2000 (12) TMI 76 - HC - Income Tax

Summary

Issues involved: Challenge to notice u/s 154/155 of Income-tax Act to amend assessment order for increasing liability based on alleged mistake in allowing deduction to Bata Workmen Sickness Benefit Society.

Judgment Details:

Challenge to Notice u/s 154/155:
The petitioner challenged a notice issued u/s 154/155 of the Income-tax Act to amend an assessment order for the assessment year 1982-83, seeking to rectify a mistake apparent from the records in allowing a deduction to the Bata Workmen Sickness Benefit Society. The petitioner argued that the notice is bad in law as the scope of u/s 154/155 is limited to rectifying apparent mistakes on the face of the assessment order. The petitioner relied on legal precedents to support the contention that the notice was not justified.

Scope of Section 154/155:
The petitioner argued that the notice was beyond the jurisdiction of the authority as there was no apparent error on the face of the assessment order. The court examined the provisions of section 154 of the Income-tax Act, emphasizing that rectification can only be done for obvious and patent mistakes. Referring to legal precedents, including a Supreme Court decision, the court held that a debatable issue cannot be rectified u/s 154. The court concluded that the notice was not valid as it aimed to reopen a debatable issue.

Validity of Notice and Merits:
The court considered the arguments presented by both parties and found that the deduction allowed to the petitioner was lawful and justified under section 40A(9) read with section 36 of the Income-tax Act. The court noted that the petitioner had followed the certified standing order for payment to the Bata Workmen Sickness Benefit Society, and the deduction had been allowed in previous assessments without question. Based on the unimpeachable evidence presented, the court held that the notice was illegally issued and set it aside.

Conclusion:
The court ruled in favor of the petitioner, setting aside the notice issued u/s 154/155 of the Income-tax Act. The court found the deduction to be lawful and justified, and the notice to be non est and illegally issued. No costs were awarded, and both parties were directed to obtain copies of the judgment and order from the court.

Judge(s): KALYAN JYOTI SENGUPTA