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TMI Blog2015 (1) TMI 1167X X X X Extracts X X X X X X X X Extracts X X X X ..... s a strict adherence and respect to avoid any abuse or misuse of the power and conflict in views. The authority of the Court standing on a lower pedestal is bound by the decision of the higher authority or the Court and it is not open to disregard the decision. It does not require any debate on the proposition of law that the principle of res judicata cannot be applied in a matter of taxation because each year’s assessment is final in that year and does not have any bearing at the time of determination of the tax for a subsequent period or other period as held in Installment Supply (P) Ltd. & Another (1961 (5) TMI 53 - SUPREME COURT OF INDIA). It is not a case of the petitioner that the principle of res judicata is applicable in the present case. The CCIT has wrongfully invoked the jurisdiction under Section 154 of the Act by recording an elaborate reasoning in the garb of the mistake apparent from the record and has, in fact, percolate the sense of change of opinion. Furthermore, the CCIT cannot sit as an Appellate Authority over the decision of the Appellate Tribunal. The CCIT is bound by the decision of the Appellate Tribunal which is a higher forum and cannot take a contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blishment of a referral cum teaching hospital with super specialties facilities and the land measuring twenty five acres in the city of Gangtok was allotted on lease. The petitioner subsequently became desirous of establishing an engineering college which was accepted by the state of Sikkim and to facilitate the same, a further land measuring seven acres was allotted in terms of the agreement dated 15th May, 2003. It was further agreed that a sum of ₹ 4.78 crores shall be granted by the department of North Eastern Council of India to purchase the equipments and the Government of Sikkim provided an annual grant to the tune of ₹ 2.5 crores. The said agreement was fully implemented and it is the case of the petitioner that till 2010, an aggregate sum of ₹ 2.82 crores was given by the Government of Sikkim. Subsequently the petitioner applied for registration under Section 12AA of the Income Tax Act, 1961 claiming that the university is substantially owned and financed by the Government of Sikkim. Initially the said application stood dismissed by the competent authority which was carried further to an appellate authority, that is the tribunal, and by a reasoned order d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner filed four separate appeals against the assessment order passed on each assessment years, which was decided by a common judgment dated 29th November, 2011 before the Income Tax Appellate Tribunal and by a common judgment dated 29th November, 2011 all the aforesaid four appeals were allowed and it is categorically held that since all the conditions prescribed under Section 10 (23C) (iii ab) of the Income Tax Act 1961 is satisfied, the income of the assessee is, therefore, exempted from an assessment. The department has challenged the said order before the High Court under Section 260A of the said Act, which is still pending. Amidst the pendency of the aforesaid proceeding, a notice under Section 154 of the said Act is issued by the Chief Commissioner of Income Tax, Jalpaiguri seeking to rectify the mistake in the order passed by the Chief Commissioner of Income Tax to the extent that the petitioner is substantially financed by the Government of Sikkim and by the department of North Southern Council of India. By the impugned order dated 17th January, 2012, the order passed by the CCIT on 12th July, 2010 was rectified by deleting the words the assessee - institution is subst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and obvious mistake and does not require elaborate debate to find the same as held in case of Commissioner of Central Excise, Calcutta -v- ASCU Ltd, Calcutta reported in (2003) 9 SCC 230. He further submits that the efficacy of the judgment is not evaporated even when the same is challenged in a higher forum until it is set aside. The learned Advocate for the respondent on the other hand submits that the principle of res judicata has no manner of applicability in the taxation matter as assessment of each year gave rise to a fresh cause of action. In support of the aforesaid contention, the reliance is placed upon a judgment of the Supreme Court rendered in case of Installment Supply (P) Ltd. Another -v- The Union of India Ors; reported in AIR 1962 SC 53. On the alternative remedy, it is submitted that Section 246(1)(c) of the said Act provides an appeal against the order passed under Section 154 and this Court should not exercise the power of judicial review under Article 226 of the Constitution. He thus submits that the CCIT found the mistakes in the order passed on 12th July, 2010, and rectified the same in invocation of Section 154 of the said Act. Having considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to the case of the first respondent is not free from doubt. Therefore the Income Tax Officer was not justified in thinking that on that question there can be no two opinions. It was not open to the Income Tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under Section 154 of the Income Tax Act, 1961. A mistake apparent on the record must be an obvious and patent mistake and not something which can 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 Laxminarayan Hegde v. Millikarjun 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 appare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein it has been held that a rectifiable mistake is a mistake which is obvious and not something which has to be established by a long-drawn process of reasoning or where two opinions are possible. Decision on debatable point of law cannot be treated as mistake apparent from the record . From the law enunciated in the above noted reports, there is no hesitation to hold that a decision which is erroneous both on fact and law and the decision based on apparent error based on record are two different and distinct situations. The erroneous decision is capable of being challenged before the higher forum but the decision based on a patent error which does not require a long-drawn process of reasoning is amenable to review and rectification jurisdiction, in whatever expression, it is provided in the statute. The review is a creature of a statute which cannot be exercised in guise of an appeal. Unless it is demonstrated from the record that reliance upon a document or the finding on facts are contrary to record which does not require an elaborate scrutiny, same partakes the character of patent error. There lies a distinction between a patent error and change of opinion. The authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority or the Court and it is not open to disregard the decision. The reliance can be placed upon a judgment of the Supreme Court rendered in case of Dunlop India Ltd; (supra) wherein it is held: We desire to add and as was said in Cassell and Co. Ltd. v. Broome [1972] AC 1027 (HL), we hope it will never he necessary for us to say so again that in the hierarchical system of courts which exists in our country, it is necessary for each lower tier , including the High Court, to accept loyally the decisions of the higher tiers . It is inevitable in a hierarchical system of courts that there are decisions of the supreme appellate tribunal which do not attract the unanimous approval of all members of the judiciary But the judicial system only works if some-one is allowed to have the last word and that last word, once spoken, is loyally accepted (See observations of Lord Hailsham and Lord Diplock in Bromme v. Cassell). The better wisdom of the court below must yield to the higher wisdom of the Court above. That is the strength of the hierarchical system. In Cassell v. Broome [1972] AC 1027, commenting on the Court of Appeal s comment that Rookes v. Barnard [1964] AC 1129, was re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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