1997 (9) TMI 145 - AT - Income Tax

Assessing Officer Assessment Year Mistake Apparent From Record Original Order Tax Liability

Summary

Issues Involved:
1. Jurisdiction of CIT(Appeals) to pass an order under section 154.
2. Existence of an apparent mistake for rectification under section 154.

Issue-Wise Detailed Analysis:

1. Jurisdiction of CIT(Appeals) to Pass an Order under Section 154:
The primary issue is whether the CIT(Appeals) had the jurisdiction to pass an order under section 154 of the Income-tax Act, 1961. The Revenue argued that the CIT(Appeals) did not have such jurisdiction as there was no apparent mistake from the record. The CIT(Appeals) initially dismissed the appeal based on the assessee's letter dated 18-3-1989, which was misinterpreted as a request to withdraw the appeal. The CIT(Appeals) later rectified this order under section 154, treating the appeal as not withdrawn and deciding it on merits.

Analysis:
- Section 154 of the Income-tax Act: This section allows income-tax authorities to rectify any mistake apparent from the record. The CIT(Appeals) is one of the income-tax authorities as per section 116, thus empowered to amend any order passed by him.
- Case Laws Supporting Jurisdiction: The CIT(Appeals) relied on several case laws to support his jurisdiction to rectify the mistake, including:
- Kapurchand Shrimal v. CIT: The Supreme Court held that an appellate authority has the duty to correct all errors in the proceedings under appeal.
- CIT v. Calcutta Steel Co. Ltd.: The Calcutta High Court held that a mistake apparent on the record must be an obvious and patent mistake.
- West Bengal State Warehousing Corpn. v. CIT: A glaring and obvious error amounts to a mistake apparent from the record.

2. Existence of an Apparent Mistake for Rectification under Section 154:
The second issue is whether there was an apparent mistake that warranted rectification under section 154. The CIT(Appeals) initially dismissed the appeal based on a misreading of the assessee's letter, which requested an adjournment, not a withdrawal of the appeal.

Analysis:
- Misinterpretation of Assessee's Letter: The letter dated 18-3-1989 requested an adjournment, stating that the company might consider withdrawing the appeal once the order of the Commissioner of Income-tax is received. The CIT(Appeals) misread this as a request to withdraw the appeal.
- Apparent Mistake: The CIT(Appeals) admitted in his order dated 28-9-1994 that the dismissal of the appeal was erroneous. This misreading was a glaring, obvious, and self-evident mistake, thus falling under the purview of section 154.
- Case Laws Supporting Rectification:
- ITO v. Raleigh Investment Co. Ltd.: The Calcutta High Court held that a mistake must be obvious, patent, and self-evident.
- CIT v. Bengal Assam Steamship Co. Ltd.: A mistake in the allowance of relief due to misreading a section is a mistake apparent from the record.
- Neeta S. Shah v. CIT: The Karnataka High Court observed that when an earlier order is founded on a mistaken assumption, rectification under section 254(2) is justified. Since the provisions of section 254(2) and section 154 are similar, this principle applies here.

Conclusion:
The Tribunal concluded that there was a mistake apparent from the record, and the CIT(Appeals) had the jurisdiction to rectify the same under section 154. The CIT(Appeals) was justified in rectifying the original order of dismissal of the appeal as withdrawn by deciding the appeal on merits. Consequently, the departmental appeal was dismissed.