1988 (2) TMI 115 - AT - Income Tax

Summary

Issues Involved:
1. Applicability of Section 154 of the Income-tax Act, 1961.
2. Entitlement to deduction under Section 80U for a totally blind assessee.
3. Legality of the Income-tax Officer's action in withdrawing previously granted deductions.

Detailed Analysis:

1. Applicability of Section 154 of the Income-tax Act, 1961:
The primary issue revolves around the use of Section 154 by the Income-tax Officer (ITO) to rectify an earlier order. The ITO initially allowed the deduction under Section 80U but later, his successor withdrew it, citing judgments from the Allahabad High Court in Anchor Pressings (P.) Ltd. v. CIT and Sharda Prasad v. CIT. The Tribunal noted that Section 154 is not meant for preferring a claim omitted during assessment proceedings but can only operate on facts already on record. The Tribunal distinguished the present case from the cited judgments, noting that the facts of the assessee being totally blind were undisputed and on record. Thus, the initial use of Section 154 to grant the deduction was appropriate, but the subsequent withdrawal was not justified as it did not involve a mistake apparent from the record.

2. Entitlement to deduction under Section 80U for a totally blind assessee:
The Tribunal emphasized that Section 80U provides for deductions for totally blind or physically handicapped persons. The facts that the assessee was totally blind during the relevant assessment years were undisputed. Therefore, the deduction was rightly granted initially. The Tribunal referenced the Supreme Court's stance that a mistake apparent from the record must be obvious and patent, not requiring a long drawn process of reasoning. Since the blindness of the assessee was an undisputed fact, there was no controversy or scope for two opinions, making the initial grant of deduction under Section 80U correct.

3. Legality of the Income-tax Officer's action in withdrawing previously granted deductions:
The Tribunal found the ITO's subsequent action to withdraw the deduction under Section 154 as controversial and not tenable in law. The Tribunal held that the ITO's initial action of granting the deduction was in accordance with the law, and the subsequent withdrawal was not warranted. The Tribunal cited various judicial precedents, including the Supreme Court's observation that perpetuating an error is not heroic, but rectifying it is a judicial compulsion. The Tribunal concluded that the assessee should not suffer due to the mistake of the authority and emphasized the duty of the assessing officer to guide the assessee and grant relief.

Conclusion:
The Tribunal allowed the appeal, restoring the original order granting the deduction under Section 80U. It criticized the first appellate authority's failure to adhere to the decisions of the higher appellate authorities and highlighted the importance of not adopting a litigious approach that wastes public resources on futile litigation. The Tribunal's decision underscores the importance of fairness and adherence to legal provisions in tax assessments, especially for vulnerable individuals like the totally blind assessee in this case.