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TMI Blog1991 (3) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... d under section 211 of the Income-tax Act. Later on, the assessing authority felt that there was an obvious mistake in law in the assessment order in so far as the interest under section 214 was allowed despite the fact that the advance tax was paid after the due date prescribed. A show cause notice was issued proposing to rectify the mistake apparent from the record to which the, assessee objected through his letter dated October 16, 1978. The objection taken by the assessee was that there was no apparent mistake inasmuch as the issue involved the "interpretation of the provisions of the Act" regarding which there was scope for debate. The Income-tax Officer overruled the objection and passed the order of rectification under section 154 on March 20, 1979, disallowing the interest on the sum of Rs. 1,43,000. In coming to the conclusion that there was an obvious mistake of law, the Income-tax Officer relied upon the decision of this court in Kangundi Industrial Works (P.) Ltd. v. ITO [1980 ] 121 ITR 339, which was decided on March 6, 1979, i.e., a few days prior to the rectification order. The Commissioner of Income-tax (Appeals) affirmed the order of the Incometax Officer holding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was of no consequence because, the judgment of this court merely declares the law and the law so declared must be deemed to be the correct law even on the date of passing the assessment order. Learned standing counsel points out that the Tribunal is not justified in referring to the decision of some other High Court, viz., the Gujarat High Court in Bharat Textile Works v. ITO [1978] 114 ITR 28, decided on February 22, 1978, in order to say that the issue was debatable one. On the other hand, it is contended by learned counsel for the respondent-assessee, Sri Y. Ratnakar, that there is neither a mistake in the assessment order nor is the mistake, if any, a patent or obvious mistake. To support his contention that the subsequent decisions do not afford justification for invoking the powers under section 154, learned counsel cited certain decisions of the Calcutta and Madhya Pradesh High Courts. Mr. Ratnakar has also referred to the following proviso introduced in section 211 of the Income-tax Act with effect from April 1, 1988, and says that the said proviso being clarificatory in nature, shall be given effect to from the very inception of the Act : "Provided that any amount pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 207 to 213". It was also held that, for the purpose of section 214, it is immaterial whether the assessee is a defaulter under section 218 and becomes liable for penalty by reason of failure to pay the advance tax on the due date. As things now stand, the judgment of this court in Kangundi Industrial Works (P.) Ltd. v. ITO [1980] 121 ITR 339 stands aloof from the company of a host of other decisions of various High Courts. Faced with this situation, when a similar issue regarding the scope of section 214 came up for consideration, a Division Bench of this court had referred the issue for consideration by a Full Bench. (Vide reference order dated March 10, 1988 in R. C. No. 124 of 1985). The long array of decisions referred to above bear ample testimony to the controversy and debatable nature of the issue. In this context, it would be appropriate to make mention of the decision of this court in CIT v. Ramagouda Satyam Reddy and Co. [1988] 172 ITR 491. In that case, the question was whether the advance tax paid beyond the due date but within the relevant year could be deducted from the tax payable for the purpose of calculating the penalty under section 271(1)(a). The measure of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade within the financial year though belatedly. The question then is whether with the pronouncement of the decision of this court in Kangundi Industrial Works (P.) Ltd. v. ITO [1980] 121 ITR 339 which the Income-tax Officer had followed, the issue ceased to be controversial or debatable. Our answer is in the negative. We have already adverted to the decisions of various. High Courts both prior and subsequent to the judgment of this court taking a view different from that of this court. We have also referred to the fact that, in view of the catena of decisions, this court prima facie felt that the matter required reconsideration and hence referred the same to the Full Bench (Vide reference order date March 10, 1988, in R. C. No. 124 of 1985). There is no decision of the highest court of the land on the subject. Thus, the legal position had been and still remains in a nebulous state. We have already made a reference to another judgment of this court in CIT v. P. Ramagouda Satyam Reddy and Co. [1988] 172 ITR 491, which had struck a different note while interpreting more or less similar language employed in the Explanation to section 271(1)(a). This casts a further cloud on the corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses the patent error permeating the assessment order and, therefore, the Incometax Officer was well within his authority in rectifying the assessment order based upon a binding decision of this court. He develops his argument by saying that a judicial decision does not make the law but it only declares the existing legal position and, therefore, its effect dates back to the day of passing the assessment order. In support of this line of argument, he has cited the decisions of the Gauhati High Court in CIT v. Assam Automobile and Accessories Agency [1978] 111 ITR 411, of the Punjab and Haryana High Court in CIT v. Mohan Lal Kansal [1978] 114 ITR 583, of the Allahabad High Court in Devendra Prakash v. ITO [1969] 72 ITR 151 and of the Bombay High Court in Walchand Nagar Industries Ltd. v. V. S. Gaitonde, ITO [1962] 44 ITR 260. As against these decisions, learned counsel for the assessee, Sri Ratnakar, has cited the judgments of the Calcutta High Court in V. R. Sonti v. CIT [1979] 117 ITR 838 and Jiyajeerao Cotton Mills Ltd. v. ITO [1981] 130 ITR 710 and of the Madhya Pradesh High Court in CIT v. Jagannath Narayan Kutumbik Trust [1983] 144 ITR 526. We do not think that the decisions ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in CIT v. Jagannath Narayan Kutumbik Trust [1983] 144 ITR .526 (MP), the Revenue itself contended before the Madhya Pradesh High Court that the assessee's entitlement to interest under section 214 was a controversial and debatable issue and the power under section 154 could not be invoked. The assessee contended otherwise. The roles have been reversed in the instant case. The Allahabad High Court in Bhauram Jawahirmal v. CIT [1980] 121 ITR 487, while negativing the contention that the mistake revealed in an order of assessment on the basis of a judgment of the High Court rendered subsequently will, under no circumstances, constitute a mistake apparent from the record, made a pertinent observation that it would be difficult to lay down the circumstances under which a mistake discovered in an assessment order on the basis of a subsequent judgment of the High Court would be a mistake apparent on the record. Mr. Ashok, learned standing, counsel, then relies upon the well-known judgment of the Supreme Court in Venkatachalam (M. K.), ITO v. Bombay Dyeing and Manufacturing Co. Ltd. [1958] 34 ITR 143 and contends that the principle is the same, whether it is a case of retrospective l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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