The Commissioner Of Income Tax, Chandigarh v. Punjab Agro Industries Corporation Ltd

ITC No.77 of 1999 (1) IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH Date of Decision: 14.03.2013 ITC No.77 of 1999 The Commissioner of Income Tax, Chandigarh ..Appellant Versus Punjab Agro Industries Corporation Ltd. ..Respondent CORAM:HON’BLE MR. JUSTICE HEMANT GUPTAHON’BLE MS. JUSTICE RITU BAHRI Present:Ms. Urvashi Dugga, Advocate, for the appellant. M/s Akshay Bhan & Alok Mittal, Advocates, for the respondent. Hemant Gupta, J. (Oral) Present petition is under Section 256(2) of the Income Tax Act,1961 (for short ‘the Act’) for directing the Income Tax Appellate Tribunal (forshort ‘the Tribunal’) to refer the following substantial question of law inrespect of assessment year 1988-89: “Whether on the facts and in circumstances of the case, the ITAT was right inlaw in set aside order of CIT(A), who restored the matter to the file ofAssessing Officer for passing fresh orders under Section 154 after allowingopportunity of being heard to the assessee?” The Assessing Officer finalized assessment of the respondent- assessee for the assessment year 1988-89 on 31.12.1990. The AssessingOfficer disallowed many expenditures including expenditure ofRs.40,29,208/-, which is evident from para 5 of the order, which reads asunder: The assessee has debited a sum of Rs.6,66,056/- for the Ist period andRs.40,29,208/- for the IInd period as adjustments relating to earlier years.The assessee has claimed certain expenses relating to the earlier years. Theliability to pay arose in that relevant year. The payments made are notallowed as business expenditure in this year as the assessee had control overthe disposal of funds and the liability to meet that expenditure arose in theearlier years in which the transactions took place. Moreover, in the IIndperiod ending on 31.03.1988 the assessee has claimed write off of diminutionof shares of subsidiary companies to the extent of Rs.33,76,052/- under thishead. No further details in this regard has been furnished. Also this is acapital loss and is not allowable. Similarly, for the IInd period the assesseehas claimed loss of Rs.4,04,433/- on account of unclaimed balances,provision, liabilities no longer required. The nature and details of thisexpenditure have not been furnished. In the absence of the same these are notallowed. The total expenditure of Rs.46,95,264/- is not taken towardscomputation of income for this relevant year.” However, while computing the additions on account of the disallowances in the final calculations, the disallowance of Rs.40,29,208/- wasleft from the calculations. Soon after the assessment order was passed, theAssessing Officer realize the omission and passed an order under Section 154of the Act so as to add amount of Rs.40,29,208/-. Aggrieved against the correction of the order passed by theAssessing Officer, the assessee filed an appeal before the Commissioner ofIncome Tax (Appeals). Such appeal was accepted for the reason thatopportunity of hearing has not been granted to the assessee. However, infurther appeal, the Tribunal set aside the order of the Commissioner of IncomeTax (Appeals) and held that the order made by the Assessing Officer underSection 154 is null & void. The Revenue sought reference under Section 256(1) of the Act, which was declined by the Tribunal vide order dated04.01.1999. Still aggrieved, the Revenue has invoked the jurisdiction of thisCourt under Section 256(2) of the Act. Since the issue is short and purely legal in nature, we proceed todecide the question of law at this stage with the consent of the parties. Section 154 of the Act empowers the Income Tax Authority torectify any mistake apparent on the record and permits amendment of anyorder passed by it under the provisions of the Act. Section 154 of the Actduring the relevant assessment year reads as under: Since the issue is short and purely legal in nature, we proceed todecide the question of law at this stage with the consent of the parties. Section 154 of the Act empowers the Income Tax Authority torectify any mistake apparent on the record and permits amendment of anyorder passed by it under the provisions of the Act. Section 154 of the Actduring the relevant assessment year reads as under: “154. (1) With a view to rectifying any mistake apparent from the record, anincome-tax authority referred to in section 116 may amend any order passedby it under the provisions of this Act. (1A) Where any matter has been considered and decided in any proceedingby way of appeal or revision relating to an order referred to in sub-section (1),the authority passing such order may, notwithstanding anything contained inany law for the time being in force, amend the order under that sub-section inrelation to any matter other than the matter which has been so considered anddecided. (2) Subject to the other provisions of this section, the authority concerned– (a) may make an amendment under sub-section (1) of its own motion,and and (b) shall make such amendment for rectifying any such mistakewhich has been brought to its notice by the assessee, and where theauthority concerned is the Deputy Commissioner (Appeals) or theCommissioner (Appeals), by the Assessing Officer also.which has been brought to its notice by the assessee, and where theauthority concerned is the Deputy Commissioner (Appeals) or theCommissioner (Appeals), by the Assessing Officer also. xxxxxxxxx” The order passed by the Assessing Officer on 31.12.1990 leaves no manner of doubt that an amount of Rs.40,29,208/- was disallowed by theAssessing Officer by detailed discussion, as reproduced above. It was onlywhile computing the total disallowances, an amount of Rs.40,29,208/- was leftfrom the final calculations. Such mistake could very well be corrected by theAssessing Officer in exercise of the powers conferred under Section 154 of theAct. The only procedural irregularity can be said to be of not granting any opportunity of hearing to the parties. Though, we have doubt that anyopportunity was required for correction of such inadvertent and clericalmistake, but since the Commissioner of Income Tax (Appeals) has grantedsuch opportunity, we restrain ourselves to opine any further on the issue. Therefore, the learned Tribunal is not right in setting aside theorder passed by the Commissioner of Income Tax (Appeals), which onlycontemplated that an opportunity of hearing should be provided to theassessee. Consequently, the substantial question of law is answered infavour of the Revenue and against the Revenue. (HEMANT GUPTA) JUDGE 14.03.2013Vimal (RITU BAHRI) JUDGE