Bombay High Court
Freny S. Contractor vs Deputy Commissioner Of Income Tax on 18 September, 1998
Equivalent citations: (1999)63TTJ(MUMBAI)758
ORDER
M.A. Bakshi, Third Member This appeal had come up for hearing before 'D' Bench of the Tribunal and since there was a difference of opinion between the Judicial Member and the Accountant Member, the matter has been referred to me under section 255(4) of the Income Tax Act, 1961, by the Hon'ble President for a decision of a Third Member in respect of following difference of opinion:-
"(1) Whether, on the facts and circumstances of the case, there was sufficient material on record with the assessing officer to warrant rectification under section 154 of the assessment made under section 143(3) for allowing necessary relief under section 80G in respect of the alleged donation of Rs. 1,00,000 even though admittedly no such claim was made in the return ?
(2) Whether the Commissioner (Appeals) was correct in upholding the order of the assessing officer rejecting the application under section 154 ?"
I have perused the relevant orders passed by the learned Judicial Member and the learned Accountant Member. I have also heard the rival contentions on behalf of the assessee and the revenue.
2. The relevant facts, briefly stated, are that the assessee had filed the return for assessment year 1992-93 on 28-10-1992, declaring income of Rs. 9,87,065. The assessee had claimed a deduction under section 80G in respect of donation of Rs. 1,50,000. The donation had been made to Firozegarh Charitable Trust. The assessing officer allowed the claim of the assessee. The assessment order was passed on 31-3-1993.
3. Subsequently, on 29-4-1993, the assessee filed an application under section 154 claiming certain mistakes in the assessment order. In this very application the assessee pointed out to the assessing officer that the assessee had made the following donations during the previous year relevant to assessment year 1992-93 :-
Date Name of the Trust Amount 26-3-1992 Firozegarh Charitable Trust Rs. 1,50,000 20-3-1992 D. C. Shah Charitable Trust Rs. 1,00,000
4. It was pointed out to the assessing officer that the withdrawal of Rs. 2,50,000 had been made from 'Grindlays Bank Account No. 01823 and is evidenced from the details of withdrawals furnished to the assessing officer. It was pointed out that the claim in regard to a donation of Rs. 1,50,000 was made in the return of income. The assessee enclosed the donation receipt for a sum of Rs. 1,00,000 with the request to the assessing officer to allow relief under section 80G of the Income Tax Act, 1961. A certificate issued by the Charity Commissioner was also furnished along with this application. The assessing officer rejected the application on the ground that no claim had been made in the return of income and, therefore, there was no mistake in the assessment order. The assessee appealed to the Commissioner (Appeals) but without any success.
5. When the matter came up before the 'D' Bench of the Tribunal, the learned Judicial Member was of the view that non-granting of deduction of Rs. 1,00,000 to the assessee constituted a mistake within the ambit of section 154 and, therefore, deduction under section 80G in respect of the donation of Rs. 1,00,000 should be allowed to the assessee.
6. The Learned Accountant Member, on the other hand, came to the conclusion that there was no mistake in the assessment order which could be rectified under section 154.
7. The learned counsel for the assessee contended before me that the assessee had furnished the return of income and other details before the assessing officer. The details of withdrawals made from the Bank Account were also furnished. A perusal of the Bank Account clearly reveals that the assessee had made donations of Rs. 1,50,000 and Rs. 1,00,000. The assessing officer had not made any enquiry about the donation of Rs. 1,00,000. If proper enquiry had been made by the assessing officer, the assessee would have given necessary evidence and details for allowance of deduction under section 80G. Since the assessing officer has failed in performing his duties in making proper enquiries which he is duty bound to make in making an assessment, it was contended that a mistake has crept in the order of the assessing officer. It was accordingly contended that the action of the assessing officer in rejecting the application under section 154 may be set aside and he be directed to allow deduction under section 80G in respect of the donation of Rs. 1,00,000. The learned counsel for the assessee placed reliance on the following decisions :-
(1) CIT v. Gangappa Cables ITD.'s (1979) 116 ITR 778 (AD) (2) CIT v. Western Rolling Mills (P) ITD.'s (1985) 156 ITR 54 (Bom.) (3) CIT v. Gurjargravures (P) ITD.'s (1978) 111 ITR 1 (SC) in support of the contention that the appellate authority has jurisdiction to entertain claim for deduction for the first time. Reliance was also placed on the decision of the Madhya Pradesh High Court in the case of CIT v. K.N. Oil Industries (1983) 142 ITR 13 (MP) in support of the contention that relief under section 35B could be made before the Commissioner (Appeals) even though such a claim was not made in assessment proceedings. Reliance was also placed on the decision of the Ca/cutta High Court in the case of West Bengal State Warehousing Corpn. v. CIT (1986) 157 ITR 149 (Cal) in which case the claim for exemption of warehousing receipts of the assessee was allowed on an application for rectification though such a claim was not made during the assessment proceedings.
8. The learned counsel for the assessee further contended that the department should have a human face and allow the deduction to an old lady who is suffering from incurable disease. It was contended that the assessing officer had not to investigate the facts. The fact that the assessee had made a donation was available on record and the certificate required under section 80G was an enabling provision and, therefore, could be produced along with an application under section 154. It was further contended that the revenue should not take advantage of the mistakes committed by the tax payers. if relief is permissible to the assessee the same ought to have been granted.
9. The learned Departmental Representative, on the other hand, contended that there was no curable mistake in the assessment order nor was there any information on the basis of which deduction under section 80G could be allowed. The decisions cited on behalf of the assessee, according to the learned Departmental Representative, are distinguishable on facts and since sufficient material was not available on record, the application of the assessee under section 154 was rightly rejected.
10. I have given my careful consideration to the rival contentions. The facts are not in dispute. The assessee had filed the return of income and had also furnished the details of withdrawals from the Bank. The details of withdrawals from Bank indicated that the assessee had donated three amounts during the year under appeal of Rs. 1,50,000, Rs. 1,00,000 and Rs. 9,500. Deduction under section 80G, however, was claimed in respect of Rs. 1,50,000 only being donation made to Firozegarh Charitable Trust. The assessing officer completed the assessment on the basis of information and granted deduction under section 80G in respect of said Rs. 1,50,000. The assessee had not claimed any deduction under section 80G in respect of donation of Rs. 1,00,000 or in respect of donation of Rs. 9,500. The reasons for not claiming deduction under section 80G in respect of the donation of Rs. 1,00,000 are not forthcoming. On receipt of the assessment order, the assessee did not file any appeal against that order. The remedy available to the assessee under section 264 by way of revision to the Commissioner was also not availed of. The assessee, however, filed an application under section 154 on 29-4-1993, claiming that a donation of Rs. 1,00,000 had been made to D.C. Shah Charitable Trust on 20-3-1992, which was recognised institution for purposes of section 80G and, therefore, deduction should be allowed to the assessee under section 80G. A certificate issued by the Charity Commissioner had also been filed along with the application under section 154. The assessing officer rejected the application on the ground that there is no mistake in the assessment order insofar as no claim had been made by the assessee in the return of income. However, certain other mistakes pointed out in the application, with which I am not concerned, were rectified.
11. The issue raised in this appeal is as to whether the assessing officer was justified in denying the benefit of deduction under section 80G to the assessee.
12. As already pointed out, the assessee had not made any claim in the return of income and had not filed any appeal or revision under section 264 against the assessment. I am reminded of the observations of their Lordships of the Supreme Court in the case of Parashuram Pottery Works Co. ITD v. ITO (1977) 106 ITR 1 (SC). Their Lordships elucidating on rule of finality of an assessment, laid down as under:-
"It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of ca/culating and realising that price should familiarise themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue. At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce, repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity."
13. In this case when the assessee had not filed any appeal or revision against the assessment for reasons best known to her or to her advisors, the issue is as to whether section 154 was the appropriate remedy for seeking relief in regard to the donation of Rs. 1,00,000.
14. Section 154 reads as under:-
"154. (1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may-
amend any order passed by it under the provisions of this Act;
amend any intimation sent by it under sub-section (1) of section 143, or enhance or reduce the amount of refund granted by it under that sub-section.
(1A).."
15. The opening words in section 154 should not leave anybody in doubt that this provision has a limited application as it can be invoked only with a view to rectifying any mistake apparent from the record. In this case the assessee had filed the return of income in which no deduction had been claimed. The withdrawal statement of the Bank though indicates a donation of Rs. 1,00,000 having been made, but it does not give the name of the institution nor was there any information available on record that the institution to which the donation has been made is a recognised institution for purposes of section 80G. It is on these facts that one has to consider as to whether it can be said that there was a mistake apparent from the record in not granting deduction to the assessee under section 80G. For deciding this simple issue it would be necessary to ignore the information furnished with the application under section 154. It is important to note that the assessee, for the first time, furnished the information about the name of the institution and the fact that the institution was recognised for purposes of section 80G, after the assessment, along with the application under section 154. The scope of section 154 has been explained by their Lordships of the Supreme Court in the case of ITO v. Volkart Bros. (1971) 82 ITR 50 (SC). Their Lordships have held as under:-
"A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on debatable point of law is not a mistake apparent from the record."
16. When the scope of section 154 is so limited, how can a deduction which possibly could not be allowed even in appellate proceedings be allowed by considering it as a mistake apparent from record ? It may be pertinent to mention that the scope of appeal against assessment is wide and broader than the scope under section 154. However, even in an appeal the powers of the appellate authority are not unlimited. In the case of Gurjargravures (P) ITD. (supra), one of the grounds of the appeal raised by the assessee in an appeal before the Appellate Assistant Commissioner was that the Income Tax Officer had erred in not giving the assessee the benefit of section 84 of the Income Tax Act, 1961. No such claim had been made before the Income Tax Officer when he completed the assessment, nor was there material on record supporting such a claim. In subsequent years relief under section 84 had been allowed to the assessee. The appeal was dismissed by the Appellate Assistant Commissioner on the ground that the question of error on the part of the Income Tax Officer did not arise as no claim for exemption under section 84 had been made before the officer. On further appeal, the Appellate Tribunal held that, since the entire assessment was open before the Appellate Assistant Commissioner, there was no reason for his not entertaining the claim and directed the Income Tax Officer to allow the appropriate relief. On a reference, the High Court held that it was competent for the Tribunal to so hold and direct.
17. The decision of the High Court was reversed and it was held that "as neither was any claim made before the Income Tax Officer regarding the relief under section 84 nor was there any material on record in support thereof, and from the mere fact that such a claim had been allowed in subsequent years it could not be assumed that the prescribed conditions justifying a claim for exemption under section 84 were also fulfilled."
18. This is the position in an appeal against the assessment. In the present case the assessee had not made any claim under section 80G in respect of a sum of Rs. 1,00,000 before the assessing officer. Apart from the fact that a donation of Rs. 1,00,000 had been made, there was no information as to whom such a donation was made and as to whether the institution was recognised for the purposes of section 80G. In such circumstances, applying the principles laid down by their Lordships of the Supreme Court in the case of Gujargravures (P) ITD. (supra), it is doubtful as to whether the assessee would have claimed the deduction even by way of an appeal against the assessment. When the scope of section 154 is limited, how can the assessee be allowed the benefit of deduction not claimed in the return of income or during the course of assessment proceedings ?
19. There is no doubt that taxing authorities exercise quasi-judicial powers and as held by their Lordships of the Supreme Court in the case of CIT v. Simon Carves ITD. (1976) 105 ITR 212 (SC), that in exercising quasi-judicial powers the taxing authorities must act in a fair and not a partisan manner. However, the duty of the assessing officer does not go beyond the facts that are available to him and the records. As has been pointed out above, there was nothing on record on the basis of.which the assessee could be granted deduction in respect of the donation of Rs. 1,00,000 under section 80G. In this case it is not as if the assessee was not aware of the benefits available under section 80G as a deduction in regard to the donation of Rs. 1,50,000 had been claimed and was allowed in accordance with law. The reasons for not making the claim and not giving requisite information, as already pointed out, are not forthcoming from records or from the assessee. In such circumstances, the assessing officer was justified, in my view, in rejecting the application of the assessee under section 154, by holding that there was no mistake apparent from record that could be rectified under the said section.
20. The decisions cited on behalf of the assessee are distinguishable on facts. I agree with the learned Accountant Member that these decisions are inapplicable to the facts of this case. As already pointed out, the principles applicable in regard to the appellate proceedings are not necessarily applicable in regard to the proceedings under section 154. Considering the totality of the facts and circumstances of this case, I am of the view that the revenue has rightly rejected the claim of the assessee under section 80G.
21. Before winding up, I would like to refer to the submission made by the learned counsel for the assessee, Mr. N. R. Prabhu, that the revenue must have a human face. Whereas one can have no quarrel with his suggestion, it is also necessary to bear in mind that the benefits available to the assessee must be sought in accordance with law. The revenue cannot be blamed for the assessee not having been properly advised. The assessee, perhaps, could have got the benefit if appropriate remedy which perhaps was by way of revision to the Commissioner under section 264, had been filed. The application under section 154 filed with the assessing officer was well within the time when a revision under section 264 could have been filed. Though I feel sorry for the assessee, one cannot travel beyond the four corners of law. I, therefore, agree with the learned Accountant Member that relief under section 154 is not warranted with regard to donation of Rs. 1,00,000 and that the Commissioner (Appeals) was right in upholding the order of the assessing officer in rejecting the application under section 154.