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TMI Blog1998 (6) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained 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 amendment under sub-section (1) of its own motion, and (b) shall make such amendment for rectifying any such mistake which has been brought to its notice by the assessee, and where the authority concerned is the Appellate Assistant Commissioner, by the Income-tax Officer also. (3) An amendment, which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this section unless the authority concerned has given notice to the assessee of its intention so to do and has allowed the assessee a reasonable opportunity of being heard. (4) Where an amendment is made under this section, an order shall be passed in writing by the income-tax authority concerned. (5) Subject to the provisions of section 241, where any such amendment has the effect of reducing the assessment, the Income-tax Officer shall make any refund which may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions, the set-off was given effect to as a consequence of which the taxable income got reduced and the assessee was given a refund of Rs. 24,367. The assessee is aggrieved by the order of the Tribunal upholding the order made by the Assessing Officer and the question as to "whether the adjustment so effected is a mistake apparent from the record within the meaning of section 154 of the Income-tax Act" has been referred to us for our opinion, at the instance of the assessee. Consequent to the adjustment of the unabsorbed depreciation against the capital gains for the assessment year 1973-74 in terms of that rectification order, the Assessing Officer proceeded to rectify the assessment order for the succeeding year as well. After hearing the assessee and overruling the assessee's objections, the assessment order for the assessment year 1974-75 was rectified resulting in an additional demand for Rs. 36,964. The order made against the assessee under section 104 of the Act also came to be revised under section 155(7) of the Act resulting in an additional demand of Rs. 45,282. The assessee having appealed to the Tribunal against those orders, for the assessment year 1974-75, the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year 1974-75 as well. Section 154 of the Act opens with the words "with a view to rectifying any mistake apparent from the record . . ." The term "record" as noticed earlier is not defined in the section or in the definition section of the Act. For determining the true scope of this provision and the meaning to be properly assigned to the term "record" it is necessary to keep in view the object of the provision and the nature of the power conferred on the authorities under that provision. These are the criteria which the Supreme Court adopted while considering the scope and effect of section 263 of the Act and the meaning to be assigned to the word "record" used in that provision, in the case of CIT v. Shree Majunathesware Packing Products and Camphor Works [1998] 231 ITR 53. The object with which power is conferred by section 154 is as stated in the marginal heading "rectification of mistake". The principal condition for exercising the power under section 154 of the Act is the existence of a mistake in the record. The mistake is not to be a mistake which requires in-depth probing to discover, but is a mistake which is "apparent" from the record. The power conferred by this p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mistake which was rectifiable under section 154. It is no doubt true as submitted by learned counsel for the assessee that even an erroneous order may be given effect to if it is not rectified within the time allowed by law. However, such order cannot be regarded as having become final until the expiry of the period available for such rectification. Learned counsel for the assessee, submitted that unlike section 263, section 154 of the Act does not contain the definition of the word "record". The absence of the definition, however, cannot have the consequence of limiting its meaning to a very narrow and limited sphere of the record of the original proceedings alone. The period of four years prescribed in the section for initiating rectification proceedings is meant to protect the assessee against unduly delayed proceedings for rectification, as also to enable the authorities to have sufficient time within which to give effect to the consequence of any orders which may be rectified or revised or modified when they have a direct bearing upon the assessment order sought to be rectified under section 154(1) of the Act. Such orders would form part of the record which is available f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 157 ITR 342 (Mad), to support her submission that even a wrong order has a finality and unless that finality is disturbed by a process known to law or by a process authorised by law, the rights of the assessee and the Revenue will continue to be governed by the order. That proposition, however, does not assist the assessee as it cannot be disputed that the order of assessment for the year 1974-75 could not have been regarded as having become final before the expiry of the period of four years that was available to the authorities for initiating rectification proceedings. Counsel for the assessee also placed reliance on the decision of the Delhi High Court in the case of Anglo Dutch Paint, Colour and Varnish Works Pvt. Ltd. v. CIT [1986] 157 ITR 614, wherein the Delhi High Court in a case arising under the Indian Income-tax Act, 1922, held that section 35 of that Act did not apply to a case where in consequence of the reassessment for a particular assessment year some changes had to be made in the assessment orders for some other years. That decision also does not assist the assessee as section 154 of the Act is clearly attracted to the case of the assessee herein and it was per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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