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TMI Blog2007 (4) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... 971 (8) TMI 3 - SUPREME COURT] that what can be rectified u/s 154 is the error which is apparent on the face of the record and mistake apparent from the record. If the issue is debatable, then the tax authority has no jurisdiction to grant relief u/s 154. Admittedly, both the decisions i.e., United Commercial Bank s case [ 1999 (9) TMI 4 - SUPREME COURT] and Nedungadi Bank Ltd. s case [ 2002 (11) TMI 29 - KERALA HIGH COURT] are relating to the banking companies and not relating to the non-banking financial companies. The first question will be whether the ratio of the said decisions is applicable to the non-banking financial company. In our opinion, this is a debatable issue. Moreover, on the perusal of the order of the CIT (Appeals), we find that the CIT (Appeals) has reviewed his own order u/s 154 and that is not permissible. We, therefore, cancel and set aside the order of the CIT (Appeals) and allow the revenue s appeal. Validity Of Assessment u/s 147 - HELD THAT:- Nothing has been brought on record by the Assessing Officer that he had some other information and the Assessing Officer has proceeded to complete the assessment on the basis of notice issued u/s 148 only fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see s own case for the assessment years 1997-98 and 1998-99 being ITA Nos. 930 and 931/Coch./2004 vide order, dated 28-3-2006. The ld. Departmental Representative Smt. A.S. Bindhu for the revenue fairly conceded that this issue is decided by this Tribunal in favour of the assessee as submitted by the ld. AR. 4. We find that a similar issue has come for the consideration of this Tribunal in assessee s own case as stated supra wherein it is held as under: "6. We have, heard rival submissions and considered the facts and materials on record. In the latest decision of the Madras High Court in the case of CIT v. Annamalai Finance Ltd., the Hon ble Madras High Court has held as under: On a plain reading of section 32 and Entry III (2)( ii ) in Appendix I to the Rules, it is clear that it is the end-user of the specified asset which is relevant for determining the percentage of depreciation. Section 32 requires that the asset should be used for the purpose of the assessee s business and the entry in the Appendix refers to the user it should be put to. Once it is accepted that the leasing out of the vehicles is one if of the modes of doing business by the assessee and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 2,61,73,755 which was processed under section 143(1)( a ). No assessment was made under section 143(3), but subsequently the Assessing Officer initiated proceedings under section 147 of the Act and issued notice under section 148 to the assessee on 25-3-2003. It was noticed by the Assessing Officer that the assessee has received an amount of Rs. 5,50,000 as interest from tax-free bonds which is shown as income in the profit and loss account and the assessee has claimed the said entire amount as exempt. The Assessing Officer relied on the decision of the Hon ble Supreme Court in the case of CIT v. United General Trust Ltd. [1993] 200 ITR 488 and made the disallowance of Rs. 27,500 which is 5 per cent of the interest income and made the addition to the total income of the assessee. 7. The assessee challenged the impugned order of the Assessing Officer before the CIT (Appeals) by taking the contentions ( i ) challenging the proceedings initiated under section 147 and ( ii ) on merits in respect of the disallowance. The CIT (Appeals) accepted the assessee s contention that the reassessment proceedings under section 147 are without any jurisdiction relying on the following pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 43,61,888 as a dividend which, was reflected in the profit and loss account, but in the computation of the taxable income, the assessee has claimed the entire dividend income as exempt. The Assessing Officer therefore, proceeded to make disallowance in respect of the expenditure relatable to the earning of the exempted dividend income and made the disallowance at 5 per cent of the dividend income and made addition to the income of the assessee. 12. The assessee challenged the impugned order of the Assessing Officer on this issue before the CIT (Appeals). The CIT (Appeals) disposed of the assessee s appeal for the assessment year 2000-01 by common order dated 30-9-2004 for the assessment years 1999-2000 and 2000-01 deleting the addition of Rs. 2,18,094. While deciding this issue in favour of the assessee for the assessment year 2000-01, the CIT (Appeals) gave the following reasons : "5. I have considered the position of law as laid down by the Punjab and Haryana High Court in the above cases. With reference to the issue before me for making the disallowance by the Assessing Officer for Rs. 27,500 and Rs. 2,18,094 for assessment years 1999-2000 and 2000-01 within, the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 30-9-2004 and had come to a definite finding that he had no reason to disagree with the conclusion and finding given by the Assessing Officer, and the present order is without considering the fact that the decisions quoted by the assessee are not at all applicable to the facts and circumstances of this case and that the CBDT Circular No. 599 is applicable only in the case of banks, whereas the assessee is a non-banking finance company." 15. The assessment of the assessee was completed under section 143(3) vide order dated 26-3-2003. The Assessing Officer made three different additions to the total income of the assessee and one of them was in respect of the depreciation on the investment of Rs. 6,11,204. 16. The assessee challenged the said addition before the CIT (Appeals), but the CIT (Appeals) confirmed the addition by giving the following reasons: "7. I have carefully considered the Authorised Representative s arguments and submissions as given in paragraph 6 above. I have also seen the principles of law laid down by the Kerala High Court and Supreme Court relied upon the cases ( supra ) which are entirely indifferent context about the change of method ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant in the current securities is a stock-in-trade, valuation of which have to be made as the closing date of the previous year on the basis of cost or market rate whichever is lower. Normal practices of the CAs while showing the position on the P L Account of the finance company is that either increase or decrease as per the RBI Guidelines is included in the closing stock of plus or minus is reflected separately along with a note etc. To my mind which I still hold that the word depreciation in the Income-tax Act for computing the income is viewed and taken in the context of fixed assets only, and depreciation is allowed on prescribed rates on the particular assets. The truth of matter is that the use of word depreciation by the CA in appellant s case has to be viewed as a misnomer viz., the real meaning and interpretation in the given contexts on the facts of the appellant s case is that there is a decrease in the valuation of the closing stock relating to the current investment which has been represented before me as a depreciation as well as before the Assessing Officer. 3.3 I have gone deeply and applied my mind on the appellant s case and remaining no doubts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erala in the case of Nedungadi Bank Ltd. ( supra ) and also the CBDT Circular No. 599, dated 24-4-1991 and hence the CIT (Appeals) has rightly allowed the claim of the assessee under section 154 of the Act. 20. We are not impressed with the arguments of the ld. CA for the assessee. As far as section 154 is concerned, it does not give power of review to any tax authority. Section 154 reads as under : "154. (1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may, ( a )amend any order passed by it under the provisions of this Act; ( b )amend any intimation or deemed intimation under sub-section (1) of section 143. (1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided. (2) Subject to the other provisions of this section, the authority concerned ( a )may make an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be established by a long-drawn process of reasoning on points on which there may conceivably be two opinions. As seen earlier, the High Court of Bombay opined, that the original assessments were in accordance with law though in our opinion the High Court was not justified in going into that question. In Satyanarayan Laxminaran Hegde v. Mallikarjun Bhavanappa Tirumale, this Court while spelling out the scope of the power of a High Court under article 226 of the Constitution ruled that an error, which has to be established by a long-drawn, process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record - see Sidhramappa Andannappa Manvi v. CIT . The power of the officers mentioned in section 154 of the Income-tax Act, 1961 to correct any mistake apparent from the record is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an error apparent on the face of the record . In this case it is not necessary for us to spell out the distinction between the expressions error app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As far as the validity of the assessment proceedings is concerned, the CIT (Appeals) was of the opinion that the Assessing Officer had issued notice under section 148 mechanically without having fulfilled the requirements of section 147. He, therefore, quashed the assessment proceedings by giving the following reasons: "4. The reading of this para clearly shows that the Assessing Officer knew at the time of processing the return under section 143(1) that the assessee is in the business of hire purchasing and leasing and not in the business of running vehicles on hire, normal rate of depreciation has been allowed at 20 per cent in earlier years, details of which were available with the Assessing Officer. Nothing prevented the Assessing Officer, therefore, to invoke the provisions of section 154. Having accepted the return, he cannot subsequently change his opinion or rectify a mistake by invoking the provisions of section 147, which inflicts injury of being subjected to repeated scrutiny, re-examination and are harassment to the assessee. Further the same para also shows that on scrutiny of the assessee s accounts, the hire claim of depreciation was noticed. In other words notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uing Ext. P7 notice under section 143(2) of the Income-tax Act as well as Ext. P8 notice under section 142 of the Income-tax Act has embarked upon a roving enquiry on issues which are unconnected with the issue which forms the basis of proceedings initiated under secion 147 of the Act vide Exts. P5 and P6. It is trite law that general enquiry can be made only by issuing notice under sub-section (2) of section 143 within the stipulated period, which in the present case has already expired on 31-3-2003. We have already indicated that it is not the case of the revenue that during the course of proceedings under section 147 of the Act it has come across any material relating to the items mentioned in Ext. P8 suggesting escapement of income under any of those heads mentioned therein. Assistant Commissioner of Income-tax cannot make any fishing enquiry in concluded matters unconnected with the issue on the basis of which proceedings under seciton 147 was initiated as per Exts. P5 and P6. Further, there is no allegation of escapement or under assessment of income either in the reasons recorded or during the course of proceedings, under section 147 of the Act in the notices issued, Exts. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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