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TMI Blog1997 (10) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ty passed by him, by mistake, had calculated the amount of penalty leviable at Rs. 4,569, instead of the correct amount of penalty leviable at Rs. 15,064. The mistake has occurred in the order of penalty as the period of default was erroneously taken as four months instead of 16 months. Since this mistake was apparent from the record the Income-tax Officer was of the view that the order of penalty passed by him should be rectified under section 154 of the Act. The Income-tax Officer issued a show-cause notice to the assessee on June 27, 1979, calling for the assessee's objections and in the absence of any explanation from the assessee, the Income-tax Officer rectified the order of penalty by an order dated November 20, 1979, determining the correct amount of penalty at Rs. 15,864. The assessee preferred an appeal challenging the order passed by the Income tax Officer under section 154 of the Act on the ground that there was no mistake in the original order and the Income-tax Officer has no power to deal with the provisions of section 271 of the Act. The Appellate Assistant Commissioner, however, rejected the assessee's contention stating that the mistake in the order under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification he, in effect, levies penalty on the enhanced amount and it is not possible for him to get over the bar of limitation prescribed under section 275 of the Act and he submitted that the penalty levied has serious consequences and since section 271 of the Act is penal in nature, the benefit of doubt must be given to the assessee. The sum and substance of the argument of learned counsel for the assessee is that the source of power on the part of the Income-tax Officer to levy penalty is section 271 of the Act and after the time limit prescribed under section 275 of the Act, it is not open to the Income-tax Officer to levy penalty and rectify the order of assessment by recourse to section 154 of the Act. Learned counsel for the assessee relied upon the decision of the Supreme Court in the case of Mrs. Khorshed Shapoor Chenai v. Asst. CED [1980] 122 ITR 21 and submitted that it is not permissible for the Income-tax Officer to invoke the powers of rectification as larger period is prescribed under section 154 of the Act when section 275 of the Act prescribes a shorter period for the levy of penalty. Mr. C. V. Rajan, learned counsel appearing for the Revenue, on the other han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er order passed by him" occurring in section 154 of the Act brings within its scope every order passed by the Income-tax Officer under the Act and that would necessarily include the order passed by the Income-tax Officer under section 271 of the Act as well. In CIT v. Sri Ramakrishna Motor Transport [1983] 144 ITR 797, the Andhra Pradesh High Court was dealing with a case of the power of the Income-tax Officer to rectify the order cancelling the registration under section 186 of the Act. The Andhra Pradesh High Court held that the power of the Income-tax Officer under section 154(1)(a) of the Act is wide enough to include any order and there is no warrant to apply the principle of ejusdem generis and cut down the amplitude of the power of rectification under section 154(1)(a) to orders of assessment and refund, more particularly in view of the fact that the words "assessment" and "refund" do not constitute a "class" and, therefore, the language employed in section 154 of the Act is wide and brooks no ambiguity. The above decision of the Andhra Pradesh High Court makes it clear that it is permissible for the Income-tax Officer to rectify any order passed by him under the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of the direction of the higher authority in appeal or on revision, or on account of an answer given by the High Court, then, the time limit laid down in section 275 of the Act will not apply. Applying the principles laid down by the decision of this court cited supra, we hold that the provisions of section 275 of the Act would apply only to the case of the first order of penalty passed by the authority. If the order of penalty was passed within the time limit prescribed under section 275 of the Act, it is not necessary to refer to the time limit prescribed under section 275 of the Act, if there are mistakes in the order of penalty. The source of the power of the Income-tax Officer is section 154 of the Act, when he rectifies the order of penalty and only the time limit prescribed under section 154 of the Act would apply, provided other conditions of section 154 of the Act are fulfilled. The decision relied upon by learned counsel appearing for the assessee in the case of Mrs. Khorshed Shapoor Chenai v. Asst. CED [1980] 122 ITR 21 (SC), in our opinion, has no application to the facts of the case. As rightly contended by learned counsel for the Revenue, the Income-tax Officer h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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