A.C.I.T., Circle-1, Gwalior V. M/s Cardinal Drugs Pvt Ltd., Gwalior

ITA 299/AGR/2012

• Counselvise Citation: 29920314 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 05-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DEE
• Keywords: Depreciation; Audit objection; Assessment record; Unabsorbed depreciation
• Section: 43B; 143(3); 115JB; 28; 154

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 299/AGR/ 2012 ASSESSMENT YEAR 2005-06 ASSTT. COMMISSIONER OF INCOME TAX VS. M/S CARDINAL DRUGS PVT. LTD. CIRCLE-1, GWALIOR SOMANI BHAWAN, SARAFA BAZAR, LASHKAR, GWALIOR (M.P.) (PAN AAACC 8089 L) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI DEEPANDRA MOHAN, ARUN DAGA & MS. PRARATHANA JALAN C.A. DATE OF HEARING : 06.08.2013 DATE OF PRONOUNCEMENT : 08.08.2013 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) GWALIOR DATED 04.04.2012 FOR A.Y. 2005-06 ON THE FO LLOWING GROUND :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(APPEALS)IS JUSTIFIED IN CANCELING THE ORDER PAS SED U/S 154 WITHOUT CONSIDERING THE FACT THE AFTER DELETION OF AN ADDITION OF ITA NO.299/AG/2012 A.Y.2005-06 2 RS.12,92,81,788/- TOTAL LOSS CAME TO RS.9,81,556/- HENCE PROVISIONS OF 115JB ARE APPLICABLE AND ACCORDINGLY TAX WAS DET ERMINED U/S 115JB OF I.T. ACT 2. IN THE PRESENT APPEAL, THE ISSUE RELATES TO APPL ICABILITY OF THE PROVISIONS OF SECTION 154 IN THE CASE OF THE ASSESSEE. THE ASSESS EE HAS FILED RETURN ON 28.10.2005 DECLARING LOSS OF RS.9,81,556/-. VIDE ORDER DATED 2 8.12.2007 PASSED UNDER SECTION 143(3) OF THE ACT, INCOME HAS BEEN ASSESSED AT RS.1 2,83,00,230/- BY MAKING ADDITION OF RS.12,92,82,788/- ON ACCOUNT OF PROVISI ONS OF INTEREST WRITTEN BACK AND RELIEF IN LOAN FROM SBI AND MADHYA PRADESH FINANCIA L CORPORATION (MPFC). ISSUES OF CREDIT OF BROUGHT FORWARD LOSSES/DEPRECIATION, W RITE OFF ETC., AS ASSESSED BY THE A.O. HAVE AGAIN BEEN RAISED BY THE ASSESSEE IN ITS APPLICATION UNDER SECTION 154 OF THE ACT. THE SAME HAVE BEEN REJECTED BY THE A.O. VI DE ORDER DATED 29.02.2008. ON APPEAL BEFORE THE CIT(A), VIDE ORDER DATED 23.07.20 08 IN APPEAL NO. 316 & 318/IT/07-08/GWL AGAINST ORDER UNDER SECTION 143(3) & 154, THE SAID ADDITION HAS BEEN DELETED. ACCORDINGLY, VIDE ORDER DATED 26.08.2 008 PASSED UNDER SECTION 250 OF THE ACT TO GIVE EFFECT TO THE APPEAL ORDER, ASSE SSMENT HAS BEEN MADE AT DECLARED LOSS OF RS.9,81,556/- BY THE A.O. 3. AS PER IMPUGNED ORDER UNDER SECTION 154 OF THE A CT, A.O. HAS MENTIONED THAT NON ASSESSMENT OF INCOME UNDER SECTION 115JB T O THE EXTENT OF ITA NO.299/AG/2012 A.Y.2005-06 3 RS.12,04,46,195/-, WHILE GIVING APPEAL EFFECT UNDER SECTION 250 OF THE ACT, HAS RESULTED IN SHORT LEVY OF TAX AND INTEREST. ACCORDI NGLY, SHOW CAUSE NOTICE DATED 02.11.2011 UNDER SECTION 154 OF THE ACT HAS BEEN IS SUE TO RECTIFY ABOVE MENTIONED MISTAKE, AS APPARENT FROM RECORD OF APPEAL EFFECT O RDER UNDER SECTION 250 OF THE ACT. ASSESSEES REPLY THAT NEITHER PROVISIONS OF SE CTION 115JB OF THE ACT NOR SECTION 154 OF THE ACT ARE APPLICABLE IN ITS CASE H AS NOT BEEN ACCEPTED BY THE A.O. BY MENTIONING AS UNDER :- THE REPLY OF THE ASSESSEE IS NOT ACCEPTABLE BECAUS E COMPANY WAS LIABLE TO BE ASSESSED UNDER SECTION 115JB. AS PER ORDER PASSE D BY BIFR ON 20.05.2005 IT IS WRITTEN IN THE PARA NO.3 AS UNDER IN THE MEAN TIME , THE COMPANY VIDE ITS LETTER DT.05.05.2005 SUBMITTED THAT IT HAS ENTERED INTO A SETTLEMENT WITH ITS BANKERS STATE BANK OF INDIA (SBI) AND THE MADHYA PRADESH FINANCIA L CORPORATION (MPFC) AND THE COMPANY HAS, THEREFORE, CEASED TO BE A SICK IND USTRIAL UNDERTAKING WITHIN THE MEANING OF SICA. AS SUCH THE COMPANY HAS PRAYED THA T THEY MAY BE DISCHARGED FROM THE PURVIEW FOR SICA. FURTHER AS PER THE ABS A S ON DULY CERTIFIED BY ITS CHARTERED ACCOUNTANTS OF THE COMPANY FOR THE FINANC IAL YEAR ENDED 31.03.2004 THE COMPANYS NET WORTH HAS BECOME POSITIVE. IN PARA 5 OF THIS ORDER IT WAS/IS WRITTEN. THUS, AS ON 31.03.2005, THE COMPANYS NET WORTH CO NSISTENCE OF ITS PAID UP SHARE CAPITAL OF RS.425.01 LACS HAS EXCEEDED ITS ACCUMULA TED LOSSES OF RS.124.112 LACS. AS SUCH, THE RESULTANT NET WORTH OF THE COMPANY IS POSITIVE BY RS.300.89 LACS AS ON 31.03.2005. THE MATTER IS NOT DEBATABLE AND IT IS VERY SIMPLE AND STRAIGHT. BECAUSE AFTER PERSONAL THE ENTIRE CASE RECORD (INCLUDING APPEAL E FFECT ORDER U/S 250 AND THE ORDER OF BIFR DATED 25.05.2005) IT CAN BE SAID THIS ISSUE IS COVERED U/S 154 BECAUSE MISTAKE IS VERY OBVIOUS AND PATENT. THE REL IANCE IS PLACED ON IN FOLLOWING CASE LAW : T.S. BALRAM, ITO VS. VOLKARI BROTHERS A ND OTHERS (SC) 82 ITR 50. IN THE ORDER U/S 154 ALL THE PROVISIONS WHICH HAVE THEIR BIG IMPACT ON THE REVENUE CAN ALSO BE COVERED. MANY PROVISIONS WHICH HAVE THE MANDATORY ITA NO.299/AG/2012 A.Y.2005-06 4 CHARACTER IN THE LAW ALSO CAN BE COVERED U/S 154. T O AVOID THE ISSUE OF 115JB (MAT PROVISIONS) IS LIKE TO AVOID THE MANDATORY PRO VISIONS OF THE INCOME TAX ACT. THIS MISTAKE IS OVERLOOKING OF MANDATORY PROVISION (115JB) OF LAW (IT ACT 1961). THIS MISTAKE CAN BE RECTIFIED. IN THE CASE OF LAW O F ADDL. CIT VS. INDIA TIN INDUSTRIES PVT. LTD. (KAR) 166 ITR 166 454 THIS FA CT HAS BEEN SUPPORTED. AFTER PERUSAL THE DOCUMENTS RELATING TO ENTIRE PRO CEEDINGS OF ASSESSMENT IN THIS CASE THE CONCLUSION CAME OUT THAT SECTION 115J B (MAT) WAS APPLICABLE IN THE INTEREST OF REVENUE. SO APPARENT FROM RECORD DOES N OT COVER ONLY THE APPEAL EFFECT ORDER U/S 250 BUT IT ALSO COVER THE ENTIRE PROCEEDI NG AND DOCUMENT FROM SENDING THE NOTICE U/S 143(2) TO APPEAL EFFECT ORDER U/S 25 0 WHICH ALSO WAS PASSED BY THE A.O. THERE IS NO INVARIABLE RULE OF LAW, TO CONSTIT UTE AN ERROR APPARENT FROM THE RECORD, THE ERROR MUST BE APPARENT FROM THE RECORD OF THE PROCEEDING AGAINST THE ASSESSEE HIMSELF. THIS STATEMENT CAN BE SUPPORTED I N THE FOLLOWING CASE LAW DEVENDRA PRAKASH VS. ITO (ALL) 72 ITR 151. AT THE TIME OF INITIATING THE PROCEEDINGS U/S 154 THE RECORD WHICH WAS IN FAVOUR OF APPLYING THE SECTION 115JB WAS/IS AVAILAB LE WITH THE INCOME TAX AUTHORITIES. THIS CASE RECORD IS VERY SUFFICIENT DO CUMENTARY EVIDENCE TO INITIATE THE PROCEEDINGS U/S 154. RECORD FOR THE PURPOSE OF 154 IS THE RECORD AVAILABLE TO THE AUTHORITIES AT THE TIME OF INITIATION OF 154 PROCEE DINGS AND NOT MERELY THE MISC. RECORD FOR THAT YEAR ALONE. THE RELIANCE IS PLACED UPON IN THE FOLLOWING CASE LAWS: CIT VS. M.R.M. PLANTATIONS PVT. LTD. (MAD) 240 ITR 660 CIT VS. ARUNA LUTHRA (P&H) 252 ITR 76 MANY TIMES A VERY RELEVANT AND BIG ISSUE IS ESCAPE D DUE TO INAVOIABLE CIRCUMSTANCES IN THE DEPARTMENT BUT THAT CAN BE COV ERED IF IT HAS NOT BEEN COVERED IN ORIGINAL ASSESSMENT ORDER AND ORDER OF CIT(A). I N THIS CASE SECTION 115JB WAS ESCAPED IN ORIGINAL ASSESSMENT ORDER AND ORDER OF C IT(A) BUT SECTION 250 (APPEAL EFFECT ORDER) WAS AN OPPORTUNITY TO APPLY THIS SECT ION. BUT 154 CAN BE INITIATED AT THIS LEVEL ALSO ON THIS SECTION. WHILE GIVING EFFEC T TO THE ORDER OF THE CIT(A), ONLY ISSUES CONSIDERED IN DECIDED IN APPEAL WILL MERGE A.O. CAN PASS ORDER U/S 154 ON OTHER ISSUES. THIS FACT HAS BEEN SUPPORTED IN THE C ASE LAW OF MARUTI UDHYOG LTD. VS. JCIT (ITAT)DEL) 100 ITD 113. ITA NO.299/AG/2012 A.Y.2005-06 5 IN VIEW OF THE FACTS DISCUSSED ABOVE, THE MISTAKE APPARENT FROM THE RECORD IS RECTIFIED TO TOTAL INCOME IS COMPUTED UNDER SECTION 115JB AS UNDER: 4. DURING THE COURSE OF APPEAL PROCEEDINGS, THE ASS ESSEE HAS SUBMITTED AS UNDER:- IT IS SUBMITTED THAT IN THE APPEAL FILED BY THE AS SESSEE COMPANY THE AMOUNT OF LOAN & INTEREST WAIVED AS ALLOWED BY THE CIT(A). IN THE ORDER U/S 250 THERE WAS NO MISTAKE INVOLVED. AOS ORDER RECTIFYING THE ORDE R PASSED U/S 250 GIVING EFFECT TO THE CIT(A)S ORDER IS NOT VALID BEING NOT IN ACCORD ANCE WITH LAW AND IS BEYOND AOS JURISDICTION, EVEN OTHERWISE THE CIT(A) VIDE O RDER DTD. 29.02.2008 HAD HELD THAT ADDITIONS MADE BY THE AO (VIDE ASSESSMENT ORDE R DTD. 28.12.2007 FOR THE A.Y. 2005-06) (I) ON ACCOUNT OF WAIVER OF LOAN BY THE ST ATE BANK OF INDIA & MP FINANCIAL CORPORATION & (II) WAIVER OF INTEREST, WA S NOT SUSTAINABLE ON FACTS & IN LAW. THERE WAS NO WHISPER OF APPLICABILITY OF PROVI SIONS OF SEC. 115JB IN CIT(A) ORDER AS NO WORKING OF BOOK PROFIT U/S 115JB WAS MA DE BY THE A.O. AT THE TIME OF MAKING ASSESSMENT AND THE JUDGEMENT IN ADDL. CIT V S. INDIAN TIN INDUSTRIES PVT. LTD. 116 ITR 454 (KAR) AS CITED BY THE A.O. IS NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. THUS, THE AO HAD CORRECTLY GIVEN A PPEAL EFFECT TO CIT(A)S ORDER REDUCING FROM ASSESSED INCOME AT THE TIME OF MAKING ADJUSTMENT U/S 143(3) ON 28.12.2007, THE AO HAD JUST COMPUTED ASSESSEE COMPA NYS INCOME FROM BUSINESS UNDER THE NORMAL PROVISIONS OF THE IT ACT THAT IS U NDER SECTION 28 TO 44 OF THE I.T. ACT. IN THE ALTERNATIVE NO COMPUTATION OF BOOK PROF IT & TAX THEREON WAS MADE AS MANDATED U/S115JB. WHEN THERE WAS NO QUESTION OF AN Y RECTIFICATION AS ONLY AN EXISTING ORDER INVOLVING A MISTAKE APPARENT FROM RE CORD CAN ONLY BE RECTIFIED. AOS ORDER U/S 154 IS, THEREFORE, ILLEGAL AND THE S AME MAY KINDLY BE CANCELLED. THE SUPREME COURT IN CIT VS. HERO CYCLES (P) LTD. 228 ITR 463 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 & I T BECOMES APPARENT FROM RECORDS. THERE WAS NO ORDER COMPUTING THE BOOK PROF IT & THEREFORE QUESTION OF RECTIFICATION U/S 154 OF COMPUTATION OF BOOK PROFIT DOES NOT ARISE. COMPUTATION OF BOOK PROFIT AND TAX THEREON U/S 115 JB IS JUST AUTOMOTIVE. AN AO IS REQUIRED TO APPLY HIS MIND AS VARIOUS ADJUSTM ENTS ARE TO BE MADE AND SET OFF OF LOSSES AND UNABSORBED DEPRECIATION IS TO BE MADE . THE AO HAS ALSO TO SEE ITA NO.299/AG/2012 A.Y.2005-06 6 WHETHER THE P&L A/C HAS BEEN PREPARED IN ACCORDANCE WITH PART II & III OF SCHEDULE VI OF THE COMPANIES ACT & IT INVOLVES DEEP EXAMINATION & IS NOT COVERED AN APPARENT AND PATENT MISTAKE OF LAW. IF THE AO HA D COMPUTED THE BOOK PROFIT & TAX THEREON U/S 115JB INVOLVING SOME CALCULATION MI STAKE, THE THINGS WERE OTHERWISE, HERE THE FACTS ARE QUITE DIFFERENT AND D ISTINGUISHABLE. THE S.C. CASE OF T.S. BALARAM AS CITED BY A.O. IS IN FAVOUR OF ASSES SEE AND DOES NOT SUPPORT REVENUES CASE. WITHOUT PREJUDICE TO ABOVE, IT IS SUBMITTED THAT A S PER AUDITORS REPORT U/S 115JB SUBMITTED IN STATUTORY FORM NO.29 (RULE 40B)C OMPUTATION OF BOOK PROFIT HAS BEEN GIVEN IN THE AUDIT REPORT. IN THE AUDIT REPORT CALCULATION OF BOOK PROFIT U/S 115JB WAS MADE IN ACCORDANCE WITH THE MANDATORY GUI DELINES OF PART II & III OF SCHEDULE VI OF COMPANIES ACT IN AS MUCH AS WAIVER O F LOAN UNDER A ONE TIME SETTLEMENT WITH STATE BANK OF INDIA & M.P. FINANCIA L CORPORATION BEING NOT IN THE NATURE OF REVENUE RECEIPT WAS NOT CONSIDERED. THE I NTEREST ON THE FINANCES HAVING NOT BEEN PAID AND THEREFORE NOT CLAIMED AS DEDUCTIO N BY VIRTUE SECTION 43B WAS ALSO NOT CONSIDERED FOR PURPOSE OF COMPUTATION OF P ROFIT. IF AO CONSIDERED ALL ABOVE THEN INSTEAD OF POSITIVE BOOK PROFIT THERE WA S NEGATIVE BOOK PROFIT. ACCORDINGLY PROVISIONS OF SEC. 115JB WERE NOT APPLI CABLE. THE AO HAS, HOWEVER WRONGLY TREATED & AMOUNT OF LOANS & INTEREST AS WAI VED BY THE STATE BANK OF INDIA & MPFC AS PROFIT WHILE THE WAIVER OF LOAN AND INTER EST IS NOT IN THE NATURE AND CHARACTER OF INCOME. THIS IS ALSO A DEBATABLE ISSUE . THIS REPORT WAS SIGNED BY AUDITOR AS COMPANY WAS SICK INDUSTRIAL COMPANY IN T HIS PARTICULAR YEAR. DEBATE ALSO ON WHETHER THE COMPANY IS A SICK INDUSTRY OR N OT IS ALSO ENVISAGED FROM AO ORDER U/S 154. THE MATTER IS HIGHLY DEBATABLE AND CANNOT BE SAID TO BE VERY SIMPLE & CLEAR OR SAY A MISTAKE APPARENT FROM RECORDS. IN THE LAND MARK JUDGEMENT OF THE SUPREME COURT IN T.S. BALARAM ITO VS. VOLKART BROTHERS 821 ITR 50 (SUPRA) HELD THAT A MISTAKE APPARENT ON RECORD MUST BE OBVIOUS AND PATE NT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A PROCESS OF REASONING ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. A DECISION ON A DEBATA BLE POINT OF LAW IS NOT A MISTAKE APPARENT FROM RECORD & THE JUDGEMENT OF DEV ENDRA PRAKASH VS. ITO 721 ITR 151 (ALL) AS CITED BY THE AO IS NOT APPLICABLE. 5. THE LD. CIT(A) CONSIDERING THE FINDING OF THE A. O. AND MATERIAL ON RECORD AND SUBMISSION OF THE ASSESSEE HELD THAT THE PROVIS ION OF SECTION 154 OF THE ACT DO ITA NO.299/AG/2012 A.Y.2005-06 7 NOT APPLY IN THIS CASE AND ACCORDINGLY CANCELLED TH E IMPUGNED ORDER. HIS FINDING IN PARAS 2.3 TO 4 OF THE APPELLATE ORDER ARE REPRODUCE D AS UNDER:- 2.3 APPELLANTS SUBMISSIONS ALONGWITH AOS ORDER H AVE BEEN CONSIDERED CAREFULLY. ASSESSMENT RECORDS ALONGWITH ASSESSMENT ORDER, APPEAL ORDER, ORDER PASSED U/S 250 HAVE ALSO BEEN P ERUSED. RETURN DECLARING LOSS OF RS.9,81,556/- HAS BEEN FILED ON 2 8.10.05. AS PER RECORDS, IT IS ACCOMPANIED BY AUDIT REPORT INFORM N O.3CA, 3CD & ALSO AUDIT REPORT IN FORM NO.29B WHEREBY IT HAS BEEN CER TIFIED BY THE AUDITORS THAT TAX PAYABLE U/S 115JB OF THE I.T. ACT , IN RESPECT OF THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. 2005-06 IS RS.NIL WHICH HAS BEEN DETERMINED ON THE BASIS OF THE ENCLOSED DETAIL S IN ANNEXURE A TO THE SAID FORM NO.29B. A.O. HAS PASSED ORDER DATED N IL U/S 143(3) BY MAKING ADDITION/DISALLOWANCE ON ACCOUNT OF PROVISIO N OF INTEREST WRITE BACK OF MPFC& SBI AND OF RELIEF IN LOAN TO THE APPE LLANT DUE TO IT BEING NOT SICK INDUSTRIAL CO. AS PER BIFR ORDER DATED 20. 05.2005 AND HAS COMPUTED INCOME AT RS.12,83,00,230/-. THE SAID ADDI TION HAS BEEN DELETED BY THE THEN CIT(A) VIDE ORDER DTD. 23.07.20 08. IN FACT, EVEN HONBLE ITAT, AGRA HAS ALSO UPHELD THE SAID DECISIO N OF CIT(A), GWALIOR VIDE ORDER DTD. 21.11.2011 IN ITA NO.651/AGR/2008. VIDE ORDER DTD. 26.08.2008 PASSED U/S 250 TO GIVE EFFECT TO CIT(APP EALS)S ORDER, A.O. HAS DETERMINED APPELLANTS LOSS AT RS.9,81,556/- AN D HAS ALSO DETERMINED POSITION OF APPELLANTS CARRY FORWARD LOSSES AS PER FOLLOWING CHART:- A.Y. DATE OF FILING OF RETURN BUSINESS LOSS (INTT. CLAIMED) UNABSORBED DEPRECIATION TOTAL LOSS CARRY FORWARD 1999-2000 30.11.1999 33288980 17934441 51223421 2000-2001 30.11.2000 23554249 13951414 37505663 2001-2002 31.10.2001 26215757 10843381 27059138 2002-2003 29.10.2002 16703641 8311543 25015184 2003-2004 24.03.2005 --- 6631715 6631715 ITA NO.299/AG/2012 A.Y.2005-06 8 2004-2005 01.11.2004 ---- 5428039 5428039 2005-2006 28.10.2005 --- 981560 981560 2.4 IT IS THIS ORDER U/S 250 OF THE AO THAT HAS NO W BEEN RECTIFIED BY THE IMPUGNED ORDER U/S 154. VIDE LETTER DTD. 02.11.2011, AO HAS ISSUED SHOW CA USE U/S 154/155 BY MENTIONING AS UNDER:- IT IS VERY APPARENT FROM THE RECORD RELATING TO A PPEAL EFFECT ORDER PASSED U/S 250 ON 26.08.2008 THE COMPANY IS LIABLE TO BE ASSESSED UNDER THE PROVISIONS OF SEC. 115JB. THERE IS NEED TO RECT IFY THE ORDER PASSED AS ABOVE. 2.5 NO DETAIL WORKING HAS BEEN GIVEN REGARDING ALLE GED MISTAKE SOUGHT TO BE RECTIFIED. IN FACT, THE SAID NOTICE IS FOUND TO HAVE BEEN ISSUED IN PURSUANCE OF AUDIT OBJECTION BY SR. AUDIT OFFICER, ITRAP-IV DTD. 21.10.09 REGARDING NON COMPUTATION OF APPELLANTS INCOME U/S 115JB AND AMOUNT OF UNABSORBED DEPRECIATION TO BE ALLOWED TO IT. APPELL ANTS REPLY TO NOTICE U/S 154 AND AS REPRODUCED BY THE AO HAS NOT BEEN ACCEPT ED BY THE A.O. WHO HAS ASSESSED APPELLANTS INCOME AS PER OBSERVATIONS MADE ION THE ABOVE MENTIONED AUDIT OBJECTION. HOWEVER, IT HAS BEEN HEL D BY VARIOUS APPELLATE AUTHORITIES THAT THE A.O. HIMSELF MUST FIND THAT A PARTICULAR MISTAKE HAS OCCURRED WHICH NEEDS RECTIFICATION. A.O. HAS TO AP PLY HIS INDEPENDENT MIND TO THE FACTS OF THE CASE AND CANNOT ALLOW HIMS ELF TO BE INFLUENCED OR GUIDED IN THE MATTER BY EXTRANEOUS CONSIDERATIONS A S IS FOUND IN APPELLANTS CASE FROM PERUSAL OF RECORDS OF THE A.O . AND AS MENTIONED ABOVE. 2.6 FURTHER, THE APPELLANT IS FOUND TO BE A SICK IN DUSTRIAL COMPANY DURING THE YEAR UNDER CONSIDERATION AS PER ORDER OF BIFR D TD. 15.01.2002. IT IS ONLY FOR SUCCEEDING YEARS W.E.F. A.Y. 2006-07 THAT IT IS NOT TO BE TREATED AS SICK UNIT ON BASIS OF DETAILS GIVEN BY IT TO BIFR A ND VIDE ORDER DTD. 20.05.2005. THE SAME VIEW HAS BEEN HELD BY APPELLAT E AUTHORITIES ALSO WHILE DELETING THE ADDITION MADE BY THE A.O. ON THE GROUND THAT IT IS A SICK ITA NO.299/AG/2012 A.Y.2005-06 9 INDUSTRIAL UNIT DURING THE YEAR. THUS, THE ISSUES U NDER CONSIDERATION ARE FOUND TO BE HIGHLY DEBATABLE ON WHICH THERE CAN BE DIVERSE OPINIONS. 2.7 WHILE PASSING ORDER U/S 154, AO HAS RELIED ON C ERTAIN CASE LAWS STATING THAT ONLY ISSUES CONSIDERED AND DECIDED IN APPEAL W ILL MERGE. THEREFORE, THE SAID MISTAKE OF NON APPLICATION OF PROVISIONS O F SEC. 115JB IS APPARENT FROM RECORD AND CAN BE RECTIFIED U/S 154, THERE BEI NG NO DEBATABLE ISSUE INVOLVED. FACTS OF THE CASE LAWS RELIED ON BY THE A .O. ARE FOUND DISTINGUISHABLE FROM APPELLANTS CASE IN THAT THOUG H THE ISSUE OF APPLICABILITY OF SEC. 115JB HAS NOT BEEN RAISED IN APPEAL BUT AT THE SAME TIME THE REASONS FOR IT IS THAT ON THE BASIS OF DET AILS AND AUDIT REPORT IN PRESCRIBED FORM NO.29B STATING IT TO BE NIL NO ADVE RSE INFERENCE HAS BEEN DRAWN BY THE A.O. DURING THE ENTIRE COURSE OF ASSES SMENT PROCEEDINGS AND IN THE ASSESSMENT ORDER. 2.8 THE POWER CONFERRED BY PROVISIONS OF SEC. 154/1 55 IS A POWER TO CORRECT MISTAKES AND NOT A POWER OF REVIEW. U/S 154 , AN A.O. CANNOT BE PERMITTED TO REVISE OR REVIEW HIS EARLIER ORDER, TH ERE BEING NO CHANGE IN FACTS OR CIRCUMSTANCES AND WHEN ENTIRE MATERIAL IS BEFORE HIM DURING THE COURSE OF ORIGINAL PROCEEDINGS WHETHER COMPLETED U/ S 143(3) OR U/S 250. IT HAS BEEN HELD BY HONBLE APEX COURT IN CASE OF CIT VS. HERO CYCLES PVT. LTD. (1997) 228 ITR 463 (SC) THAT RECTIFICATION IS NOT POSSIBLE, IF THE QUESTION IS DATABLE. MOREOVER, A POINT WHICH WAS NO T EXAMINED ON FACTS OR IN LAW CANNOT BE DEALT WITH AS A MISTAKE APPARENT F ROM THE RECORD. WHETHER THE APPELLANT IS A SICK INDUSTRIAL UNIT OR NOT, WHAT IS THE AMOUNT OF BROUGHT FORWARD LOSSES/DEPRECIATION TO COMPUTE BOOK PROFITS TO APPLY PROVISIONS OF SEC. 115JB ARE DEBATABLE ISSUES AND S ECTION 154 WILL NOT APPLY ON THESE ISSUES. FACTS WHICH REQUIRE INVESTIG ATION CANNOT BE CORRECTED BY RECTIFICATION. 2.9 ON THE BASIS OF FACTS ABOVE AND AFTER PERUSAL O F RECORDS AND SUBMISSIONS, I AM OF THE VIEW THAT THE APPELLANTS CASE IS NOT COVERED BY THE PROVISIONS OF SEC. 154 OF THE I.T. ACT. ACCORDI NGLY, AO IS NOT FOUND JUSTIFIED IN ASSESSING APPELLANTS INCOME U/S 115JB VIDE IMPUGNED ORDER PASSED U/S 154. THE SAME IS, HEREBY, CANCELLED. ITA NO.299/AG/2012 A.Y.2005-06 10 3. SINCE THE ORDER PASSED U/S 154 HAS BEEN CANCELLE D AS ABOVE, APPELLANTS OTHER GROUND REGARDING CALCULATION OF BOOK PROFITS BY DEDUCTING UNCORRECT AMOUNT OF UNABSORBED DEPRECIATION IS NOT BEING ADJU DICATED UPON. 4. IN THE RESULT, THE APPEAL IS ALLOWED. 6. LD. D.R. RELIED UPON THE ORDER OF THE A.O. HE HA S SUBMITTED THAT PROVISION OF SECTION 115JB APPLY TO THE FACTS OF THE CASE. TH EREFORE, THE A.O. HAS CORRECTLY PASSED THE ORDER UNDER SECTION 154 OF THE ACT, RECT IFYING THE MISTAKE APPARENT FROM RECORD. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSE SSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE WORKING GIVEN BY THE ASSESSEE HAS NOT BEEN DISPUTED. HE HAS FILED COPIES OF ORIGINAL ASSESSMEN T ORDER, ORDER OF CIT(A) AND INCOME TAX APPELLATE TRIBUNAL FOR RELEVANT ASSESSME NT YEAR UNDER APPEAL AND THE APPEAL EFFECT GIVEN BY THE A.O. DATED 26.08.2008 IN THE PAPER BOOK. HE HAS REFERRED TO REPORT UNDER SECTION 115JB (P.B.1) AND SUBMITTED THAT AUDITOR HAS REDUCED THE LOSS OF SICK INDUSTRIAL COMPANY FROM TH E PROFIT AND THE DETAIL IS GIVEN IN THE AUDITED ACCOUNTS (P.B.2) AND THE SAME FACTS HAVE BEEN DECLARED IN COMPUTATION OF INCOME FILED WITH THE RETURN OF THE INCOME (P.B.3). HE HAS ALSO REFERRED TO PROVISION OF SECTION 115JB(2) (EXPLANAT ION 1) (VII) OF THE I.T. ACT AND STATED THAT THE AMOUNT OF PROFIT OF SICK INDUSTRIAL COMPANY FOR ASSESSMENT YEAR COMMENCING ON AND FROM ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH ITA NO.299/AG/2012 A.Y.2005-06 11 THE SAID COMPANY HAS BECOME A SICK INDUSTRIAL C OMP ANY AND ENDING WITH THE ASSESSMENT YEAR DURING WHICH THE ENTIRE NET WORTH O F SUCH COMPANY BECOME EQUAL OR EXCEEDS ACCUMULATED LOSS, SHALL HAVE TO BE REDUC ED FOR COMPUTING INCOME UNDER SECTION 115JB OF THE ACT WHICH IN THE CASE OF THE A SSESSEE HAS BEEN DONE BY THE AUDITOR. HE HAS SUBMITTED ALL THE FACTS BEFORE A.O. SINCE BEGINNING, THEREFORE, AFTER DECISION ON MERITS BY THE CIT(A) AND THE TRIBUNAL, A.O. IS NOT EMPOWERED TO PASS ORDER UNDER SECTION 154 OF THE ACT FOR THE PURPOSE OF ENHANCING INCOME OF THE ASSESSEE UNDER THE GARB OF ABOVE PROVISION. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). SECT ION 154 OF THE I.T. ACT PROVIDES THAT WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM RECORD, THE INCOME TAX AUTHORITY MAY AMEND ANY ORDER PASSED BY IT. THEREFO RE, THERE SHOULD BE A MISTAKE APPARENT FROM THE RECORD OF THE INCOME TAX AUTHORIT IES WHILE EXERCISING JURISDICTION UNDER SECTION 154 OF THE ACT. 7.1 HONBLE CALCUTTA HIGH COURT IN THE CASE OF HIND USTAN LEVER LTD. VS. COMMISSIONER OF INCOME-TAX AND OTHERS [2006] 284 IT R 42 (CAL) HELD THAT MISTAKE MUST BE OBVIOUS THAT IT CAN BE EASILY CORRE CTED, TO WIT AN ARITHMETICAL MISTAKE, QUOTATION OF WRONG SECTION, ETC. AND NOT O N DATABLE ISSUE. ITA NO.299/AG/2012 A.Y.2005-06 12 7.2 HONBLE SUPREME COURT IN THE CASE OF ITO VS. VO LKART BROTHERS & ORS (1971) 82 ITR 50 (SC) HELD THAT 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 ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. 8. THE ASSESSEE FILED RETURN OF INCOME DECLARING LO SS OF RS.9,81,556/-, WHICH WAS ACCOMPANIED BY AUDITORS REPORT IN WHICH IT HAS BEEN CERTIFIED BY THE AUDITORS THAT THE TAX PAYABLE UNDER SECTION 115JB IN RESPECT OF ASSESSMENT YEAR UNDER APPEAL IS NIL, WHICH HAS BEEN DETERMINED ON THE BAS IS OF DETAILS IN ANNEXURE-A TO THIS FORM. THE A.O. PASSED THE ASSESSMENT ORDER UND ER SECTION 143(3) OF THE ACT BY MAKING ADDITION OF THE DISALLOWANCE ON ACCOUNT O F PROVISION OF INTEREST WRITE BACK FROM MPFC & SBI AND OF RELIEF IN LOAN TO THE A SSESSEE DUE TO IT BEING NOT SICK INDUSTRIAL COMPANY AND HAS COMPUTED THE INCOME AT RS.12,83,00,230/-. THE SAID ADDITION HAS BEEN ADMITTEDLY DELETED BY THE LD . CIT. CIT(A) VIDE ORDER DATED 23.07.2008 (P.B.32) A.O. GAVE APPEAL EFFECT UNDER S ECTION 250 OF THE ACT ON DATED 26.08.2008 (P.B.53) AND TOTAL LOSS WAS CARRIED FORW ARD IN A SUM OF RS.9,81,556/-. THE TRIBUNAL ALSO UPHELD THE ORDER OF THE LD. CIT(A ) BY DISMISSING THE DEPARTMENTAL APPEAL. THE AUDITOR OF THE ASSESSEE IN ANNEXURE-A ALSO REDUCED THE ITA NO.299/AG/2012 A.Y.2005-06 13 LOSS OF SICK INDUSTRIAL COMPANY FROM THE PROFIT. TH EREFORE, ASSESSEE HAS DISCLOSED ALL THE PARTICULARS REGARDING INCOME TO BE COMPUTED UNDER SECTION 115JB WHILE FILING RETURN OF INCOME. THE CERTIFICATE REGARDING ASSESSEE IS SICK INDUSTRIAL COMPANY ISSUED BY BIFR WAS ALSO FILED AT THE ASSESS MENT STAGE. THEREFORE, WHEN THE A.O. APPLIED HIS MIND TO ALL THE FACTS AND CIRC UMSTANCES OF THE CASE AND PASSED THE ASSESSMENT ORDER BY MAKING CERTAIN ADDITIONS WH ICH HAVE BEEN DELETED BY THE CIT(A) AND WHILE GIVING APPEAL EFFECT, ULTIMATELY T HE INCOME/LOSS DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED. THERE WAS NO SCOPE FOR THE A.O. TO HAVE RESORTED TO THE PROVISION OF SECTION 154 OF THE ACT FOR THE PUR POSE OF ENHANCING THE INCOME OF THE ASSESSEE. THE LD. CIT(A) GAVE SPECIFIC FINDING OF FACT THAT THE ASSESSEE IS SICK INDUSTRIAL COMPANY DURING THE YEAR UNDER CONSIDERAT ION. THEREFORE, THE A.O. ON LONG DRAWN PROCESS OF REASONING SHOULD NOT HAVE PAS SED THE ORDER UNDER SECTION 154 OF THE ACT. THE ISSUE RAISED BY THE A.O. IN PRO CEEDING UNDER SECTION 154 OF THE ACT IS HIGHLY DEBATABLE WHICH REQUIRES THE ISSUE TO BE RECONSIDERED BY THE A.O. ABOUT APPLICABILITY OF THE PROVISION OF SECTION 115JB OF THE A CT WHICH WAS NOT RAISED BY THE A.O. IN ASSESSMENT OR APPELLATE PROCE EDINGS. THEREFORE, A.O. HAS NO POWER TO REVIEW HIS ENTIRE ASSESSMENT ORDER AND TO MAKE CERTAIN ADDITIONS WHICH ARE NOT PART OF THE RECORD. THE ASSESSEE HAS DECLAR ED ALL PARTICULARS REGARDING ASSESSMENT AND ASSESSMENT TO BE FRAMED UNDER SECTIO N 115JB OF THE ACT. WHEN THE ITA NO.299/AG/2012 A.Y.2005-06 14 A.O. HAS CONSCIOUSLY TAKEN THE VIEW TO FRAME A REGU LAR ASSESSMENT AND MADE CERTAIN ADDITIONS, WHICH HAVE BEEN DELETED BY THE L D. CIT(A) AND CONFIRMED BY THE TRIBUNAL, THE A.O. IS NOT EMPOWERED TO TAKE A CONTR ARY VIEW TO REVIEW THE ENTIRE ASSESSMENT ORDER ALREADY FRAMED. IT IS AGAINST THE SPIRIT OF PROVISION OF SECTION 154 OF THE ACT. THEREFORE, LD. CIT(A) CORRECTLY HELD TH AT THERE WAS NO MISTAKE APPARENT FROM RECORD AND A.O. CANNOT BE ALLOWED TO PASS THE IMPUGNED ORDER ON DEBATABLE ISSUE. LD. CIT(A) CORRECTLY CANCELLED THE ORDER UND ER SECTION 154 OF THE ACT. LD. COUNSEL FOR THE ASSESSEE ALSO CORRECTLY DEMONSTRATE D FROM THE PROVISION OF SECTION 115JB(2) OF THE ACT THAT WHATEVER AMOUNT WAS REDUCE D FROM THE PROFIT OF BUSINESS ON ACCOUNT OF LOSS TO SICK INDUSTRIAL COMPANY WERE IN ACCORDANCE WITH LAW. THEREFORE, THERE WAS NO JUSTIFICATION FOR A.O. TO P ASS THE ORDER UNDER SECTION 154 OF THE ACT. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. THE SAME IS ACCORDINGLY DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (A.L. GEHLOT) (BHAV NESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER AMIT/ ITA NO.299/AG/2012 A.Y.2005-06 15 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY