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TMI Blog2011 (12) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... preme court in the garb of seeking rectification - Section 154 does not contemplate review of an order already passed. Further, section 154(2)(b) provides that mistake which has been brought to notice "by the assessee"could be rectified. In the present case, application has been signed by assessee's representative. Assessee himself has not brought any mistake to the notice of the A.O. A representative can represent the assessee but he cannot substitute the assessee for all intent and purpose. - Decided against the assessee. - IT APPEAL NOS. 878 TO 887 (CHD.) OF 2011 - - - Dated:- 29-12-2011 - H.L. KARWA, MEHAR SINGH, JJ. Akhilesh Gupta for the Respondent. ORDER 1. The above captioned appeals filed by the assessee appellants are directed against the common order passed by the CIT(A) on 01.07.2011 u/s 250(6) of the Income-tax Act, 1961 (in short 'the Act'). 2. Both the facts of the cases and the grounds of appeal taken in the present bunch of appeals are identical. Therefore, we find it convenient to dispose of the present bunch of appeals by consolidated order for the sake of convenience. 3. As the grounds of appeal and facts of the case in respect of all these ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see as per the necessary claim made by the assessee in this regard. Under the first proviso to the newly substituted Section 143(1), w.e.f. June 1, 1999 except as provided in the provision itself, the acknowledgement of the return shall be deemed to be an intimation u/s 143(1) where, (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is pertinent to mention here that u/s 143(1), AO does not have power or jurisdiction to make any adjustment to the income disclosed by the assessee. 7. The provisions of Section 154 of the Act and the provision of Section 143(1) are distinct and different in nature and scope. The provisions of Section 154 are applicable where there is a mistake apparent from record. The existence of mistake apparent from record in the order of the concerned income tax authority is a statutory condition precedent to invoke the provisions of Section 154 of the Act. Rectification proceedings as contemplated u/s 154 of the Act cannot be converted into assessment proceedings with a view to making fresh claim, which was not made in the return of income filed by the assessee. The assessee is duty bound to bring on record requisite material or e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable in the assessment record, before the AO, at the time the return of income was processed by the AO. Further, the AO has no jurisdiction u/s 143(1) of the Act to make adjustment to the returned income. In this case, such new material was not examined and considered y the AO at the time of processing the return filed by the appellant. Thus the intended rectification requires interpretation of the provisions of Section 28 of the Law acquisition Act, 1894, Section 154 and 143(1) of the Income-tax Act, 1961 and determination of existence of foundational facts needs detailed investigation and verification and, hence, the case of the appellant patently falls beyond the ambit of the provisions of Section 154 of the Act but is the subject matter of scrutiny assessment within the meaning of Section 143(3)or reassessment u/s 147 r.w.s. 148 of the Act. In short, there does not exist any mistake in the intimation issued by the AO u/s 143(1) of the Act, much less the mistake apparent from record. Accordingly, such alleged mistake is not self-evident and consequently, cannot be rectified u/s 154 of the Act. This view is duly fortified by the decision of the Tribunal, jurisdictional High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds of Shri Jai Singh v. ITO, ITA No. 913/Chd/2011. 2. In ITA No. 913/Chd/2011, the assessee has taken the following grounds of appeal:- 1. That order passed u/s 250(6) of the Income-tax Act, 1961 by the ld. CIT(A), Panchkula is against law and facts on the file in as much she was not justified to arbitrarily hold that action of the AO in holding that rectification is not possible is justified. 2. That she gravely erred in holding that as the issue of taxability of interest on compensation has traveled up to Hon'ble Supreme Court, the issue is debatable and thus, does not fall within the ambit of rectification u/s 154. 3. At the time of hearing of appeal bearing ITA No. 913/chd/2011, 914/Chd/2011 and 915/Chd/2011, it was submitted by the ld. authorized representative for the assessee that the ld. CIT(A) has passed a common order on 1.7.2011 disposing of 63 appeals filed by the assessee. It was further submitted by him that all the relevant details including copy of application filed u/s 154 on behalf of the assessee, sheet of computation of assessable income and TDS certificates dated 5.2.2007 issued by the Land Acquisition Officer have been filed in the case of Shri Balvin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 864/Chd/2011 contains a copy of the application filed by Shri Shiv Singla, authorized representative for the assessee which reads as under:- "To The Income Tax Officer, Ward-3, Ambala Sub:- Rectification u/s 154 in the case of Shri Bhupinder Singh S/o Shri Gurbaksh Singh r/o Village, Saunda, Distt. Ambala having permanent Account number BTKPS 8321 J for the assessment year 2007-08. Respected Sir, The Assessee is agriculturist and was having agriculture land in village Saunda, District Ambala. The Land was acquired by Land Acquisition Officer. Assessee has received enhanced compensation of Rs. 6,70,583.00 and interest of Rs. 14,67,470.00 during the FY 2006-07 as per detail given as under: Cert No. Additional Compensation Interest Total TDS 74 6,70,583 14,67,470 21,38,043 2,41,424 Assessee had filed his income tax return in your office vide return receipt number 6331014296 dated 13.3.2008 declaring his gross total income Rs. 7,29,558.00 in which assessee has claimed exemption u/s 10(37) to the tune of Rs. 6,70,583.00 being enhanced compensation and balance Rs. 58,975.00 as interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat interest on enhanced compensation was shown by the assessee in the year under appeal at Rs. 58,974/-. It is equally evident on bare perusal of the copy of application filed u/s 154 on behalf of the assessee that the assessee was seeking not only enhancement of interest from Rs. 58,974/- as shown in the return of income to Rs. 14,67,470/- and its inclusion in the enhanced compensation on the basis of judgment of the Hon'ble Supreme Court in CIT v. Ghansham(HUF) 315 ITR 1 (SC) but also exemption of the whole amount of enhanced compensation including interest u/s 10(37). 8. The Assessing Officer considered the rectification application. He however, rejected the same with the following observations:- 3. Brief background of the case is that the assessee filed his return on 27.3.2008 declaring total income at Rs. 59,100/- after claiming exemption of Rs. 6,75,466/- u/s 10(37) of the Act in respect of the enhanced land compensation. The assessee also claimed credit for TDS amounting to Rs. 82,418/- corresponding to the interest income declared in the return and the enhanced compensation. The case was processed u/s 143(1) as such and refund was also issued accordingly. 4. Thus, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in CIT v. Ghanshyam (supra) and thereafter exempted the same u/s 10(37) as the enhanced compensation itself was exempt u/s 10(37). 11. Referring to the judgment in CIT v. Aruna Luthra, 252 ITR 76 (P H), he submitted that rectification u/s 154 can be carried out on the basis of the judgment of the jurisdictional High Court and the Supreme Court rendered subsequently so as to rectify a mistake apparent from the record and therefore the Assessing Officer ought to have accepted the application filed on behalf of the assessee u/s 154. He submitted that this Tribunal has also held in a bunch of appeals, i.e., ITO, Ambala v. Devi Dayal and Others, ITA No. 561/Chd/2010 relating to assessment year 2007-08 involving identical set of facts, that the entire interest received u/s 28 of the Land Acquisition Act in a particular year was liable to the included in the enhanced compensation received in that year. According to him, the Tribunal has also held that since the enhanced compensation was exempt u/s 10(37), the entire interest received u/s 28 of the Land Acquisition Act, being part of the enhanced compensation would also be exempt from tax. He submitted that the aforesaid order of this Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court provided the mistake sought to be rectified is apparent from the record. Similar view has been taken in other judgments also, e.g., Mepco Industries Ltd. v. CIT, 319 ITR 208 (SC) in which it has been held that a subsequent judgment of the Supreme Court laying down a principle of law will be applicable across the board and rectification can be done on that basis. It is thus no longer res integra that subsequent judgments of the Supreme Court laying down a principle of law are applicable across the board and the rectification can be carried out on the basis of a subsequent judgment of the Supreme Court provided the mistake sought to be rectified is apparent from the record. However, the relevant questions in this behalf are two-fold: one, whether the existence of a rectifiable mistake in the order, which is sought to be rectified, is a condition precedent for exercising rectificatory jurisdiction u/s 154, and two, whether the foundational facts necessary for applying the principle of law laid down by the Supreme Court, which are not self-evident or apparent from the record, can be collected and investigated afresh in the course of proceedings u/s 154 so as to give effect to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only when a mistake in the order is detected. The mistake has to be on the record of the case. The record would include everything on the case file. The return, the evidence and the order are a part of the record. The mistake can be detected from anything on the file. Thus, even in case of an assessment under s. 143(1), it has not to be assumed that there can be no error apparent from the record. As for the decision in the case of Hero Cycles (supra), the rule laid down by their Lordships is that the mistake can be of fact and law. However, the rectification can be made only when "a glaring mistake of fact or law committed by the officer passing the order becomes apparent from the record. Rectification is not possible if the question is debatable". We cannot read this decision to mean that only the order has to be seen and not the record. Thus, the contention raised by the counsel cannot be accepted. It was also contended that the decision of an authority decides the rights of the parties. It vests a right in them. The vested right can't be taken away except when specifically permitted by a retrospective law. There is no quarrel with the proposition. However, what deserves, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ans visible; capable of being seen, obvious; plain. It means "open to view, visible, evident, appears, appearing as real and true, conspicuous, manifest, obvious and seeming." (iii) A mistake which can be rectified is one which is patent, which is obvious and shows discovery and is not dependent or at argument or elaboration. Though a mistake capable of being rectified is not confined to clerical or arithmetical mistake, it does not however, cover any mistake which may be discovered by a complicated process of investigation, argument or proof. The decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification. (iv) Rectification of an order does not mean obliteration of the order originally passed and its substitution by a new order. (v) Where an error is far from self evident, it ceases to be an apparent error and, therefore, not capable of being rectified. 19. It is thus clear from the aforesaid authoritative pronouncements of the Hon'ble Supreme Court as also of the Hon'ble jurisdictional High Court that a rectifiable mistake must exist and that such a mistake shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee in the return of income was received by the assessee u/s 28 of the Land Acquisition Act. A copy of the TDS certificate (No.74) has also been filed before us. It also does not show that the interest was received by the assessee u/s 28 of the Land Acquisition Act. The AO simply acknowledged the return and granted refund to the assessee without carrying out any adjustment so much so that he did not even touch upon the issue of exemption u/s 10(37) as claimed by the assessee in his return of income. These facts clearly establish that no mistake exists in any order, intimation, etc., which can be rectified u/s 154. Rectification u/s 154 pre-supposes the existence of a mistake in an order, intimation, etc., which is sought to be rectified. None of the papers filed by the assessee shows any mistake which can be termed as self-evident or apparent from the record. It is quite possible that the assessee may be able to establish the mistake in the return of income or in the chart showing computation of income or in the TDS certificate issued by the Land Acquisition Officer if it is given opportunity to do so or some material is allowed to be collected. However such a course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the conditions enumerated therein. Therefore the claim of the assessee that interest would be exempt u/s 10(37) would also require examination in the light of the provisions of section 10(37). True, the assessee has claimed exemption u/s 10(37) in respect of enhanced compensation in his return of income but no material has been placed before us to establish that the conditions laid down in section 10(37) have been fulfilled. The claim of the assessee that the interest received by him is exempt u/s 10(37) would therefore require examination of the claim of the assessee in the light of the provisions of section 10(37), which cannot be undertaken in proceedings u/s 154. The judgment in Ghanshyam (supra) does not lay down any such proposition that the interest received under the Land Acquisition Act would always be exempt u/s 10(37). Besides, it is a matter of debate as to whether the impugned interest is at all eligible for exemption u/s 10(37) of the Income-tax Act. Therefore the claim of the assessee regarding exemption of interest u/s 10(37) cannot be considered u/s 154. 24. On careful perusal of the materials available on record, we are convinced that what the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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