2008 (10) TMI 672 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the rectification order u/s 154 of the Income-tax Act.
2. Time-barred nature of the rectification order.

Summary:

Validity of the Rectification Order u/s 154:
The revenue appealed against the Commissioner of Income-tax (Appeals) decision, which held the Assessing Officer's rectification order u/s 154 as invalid and void ab initio. The original assessment was completed u/s 143(3) on 30-3-1999. Subsequent rectifications were made, but none addressed the exemption u/s 10B. The Commissioner of Income-tax (Appeals) concluded that the rectification order dated 3-3-2006 was invalid as it attempted to rectify an issue from the original assessment order dated 30-3-1999, which was not addressed in any intervening orders.

Time-barred Nature of the Rectification Order:
The revenue argued that the rectification was within four years of the earlier rectification order. However, the Commissioner of Income-tax (Appeals) and the Tribunal found that the rectification sought by the revenue was beyond four years from the date of the original order, as per section 154(7). The Tribunal noted that the rectification order dated 3-3-2006 attempted to rectify a mistake from the original assessment order dated 30-3-1999, which was not addressed in any intervening rectification orders. Therefore, the rectification was time-barred.

Case Laws and Precedents:
The Tribunal referred to several case laws, including Hind Wire Industries Ltd. v. CIT, Waldies Ltd. v. CIT, and Salem Co-operative Spg. Mills Ltd. v. CIT, to support its decision. These cases established that rectification orders must be within four years of the original or intervening order if they address the same issue. Since the rectification in question did not address an issue from any intervening order, it was deemed time-barred.

Conclusion:
The Tribunal upheld the Commissioner of Income-tax (Appeals) decision, concluding that the rectification order dated 3-3-2006 was invalid and time-barred. The appeal filed by the revenue was dismissed.