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2006 (4) TMI 201 - AT - Income TaxRectification Of Mistakes - reassessment order passed u/s 143(3) r/w section 147 - time-barred - deduction u/s 80-I - whether it is open to the assessee, not having appealed against the reassessment order, to set up or canvass its correctness in collateral proceedings taken for rectification thereof u/s 154 - HELD THAT - We find that, it is not open to the assessee to argue that the order passed by the Assessing Officer, if it is considered to be one u/s 155(4), seeks to amend debatable issues. In fact no such attempt was made before us on behalf of the assessee. What was argued before us, as we have already noticed, is that the power of amendment has to be traced to a specific power in the various sub-sections of section 155 and that there is no specific power conferred upon the Assessing Officer to pass the type of amendment order which he did on 28-2-2003. The provisions of section 155(4) refer specifically only to the adjustment of the figures of losses or depreciation to be carried forward and adjusted against the profits of a subsequent year or years under sections 72 to 74A. Such adjustments alone can be carried out through an order of amendment. There is no specific power conferred upon the Assessing Officer to amend the assessment of a later year to give effect to the change in the figure of loss in respect of an industrial undertaking arising out of a rectification order passed for the earlier year, purely for the purpose of adjusting the figure of deduction available u/s 80-I in the later year. As we have already noticed in the earlier part of our order while narrating the facts, even in the notice u/s 154 for the year under appeal the Assessing Officer has stated that he proposed to amend and recompute the claim for deduction u/s 80-I in respect of the Anola unit for the year under appeal consequent upon passing of order u/s 154 dated 10-2-2003 in the assessment year 1993- 94 regarding claim of 80-I of the Income-tax Act, 1961 on Anola Unit. There is no reference to any order of reassessment passed u/s 147 as required by sub-section (4) of section 155 for the assessment year 1993-94. This sub-section can be invoked only if the amendment for a later year is found necessary 'as a result of proceedings initiated u/s 147 for an earlier year, as the opening words of the sub-section show. Going by the notice issued prior to the impugned order of rectification, it is seen that the basic requirement of the sub-section has not been satisfied. It is not a case of rectification of a mistake apparent from the record, which assumes that the order sought to be rectified was erroneous even when passed, which assumption is not correct at all in the case of the order of reassessment passed on 28-3-2002. It may be useful to recall the observations of the Privy Council in CIT v. Khemchand Ramdas 1938 (4) TMI 1 - PRIVY COUNCIL , followed by the Supreme Court in ITO v. S.K. Habibullah 1962 (1) TMI 12 - SUPREME COURT that an assessment once made is final and it is not open to the department to keep on modifying the same by issuing notices to the end of all time. In particular, it was held by the Supreme Court that 'The provisions relating to assessments and rectification or reopening thereof are exhaustive, and may not be extended by analogies. The right to rectify an assessment may therefore be exercised in strict compliance with conditions prescribed by the statute in that behalf'. Any assessment or other order made by the Assessing Officer can be modified only by a process known to law and it is for the Assessing Officer to trace the power to the specific provision of law which authorises him to do so. In the absence of any such power, the assessment or other order cannot be tampered with. The provisions of section 154 have been referred to in section 155 only for the limited purpose of reckoning the period of limitation of four years. In all other respects, both the sections operate on different fields. We have to therefore hold on this ground also that in the present case the Assessing Officer was not right in law in resorting to section 154. Our attention was not drawn to any other sub-section of section 155 authorising the Assessing Officer to amend the assessment in the manner he has done in the present case for the year under appeal so as to enable us to hold that the impugned order of rectification passed u/s 154 can be interpreted as an order of amendment passed u/s 155. Thus, we quash the impugned order of rectification passed by the Assessing Officer u/s 154. The appeal is allowed with no order as to costs.
Issues Involved:
1. Validity of the order passed under section 147/143(3)/154 of the Income-tax Act. 2. Jurisdiction and limitation of the reassessment order. 3. Debatability of the issue sought to be rectified under section 154. 4. Applicability of section 155(4) for amendment. Issue-wise Detailed Analysis: 1. Validity of the Order Passed Under Section 147/143(3)/154: The primary contention was that the order passed by the Assessing Officer on 28-2-2003 under section 147/143(3)/154 was bad in law, without jurisdiction, and time-barred. The original assessment was made on 29-11-1996, and later reopened under section 147, completed on 28-3-2002. The reassessment order was subsequently rectified under section 154 on 22-7-2002. The Assessing Officer issued another notice under section 154 on 14-2-2003 to rectify the assessment for the year under appeal, which was objected to by the assessee on the grounds of time-bar and jurisdiction. 2. Jurisdiction and Limitation of the Reassessment Order: The reassessment order dated 28-3-2002 was challenged on the grounds of being barred by limitation. The assessee argued that the demand notice dated 17-5-2002 should be taken as the date of passing the reassessment order, which would be beyond the permissible period under section 153(2). However, the Tribunal held that since no fresh demand was raised in the reassessment order, the demand notice was unnecessary and the reassessment order dated 28-3-2002 was within the limitation period. 3. Debatability of the Issue Sought to be Rectified Under Section 154: The Tribunal examined whether the issue of adjusting brought forward losses of the Anola unit against its profits was debatable. It concluded that the provisions of sub-section (6) of section 80-I clearly mandated such an adjustment, making it a non-debatable issue. The Supreme Court's decision in Cambay Electric Supply Industrial Co. Ltd. v. CIT supported this view, stating that section 80-I(6) provisions are computation provisions and must be applied before determining the profits of the unit for the year in question. 4. Applicability of Section 155(4) for Amendment: The Tribunal considered whether the rectification order could be sustained under section 155(4), which allows for amendments in subsequent years' assessments following a reassessment order. However, it was determined that section 155(4) specifically deals with adjustments of losses or depreciation under sections 72 to 74A and does not cover adjustments related to section 80-I deductions. The Tribunal noted that the Assessing Officer did not base the rectification on any reassessment order for the earlier year, which is a requirement under section 155(4). Conclusion: The Tribunal quashed the rectification order passed by the Assessing Officer on 28-2-2003 under section 154, holding it invalid due to being time-barred and beyond the jurisdiction of the Assessing Officer. The appeal was allowed with no order as to costs.
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