2011 (6) TMI 864 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the order under section 154/155 of the IT Act.
2. Limitation period for passing the order under section 154/155.
3. Rectification of debatable issues under section 154/155.

Issue-wise Detailed Analysis:

1. Validity of the Order under Section 154/155 of the IT Act:
The assessee contended that the CIT(A) erred in confirming the validity of the order under section 154/155, treating the purported mistakes as mistakes apparent from the records. The AO had issued a notice under section 154 to rectify an alleged mistake in the computation of deduction under section 80HHC, which the assessee objected to, claiming there was no mistake in the original computation. The CIT(A) upheld the AO's action, relying on the Supreme Court decisions in Hind Wire Industries Ltd. vs. CIT and Waldies Ltd. vs. CIT, which allowed rectification with reference to the last order where the mistake occurred.

2. Limitation Period for Passing the Order under Section 154/155:
The primary argument from the assessee was that the rectification order dated 10.03.2000 was beyond the statutory period of four years from the original assessment order dated 29.03.1995. The CIT(A) rejected this argument, stating that the four-year limitation period should be calculated from the date of the last rectification order, which was 5.12.1997. The CIT(A) cited the Supreme Court's ruling in Hind Wire Industries Ltd. vs. CIT, which stated that the time limit for rectification should be reckoned from the date of the order sought to be amended, including amended or rectified orders.

3. Rectification of Debatable Issues under Section 154/155:
The assessee argued that the issues covered by the order under section 154 were debatable and could not be termed as mistakes apparent from the record. The CIT(A) disagreed, maintaining that the rectification was valid and within the authority vested under the Act. The tribunal, however, found that the mistake pointed out in the rectification order arose from the original assessment order dated 29.03.1995 and not from any subsequent rectification orders. Therefore, the limitation period should be reckoned from the original order, making the rectification order dated 10.03.2000 barred by limitation.

Conclusion:
The tribunal concluded that the rectification order dated 10.03.2000 was barred by limitation as it was beyond four years from the original assessment order dated 29.03.1995. The tribunal quashed the orders of the lower authorities, treating them as barred by limitation under section 154(7) of the IT Act. The appeal of the assessee was allowed.

Order Pronounced:
The order was pronounced in the open court on 24.06.2011.