1998 (9) TMI 603 - AT - Income Tax

Summary

Issues Involved:

1. Whether there was sufficient material on record with the Assessing Officer to warrant rectification under section 154 for allowing relief under section 80G in respect of the donation of Rs. 1,00,000.
2. Whether the Commissioner of Income-tax (Appeals) was correct in upholding the order of the Assessing Officer rejecting the application under section 154.

Issue-wise Detailed Analysis:

1. Sufficient Material on Record for Rectification under Section 154:

The appellant filed a return of income declaring a total income of Rs. 9,87,065 and claimed a deduction of Rs. 1,50,000 under section 80G for a donation to Firozegarh Charitable Trust. However, the appellant omitted to claim a deduction of Rs. 1,00,000 donated to D. C. Shah Charitable Trust. The appellant filed an application under section 154 for rectification, claiming the omitted deduction. The Assessing Officer rejected the application, stating there was no mistake apparent from the record as the deduction was not claimed in the return. The Commissioner of Income-tax (Appeals) upheld this decision, relying on the Supreme Court decision in Addl. CIT v. Gurjargravures (P.) Ltd., which held that no claim for exemption was made nor was there any material on record supporting such a claim.

The appellant argued that the bank summary showing the donation was submitted during the assessment proceedings, and thus, the material was on record. The appellant cited several cases, including CIT v. Gangappa Cables Ltd., CIT v. Western Rolling Mills (P.) Ltd., and CIT v. Ganga Engg. Works, arguing that relief can be granted under section 154 if the material is on record. The appellant emphasized that the term "record" includes all material forming part of the assessment proceedings, not just the return.

The Tribunal noted that the jurisdiction to rectify under section 154 arises when there is a mistake apparent from the record, which includes all material forming part of the assessment proceedings. The Tribunal held that the Assessing Officer should have considered the bank summary and the certificate under section 80G submitted with the rectification application. The Tribunal found that the authorities below were not justified in rejecting the appellant's claim as the material was on record, and the Assessing Officer should have pointed out the omission during the assessment.

2. Correctness of the Commissioner of Income-tax (Appeals) in Upholding the Order:

The learned Departmental Representative argued that the appellant could not claim the omitted deduction in proceedings under section 154 after the assessment was completed, as no material was on record to grant the relief. The Tribunal, however, disagreed, stating that the Assessing Officer should look into the entire material available on the record of the assessment, not just the return. The Tribunal cited the Supreme Court decisions in Mahendra Mills Ltd. v. P.B. Desai and Navnit Lal C. Javeri v. K. K. Sen, AAC, which held that material forming part of the assessment record could be taken into account for correcting the mistake.

The Tribunal found that the facts of the Supreme Court decision in Gurjargravures (P.) Ltd. were distinguishable, as there was no material on record supporting the claim in that case. In contrast, in the present case, the bank summary and the section 80G certificate were part of the record. The Tribunal concluded that the Revenue authorities were not justified in rejecting the appellant's claim and directed the Assessing Officer to allow the deduction under section 80G for the donation of Rs. 1,00,000.

Separate Judgments by Judges:

The Judicial Member allowed the appellant's appeal, holding that the Revenue authorities were not justified in rejecting the claim. The Accountant Member, however, disagreed, stating that the claim could not be made under section 154 as there was no substantial material on record before the Assessing Officer to support the claim. The Accountant Member emphasized that the jurisdiction of the first appellate authority is broader than that under section 154, which only allows rectification of mistakes apparent from the record. The Accountant Member concluded that the Commissioner of Income-tax (Appeals) was correct in upholding the Assessing Officer's order.

Order of Third Member:

The Third Member, agreeing with the Accountant Member, held that the Assessing Officer was justified in rejecting the application under section 154 as there was no mistake apparent from the record. The Third Member noted that the necessary material, such as the receipt and the certificate from the Charity Commissioner, was not available on the record at the time of assessment. The Third Member emphasized that section 154 has a limited application and cannot be used to introduce new claims or rectify omissions made by the assessee. The Third Member concluded that the Commissioner of Income-tax (Appeals) was right in upholding the Assessing Officer's order.