1989 (5) TMI 36 - HC - Income Tax

Summary

Issues:
1. Competency of the appeal filed by the assessee before the Commissioner of Income-tax (Appeals) regarding the allocation of overhead charges in rectification proceedings.
2. Whether the consent by the assessee confers jurisdiction on the Income-tax Officer to pass a rectification order under section 154 of the Income-tax Act, 1961.
3. Whether there was an error apparent from the records that could be rectified under section 154 of the Income-tax Act, 1961.

Analysis:
The High Court of Kerala addressed the reference made by the Revenue regarding an assessee's income tax assessment for the year 1973-74. The Income-tax Officer rectified the assessment order under section 154 of the Act after realizing a mistake. The assessee agreed to the rectification in writing. Subsequently, the Commissioner of Income-tax (Appeals) partly allowed the assessee's appeal against the rectification order. The Revenue appealed to the Appellate Tribunal, arguing that the appeal before the Commissioner of Income-tax (Appeals) was incompetent. The Tribunal held that the consent of the assessee does not confer jurisdiction on the Income-tax Officer to pass a rectification order. The Tribunal referred two questions to the High Court, which were related to the jurisdiction of the Income-tax Officer and the existence of an apparent error in the records for rectification.

The High Court determined that the appeal filed by the assessee before the Commissioner of Income-tax (Appeals) was incompetent regarding the allocation of overhead charges in rectification proceedings. The Court held that the assessee cannot be considered a "person aggrieved" by the rectification order, and thus, the order passed by the Income-tax Officer stood unassailable. The Court disagreed with the Tribunal's decision and concluded that the order passed by the Income-tax Officer should stand, overturning the decision of the Commissioner of Income-tax (Appeals). The High Court reformulated the question posed by the Tribunal to focus on the competency and legality of the appeal filed by the assessee. The Court answered the reformulated question in the negative, ruling against the assessee and in favor of the Revenue. The judgment was to be forwarded to the Income-tax Appellate Tribunal, Cochin Bench for further action.