1995 (1) TMI 2 - SC - Income Tax

Interpretation of the provisions of section 154(7) - held that that the word any in the expression order sought to be amended would mean even the rectified order

Summary

Issues Involved:
1. Interpretation of the expression "from the date of the order sought to be amended" in Section 154(7) of the Income-tax Act, 1961.
2. Timeliness of the rectification application filed by the assessee.

Issue-wise Detailed Analysis:

Interpretation of the Expression "from the date of the order sought to be amended" in Section 154(7) of the Income-tax Act, 1961:
The primary issue in this case is the interpretation of the phrase "from the date of the order sought to be amended" in Section 154(7) of the Income-tax Act, 1961. The court examined whether this phrase refers only to the original assessment order or includes any subsequent rectified or amended orders.

The Supreme Court held that the term "order" in Section 154(7) is not qualified and can include any order, whether original, amended, or rectified. The court cited its earlier decisions in International Cotton Corporation (P.) Ltd. v. Commercial Tax Officer, Deputy Commissioner of Commercial Taxes v. H. R. Sri Ramulu, and V. Jaganmohan Rao v. CIT and CEPT, to support the interpretation that once an assessment is reopened or rectified, the original order ceases to be operative, and the rectified order becomes the new order for all intents and purposes.

Timeliness of the Rectification Application Filed by the Assessee:
The second issue concerns whether the rectification application filed by the assessee on July 4, 1986, was within the permissible time frame. The original assessment order was dated September 21, 1979, and was rectified on July 12, 1982. The Income-tax Officer and the Appellate Assistant Commissioner dismissed the application as time-barred, calculating the four-year period from the original assessment order. However, the Tribunal allowed the application, considering the four-year period from the rectified order dated July 12, 1982.

The Supreme Court upheld the Tribunal's view, stating that the four-year period should be calculated from the date of the rectified order, not the original order. The court referred to its decisions in CST v. H. M. Esufali H. M. Abdulali and other relevant cases to emphasize that reassessment or rectification results in a fresh order, and the limitation period should be counted from this new order.

The court also considered conflicting views from various High Courts. While the Calcutta, Gujarat, Madras, and Orissa High Courts interpreted "order" to mean the original order, the Patna and Karnataka High Courts took the contrary view. The Supreme Court sided with the latter interpretation, aligning with its previous rulings.

Conclusion:
The Supreme Court concluded that the High Court erred in setting aside the Tribunal's decision. The rectification application filed by the assessee was within the permissible time frame, calculated from the date of the rectified order. The appeals were allowed, and the Tribunal's decision was restored, with no order as to costs.