9911796707
TMI Blog1985 (5) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the records showed that the penalty under section 271(1)(a) of the Act was wrongly calculated. The assessee was assessed on a total income of Rs. 72,791 in the status of a registered firm. The Income-tax Officer took the view that so far as the penalty proceedings are concerned, the quantum of the penalty is calculated on the tax that would be payable treating the firm as unregistered firm. The Income-tax Officer found that the tax on unregistered firm would amount to Rs. 36,464 and since there was a delay of 50 months, penalty imposable under section 271(1)(a) would amount to Rs. 36,400. However, since the tax on the unregistered firm itself amounted to Rs. 36,464, the Income-tax Officer took the view that the penalty would be limited to 50% of Rs. 36,464 or Rs. 18,232. The Income-tax Officer found that by mistake penalty of only Rs. 2,280 was imposed and so it was a mistake apparent from the record. The Income-tax Officer served a notice on the assessee under section 154/155 of the Act for compliance on July 30, 1970. The assessee chose to remain silent and no written reply was filed. The Income-tax Officer, therefore, rectified the mistake in view of section 271(2) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 543 (Punj) (sic), B.B. Biddappa v. Dy. Commr. of Agrl. LT. [1972] 85 ITR 630 (Mys) and CIT v. K. Adinarayana Murthy [1967] 65 ITR 607 (SC) (sic). It was argued on behalf of the Department that the levy of penalty under section 271(1)(a) of the Act and the rectification of the quantum of penalty under section 154 of the Act are two different matters and in an appeal against an order under section 154, matters relating to the very imposition of penalty under section 271(1)(a) of the Act could not be considered. The Tribunal held that it is well settled that there is no inherent right of appeal against an order and the right of appeal arises only when it is expressly conferred by the statute. The Tribunal observed that looking at the scheme of section 246 of the Act, it appears that in an appeal under a particular sub-section of section 246, matters falling under another subsection of the said section cannot be agitated because separate rights of appeal have been provided against separate orders in the list enumerated in the said section. For this purpose, the Tribunal relied on the decisions reported in Gaurishankar Kedia v. CIT [1963] 49 ITR 655 (Bom) and M. M. Muthuwappa v. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , did not argue before us that the rectification under section 154 of the Act could not be made as it was not a mistake apparent from the record and that it required detailed investigations or long-drawn debate and process of reasoning. This argument which was advanced before the Tribunal has been given up before us and so it cannot be doubted that now it has to be held that it was a case of a mistake apparent from the record which could be rectified under section 154 of the Act. The only argument of Mr. K. N. Jain, on behalf of the assessee, was that when the penalty order has been rectified, then the original penalty order has been substituted by the rectified order of penalty and so the assessee has a right to challenge the levy of penalty under section 271(1)(a) of the Act. The first question which arises for consideration in this case is whether the provisions of section 154 of the Act were rightly applied for levying enhanced penalty by relying on the provisions of section 271(2) of the Act. It is evident that for the assessment year 1963-64, the Income-tax Officer originally imposed a penalty of Rs. 2,280 for the delay in filing the return and there was no appeal against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequently, whether the sub-section finds a place as a separate sub-section or finds place as a part of section 271(1), the language is clear and categorical. It cannot be doubted that if the penalty under section 271(1)(a) was imposed for the default by a registered firm, the penalty should have been calculated as provided under section 271(2) and if the penalty is imposed under a mistake ignoring the provisions of section 271(2) of the Act, then it cannot be doubted that it is a mistake of law committed by the authority levying the penalty and so it is a mistake apparent from the record and it can be rectified under section 154 of the Act. It has been held in the case of CIT v. Rajnagar Tea Company Ltd. [1973] 87 ITR 669 (Cal) that a " mistake apparent from the record" may be a mistake of law or of fact, but it must be a clear (apparent) or self-evident mistake and that if the discovery of a mistake calls for elaborate investigation either as to the legal position or the facts involved, it would not be a mistake apparent from the record. It also appears from this decision that in a case where two views are possible, you cannot take one of those views and proceed to rectify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he is not entitled to challenge that no penalty is imposable under section 271(1)(a) of the Act. Mr. Rajgarhia has submitted that the penalty under section 271(2) of the Act is the only method of calculation and it is not as if the penalty has been imposed for the first time under section 271(1)(a) of the Act. Mr. K. N. Jain has relied on the case of CCT v. North Ramgarh Coal Company Private Limited [1974] 33 STC 469, which is a decision of the Patna High Court, where it has been held that the power of review conferred on the Deputy Commissioner under s. 32 of the Bihar Sales Tax Act, 1959, is distinct from the appellate power conferred on him under section 30 of the Act. It has also been held in this decision that if a review is allowed and any order passed in appeal is changed, then a revision would be competent before the Tribunal not from the order of review but from the fresh and substituted order passed in appeal. It has also been held in this decision that when a review is dismissed, then the order rejecting the review remains an order, pure and simple, passed under section 32 of the Act and by construction, it is not possible to treat such an order as an order passed, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew assessment of firm or association of persons is ordered to be made, the Appellate Tribunal may authorise the Income-tax Officer to amend accordingly any assessment made on any partner of the firm or any member of the association. The facts of this case are not applicable to the facts before me. There are various decisions to the effect that no appeal lies against the order of rectification under section 35 of the 1922 Act, even though the rectification under section 35 of the 1922 Act enhances the amount of tax. It has been held in the case of Mandal Ginning and Pressing Co. Ltd. v. CIT [1973] 90 ITR 332 (Guj), that when an order of rectification is passed under section 35(1) of the 1922 Act, it undoubtedly rectifies the assessment under section 23 and is a part of the procedure for ascertainment and imposition of tax liability, but the enhanced tax liability which results owes its validity to the exercise of power under section 35(1) and not to the exercise of power under section 23. It has also been held in this decision that there is no mandate that when the Income-tax Officer rectifies an assessment under section 35(1), he must follow the procedure laid down in sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 34(1)(a) of the 1922 Act read with section 22(2) was served on the assessee. The assessee did not furnish any return and the Income-tax Officer made an assessment to the best of his judgment under section 23(4) of the 1922 Act. When a notice of demand was issued, the assessee applied under section 27 to have the assessment cancelled. That application was dismissed. No appeal was filed by the assessee against that order under section 27. He, however, filed an appeal against the order of assessment made under section 23(4) of the Act, but that appeal was dismissed. On further appeal, the assessee questioned the jurisdiction of the Income-tax Officer to invoke section 34 and contended further that he did not carry on any business in Bombay. It was in those circumstances that the Bombay High Court held that the appeal which the assessee preferred against the best judgment assessment under section 23(4) of the 1922 Act was necessarily confined to the questions regarding the correctness of income determined and correctness of the tax assessed and the Tribunal was, therefore, justified in not dealing with the contentions of the assessee as regards the validity of the proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
