Income Tax Appellate Tribunal - Ahmedabad
Income-Tax Officer vs Smt. Manini Niranjanbhai on 1 July, 1991
Equivalent citations: [1991]39ITD73(AHD)
ORDER
R.L. Sangani, Judicial Member
1. For assessment year 1978-79 the Income-tax Officer gave effect to the order of CIT (Appeals) which had been passed in appeal against the assessment order. As a result of the order of the CIT(A) a refund of Rs. 9,315 was payable to the assessee. The ITO did not mention about the grant of interest on said amount under Section 214 of the Income-tax Act, 1961. The assessee filed application for rectification under Section 154 of the Act. The ITO noted that interest was payable under Section 214 in view of the Full Bench decision of Gujarat High Court in Bardolia Textile Mills v. ITO [1985] 151 ITR 389. The ITO also noted that the Department had not filed Special Leave Petition against that order of the High Court. However the ITO held that Kerala High Court had taken a different view on the point in controversy in CIT v. G.B. Transports [1985] 155 ITR 548 (FB) and as such the point in controversy was debatable. He therefore, refused to exercise his powers under Section 154 and grant interest under Section 214 of the Act in conformity with the decision of the Gujarat High Court in the case of Bardolia Textile Mills (supra). In the appeal filed by the assessee the AAC held that the ITO was bound by the decision of Gujarat High Court referred to above and as such interest should have been granted in conformity with said decision in exercise of powers under Section 154 of the Act. The Department is now in appeal before the Tribunal.
2. The learned Departmental Representative submitted that although interest under Section 214 was allowable in view of the decision of Gujarat High Court in the case of Bardolia Textile Mills (supra), yet the mistake in the order of the ITO in not granting interest could not be said to be a mistake apparent from record because other High Courts had taken a view different from the one taken by Gujarat High Court in the abovementioned decision. It was submitted that when the point in controversy was debatable, no relief under Section 154 could be granted. Reliance was placed on the decision in V.R. Sonti v. CIT [1979] 117 ITR 838 (Cal.), Veena Theatres v. Union of India [1977] 109 ITR 748 (Pat.), Raja Hari Chand Raj Singh v. CIT [1978] 114 ITR 727 (All.) and Jiyajeerao Cotton Mills Ltd. v. ITO [1981] 130 ITR 710 (Cal.).
3. The submission of the learned counsel for the assessee, on the other hand, was that since the decision of Gujarat High Court in the case of Bardolia Textile Mills (supra) was admittedly applicable to the fact of the case and was binding on the ITO, his omission to grant interest under Section 214 in conformity with said decision would constitute a mistake apparent from record because of the fact that said decision was of jurisdictional High Court. Reliance was placed on the decision of Gujarat High Court in Standard Radiators v. CIT [1987] 165 ITR 178 in support of the submission that mistake in such cases would come in the category of mistake apparent from record.
4. I have considered the rival submissions and facts on record. It is an admitted position before me that on the date when the ITO gave effect to the order of the CIT(A) the decision of Gujarat High Court in Bardolia Textile Mills (supra) was applicable. Consequently, while giving effect to the order of the CIT(A) the ITO was bound to grant interest under Section 214 in conformity with the said decision of the Gujarat High Court. The ITO omitted to grant the interest while giving effect to the order of CIT(A). Under such circumstances the mistake in the order of the ITO must be regarded as mistake apparent on record. This is because he was bound to follow the decision of Gujarat High Court and yet he did not follow the said decision.
5. In Jiyajeerao Cotton Mills Ltd. 's case (supra) on which the learned D.R. had relied it has been held that on the basis of subsequent decision of Supreme Court the earlier order could not be rectified because the decision of Supreme Court does not obliterate the existence of conflict of opinions prior to it. I find that it is now a well established position that the Supreme Court does not declare the law with effect from the date of its order and the law declared by the Supreme Court has effect not only from the dale of the decision but from the inception of the statutory provision. This position has been recognised in the Departmental Circular No. 68 dated 17th November, 1971 which has been published in 83 ITR (Statute) 1961. It has been mentioned therein that the Board have been advised that a mistake arising as a result of subsequent interpretation of law by Supreme Court would constitute a mistake apparent from record and rectificatory action under Section 154 of the Act would be justified. It is further mentioned therein that where an assessee moves an application under Section 154 pointing out that in the light of a latter decision of Supreme Court pronouncing the correct legal position, a mistake has occurred in any of the completed assessment in his case, the application shall be acted upon provided the same has been filed within time and is otherwise in order. In view of this Circular which is beneficial and as such which is bound to be given effect to, the above-mentioned decision of Calcutta High Court has been rendered ineffective. As regards the remaining three decisions which have been cited on behalf of the Department, I find that in two of them what has been laid down is that rectification on point of law was not permissible when there was conflict of decisions. Ours is not a case of that type. As already stated there was a decision of jurisdictional High Court on the date when the ITO passed the order and the mistake in the order of the ITO is in not following the binding decision. In V.R. Sonti's case (supra) which has been cited on behalf of the Department, there is one observation to the effect that at the time when the rectification order was passed the concerned authority should consider all the decisions including the decision of jurisdictional High Court in order to determine whether the point was debatable. The ratio of this decision is not that when the ITO does not follow a binding decision of jurisdictional High Court there is no mistake apparent from record. In fact, the direct decision on this point is that of Gujarat High Court in Standard Radiators' case (supra) in which it is observed that it is implicit in the power of supervision conferred on the High Court that all the authorities subject to its supervision should conform to the law laid down by it and as such the law laid down by the jurisdictional High Court has to be followed by the income-tax authorities situated in an area over which the High Court has jurisdiction. In this decision it is laid down that if the order of the ITO is not in conformity with the existing decision of jurisdictional High Court it would be regarded that there was mistake apparent from record. I respectfully follow this decision and hold that in the present case there was a mistake apparent from record in the order giving effect to the order of the CIT(A) because of the fact that the ITO had not passed that order in conformity with the decision of Gujarat High Court in the case of Bardolia Textile Mills (supra). Consequently, provisions under Section 154 were attracted for rectifying the said mistake. The CIT(A) was justified in directing the ITO to allow interest in conformity with the said decision of Gujarat High Court. I reject the ground raised by the Department.
6. The appeal is dismissed.