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TMI Blog2021 (6) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of Income Tax Act and thus the respondent has no jurisdiction to issue notice and consequently, the impugned notice is liable to be set aside. However, the fact remains that the writ petitioner filed a reply to the notice in writing on 09.07.2018. 3. The learned counsel appearing on behalf of the petitioner strenuously contended that the case on hand is a classic case, where there is an error apparent on exercise of jurisdiction by the respondent under Section 154 of the Income Tax Act. Further the respondent has not considered the facts and circumstances as well as the points raised in the reply by the petitioner for initiation of Rectification Proceedings under Section 154 of the Income Tax Act. The entire exercise is done beyond the scope of the provision under Section 154 of the Act and thus the impugned order is unsustainable. 4. The learned counsel for the petitioner solicited the attention of this Court with reference to the notice issued under Section 142 (1) of the Income Tax Act on 27.01.2015 of the annexure to the said order states that specific reply is given to the each of the queries and furnish details. Item 19 and 20 reveals that as per Provisional Statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with Section 264 of Income Tax Act, 1961, the Authorities have considered all these aspects elaborately and passed orders on merits and, therefore, the very initiation of proceedings under Section 144 for rectification of mistake is beyond the scope and now the respondent is making an attempt to adjudicate a disputable point, which is impermissible in view of the decisions of the various Courts in this regard. 7. The learned counsel of the petitioner relied on the judgment of the Hon'ble Supreme Court of India, in the case of T.S.Balaram, Income Tax Officer vs. Volkart Brothers reported in [1971] 82 ITR 50 (SC), wherein Apex Court held as follows: "It is a matter for consideration whether the definition contained in S. 2(31) of the Income-tax Act, 1961, is an amendment of the law or is merely declaratory of the law that was in force, earlier. To pronounce upon this question, it may be necessary to examine various provisions in the Act as well as its scheme. Section 113 of the Income-tax Act, 1961 corresponded to S. 17(1) of the Indian Income-tax Act, 1922, but that section has now been omitted with effect from April 1, 1965 as a result of the Finance Act, 1965. From wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... razor blades could be said to be part of 'Iron & Steel Industry' and could come within category (b) of item III (ii) in Part I of Appendix I of Income-tax Rules, 1962 which was a question which required, firstly an interpretation of expression 'other machinery and plant' and, secondly, nature of machinery and plant used by assessee - Held, yes - whether since that would require investigation both of facts as well as interpretation of law, it could not be said that it was an obvious and apparent mistake which was self-evident and did not require either a process of argument or investigation - Held, yes - whether, therefore, proceedings taken under Section 154 were without jurisdiction and further proceedings pursuant to impugned notice had to be quashed ." 9. In yet an another judgment in the case of Coates of India ltd., vs Deputy Commissioner of Income Tax reported in [1995] 214 ITR 498 (Cal), the Calcutta High Court held that "different courts have held that both under Section 143 (1) (a) and Section 154, the Assessing Officer has power to act only when there is no dispute as to fact and law. The very matter which was sought to be rectified under Section 154 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f appeal and, therefore, the present writ petition is to be dismissed on the ground of maintainability itself. 12. The learned Senior Standing Counsel by referring the counter affidavit filed by the respondent have stated that the mistake apparent on record sought to be rectified by invoking Section 154 of the Income Tax Act, is enumerated in Paragraph Nos.5 & 6 of the counter affidavit which reads as under: "5. I submit that for claiming depreciation u/s.32 the petitioner had to file detailed particulars and had to make a specific claim for depreciation allowance, provided that depreciation could not be allowed where the required particulars had not been furnished by the petitioner and no claim for the depreciation had been made in the return. 6. I submit that it is clear that the provision for bad and doubtful debts is under section 36 (1) (viia). Unless amount of bad and doubtful debts is debited to the provision for bad and doubtful debts account and the deduction admissible u/s.36 (1) (vii) is limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account. The language and intention of the legislatur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now consider the scope of Section 154 which denotes rectification of mistake. Section 154 (1) stipulates that " With a view to rectifying any mistake apparent form the record an income-tax authority referred to section 116 may - (a) amend any order passed by it under the provisions of this Act; (b) amend any intimation under sub-section (1) of section 143; (c) amend any intimation under sub-section (1) of section 200A; (d) amend any intimation under sub-section (1) of section 206CB; 17. As rightly pointed out by the learned counsel for the petitioner, by invoking Section 154 of the Income Tax Act, the authority cannot re-adjudicate the facts on merits. Disputable facts and circumstances cannot be adjudicated under Section 154 of the Income Tax Act. The learned counsel has pointed out that such an adjudication would cause prejudice to the interest of the assessee. 18. This Court is of the considered opinion that Section 154 cannot be converted as an appeal for entertaining a ground for adjudication of merits or disputable issues. Thus, the scope of Section 154 is undoubtedly limited with reference to the circumstances narrated under the provision itself. Section 154 unamb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued specifically stating that the mistake apparent from record alone is to be created. Even impugned notice reveals that the nature of mistake proposed to be rectified is clear that the respondent has not taken any steps to adjudicate the disputable issues. Even otherwise also, the petitioner has got ample opportunities to place their grounds before the Authorities Competent and the Authorities are bound to consider the grounds on merits and in accordance with law. The petitioner had already submitted his reply, if necessary, they are at liberty to submit further explanations or documents. 22. With reference to the judgments cited on behalf of the writ petitioner, this Court is of the considered opinion that regarding the observations made by Apex Court of India in the case of T.S.Balaram, Income Tax Officer vs. Volkart Brothers, it was a case where Section 71 of the Income Tax Act, was applicable to the case of the respondent is not free from doubt. Therefore, the Income Tax Officer was not justified in thinking that on that questions there could be no two opinions which was not proved the scope of relevant provisions of the Act under Section 154 of the Income Tax. Thus, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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