Itta/126/2002 Of Pothina Venkata Rama Rao v. Asst. Commissioner Of Income Tax

HON’BLE SRI JUSTICE L. NARASIMHA REDDYAND HON’BLE SRI JUSTICE T. SUNIL CHOWDARY ITTA Nos. 125 AND 126 OF 2002 05-09-2014 BETWEEN Pothina Venkateswara Swamy …Appellant And Assistant Commissioner of Income Tax, Central Circle,Vijayawada …..Respondent HON’BLE SRI JUSTICE L. NARASIMHA REDDYANDHON’BLE SRI JUSTICE T. SUNIL CHOWDARY ITTA Nos. 125 AND 126 OF 2002 COMMON JUDGMENT:(per the Hon'ble Sri Justice L. Narasimha Reddy) These two appeals are interrelated. The respectiveappellants are brothers. They are assessees under the IncomeTax Act, 1961 (for short ‘the Act’). They jointly constructed agodown near Suryapalem Village of Vijayawada between 1991 and1992. In the returns filed by the appellants for the correspondingyears, the cost of construction that fell to their share was shown as Rs.25,50,853/- each. It is stated that a report of valuer wasenclosed to the returns. The assessing officer accepted the factsand figures and completed the assessment. On 14-03-1996, the Income Tax Department issued noticesto the appellants stating that the Superintending Engineer,Valuation Cell found that the cost of the construction was aroundRs.84,76,000/- and required them to show cause as to why thedifference between the cost of construction admitted in theassessment and the value determined by the Superintendent benot treated as unexplained investment under Section 69B of theAct. Reply was filed by the appellants on 20-04-1996 taking anobjection to the very attempt to reopen the assessment. Notsatisfied with that, the assessing officer required the appellants tofile returns for the assessment year 1992-93 and on filing suchreturns, orders were passed on 20-03-1998 under Section 143(3) read with Section 147 of the Act making an additionof Rs.7,02,760/- each to the income of the appellants. Theappellants filed appeals before the Commissioner (Appeals),Range IV, Hyderabad aggrieved by the orders of re-assessment.The appeals were partly allowed through a common order dated28-05-1999 reducing the figures on the orders of re-assessment toRs.3,32,420/- to each of the appellants. In the meanwhile, ordersof rectification under Section 154 of the Act were passed by theassessing officer by adding a sum of Rs.78,085/- each disallowingthe depreciation of 10%. The appellants filed further appeals before the Income Tax Appellate Tribunal, Visakhapatnam (for short, ‘the Tribunal’) beingITA Nos. 178/v/1999 and 180/v/1999. Through orders dated 15-02-2001, the Tribunal partly allowed the appeals by reducing thecost by 10% towards supervisory charges. However, theappellants were not satisfied with that and they filed MiscellaneousPetition Nos. 21/v/2001 and 22/v/2001 in the respective appealsunder Section 254(2) of the Act. Through common order dated 15-07-2002, the Tribunal rejected the miscellaneous petitions. Hence, these two appeals under Section 260A of the Act. Sri Challa Gunaranjan, learned counsel for the appellantssubmits that there was a clear error apparent on the face of therecord and the Tribunal ought to have exercised its jurisdictionunder Section 254(2) of the Act. According to the learned counsel,the very reopening of the assessments were without any basissince the respondent failed even to mention as to what constituted“the reason to believe” under Section 147 of the Act. He contendsthat the ratio laid down by various Courts in this behalf was nottaken note of by the Tribunal and even after its attention is invitedto the same, the Tribunal did not rectify its orders. Sri J.V. Prasad, learned counsel for the respondent, on theother hand, submits that the very fact that the assessments werereopened on the basis of the valuation of the cost of the buildingdiscloses that there existed adequate basis and that all theauthorities under the Act were convinced as to the existence ofbasis for reopening. He submits that once the Tribunal haspassed orders in the appeals preferred by the appellants, there Sri J.V. Prasad, learned counsel for the respondent, on theother hand, submits that the very fact that the assessments werereopened on the basis of the valuation of the cost of the buildingdiscloses that there existed adequate basis and that all theauthorities under the Act were convinced as to the existence ofbasis for reopening. He submits that once the Tribunal haspassed orders in the appeals preferred by the appellants, there was no basis for filing the miscellaneous petitions. He submitsthat the jurisdiction under Section 254(2) can be exercised if onlythe error is so apparent and patent that it can be discerned withoutany effort and can be established without taking the help of anyexternal material, and such an error did not exist in the instancecase, at all. He contends that even if there is a possibility ofdifferent views being taken on the same facts, it cannot constitutethe basis for passing an order of rectification and therebyexercising the power of appeal by the Tribunal on its own orders. He placed reliance on certain precedents. The factual background, in brief, for filing of miscellaneouspetitions by the appellants herein has been mentioned in thepreceding paragraphs. The orders of assessment, insofar as theyrelate to the cost of construction of a godown have been reopenedin exercise of power under Section 148 of the Act. The appellantssuffered orders of re-assessment in the hands of the assessingauthority and accordingly carried the matter to the appellateCommissioner. It is no doubt true that the ground of the absenceof factual basis for reopening the assessment was urged. All thesame, that ground did not weigh with the appellate Commissioner. The reason appears to be that the reopening was on the basis ofthe valuation of the godown by the Superintending Engineer. Accordingly, notices were issued to the appellants duly pointingout the same. Section 148 of the Act has been interpreted by the Courts insuch a way as to keep the power of the assessing authority intact, as long as there existed some basis. If the basis as such exists,the exercise thereof becomes non-justiciable. It is only when there is a total absence of anyreason or basis whatever, that an attempt to invoke power underSection 148 can be found fault. Adequacy of the material that wasavailable with the assessing officer cannot be subject matter of theadjudication. The appellants were granted partial relief by theCommissioner (Appeals) by virtually slashing the added amount,to half. In the further appeals before the Tribunal, relief in the formof reduction of cost by 10% towards personal maintenancecharges was granted. In case, the appellants were not satisfiedwith the nature of disposal given by the Tribunal, it was open tothem to avail the further remedies. Section 254(2) confers power upon the Tribunal, which iscomparable or akin, to the one of review. It is only in limitedcircumstances that a power of that nature can be exercised. Theprovision reads: “254(2) The Appellate Tribunal may, at any timewithin four years from the date of the order, with a view torectifying any mistake apparent from the record, amendany order passed by it under sub-section (1), and shallmake such amendment if the mistake is brought to itsnotice by the assessee or the Assessing Officer: Provided that an amendment which has the effect ofenhancing an assessment or reducing a refund orotherwise increasing the liability of the assessee, shallnot be made under this sub-section unless the AppellateTribunal has given notice to the assessee of its intentionto do so and has allowed the assessee a reasonable opportunity of being heard: Provided further that any application filed by theassessee in this sub-section on or after the 1[st] day ofOctober, 1988, shall be accompanied by a fee of fiftyrupees.” From a perusal of it, it becomes clear that the power can beexercised to rectify only a mistake which has occurred in therecord and not for other purposes. Provided that an amendment which has the effect ofenhancing an assessment or reducing a refund orotherwise increasing the liability of the assessee, shallnot be made under this sub-section unless the AppellateTribunal has given notice to the assessee of its intentionto do so and has allowed the assessee a reasonable opportunity of being heard: Provided further that any application filed by theassessee in this sub-section on or after the 1[st] day ofOctober, 1988, shall be accompanied by a fee of fiftyrupees.” From a perusal of it, it becomes clear that the power can beexercised to rectify only a mistake which has occurred in therecord and not for other purposes. The expression “error apparent on the face of the record”occurs even in administrative adjudications. An error can betreated as the one ‘apparent on the face of the record’, if only itcan be discerned just on perusal of the connected record, withoutthe aid of any external material. To put it conversely, if the errorcan be demonstrated only by taking recourse to the other materialor arguments, it ceases to be the one, “apparent from record”. InAssistant Commissioner of Income Tax v. Saurashtra Kutch Stock Exchange Ltd.,[[1]] the Supreme Court observed: “In our judgment, therefore, a patent, manifest and self-evident error which does not require elaborate discussionof evidence or argument to establish it, can be said to bean error apparent on the face of the record and can becorrected while exercising certiorari jurisdiction. An errorcannot be said to be apparent on the face of the record ifone has to travel beyond the record to see whether thejudgment is correct or not. An error apparent on the face ofthe record means an error which strikes on mere lookingand does not need a long drawn out process of reasoningon points where there may conceivably be two opinions.Such error should not require any extraneous matter toshow its incorrectness. To put it differently, it should be somanifest and clear that no Court would permit it to remain on record. If the view accepted by the court in the originaljudgment is one of the possible views, the case cannot besaid to be covered by an error apparent on the face of therecord.” Similarly, in Commissioner of Income Tax v. Earnest Exports Ltd.,[[2]]the Bombay High Court explained the scope ofSection 254(2) of the Act as under: “Section 254(2) empowers the Tribunal torectify a mistake apparent from the record and forthat purpose to amend any order passed by it. TheSupreme Court has held in its judgment in Honda SielPower Products Ltd. v. CIT [2007] 295 ITR 466 thatthe underlying purpose of section 254(2) is based onthe fundamental principle that a party appearingbefore the Tribunal should not suffer on account of amistake committed by the Tribunal. When prejudiceresults from an order attributable to the Tribunal’smistake, error or omission, it is the duty of theTribunal to set it right and it has nothing to do with theconcept of the inherent power to review.” The precedents can be multiplied on this issue. Reverting to the facts of the case, the appellants are notable to point out as to what exactly the error in the orders passedby the Tribunal in the appeals, which is apparent from the record. The thrust of their argument is that the Tribunal did not addressthe question pertaining to the very basis for reopening theassessment. It is too well known that the Court or a Tribunal isdeemed to have taken every aspect that is placed before it, intoaccount and granted the relief which it felt appropriate and gave adisposal to the matter before it, in a manner which it felt appropriate. It is not necessary that every aspect must beaddressed in greater detail. This is particularly so with theappellate fora. If on any aspect, the appellate forum is silent, itcan be deemed to have concurred with the view expressed by theforum from which the order under appeal has arisen. At any rate,we do not find any basis to interfere with the orders underappeals. appropriate. It is not necessary that every aspect must beaddressed in greater detail. This is particularly so with theappellate fora. If on any aspect, the appellate forum is silent, itcan be deemed to have concurred with the view expressed by theforum from which the order under appeal has arisen. At any rate,we do not find any basis to interfere with the orders underappeals. The appeals fail and they are accordingly dismissed. Themiscellaneous petitions pending in these appeals shall also standdisposed of. There shall be no order as to costs. ___________________________ L. NARASIMHA REDDY, J 05-09-2014ksNote: LR copy to be marked. B/O ks _________________________T. SUNIL CHOWDARY, J [1](2008) 305 ITR 227 (SC) [2](2010) 323 ITR 577 (Bom)