Income Tax Appellate Tribunal - Chandigarh
Sh. Harinder Singh, Ambala City vs Assessee on 8 November, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH 'B' CHANDIGARH
BEFORE SHRI H.L.KARWA, VICE PRESIDENT
AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER
ITA No. 878/CHD/2011
Assessment Year: 2007-08
Shri Harinder Singh, V ITO, Ward-3,
S/o Shri Gurjeet Singh, Ambala.
VPO Saunda, Ambala City.
PAN: BZWPS-3739N
&
ITA No. 879/CHD/2011
Assessment Year: 2007-08
Shri Harbans Singh, V ITO, Ward-3,
S/o Shri Mehar Singh, Ambala.
VPO Saunda, Ambala City.
PAN: BUQPS-3523M
&
ITA No. 880/CHD/2011
Assessment Year: 2007-08
Shri Hablash Singh, V ITO, Ward-3,
S/o Shri Gurdev Singh, Ambala.
#6, Sector 10,
Ambala City.
PAN: BZWPS-4348R
&
ITA No. 881/CHD/2011
Assessment Year: 2007-08
Shri Hazura Singh, V ITO, Ward-3,
S/o Shri Surjan Singh, Ambala.
VPO Saunda, Ambala City.
PAN: AXAPS-2764E
ITA No. 882/CHD/2011
Assessment Year: 2007-08
Shri Harnek Singh, V ITO, Ward-3,
S/o Shri Mehar Singh, Ambala.
VPO Saunda, Ambala City.
PAN: BVXPS-2548J
(Appellant) (Respondent)
Date of Hearing : 08.11.2011
2
Assessee by : None
Department by : Smt.Jaishree Sharma
&
ITA No. 883/CHD/2011
Assessment Year: 2007-08
Shri Harnek Singh, V ITO, Ward-1,
S/o Shri Gurdayal Singh, Ambala.
Parshuram Nagar,
Ambala City.
PAN: CAEPS-1808N
&
ITA No. 884/CHD/2011
Assessment Year: 2007-08
Shri Harbans Singh, V ITO, Ward-3,
S/o Shri Gurdayal Singh, Ambala.
VPO Saunda,
Ambala City.
PAN: CEHPS-7568J
&
ITA No. 885/CHD/2011
Assessment Year: 2007-08
Shri Avtar Singh, V ITO, Ward-1,
S/o Shri Gurdayal Singh, Ambala.
Parshuram Nagar,
Ambala City.
PAN: CAAPS-4696A
&
ITA No. 886/CHD/2011
Assessment Year: 2007-08
Shri Amarjit Singh, V ITO, Ward-3,
L/H Shri Gurpreet Singh, Ambala.
S/o Shri Bachan Singh,
VPO Saunda,
Ambala City.
PAN: ATTPS-2735C
3
ITA No. 887/CHD/2011
Assessment Year: 2007-08
Smt. Amarjit Singh, V ITO, Ward-1,
D/o Shri Hazoora Singh, Ambala.
Parshuram Nagar,
Ambala City.
PAN: -----------
Assessee by : None
Department by : Shri Akhilesh Gupta
Date of Hearing : 09.11.2011
Date of Pronouncement : 29.12.2011
ORDER
PER BENCH The above captioned appeals filed by the assessee appellants are directed against the common order passed by the CIT(A) on 01.07.2011 u/s 250(6) of the Income-tax Act,1961 (in short 'the Act').
2. Both the facts of the cases and the grounds of appeal taken in the present bunch of appeals are identical. Therefore, we find it convenient to dispose of the present bunch of appeals by consolidated order for the sake of convenience.
3. As the grounds of appeal and facts of the case in respect of all these appeals are identical, the grounds of appeal from the record of ITA 878/Chd/2011 (Shri Harinder Singh) are extracted as an illustrative case and are reproduced hereunder :
"1. The order passed u/s 250(6) of theia,1961 by the ld. CIT(A) Panchkula is against law and f acts on the f ile in as much as she was not justif ied to arbitrarily hold that action of the ld. AO in holding that rectif ication is not possible, is justif ied.4
2. That she gravely erred in holding that as the issue of taxabil ity of interest on compensation has traveled upto Hon'ble Supreme Court, the issue is debatable and thus, does not f all within the ambit of rectif ication u/s 154."
4. At the time of hearing, ld. 'AR' submitted that the ld.
CIT(A) had passed a common order on 1.7.2011 disposing of 63 appeals filed by various appellants. The ld. 'AR' was, of the opinion that the order passed by the CI T(A) Panchkula is against the facts on file.,He further submitted that in view of the decision of the Hon'ble Supreme Court in the case of CIT V Ghansham (HUF) 315 I TR 1 (S.C), the facts of the appeals falls under the provision of Section 154 of the Act.
5. Ld. 'DR', on the other hand, contended that the provisions of Section 154 are not applicable to the facts of the present cases as there is no mistake apparent from the record. The issue raised by the ld. 'AR' does not owe its origin to the material available in the assessment record. Hence, it does not fall under the purview of Section 154 of the Act.
6. The brief facts of the case, as culled out from the relevant records including the order passed by the AO u/s 154 of the Act and the appellate order passed by CIT(A) on 1.7.2011 reveals that the assessee (Shri Harinder Singh) filed its return of income on 31.3.2008 disclosing total income at Rs. 3,13,760/-
after claiming exemption of Rs. 35,85,830/-u/s 10(37) of the Act in respect of enhanced compensation on acquisition of land.
The appellant also claimed credit for a sum of Rs. 4,37,534/-
being the tax deducted at source in respect of interest income declared in the return of income. The AO processed the case u/s 143(1) of the Act without making any adjustment to the 5 income disclosed by the assessee and a refund was accordingly issued. In the present case, the AO exercised his jurisdiction u/s 143(1) of the Act and issued the impugned refund to the assessee as per the necessary claim made by the assessee in this regard. Under the first proviso to the newly substituted Section 143(1), w.e.f. June 1,1999 except as provided in the provision itself, the acknowledgement of the return shall be deemed to be an intimation u/s 143(1) where, (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is pertinent to mention here that u/s 143(1), AO does not have power or jurisdiction to make any adjustment to the income disclosed by the assessee.
7. The provisions of Section 154 of the Act and the provision of Section 143(1) are distinct and different in nature and scope.
The provisions of Section 154 are applicable where there is a mistake apparent from record. The existence of mistake apparent from record in the order of the concerned income tax authority is a statutory condition precedent to invoke the provisions of Section 154 of the Act. Rectification proceedings as contemplated u/s 154 of the Act cannot be converted into assessment proceedings with a view to making fresh claim, which was not made in the return of income filed by the assessee. The assessee is duty bound to bring on record requisite material or evidence, while filing the return of income with a view to making a claim of rectification u/s 154 of the Act. The provisions of Section 154 cannot be invoked where the assessee has committed a mistake while filing the return of income. The provisions of such Section are intended to amend 6 the order passed by any revenue authority, mentioned therein in respect of mistake which is floating on surface of the assessment record. If mistake of law or fact has to be established by construing the words of a Section to find its proper meaning, then such an error cannot normally be a rectifiable error. The Supreme Court in the case of T.S.Bala Ram, I TO V Volkart Bros. (1971) 82 ITR 50 (S.C) held "It is not open to the ITO to go into the true scope of relevant provisions of the Act in proceeding u/s 154 of the Act. 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 of points on which there may, conceivably two opinions." A decision on a debatable point of law is not a mistake apparent from record. The power of rectification u/s 154 of the Act cannot be understood to review, revise or re-
consider the substantial decisions, taken after due consideration of law and facts. In a nut-shell, mistake apparent from record, u/s 154 of the Act must be self evident, obvious and patent mistake of facts or law which is floating on the surface of the record and not the mistake which can be discovered or discerned or established by way of discussions, debate and investigation into the issue.
8. The assessee appellant intends that the rectification application, wherein details including receipt of full interest have been furnished and a new contention made that such interest received u/s 28 of the Law Acquisition Act, which is exempt u/s 10(37) of the Income-tax Act,1961, be considered and treated as return of income, wherein foundational 7 material exists, for the purpose of rectification of mistake apparent from the records. Such contention of the appellant is contrary to the scheme of Income-tax Act,1961 and relevant provisions of Section 139 and 154 of the Act. The appellant did not furnish such details and material in the return of income, which was processed and accepted as such by the AO u/s 143(1) of the Act. It is undisputed fact that such materials or claim of the assessee is not available in the assessment record, before the AO, at the time the return of income was processed by the AO. Further, the AO has no jurisdiction u/s 143(1) of the Act to make adjustment to the returned income. In this case, such new material was not examined and considered y the AO at the time of processing the return filed by the appellant.
Thus the intended rectification requires interpretation of the provisions of Section 28 of the Law acquisition Act, 1894, Section 154 and 143(1) of the Income-tax Act,1961 and determination of existence of foundational facts needs detailed investigation and verification and, hence, the case of the appellant patently falls beyond the ambit of the provisions of Section 154 of the Act but is the subject matter of scrutiny assessment within the meaning of Section 143(3)or re-
assessment u/s 147 r.w.s. 148 of the Act. In short, there does not exist any mistake in the intimation issued by the AO u/s 143(1) of the Act, much less the mistake apparent from record.
Accordingly, such alleged mistake is not self-evident and consequently, cannot be rectified u/s 154 of the Act. This view is duly fortified by the decision of the T ribunal, jurisdictional 8 High Court and Apex Court of the land, as is evident from the ratio laid down therein:
i) In the case of Packers (India) V ITO, Vapi, Ward-I, Daman (2006) I TD 383 (AHD). Hon'ble ITAT, Ahmedabad Bench 'A' on identical facts held as "The provisions of Section 154(1)(b) simply gave power to the AO to amend any intimation issued. It has to be restricted to the limited power of AO given u/s 143(1) to determination of tax, interest payable or refundable to the assessee only and not beyond that, as what cannot be done directly u/s 143(1) cannot as well be done indirectly by taking resort to Section 154(b). Making any adjustment to the returned income by way of rectification u/s 154 will be amounting to do an act that cannot be done directly under the provisions of Section 143(1).
9. The Hon'ble jurisdictional High Court has held in the case of Punjab State Co-operative Supply & Marketing Fed.Ltd. V Dy.CI T (2008) 173 Taxman 15 (P&H) that the omission of assessee to claim deduction in the return or during the course of assessment proceedings, is not a mistake apparent from record.
10. The facts of the present case are covered by the decision of the Hon'ble Supreme Court in the case of CIT V Hero Cycles (P) Ltd. (1997) 228 ITR 463 (S.C) wherein it has been held that rectification u/s 154 can only be made when glaring mistake of fact or law has been committed by the officer passing the order and it becomes apparent from the record. Rectification is not possible if the question is debatable. Moreover, the point 9 which is not examined on fact or in law, cannot be dealt with as mistake apparent from record.
11. The I TAT in I TA Nos. 908 to 915/Chd/2011 in respect of various assessee appellants for the assessment year 2007-08, on identical facts and circumstances and grounds of appeal passed order dated 26.12.2011, whereby the appeals of the assessees were dismissed. The relevant part of the order of the Tribunal dated 26.12.2011 is reproduced hereunder :
"All the aforesaid appeals filed by the assessees are directed against the common order passed by the CIT(A) on 1.7.2011. The facts and the grounds of appeal taken in the present bunch of appeals are identical. We therefore find it convenient to dispose of the present bunch of appeals by a consolidated order. For the sake of convenience, facts as well as the grounds of appeal are being extracted form the case records of Shri Jai Singh v. ITO, ITA No. 913/Chd/2011.
2. In ITA No. 913/Chd/2011, the assessee has taken the following grounds of appeal:-
1. That order passed u/s 250(6) of the Income-tax Act, 1961 by the ld. CIT(A), Panchkula is against law and facts on the file in as much she was not justified to arbitrarily hold that action of the AO in holding that rectification is not possible is justified.
2. That she gravely erred in holding that as the issue of taxability of interest on compensation has traveled up to Hon'ble Supreme Court, the issue is debatable and thus, does not fall within the ambit of rectification u/s 154.
3. At the time of hearing of appeal bearing ITA No. 913/chd/2011, 914/Chd/2011 and 915/Chd/2011, it was submitted by the ld. authorized representative for the assessee that the ld. CIT(A) has passed a common order on 1.7.2011 disposing of 63 appeals filed by the assessee. It was further submitted by him that all the relevant details including copy of application filed u/s 154 on behalf of the assessee, sheet of computation of assessable income and TDS certificates dated 5.2.2007 issued by the Land 10 Acquisition Officer have been filed in the case of Shri Balvinder Singh v.
ITO, ITA No. 864/Chd/2011 and that they are equally relevant in the case of Shri Jai Singh v ITO in ITA No. 913/Chd/2011 and therefore they should be taken into account for disposal of the said appeal.
4. Briefly stated, the facts of the case as culled out from the order passed by the Assessing Officer u/s 154 of the Income-tax Act and the appellate order passed by the CIT(A) on 1.7.2011 in the case of Shri Jai Singh shows that the assessee had filed his return of income on 27.3.2008 returning total income at Rs. 59,100/- after claiming exemption for a sum of Rs. 6,75,466/- u/s 10(37) in respect of enhanced compensation on acquisition of land. The assessee also claimed credit for a sum of Rs. 82,480/- being the tax deducted at source out of interest, in the return of income. The return was processed u/s 143(1) without any adjustment and refund was accordingly granted to the assessee.
5. Paper book filed by the ld. authorized representative for the assessee in the case of Shri Bhupinder Singh in ITA No. 864/Chd/2011 contains a sheet of computation chart for assessment year 2007-08 which reads as under:-
'Computation of Assessable Income Income from other sources Enhanced Compensation received from 670583.00 Land acquisition officer though Certificate No. 74 Intt. received on Enhanced compensation 58974.56 From Land Acquisition officer through Certificate No. 74 from 1.4.2006 to 31.10.2006 (670583*15%*7/12) Total Income received 772557.56 Less deduction u/s 10 (37) 670583.00 Taxable income 58974.56 Total income rounded off u/s 288A 58970.00 Total tax due ---NIL--
Details of Tax paid TDS @ 11.22% on interest 6616.95 TDS @ 11.22% on Additional Compensation 75239.41 81656.36 Refund due 81656.36"
116. Paper book filed by the ld. authorized representative in the case of Shri Bhupinder Singh v ITO in ITA No. 864/Chd/2011 contains a copy of the application filed by Shri Shiv Singla, authorized representative for the assessee which reads as under:-
"To The Income Tax Officer, Ward-3, Ambala Sub:- Rectification u/s 154 in the case of Shri Bhupinder Singh S/o Shri Gurbaksh Singh r/o Village, Saunda, Distt. Ambala having permanent Account number BTKPS 8321 J for the assessment year 2007-08. Respected Sir, The Assessee is agriculturist and was having agriculture land in village Saunda, District Ambala. The Land was acquired by Land Acquisition Officer. Assessee has received enhanced compensation of Rs. 6,70,583.00 and interest of Rs. 14,67,470.00 during the FY 2006-07 as per detail given as under:
Cert No. Additional Interest Total l TDS
Compensation
74 6,70,583 14,67,470 21,38,043 2,41,424
Assessee had filed his income tax return in your office vide return receipt number 6331014296 dated 13.3.2008 declaring his gross total income Rs. 7,29,558.00 in which assessee has claimed exemption u/s 10(37) to the tune of Rs. 6,70,583.00 being enhanced compensation and balance Rs. 58,975.00 as interest income received on enhanced compensation relevant for assessment year 2007-08. Assessee has bifurcated the interest on yearly basis as per the case decided in Punjab and Haryana High Court in case of CIT v Hardwari Lal (HUF) and others as recorded in (2008) 219 CTR (P&H) 583.
In view of the judgment of Hon'ble Supreme Court in case of CIT v Ghanshyan (HUF) 315 ITR 1, the whole of the interest amounting to Rs. 14,67,470.00 received by the assessee is to be taxable on the receipt basis. The order was passed by the Supreme Court on 16.7.2009. Whereas assessee declared interest of Rs. 58,975/- on accrual basis in his return of income file on 13.3.2008.
Assessee has received above said interest u/s 28 of Land Acquisition Act. In view of the apex court judgment above said interest now forms part of enhanced compensation. Meaning thereby that whole of the interest and enhanced compensation received by the assessee is to be accounted for in the assessment year 2007-08 itself and Tax deducted on it also to be accounted for in the assessment year 2007-08. Assessee qualifies all the conditions as specified in section 10(37). Hence whole the receipts are exempt u/s 10(37). Hence, interest declared in return of income is now exempt as per apex court judgment.12
Assessee has claimed only interest and enhanced compensation of Rs. 7,29,558.00 in the return and balance amount of interest and enhanced compensation Rs. 14,08,495.00 (Rs. 6,70,583.00 + Rs. 14,67,470.00 - Rs. 7,29,558.00) is to be added. Accordingly proportionate TDS credit is to be taken. The judgment of the apex court has come after filing of the return. The rectification is sought in view of the apex court judgment.
Section 154 clearly specifies that a mistake arising as a result of subsequent interpretation of law by the supreme court constitute a mistake apparent from the records and is rectifiable provided proper application for the same has been filed within time allowed for the pur0psoe. The same view was taken by the Supreme Court in case of Assistant Commissioner of Income Tax Vs Saurashtra Kutch Stock Exchange Limited as reported in 305 ITR 227.
Hope your good self will find the above in order and rectify the order.
Thanking you Yours Faithfully For Shri Bhupinder Singh (Shiv Singla) Counsel"
7. It is evident on bare perusal of the chart showing computation of assessable income that interest on enhanced compensation was shown by the assessee in the year under appeal at Rs.58,974/-. It is equally evident on bare perusal of the copy of application filed u/s 154 on behalf of the assessee that the assessee was seeking not only enhancement of interest from Rs.58,974/- as shown in the return of income to Rs.14,67,470/- and its inclusion in the enhanced compensation on the basis of judgment of the Hon'ble Supreme Court in CIT v Ghansham(HUF) 315 ITR 1 (SC) but also exemption of the whole amount of enhanced compensation including interest u/s 10(37).
8. The Assessing Officer considered the rectification application. He however, rejected the same with the following observations:-
3. Brief background of the case is that the assessee filed his return on 27.3.2008 declaring total income at Rs. 59,100/- after claiming exemption of Rs. 6,75,466/- u/s 10(37) of the Act in respect of the enhanced land compensation. The assessee also claimed credit for TDS amounting to Rs. 82,418/- corresponding to the interest income declared in the return and the enhanced compensation. The case was processed u/s 143(1) as such and refund was also issued accordingly.13
4. Thus, as on date, the returned income stands to be the assessed income and there is no mistake apparent from the record warranting rectification thereof. In fact, it appears that the assessee intends its case to be decided as per the particulars which were not shown in the return of income. However, there lies no rectification for the said purpose as there is no mistake rectifiable u/s 154. Further, although, after a respectful consideration of the judgment of Hon'ble Supreme Court in the case of Ghansham (HUF) supra, the assessee's entire income is assessable in the year of its receipt, but the rectification is not a proper process in this case because the assessee has neither claimed the relevant relief in his original return nor any return has been revised to this effect as per the relevant provisions of the law. For the similar reasons, the facts of the assessee's case are distinguishable from the case of ACIT v. Saurashtra Kutch Stock Exchange Limited, 305 ITR 227 also as there was no mistake in the AO's order passed w.r.t. the facts reported in the return.
5. Therefore, in view of the afore-discussed facts of the case, the assessee's application is not found to be acceptable, and is accordingly rejected."
9. Aggrieved by the order passed by Assessing Officer, the assessee filed appeal before the CIT(A). The ld. CIT(A), however, dismissed the appeal for the reasons given in his appellate order.
10. Aggrieved by the order passed by the CIT(A), the assessee is now in appeal before this Tribunal. In support of appeal, the ld. authorized representative for the assessee submitted that the judgment of the Supreme Court in CIT v. Ghansham (HUF), 315 ITR 1 (SC) has finally settled the issue that the amount of interest received u/s 28 of the Land Acquisition Act was part of the enhanced compensation and therefore liable to be included in its entirety in the enhanced compensation received in the year under appeal. He submitted that the interest amounting to Rs.14,67,470/- was received u/s 28 in the year under appeal and therefore was part of the enhanced compensation. According to him, the Assessing Officer ought to have taken the said amount of interest (Rs.14,67,470/-) in place of Rs.58,974/- shown by the assessee in his return of income and included the same in the enhanced compensation received by the assessee in the 14 year under appeal following the judgment in CIT v. Ghanshyam (supra) and thereafter exempted the same u/s 10(37) as the enhanced compensation itself was exempt u/s 10(37).
11. Referring to the judgment in CIT v Aruna Luthra, 252 ITR 76 (P&H), he submitted that rectification u/s 154 can be carried out on the basis of the judgment of the jurisdictional High Court and the Supreme Court rendered subsequently so as to rectify a mistake apparent from the record and therefore the Assessing Officer ought to have accepted the application filed on behalf of the assessee u/s 154. He submitted that this Tribunal has also held in a bunch of appeals, i.e., ITO, Ambala v. Devi Dayal and Others, ITA No. 561/Chd/2010 relating to assessment year 2007-08 involving identical set of facts, that the entire interest received u/s 28 of the Land Acquisition Act in a particular year was liable to the included in the enhanced compensation received in that year. According to him, the Tribunal has also held that since the enhanced compensation was exempt u/s 10(37), the entire interest received u/s 28 of the Land Acquisition Act, being part of the enhanced compensation would also be exempt from tax. He submitted that the aforesaid order of this Tribunal squarely covers the case of the assessee in his favour. He further submitted that the principle of equity requires that similar treatment should be given to the assessee as has been given to other assessees similarly placed and circumstanced.
12. In reply, the ld. DR supported the order passed by the Assessing Officer and the CIT(A).
13. We have carefully considered the materials placed before us including the submissions made by the parties. In CIT v Ghansham (HUF) 315 ITR 1 (SC) referred to by the ld. authorized representative for the assessee, the Hon'ble Supreme Court has held as under:-
"To sum up, interest is different from compensation. However, interest paid on the excess amount under section 28 of the 1894 Act depends upon a claim by the person whose land is acquired whereas interest under section 34 is for delay in making payment. This vital difference needs to be kept in mind in deciding this matter. Interest under section 28 is part of the amount of compensation whereas interest under section 34 is only for delay in making payment after the compensation amount is determined. Interest 15 under section 28 is a part of the enhanced value of the land which is not the case in the matter of payment of interest under section 34."
14. The assessee seeks rectification on the basis of the aforesaid judgment. It is contended that interest shown by him in the return of income was received by him u/s 28 of the Land Acquisition Act and not under section 34 thereof and therefore the interest so received by him u/s 28 is part of the enhanced compensation, received in the year under appeal. It is also his case that since the enhanced compensation is exempt from tax u/s 10(37) of the Income-tax Act, the interest being part of the enhanced compensation is also exempt from tax and, therefore, not liable to tax at all in the year under appeal. Referring to the judgment in CIT v. Aruna Luthra, 252 ITR 76 (P&H), the ld. authorised representative for the assessee contends that rectifications are permissible on the basis of law laid down by the Supreme Court subsequent to the passing of the order sought to be rectified.
15. It has been held by the Hon'ble jurisdictional High Court in CIT v Aruna Luthra, 252 ITR 76 (P&H) that rectification of an order/intimation can be carried out on the basis of subsequent judgment of the jurisdictional High Court/Supreme Court provided the mistake sought to be rectified is apparent from the record. Similar view has been taken in other judgments also, e.g., Mepco Industries Ltd v CIT, 319 ITR 208 (SC) in which it has been held that a subsequent judgment of the Supreme Court laying down a principle of law will be applicable across the board and rectification can be done on that basis. It is thus no longer res integra that subsequent judgments of the Supreme Court laying down a principle of law are applicable across the board and the rectification can be carried out on the basis of a subsequent judgment of the Supreme Court provided the mistake sought to be rectified is apparent from the record. However, the relevant questions in this behalf are two-fold: one, whether the existence of a rectifiable mistake in the order, which is sought to be rectified, is a condition precedent for exercising rectificatory jurisdiction u/s 154, and two, whether the foundational facts necessary for applying the principle of law laid down by the Supreme Court, which are not self-evident or apparent from the record, can be collected and investigated afresh in the course of proceedings u/s 154 so as to give effect to the judgment of the Supreme Court.
16. In CIT v. Aruna Luthra, 252 ITR 76 (P&H), the facts of the case were that the assessee had filed her return of income for the assessment year 1987-88 in 16 which she had declared her income at Rs.44,380. While computing the profit from business, the assessee had claimed deduction of Rs.74,205 on account of loss in chit fund. The AO framed the assessment under s. 143(1)(a) of the I-T Act, 1961. Vide order dated 30th March, 1988, the income as declared by the assessee was accepted. Subsequently on 4th April, 1989, a Division Bench of the Punjab and Haryana High Court decided the case of Soda Silicate & Chemical Works vs. CIT, 179 ITR 588 (P&H) in which it was, inter alia, held that the "contributions made to the chit fund could not be treated as revenue expenditure nor could the payment or receipt of any amount to and from the chit fund be treated as the business activity of the assessee. The transactions involved did not give rise to any income assessable to income-tax nor any revenue loss in respect of which any deduction could be claimed". After the above decision, the AO issued a notice under section 154 to the assessee. She was asked to show cause as to why the deduction on account of loss in chit fund be not disallowed. Finally, vide order dated 13th February 1992, the order of assessment was rectified. The assessee's claim for deduction of Rs.74,205 on account of loss in chit fund by debiting the amount to her P&L a/c was, thus, disallowed. As a consequence, the amount was added to the taxable income of the assessee. Aggrieved by the order of the AO, the assessee filed appeal which was dismissed by the CIT(A). On further appeal, the Tribunal took the view that the issue regarding the admissibility of the deduction was debatable as the Delhi Bench of the Tribunal, after considering the decision of the Punjab & Haryana High Court in the case of Soda Silicate (supra), had taken a different view and, thus, it goes out of the purview of the provisions of section
154. On appeal by the Revenue, it was contended by the Revenue that in view of the decision of the jurisdictional High Court, the Tribunal could not have held that the issue was debatable. In the aforesaid factual matrix of the case, the Hon'ble High Court has held as under:
"On a perusal of section 154, we find that the provision does not provide for rectification only when a mistake in the order is detected. The mistake has to be on the record of the case. The record would include everything on the case file. The return, the evidence and the order are a part of the record. The mistake can be detected from anything on the file. Thus, even in case of an assessment under s. 143(1), it has not to be assumed that there can be no error apparent from the record. As for the decision in the case of Hero Cycles (supra), the rule laid down by their Lordships is that the mistake can be of fact and law. However, the rectification can be made 17 only when "a glaring mistake of fact or law committed by the officer passing the order becomes apparent from the record. Rectification is not possible if the question is debatable". We cannot read this decision to mean that only the order has to be seen and not the record. Thus, the contention raised by the counsel cannot be accepted.
It was also contended that the decision of an authority decides the rights of the parties. It vests a right in them. The vested right can't be taken away except when specifically permitted by a retrospective law.
There is no quarrel with the proposition. However, what deserves, notice is that the right, if any, is subject to the provisions of law. Sec. 154 clearly provides for the intervention of the authority within the specified time subject to the condition that the mistake is apparent and The issue is not debatable. Thus, any right under an order is subject to the provision of the statute. That being so, there is no vested right which can be said to have been taken away. In view of the above, we hold that the power under s. 154 can be invoked even when an issue is decided by the jurisdictional High Court or a superior Court after the order has been passed."
17. In Mepco Industries Ltd v CIT, 319 ITR 208 (SC), the Hon'ble Supreme Court has cited, with approval, the observations made in Deva Metal Powders P. Ltd v Commissioner, Trade Tax, U.P., 2008 (2) SCC 439 (SC) and held that not only a mistake should exist in the order sought to be rectified but the same should also be a patent mistake which is obvious and whose discovery is not dependent on elaborate arguments.
18. In Deva Metal Powder P. Ltd v Commissioner, Trade Tax (supra), the facts of the case were that the assessee was dealing with aluminium powder. In the original assessment order passed, aluminium powder was treated as metal and accordingly held liable to tax at the rate of 2.2%. The Assessing Officer initiated proceedings for rectification of the said order on the ground that the Supreme Court had in Hindustan Aluminium Corporation Ltd. v. State of Uttar Pradesh and Another, 1981 (3) SCC 578 considered the entry "All kinds of minerals, ores, metals and alloys including sheets and circles" and held that under the said entry only the primary metal was covered. It was also held in that judgment that sheets and circle of aluminium would not be covered under the entry "Metal". Based on 18 the aforesaid judgment, the Assessing Officer rectified the assessment order and levied tax treating the aluminium powder as an unclassified item. In the aforesaid factual matrix, the Hon'ble Supreme Court while allowing the appeal of the assessee, has laid down the following propositions:
(i) The 'mistake' in the order sought to be rectified must exist and the same must be apparent from the record.
(ii) "Mistake" means to take or understand wrongly or inaccurately; to make an error in interpreting; it as an error, a fault, a misunderstanding, a misconception. "Apparent" means visible;
capable of being seen, obvious; plain. It means "open to view, visible, evident, appears, appearing as real and true, conspicuous, manifest, obvious and seeming."
(iii) A mistake which can be rectified is one which is patent, which is obvious and shows discovery and is not dependent or at argument or elaboration. Though a mistake capable of being rectified is not confined to clerical or arithmetical mistake, it does not however, cover any mistake which may be discovered by a complicated process of investigation, argument or proof. The decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification.
(iv) Rectification of an order does not mean obliteration of the order originally passed and its substitution by a new order.
(v) Where an error is far from self evident, it ceases to be an apparent error and, therefore, not capable of being rectified.
19. It is thus clear from the aforesaid authoritative pronouncements of the Hon'ble Supreme Court as also of the Hon'ble jurisdictional High Court that a rectifiable mistake must exist and that such a mistake should be self-evident and apparent from the record. No judgment has been brought to our notice to the effect that a mistake, which is not self-evident or apparent from the record, is also amenable to rectification u/s 154. All the authorities are consistent in the view that the mistake sought to be rectified u/s 154 must be self-evident and apparent from the record. As a corollary of the aforesaid proposition, it follows that foundational facts can neither be collected nor enquired into nor investigated in the course of rectification proceedings u/s 154 in order to give effect to the judgment of the 19 Supreme Court. A party seeking rectification u/s 154 has to necessarily establish that the mistake sought to be rectified is self-evident or apparent from the record.
20. There is no doubt that the judgments of the Supreme Court have retrospective effect except as regards matters that are res-judicata, or accounts that have been settled in the meantime. A judgment of the Supreme Court does not thus have the effect of disturbing the matters which stand concluded except in the manner provided by law. Section 154 permits rectification on the basis of a subsequent judgment of the Supreme Court provided the rectifiable mistake is apparent from the record and is self-evident. Judgments rendered by the Supreme Court and jurisdictional High Court cannot be pressed into service to disturb or reopen the concluded matters except in the manner provided by law, e.g., section
154. For similar reasons, judgments of the Supreme Court and jurisdictional High Court cannot be pressed into service to make a new claim, which was not made earlier, or to seek review of the decision in the light of the judgments of the Supreme Court. Section 154 permits rectification of mistake on the basis of the judgments of the Supreme Court provided the rectifiable mistake is self-evident and apparent from the record. Review of the earlier decision or collection of materials including foundational facts is clearly outside the scope of section 154.
21. Turning to the facts of the case, the assessee filed his return of income offering a sum of Rs.58,974/- to tax without any indication that the interest being returned by the assessee was received u/s 28 of the Land Acquisition Act. There is no indication even in the copy of chart of "computation of income" as filed before us that the interest shown by the assessee in the return of income was received by the assessee u/s 28 of the Land Acquisition Act. A copy of the TDS certificate (No.74) has also been filed before us. It also does not show that the interest was received by the assessee u/s 28 of the Land Acquisition Act. The AO simply acknowledged the return and granted refund to the assessee without carrying out any adjustment so much so that he did not even touch upon the issue of exemption u/s 10(37) as claimed by the assessee in his return of income. These facts clearly establish that no mistake exists in any order, intimation, etc., which can be rectified u/s 154. Rectification u/s 154 pre-supposes the existence of a mistake in an order, intimation, etc., which is sought to be rectified. None of the papers filed by the assessee shows any mistake which can be termed as self- evident or apparent from the record. It is quite possible that the assessee may be able to establish the mistake in the return of income or in the chart showing 20 computation of income or in the TDS certificate issued by the Land Acquisition Officer if it is given opportunity to do so or some material is allowed to be collected. However such a course of action is not permissible u/s 154 for the reason that section 154 can be invoked to rectify only those mistakes which are self-evident or apparent from the record. Thus mere allegation of the assessee that a mistake exists is not sufficient. What is contemplated for rectification under section 154 is a mistake which is self-evident or apparent from the record and not each and every mistake. A party seeking rectification u/s 154 cannot be allowed to lead evidence to establish the mistake. True, rectification can be carried out on the basis of judgments of the Supreme Court but the mistake sought to be rectified on that basis must be self-evident and apparent from the record. In the present case, no such mistake in any order, intimation, etc., has been brought to our notice, which can be rectified u/s 154.
22. The applicability of the judgment in Ghanshyam (supra) depends upon the existence of certain foundational facts, which must be self-evident or apparent from the record of the AO so as to bring the case within the ambit of section 154. As stated earlier, the assessee has no-where stated either in the return of income or in the computation sheet filed along with return of income that the interest shown by him was received by him u/s 28 and not u/s 34. The assessee wants this issue to be verified and investigated which is not permissible in the course of rectification proceedings u/s 154. It is not the case of the assessee that he has shown interest income as received u/s 28 of the Land Acquisition Act either in the return of income or in the computation sheet filed along with return of income. Perusal of the TDS certificate shows that the impugned interest has not been shown even by the Land Acquisition Officer as paid to the assessee u/s 28 of the Land Acquisition Act. Therefore, the foundational facts necessary for applying the judgment of the Hon'ble Supreme Court in CIT v Ghansham (HUF) 315 ITR 1 (SC) are not self-evident or apparent from the record of the Assessing Officer. As already stated above, section 154 cannot be applied to a case where the mistake is far from self evident. Therefore, the mistake pointed out by the assessee cannot be said to be a mistake apparent form record.
23. It is claimed by the assessee that the interest, being part of the enhanced compensation, is exempt u/s 10(37). Exemption u/s 10(37) is available on the fulfillment of the conditions enumerated therein. Therefore the claim of the assessee that interest would be exempt u/s 10(37) would also require examination 21 in the light of the provisions of section 10(37). True, the assessee has claimed exemption u/s 10(37) in respect of enhanced compensation in his return of income but no material has been placed before us to establish that the conditions laid down in section 10(37) have been fulfilled. The claim of the assessee that the interest received by him is exempt u/s 10(37) would therefore require examination of the claim of the assessee in the light of the provisions of section 10(37), which cannot be undertaken in proceedings u/s 154. The judgment in Ghanshyam (supra) does not lay down any such proposition that the interest received under the Land Acquisition Act would always be exempt u/s 10(37). Besides, it is a matter of debate as to whether the impugned interest is at all eligible for exemption u/s 10(37) of the Income-tax Act. Therefore the claim of the assessee regarding exemption of interest u/s 10(37) cannot be considered u/s 154.
24. On careful perusal of the materials available on record, we are convinced that what the assessee is now trying in the garb of seeking rectification is to have its case reopened or reviewed in the light of the judgment of the Hon'ble Supreme court in CIT v Ghansham (HUF) (supra). Section 154 of the Income-tax Act does not contemplate review of an order already passed. What the assessee wants to do now is to make a fresh claim on the basis of fresh materials and in the light of the judgment of the Supreme Court in CIT v Ghamsham (HUF), which is not permissible u/s 154.
25. The reliance placed by the ld. authorized representative for the assessee on the decision of this Tribunal in a bunch of appeals, i.e., ITO, Ambala v. Devi Dayal and Others, ITA No. 561/Chd/2010 relating to assessment year 2007-08 involving identical set of facts is of no help to him as that decision was rendered in matters relating to assessment u/s 143(3) and not in the matters relating to section 154. Complete facts were available in those matters. The appeals filed before us relate to matters u/s 154. Section 154 can be invoked only where the mistake sought to be rectified is self-evident or apparent from the record. Decisions rendered by this Tribunal in matters of assessment cannot form the basis for carrying out rectification u/s 154 in other cases howsoever similarly placed and circumstanced they be and that too of mistakes which are not self-evident or apparent from the record. It was also pleaded by him that relief should be allowed to the assessees on considerations of equity. In our view rectifications u/s 154 cannot be carried out on considerations of equity.
2226. We have reproduced a copy of the application filed u/s 154. Its perusal shows that it has not been signed by the assessee but by his Chartered Accountant. Section 154(2)(b) provides that the authority concerned shall make such amendment for rectifying any such mistake which has been brought to its notice "by the assessee". In the present case, the assessee himself has not brought any mistake to the notice of the Assessing Officer. A representative can represent the assessee but he cannot substitute the assessee for all intent and purpose. Since it is an admitted fact that the assessee himself has not filed a rectification application u/s 154, rectification application filed by the representative of the assessee in the present case is incompetent and therefore non-est in the eyes of law. The order of the AO/CIT(A) is liable to be confirmed for this reason also.
27. In view of the foregoing, the Assessing Officer has rightly declined to exercise his rectification jurisdiction in the matter under appeal. Appeal filed by the assessee is dismissed. For similar reasons, the appeals filed by other assessees are also dismissed."
12. As identical fact situations are obtained and identical grounds of appeal are raised by the assessee appellants, in the appeals in question, respectfully following the decision of the Hon'ble coordinate Bench in I TA Nos. 908 to 915/Chd/2011, the appeals of the assessees are dismissed.
13. In the result, appeals of the assessees are dismissed.
Order pronounced in the Open Court on 29 t h Dec.,2011.
Sd/- Sd/- (H.L.KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 29 t h Dec.,2011. 'Poonam' Copy to:
The Appellant, The Respondent, The CI T(A), The CI T,DR Assistant Registrar, I TAT Chandigarh