Income Tax Appellate Tribunal - Delhi
Smt. Kewati Devi Jain vs Income-Tax Officer on 19 May, 1987
Equivalent citations: [1987]23ITD11(DELHI)
ORDER
'--In s. 154 Ratio & Held:
Legal documents amend in the above context means `correct an error' and expression `amend the order' would mean `correct the order' in the order under section 154.
Application:
Also is current assessment years.
Income Tax Act 1961 s.154 Rectification under s. 154--POWER--Scope.
Ratio:
Section 154 extends to amendment or correction of order to eliminate mistake apparent on record. This may extend to whole order or to a part of it.
Held:
In the order under section 154 the power to rectify the orders is to be exercised by correcting the error in the order and the correction must, therefore, extend to the elimination of the error. The assessing officer will thus be able to amend or correct the order to the extent to which the correction is necessary for rectification of the error and such correction may extend either to the whole of the order or only to a part of it.
Case Law Analysis:
Blue Star Engg. Co. (Bombay) (P) Ltd. v. CIT (1969) 73 ITR 283 (Bom) relied.
Application:
Also to current assessment years.
Income Tax Act 1961 s.154 ORDER V.P. Elhence, Judicial Member
1. This is assessee's appeal against the order dated 30-3-1985 of the learned Appellate Asstt. Commissioner, Meerut Range, Meerut for the Assessment year 1982-83.
2. The assessee is an individual. For the assessment year 1982-83 in question originally the assessment was completed by the Income-tax Officer Under Section 144 on 31-3-1984 on an income of Rs. 35,000 on the supposition that in response to the notice Under Section 139(2) the assessee had neither filed her return nor sought any extension for filing the same. However, thereafter by an order Under Section 154 passed on 12-2-1985 the Income-tax Officer cancelled the ex parte assessment on the ground that the assessee had filed her return on 31-3-1983 declaring an income of Rs. 70,500 whereas notice had been issued to the assessee for the fault of not having filed any return.
3. Against the said order the assessee came up in appeal before the learned Appellate Asstt. Commissioner and submitted that the Income-tax Officer had. no jurisdiction to cancel the ex parte assessment Under Section 154. The learned AAC however did not accept the assessee's submission and upheld the order of the ITO and hence the present appeal before us.
4. Shri K.P. Bhatnagar, the learned counsel for the assessee, referring to the wordings of Section 154 submitted before us that the ITO could only rectify a mistake apparent from the record and that he could not purport to efface the order itself. According to him there had to be an order which could be amended. He also submitted that after the passing of the assessment order, the assessing authority becomes functus officio and it is another matter that the assessment order even if wrongly framed, is set aside by the Commissioner Under Section 263 which has not been resorted to in the present case. Reliance was also placed by him on the decision of the Hon'ble Madras High Court in the case of CIT v. O.RM.M.SM.SV. Sevugan [1948] 16 ITR 59. On the other hand Shri T.R. Talwar, the learned Departmental Representative, strongly relied upon the orders of the Income-tax authorities.
5. We have considered the rival submissions as also the decision relied upon on behalf of the assessee. There can be no manner of doubt that if an assessee has already filed her return and even then an assessment is framed ex parte Under Section 144 on the basis that neither there was any return nor any application for extension of time for filing the same, it was a case of mistake apparent from the record. What remains thereafter is rectification. No limits as to rectification have been circumscribed Under Section 154 excepting the limitation as to time and of course the limitation that the mistake should be apparent from the record. Both these requisites were fulfilled in the present case. In the case of O.RM.M.SM.SV. Sevugan (supra) all that the Hon'ble Madras High Court decided was that the power of rectification Under Section 35 of the Indian Income-tax Act, 1922 (which corresponds to Section 154 and 254(2) of the Income-tax Act, 1961) does not enable an order to be reversed by revision or by review, but permits only some error, which is apparent on the face of the record to be corrected. We are not prepared to agree with the submission made on behalf of the assessee. The power intending to be given Under Section 154 is to rectify an error apparent on the face of the record. Amendment of the order is the consequence of the rectification and its purpose is to give effect to the rectification. If the rectification involves an amendment, which will affect the whole of the order, it cannot be said that simply because of the use of the word 'amend', which normally cannot mean the cancellation of the whole order, the ITO should be powerless to rectify the mistake or error which is apparent on the face of the order. The word 'amend' with reference to legal documents means 'correct an error' and the expression 'amend the order' would mean 'correct the error' in the order Under Section 154 the power to rectify the order is to be exercised by correcting the error in the order and the correction must, therefore, extend to the elimination of the error. What the effect of the elimination of the error will be on the original order will depend upon each case. It may be that the elimination of the error may affect only a part of the order. It may also be that the error may be such as may go to the root of the order and its elimination may result in the whole order falling to the ground. In our opinion the ITO will be able to amend or correct the order to the extent to which the correction is necessary for rectification of the error and such correction may extend either to the whole of the order or only to a part of it. If an authority was to be needed for this proposition it would be specifically found in the decision of the Hon'ble Bombay High Court in the case of Blue Star Engg. Co. (Bombay) (P.) Ltd. v. CIT [1969] 73 ITR 283. In that case also a question arose whether it was within the power of the ITO Under Section 154 to rectify the order by cancelling the order of assessment itself. In this case it is only because the ex parte assessment was framed by the ITO at the figure of Rs. 35,000 that it suits the assessee to say that the ex parte order could not be rectified Under Section 154 so as to cancel it, because the assessee had herself declared an income of Rs. 70,500. What would have happened in the case where the assessee had herself declared a figure of income much lower than that assessed by the ITO Under Section 144 ? If that were the case, the assessee who had filed her return before the passing of such an ex parte order, would have herself approached the ITO for rectification Under Section 154 to say that the error should be rectified and the ex parte order should be cancelled. A provision has to stand the test whatever be the facts and circumstances. The view taken by us would hold good, whatever be the facts and circumstances. We, therefore, find no force in this appeal.
6. The appeal fails and is dismissed.