenue authorities cannot pass an order only to accommodate the assessee for availing the benefit of KVSS. 9. Assessee again approached the Hon'ble Bombay High Court by way of Writ, which was disposed off by the Hon'ble High Court with certain directions giving time frame for disposal. Assessee filed an appeal before the CIT(A) pursuant to the direction of the Hon'ble High Court. The order of the Asses....
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....e claim was wrongly made, hence assessee wants to avail KVSS. He further submitted that there is no evidence to show that the revenue authorities prevailed upon the assessee to avail KVSS and there was routine correspondence which was addressed to most of the assessees intimating the benefit of availing KVSS and such correspondence and subsequent discussion is not an agreement, as contended by the assessee. Assessment was completed much earlier under section 143(3). Subsequently certain materials came to the notice of the revenue and proceedings under section 147 were initiated on 17-8-1998. Assessee filed rectification petition under section 154 much later, i.e., on 3-1-1999. Even according to the assessee, there was no mistake apparent from the record in the order of the Assessing Officer. Assessee filed rectification application only to avail the benefit of KVSS, which was rightly 'treated as filed', submitted the learned DR. 12. In the rejoinder, assessee objected the affidavit filed by the Officer as the deponent was not privy to the discussions. He came to the picture much later. He was not aware of any discussion. Therefore, it was submitted that the affidavit has no valu....
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....tification, even to avail KVSS benefit. According to the learned AM, the application under section 154 was made after due deliberations with the Departmental authorities. It was a suo motu application by the assessee. Learned AM further opined in his proposed order that by filing an application under section 154, assessee intended to settle all its disputes in 'one go' under a package deal availing KVSS, which was announced by the Government of India. Filing of an application under section 154 in these circumstances cannot be treated as a back door entry. Learned AM did accept the stand of the revenue that the Assessing Officer is free either to act under section 147 or to act under section 154 when both the options are available, but he held, when two courses are open, one favourable to the assessee should be adopted. He further agreed with assessee's contention that where the assessee suo motu files an application under section 154 to settle all its disputes under KVSS, the stream of rectification under section 154 should have been favoured against the course of action under section 147, especially when the assessee filed the return in response to notice under section 148 under p....
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....enue or the assessee, cannot make an order already passed, a wrong order much less an apparent mistake to be rectifiable under section 154. Learned JM placed reliance upon the decision of the jurisdictional High Court in the case of Gammon India Ltd. and the decision of the Hon'ble Supreme Court in the case of Maharana Mills (P.) Ltd. dealing with section 35 of 1922 Act, which pari materia with the provisions of section 154, particularly the following observation of the Hon'ble Supreme Court: "'The record' contemplated by section 35 does not mean only the order of assessment but it comprises all proceedings on which the assessment order is based and the Income-tax Officer is entitled for the purpose of exercising his jurisdiction under section 35 to look into the whole evidence and the law applicable to ascertain whether there was an error." 18. Learned JM held, the material/evidence furnished by the assessee and considered by the Assessing Officer regarding ownership and user of asset as enumerated in Para 2 of the learned AM's order were more than sufficient to satisfy two conditions under section 32, to make the assessee eligible for depreciation, i.e. to say, asset was ow....
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....bsence of any mistake apparent from the face of the record, can there be rectification under section 154 for the reason that the Department has agreed or the assessee has conceded? 22. As rightly noted by the learned AM, mere issuance of notice does not efface the entire original assessment and this view is supported by the decisions in Sun Engg. Works (P.) Ltd.'s case, Nawab Mir Barakat Ali Khan Bhadur's case and Sharda Trading Co.'s case. Learned JM is not disputing this finding. Hence, on this point there is no difference of opinion. 23. According to the assessee (as recorded by learned AM vide Para 19 of his proposed order), after discussions with the revenue authorities, assessee/decided to avail the benefit of KVSS and assessee also came to the conclusion that the depreciation claimed by it was not proper. Assessee made an application under section 154. According to the learned AM, assessee had a right to file an application under section 154 taking into consideration assessee's own perception and if the statute invests in a Public Authority to act in a particular way, it is imperative upon him to exercise his authority in that particular way. The Officer cannot act on ....
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..... Where assessment is made under section 147 in respect of income which has escaped assessment, the Income-tax Officer's jurisdiction is confined to only such income which has escaped assessment or has been underassessed and does not extend to revising, reopening or reconsidering the whole assessment or permitting the assessee to reagitate questions which had been decided in the original assessment proceedings. It is only the underassessment which is set aside and not the entire assessment when reassessment proceedings are initiated. When the assessment is reopened the original assessment under section 143(3) remains and it could not be said that the original assessment is non est on account of the reopening of the assessment." 26. The Hon'ble Kerala High Court in the case of CIT v. Masoneilan (India) Ltd. [2000] 242 ITR 569, after considering various decisions including the decision of the Hon'ble Supreme Court in the case of Volkart Bros., cited supra, came to the conclusion that "the plain meaning of the word 'apparent' is that it must be something which appears to be so ex facie and is incapable of argument or debate". 27. In the case of Nasiruddin v. CIT [1989] 176 ITR 1....
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.... one which is to be discovered as a result of an argument but it is open to the Income-tax Officer to examine the record including the evidence and if he discovers any mistake he is entitled to rectify the error provided that if the result is enhancement of assessment or reducing the refund then notice has to be given to the assessee and he should be allowed a reasonable opportunity of being heard". Their Lordships further held: "'the record' contemplated by section 35 does not mean only the order of assessment but it comprises all proceedings on which the assessment order is based and the Income-tax Officer is entitled for the purpose of exercising his jurisdiction under section 35 to look into the whole evidence and the law applicable to ascertain whether there was an error". In other words, as rightly held by learned JM, any evidence that came into the possession either of the revenue or of the assessee cannot be used for rectifying an order, because it falls beyond the scope of apparent mistake contemplated under section 154. 31. Coming to the argument of the assessee that the assessee was induced to avail the benefit of KVSS and to settle all the disputes in one go assessee....