1983 (9) TMI 114 - AT - Income Tax

A Firm, Application For Registration, Firm Assessment, Registered Firm, Share Income, Unregistered Firm

Summary

Issues:
- Rectification of assessment order under section 143(1) by subsequent order under section 154
- Interpretation of provisions under section 143(1), 143(2), and 154
- Application of the rule 'the special excludes the general'

Analysis:
The appeal was filed by the department against the order of the AAC relating to the assessment year 1975-76, where the ITO had initially allowed depreciation and expenses towards gratuity as claimed by the assessee under section 143(1) of the Income-tax Act, 1961. Subsequently, the ITO issued a show-cause notice to rectify the assessment under section 154 due to alleged errors. The assessee requested for time to respond, but the ITO proceeded with the rectification without waiting for the response, reducing depreciation and withdrawing the gratuity deduction. The AAC found that while errors existed, rectification under section 154 was not appropriate as it would violate the sanctity of the original assessment under section 143(1. The AAC directed the ITO to seek permission under section 143(2)(b) to rectify the mistakes and pass a fresh order.

The department appealed the AAC's decision, arguing that the ITO's order under section 154 should have been upheld as there were mistakes in the original assessment. The department contended that both section 143(2) and section 154 could be used to rectify errors, and the choice of section was at the discretion of the ITO. However, the assessee's representative supported the AAC's decision, emphasizing that section 143 is a complete code in itself, with section 143(3) providing for the rectification of mistakes in the original assessment under section 143(1).

The Tribunal considered the arguments and found merit in the assessee's contention that 'the special excludes the general.' Citing precedents, the Tribunal held that the provisions of section 143(1) and related sections constituted a complete code for assessments made under section 143(1), and the general provisions under section 154 should not override the special provisions under section 143. Therefore, the Tribunal upheld the AAC's order, dismissing the department's appeal.