DCIT, Jaipur V. M/S RAJ. STATE MINES & MINERALS, Jaipur

ITA 1345/JPR/2010

• Counselvise Citation: 134523114 RSA 2010
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 1995-1996
• Appeal Filed On: 18-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Keywords: Rectification of order; Period of limitation
• Section: 43B; 143(3); 54; 263; 154

Judgement Text

1 ITA 1345-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 1345/JP/2010 ASSTT. YEAR : 1995-96. THE DCIT, CIRCLE-6, VS. M/S. RAJASTHAN STATE MIN ES& JAIPUR. MINERALS, C-89-90, LAL KOTHI SCHEME, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBHASH CHANDRA RESPONDENT BY : SHRI P.C. PARWAL ORDER DATE OF ORDER : 24/06/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY DEPARTMENT AGAINST THE ORDER OF LD. CIT (A)RELATING TO ASSESSMENT YEAR 1995-96. 2. THE DEPARTMENT IS OBJECTING IN DELETING THE ADDI TION OF RS. 1,97,14,000/- MADE BY AO BY DISALLOWING EXCESS CLAIM MADE UNDER SECTION 4 3B HOLDING THAT ORDER PASSED UNDER SECTION 154 WAS BEYOND THE PERIOD OF LIMITATION. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSM ENT IN THIS CASE WAS COMPLETED UNDER SECTION 143(3) ON 20.3.1998 ORIGINALLY. THE AO ALLOWED EXCESS DEDUCTION UNDER SECTION 43B BY RS. 1,97,14,936/-. THEREAFTER TO RE CTIFY THE SAID MISTAKE NOTICE UNDER SECTION 154 WAS ISSUED ON17.6.2009. FOR ISSUING NOT ICE APPROVAL WAS TAKEN FROM CIT JAIPUR-II VIDE LETTER DATED26.3.2009. THEREAFTER TH E ASSESSEE FILED REPLY BEFORE AO THAT 2 THERE IS NO APPARENT MISTAKE IN THE ORDER PASSED ON 27.3.2007 UNDER SECTION 143(3)/254. IT WAS SUBMITTED THAT THE ORIGINAL ORDER UNDER SECT ION 143(3) WAS PASSED ON 20.3.1998 AND IF THERE IS ANY MISTAKE IN THE ORDER PASSED ON 20.3 .1998 THEN THE SAME CANNOT BE RECTIFIED NOW AS MORE THAN 4 YEARS HAVE BEEN EXPIRED FROM THE END OF THE FINANCIAL YEAR IN WHICH ORDER RECTIFICATION SOUGHT TO BE MADE. IT WAS FUR THER SUBMITTED THAT AS PER PROVISIONS OF SECTION154 NO AMENDMENT UNDER SECTION154 CAN BE MAD E AFTER EXPIRY OF 4 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE AMENDED AS PASSED. THE AO CONSIDERED THE REPLY AND FOUND THAT THE EXPLANATION IS NOT TENABLE. BY OBSERVING THAT LAST ORDER UNDER SECTION 143(3)/254 WAS PASSED IN THIS C ASE ON 31.7.2007 ACCORDINGLY THE APPARENT MISTAKE FROM RECORD CAN BE CORRECTED VIS- -VIS THE ORDER UNDER SECTION 143(3)/254 DATED31.7.2007 IS WITHIN A PERIOD OF 4 Y EARS FROM THE SAID ORDER. ACCORDINGLY THE CONTENTION OF THE ASSESSEE WAS REJECTED AND ORD ER UNDER SECTION 154 WAS PASSED BY WHICH THE ADDITION OF RS.1,97,14,936/- WAS MADE. A SSESSEE PREFERRED APPEAL BEFORE LD. CIT (A). THE CONTENTION RAISED BEFORE AO WAS REITE RATED. 4. IT WAS FURTHER SUBMITTED THAT AO HAD SOUGHT TO R ECTIFY ORDER PASSED UNDER SECTION 143(3) ON 20.3.1998 BUT HAS WRONGLY MENTIONED THE D ATE OF SUCH ORDER AS 31.7.2007 WHICH IN FACT ON 31.7.2007 THE ORDER WAS PASSED TO GIVE EFFECT TO THE ISSUE SET ASIDE BY THE JAIPUR BENCH OF THE TRIBUNAL. RELIANCE WAS PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ALAGENDRAN FINANCE LTD ., 293 ITR 1 IN WHICH IT WAS HELD THAT IN RESPECT OF AN ISSUE WHICH WAS NOT SUBJECT MATTER OF REASSESSMENT, LIMITATION UNDER SECTION 263(2) WOULD RUN FROM THE DATE OF ORIGINAL ASSESSMENT AND ACCORDINGLY IT WAS ARGUED THAT THIS ORDER PASSED BY AO UNDER SECTION 1 54 WAS BARRED BY LIMITATION. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING OTHER MATE RIAL ON RECORD, LD. CIT (A) FOUND THAT 3 THE ISSUE SQUARELY COVERED BY THE DECISION OF HONB LE SUPREME COURT IN THE CASE OF CIT VS. ALAGENDRAN FINANCE LTD. (SUPRA) AND ACCORDINGLY IT WAS HELD THAT THE ORDER PASSED UNDER SECTION 154 IS BARRED BY LIMITATION. 5. NOW THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. 6. THE LD. CIT D/R FIRST PLACED RELIANCE ON THE ORD ER OF THE AO. IT WAS FURTHER SUBMITTED THAT HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. TONY ELECTRONICS LTD.,320 ITR 378 HAS HELD THAT THE LIMITATION FOR T HE PURPOSE OF RECTIFICATION UNDER SECTION154 WILL BE COUNTED FROM THE DATE OF LAST OR DER OF APPELLATE AUTHORITY WHICH WAS GIVEN EFFECT BY THE AO AS THE ORIGINAL ORDER HAS BE EN MERGED WITH THE APPELLATE ORDER AND, THEREFORE, THE DATE OF ORIGINAL ORDER CANNOT B E TAKEN INTO CONSIDERATION BUT THE DATE OF APPELLATE ORDER HAS TO BE TAKEN INTO CONSIDERATION. IT WAS FURTHER SUBMITTED THAT THE FACTS ARE IDENTICAL IN THE PRESENT CASE. THEREFORE, THE O RDER OF LD. CIT (A) IS LIABLE TO BE SET ASIDE AND THE ORDER OF AO IS LIABLE TO BE RESTORED. IT WAS ALSO ADDED THAT THERE IS NO DISPUTE THAT INADVERTENTLY THE EXCESS DEDUCTION WAS ALLOWED WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3). 7. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE R ELIED UPON THE ORDER OF LD. CIT (A). IT WAS FURTHER SUBMITTED THAT THE ISSUE IS CO VERED BY THE DECISION OF HONBLE SUPREME COURT WHICH IS CONSIDERED BY LD. CIT (A) AN D THIS ORDER OF THE HONBLE SUPREME COURT WAS NOT BROUGHT TO THE NOTICE OF HONBLE DELH I HIGH COURT AS FROM THE ORDER OF HONBLE DELHI HIGH COURT IT IS SEEN THAT THIS DECIS ION WAS NOT BEFORE THE HONBLE DELHI HIGH COURT. FURTHER ATTENTION OF THE BENCH WAS DRA WN ON PROVISIONS OF SECTION 154 AND ALSO PROVISIONS OF SECTION 263. COPY OF WRITTEN SU BMISSIONS WAS ALSO FILED. 4 8. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT ORDER OF LD. CIT (A) IS LIABLE TO BE CONFIRMED . IT IS SEEN THAT ORIGINAL ORDER UNDER SECTION 143(3) WAS PASSED ON 20.3.1998 BY WHICH THE DEDUCTION CLAIMED UNDER SECTION 43B WAS ALLOWED. HOWEVER, VARIOUS OTHER ADDITIONS WERE MADE, AGAINST THOSE ADDITIONS THE ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A) AN D THEREAFTER BEFORE THE TRIBUNAL. THE TRIBUNAL DECIDED THE ISSUE AND MATTER WAS RESTORED TO THE FILE OF AO TO GIVE EFFECT AND ACCORDINGLY AN ORDER UNDER SECTION 143(3)/254 DATED 31.7.2007 WAS PASSED. THEREAFTER ON EXAMINATION OF RECORD, THE AO NOTED THAT INADVER TENTLY THE DEDUCTION OF RS. 1.97 CRORES OR ODD HAVE BEEN WRONGLY ALLOWED. THEREFORE , NECESSARY APPROVAL FROM CIT WAS OBTAINED BY LETTER DATED 26.3.2009. THEREAFTER, NOT ICE UNDER SECTION 154 WAS ISSUED TO RECTIFY THE MISTAKE. THE AO TOOK THE VIEW THAT 4 Y EARS LIMITATION STARTS FROM THE DATE OF ORDER PASSED UNDER SECTION 143(3)/254 AND NOT FROM THE DATE OF ORDER PASSED ORIGINALLY. 9. THE LD. CIT (A) PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. ALAGENDRAN FINANCE LTD. (SUPRA) WHE REIN IT HAS BEEN HELD THAT DOCTRINE OF MERGER IS NOT APPLICABLE ON THE ISSUE WHICH WAS NOT SUBJECT MATTER OF REASSESSMENT AND, THEREFORE, THE LIMITATION FOR INITIATION OF PROCEED INGS UNDER SECTION 263 CAN BE STARTED FROM THE DATE OF ORIGINAL ASSESSMENT ORDER. 10. SECTION 263(2) CLEARLY PROVIDES THAT NO ORDER SHALL BE MADE UNDER SUB SECTION (1) AFTER THE EXPIRY OF 2 YEARS FROM THE END OF THE FIN ANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE RECTIFIED WAS PASSED. 10.1. SIMILARLY SECTION 154(1) PROVIDES - (1) WITH A VIEW TO RECTIFYING ANY MISTAKE APPAREN T FROM THE RECORD AN INCOME-TAX AUTHORITY REFERRED TO IN SECTION 116 MAY , - 5 (A) AMEND ANY ORDER PASSED BY IT UNDER THE PROVISIO NS OF THIS ACT ; FURTHER, SUB-SECTION 1A OF SECTION 154 PROVIDES (1A) WHERE ANY MATTER HAS BEEN CONSIDERED AND DEC IDED IN ANY PROCEEDING BY WAY OF APPEAL OR REVISION RELATING TO AN ORDER REFERRED TO IN SUB-SECTION (1), THE AUTHORITY PASSING SUCH ORDER M AY, NOTWITHSTANDING ANYTHING CONTAINED IN ANY LAW FOR THE TIME BEING IN FORCE, AMEND THE ORDER UNDER THAT SUB-SECTION IN RELATION TO ANY MATTER OT HER THAN THE MATTER WHICH HAS BEEN SO CONSIDERED AND DECIDED. 10.2. SECTION 154(7) SAVE AS OTHERWISE, PROVIDES IN SECTION 155 OR SUB-SECTION (4) OF SECTION 186, NO AMENDMENT UNDER THIS SECTION SHALL BE MADE AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORD ER SOUGHT TO BE AMENDED WAS PASSED. 11. AFTER TAKING INTO CONSIDERATION ALL THE ABOVE S ECTIONS, IT IS CLEARLY SEEN THAT ANY ORDER UNDER SECTION 154 CAN BE RECTIFIED WITHIN 4 Y EARS PASSED BY THE AUTHORITY. THE AUTHORITY INDICATES THE AO WHO PASSED ORIGINAL ORDE R ON 20.3.1998 AND THEREFORE IT CAN BE RECTIFIED ON OR BEFORE 31 ST MARCH, 2002. HOWEVER, NOTICE FOR RECTIFYING ISSUED MUCH LATER I.E. IN THE YEAR 2009. THE AO HAS MENTIONED THE DA TE OF ORDER AS ON 31.7.2007. IN FACT THERE WAS NO MISTAKE IN THIS ORDER AS THIS ORDER WA S PASSED TO GIVE EFFECT TO THE ORDER OF TRIBUNAL. THE MISTAKE WAS IN THE ORIGINAL ORDER BY WHICH THE EXCESS DEDUCTION UNDER SECTION 43B WAS ALLOWED. DEDUCTION UNDER SECTION 4 3B WAS NOT SUBJECT MATTER OF APPEAL BEFORE LD. CIT (A) OR BEFORE TRIBUNAL. THEREFORE, IT CANNOT BE SAID THAT THE ISSUE ON ACCOUNT OF EXCESS DEDUCTION HAS BEEN MERGED WITH TH E ORDER OF LD. CIT (A) OR WITH THE ORDER OF TRIBUNAL. THE HONBLE SUPREME COURT HAS C LEARLY CLARIFIED THIS POSITION THOUGH 6 DECIDING THE ISSUE IN RESPECT OF SECTION 263. THE DOCTRINE OF MERGER HAVE BEEN DISCUSSED BY THE HONBLE SUPREME COURT. 12. THE BRIEF FACTS BEFORE THE HONBLE SUPREME COUR T WERE THAT ASSESSMENTS FOR THE ASSESSMENT YEARS 1994-95, 1995-96 AND 1996-97 ON TH E ASSESSEE WERE COMPLETED IN 1997 AND 1998. IN THE ORDERS OF ASSESSMENT, THE ASSESSEE S CLAIM RELATING TO LEASE EQUALISATION FUND WAS ACCEPTED. THEREAFTER ORDERS OF REASSESSMENT WERE INITIATED IN RESPECT OF THREE OTHER ITEMS BUT NOT THE ITEM RELAT ING TO LEASE EQUALISATION FUND AND ASSESSMENTS WERE MADE. THEREAFTER, THE COMMISSIONER , BY AN ORDER DATED MARCH 29,2004, INITIATED REVISION PROCEEDINGS ONLY IN RELATION TO THE ITEM LEASE EQUALISATION FUND. THE APPELLATE TRIBUNAL HELD THAT THE REVISION PROCEEDIN GS WERE BARRED BY LIMITATION AS THEY WERE INITIATED MORE THAN FOUR YEARS AFTER THE ORIGI NAL ASSESSMENTS ; AND THE HIGH COURT DISMISSED THE APPEAL THEREFROM. THE DEPARTMENT APPE ALED TO THE SUPREME COURT. 13. THEREAFTER THE HONBLE SUPREME COURT HAS HELD A S UNDER :- HELD, AFFIRMING THE DECISION OF THE HIGH COURT, T HAT THE COMMISSIONER HAD SOUGHT TO REVISE ONLY THAT PART OF THE ORDER OF ASSESSMENT WHICH RELATED TO LEASE EQUALISATION FUND; BUT THE PROCEEDINGS FOR REASSESSMENT HAD NOTHING TO DO WITH THAT ITEM OF INCOME. THE DOCTRIN E OF MERGER DID NOT APPLY IN A CASE OF THIS NATURE : THE PERIOD OF LIMI TATION COMMENCED FROM THE DATES OF THE ORIGINAL ASSESSMENTS AND NOT FROM THE REASSESSMENTS SINCE THE LATTER HAD NOT HAD ANYTHING TO DO WITH THE LEAS E EQUALISATION FUND. THIS WAS NOT A CASE WHERE THE SUBJECT MATTER OF REA SSESSMENT AND THE SUBJECT MATTER OF THE ASSESSMENT WERE THE SAME.. 14. IN VIEW OF THE DECISION OF HONBLE SUPREME COUR T, WE ARE OF THE VIEW THAT THE LD. CIT (A) WAS CORRECT IN ALLOWING THE APPEAL OF THE A SSESSEE. 7 15. MOREOVER, FOR RECTIFICATION OF ORDER UNDER SECT ION 154, TWIN CONDITIONS HAS TO BE SEEN WHETHER THEY ARE SATISFIED OR NOT. FIRST CONDI TION I.E. PROVIDED IN SUB-CLAUSE (A) OF CLAUSE (1) OF SECTION 154 THAT ANY ORDER CAN BE REC TIFIED WHO PASSED IT, AND SECOND CONDITION IS THAT THE SAME CAN BE RECTIFIED WITHIN 4 YEARS. THESE TWO CONDITIONS SPECIFIED UNDER SECTION 154 ARE VERY CLEAR. THEREFORE, ANY OR DER UNDER SECTION 154 CAN BE PASSED BY THE AUTHORITY WHO PASSED THE ORIGINAL ORDER. THE TI ME LIMIT IS PRESCRIBED WITHIN 4 YEARS. THE DATE OF ORDER OF APPELLATE AUTHORITY CANNOT BE TAKEN INTO CONSIDERATION AS THOSE AUTHORITY ONLY CAN RECTIFY THEIR ORDER, IF ANY MIST AKE IN THEIR ORDER IS BROUGHT TO THE NOTICE. THEREFORE, WE HAVE NO HESITATION IN HOLDING THAT AN Y ORDER CAN BE PASSED FOR RECTIFICATION BY THE SAME AUTHORITY AND WITHIN THE TIME LIMIT PRE SCRIBED UNDER THE LAW. THE DECISION OF HONBLE SUPREME COURT (SUPRA) IS SQUARELY APPLICABL E ON THE FACTS OF THE PRESENT CASE. 15.1. IT IS FURTHER SEEN THAT EVEN PROVISIONS OF SE CTION 154(1A) ARE VERY CLEAR AND SPECIFIC BY WHICH IT HAS BEEN PROVIDED THAT IF ANY ITEM IS SUBJECT MATTER OF APPEAL, THE SAME CANNOT BE RECTIFIED UNDER SECTION 154(1) BY TH E AUTHORITY WHO PASSED ORDER ORIGINALLY. 16. NOW WE WILL DISCUSS THE ORDER OF HONBLE DELHI HIGH COURT RELIED UPON BY LD. CIT D/R IN CASE OF CIT VS. TONY ELECTRONICS LTD. (S UPRA). IN THIS DECISION THE HONBLE DELHI HIGH COURT HAS HELD THAT ONCE AN ORDER WAS PA SSED ON APPEAL, ORDER OF ORIGINAL AUTHORITY CEASES TO EXIST AND THE ORDER OF APPELLAT E AUTHORITY PREVAILS, IN WHICH ORDER OF THE ORIGINAL AUTHORITY IS MERGED FOR ALL INTENT AND PURPOSE, IT IS THE ORDER OF APPELLATE AUTHORITY THAT WOULD BE SEEN. 15.1. LIMITATION FOR THE PURPOSE OF SECTION 154(7) HAS TO BE COUNTED FROM THE DATE OF APPELLATE ORDER AND NOT THE ORIGINAL ORDER OF ASSES SMENT. NO DOUBT, THE RATIO OF THIS 8 DECISION IS IN FAVOUR OF THE DEPARTMENT, HOWEVER, W E FIND THAT THE DECISION OF HONBLE SUPREME COURT IN CASE OF CIT VS. ALAGENDRAN FINANCE LTD. (SUPRA) WAS NOT BROUGHT TO THE NOTICE OF HONBLE DELHI HIGH COURT. THE DECISION O F HONBLE SUPREME COURT IS BINDING AS THE SAME HAS BECOME LAW OF LAND NOW. THEREFORE, IN VIEW OF THIS FACT AND WITH UTMOST RESPECT TO THE DECISION OF HONBLE DELHI HIGH COURT , WE HAVE TO FOLLOW THE DECISION OF HONBLE SUPREME COURT WHICH IS BINDING IN NATURE. THE LD. CIT (A) HAS CONSIDERED THE DECISION OF HONBLE SUPREME COURT AND THEN ONLY ALL OWED THE CLAIM OF THE ASSESSEE. THEREFORE, WE CONFIRM THE ORDER OF LD. CIT (A) AND REJECT THE GROUND OF THE DEPARTMENT. 16. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED. 17. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 24 .6.2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, D/- COPY FORWARDED TO :- THE DCIT, CIRCLE-6, JAIPUR. M/S. RAJASTHAN STATE MINES & MINERALS, JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 1345/JP/2010) BY ORDER, AR ITAT JAIPUR. FIT FOR PUBLICATION AM JM