BOMBAY BURMAH TRADING CORPORATION LTD. VS COMMISSIONER OF INCOME-TAX
1992 P T D 1463
[Bombay High Court (India)]
[195 ITR 328]
Before T. D. Sugla and B. N. Srikrishna, JJ
BOMBAY BURMAH TRADING CORPORATION LTD.
Versus
COMMISSIONER OF INCOME-TAX
Income-tax Reference No.386 of 1977, decided on /01/.
th
April, 1991. Income-tax---
----Income-tax Officer---Powers of ITO ---ITO making mistake in calculating tax at the time 'of making original assessment order---Subsequent order of ITO giving effect to Tribunal's order----ITO justified in correcting the mistake-- Does not amount to rectification.
Though, technically, the amount of tax also is determined by the Income-tax Officer, factually, the Income-tax Officer merely computes the total income and gives directions in the order of assessment as to the special features, if any, which have to be borne in mind while calculating/determining the tax payable by the assessee. However, this exercise is done by the office, though the demand notice has to bear the Income-tax Officer's signature. If the Income-tax Officer commits a mistake in calculating the tax at the time of passing the original assessment order, he need not repeat the mistake while giving effect to the order of the Tribunal and non-repetition of the mistake would not amount to rectification of the original assessment order.
Held accordingly, that merely because .the Income-tax Officer had inadvertently failed to reduce the rebate of 30 per cent. on super-tax admissible by 12-1/2 per cent. of the bonus issue while making the initial assessment order, he was not obliged to repeat this mistake when he made the order giving effect to the order of the Appellate Tribunal. [p. 1465) A
CIT v. Himalaya Drug Co. (1982) 135 ITR 368 (All.) and M. Chockalingam and M. Meyyappan v. CIT (1963) 48 ITR 34 (SC) ref.
S. J. Mehta and I. M. Munim for the Assessee.
Dr. V. Balasubramanian, J. P. Devdhar and K. C. Sidhwa for the Commissioner.
JUDGMENT
B. N. SRIKRISHNA, J:---In this reference made under section 256(1) of the income-tax Act, 1961, at the instance of the asses see, the income-tax Appellate Tribunal has referred the following question of law for the opinion of this Court:
"Whether, on the facts and in the circumstances of the case, the Income-tax Officer was justified, while passing his order dated January 4, 1974 (giving effect to the Appellate Tribunal's order dated May, 3, 1972), in revising the quantum of the reduction in rebate in super tax, though the period of 4 years from the date of the original assessment had expired on February 16, 1972?"
The assessment year concerned is 1963-64. The assessee had issued bonus shares of Rs. 1,33,75,000 in the previous year relevant to the assessment year 1963-64. Under the Finance Act, 1963 for such an issue, the rebate of 30 per cent on super-tax admissible was to be reduced by 12-1/2 per cent of the bonus issue.
The Income-tax Officer referred to this aspect in the order of assessment completed by him on February 17, 1968. However, the rebate was actually not reduced while determining the tax payable by the assessee.' The order of assessment was challenged in appeal before the Appellate Assistant Commissioner and thereafter before the Tribunal. The grounds were naturally those on which the assessee was aggrieved and the assessee did get considerable relief as a result of the appellate orders. The Tribunal's order is dated May 3, 1972. The Income-tax Officer gave effect to the Tribunal's judgment by passing an order on January 4, 1974 and computed the assessee's total income at Rs. 73,41,243 as against Rs. 78,34,428 computed originally. He also directed that interest was to be allowed to the assessee under section 244 and that a revised demand notice be issued. While determining the tax payable this time, the mistake committed originally in not reducing the rebate at the rate of 12-1 /2 per cent of the bonus issue was not repeated.
In this context, it may be pertinent to mention that though, technically, the amount of tax also is determined by the Income-tax Officer, factually, the Income-.tax Officer merely computes the total income and gives directions in the order of assessment as to the special features, if any, which have to be borne in mind while calculating/determining the tax payable by the assessee. However, this exercise is done by the officer, though the demand notice has to bear the Income-tax Officer's signature. The controversy herein is thus required to be considered in this background.
In order to appreciate the rival contentions, it requires to be borne in mind that so far as the order passed by the Income-tax Officer on January 4, 1974 giving effect to the Tribunal's judgment dated May 3, 1972 is concerned, the assessee has no grievance. The grievance is against the calculation and determination of tax on the basis of the said assessment order. The assessee's case is that not repeating the mistake in calculating and determining the tax by the Income-tax, Office amounts to a rectification of a mistake and since it is not done within the time limit prescribed, the Income-tax Officer could not have done so. What is necessary to be appreciated is that, while giving effect to the Tribunal's order, the Income-tax Officer is bound to determine the total income in accordance with the Tribunal's order. He is also bound to give special directions, if any, necessary to give effect to the Tribunal's order for determining the tax payable. In the present case, as a result of the Tribunal's order, the assessee's total income was reduced. On the basis of the reduced total income, the Income-tax Officer was bound to calculate and determine the tax payable on the basis of that income and, in accordance with the special features as regards the rates of tax to be applied, if any. This is what the Income-tax Officer has done. In fact, there is no dispute that the calculation/determination of the tax payable by the assessee done by the Income-tax Officer on the basis of the reduced total income is correct.
We fail to see how the order passed by the Income-tax Officer giving effect to the Appellate Tribunal's order amounts to rectification of his earlier mistake. It is not disputed by the assessee's learned counsel that, upon the revised income which was calculated in accordance with the order 'of the Appellate Tribunal, the tax had been correctly calculated by following rightly the provisions of the Finance Act, 1963 which were applicable. What is contended is that the Income-tax Officer, having committed a mistake in calculating the tax at the time of the original assessment order, ought to have repeated the mistake while giving effect to the order of the Appellate Tribunal and that it is not a repetition. of the mistake which amounts to rectification of the initial assessment order. Since this was not done within a period of four years, it was not permissible under the provisions of the Income-tax Act. In our view, this argument is entirely misconceived. Merely because the Income-tax Officer had inadvertently failed to reduce the rebate by 12.5 per cent of the bonus issue while making the initial assessment order---which is admittedly erroneous under the provisions of the Finance Act, 1963---he was not obliged to repeat this mistake when he made the order giving effect to the order of the Appellate Tribunal. In our view, the order passed by the Income-tax Officer on January 4, 1974, is perfectly in accordance with law and does not amount to a rectification order at all. It is nothing more than an order giving effect to the order of the Tribunal in appeal.
Mr. Mehta relied on a judgment of the Allahabad High Court in CIT v. Himalaya Drug Co. (1982) 135 ITR 368 and the judgment of the Supreme Court in M. Chockalingam and Ml. meyyappan v. CIT (1963) 48 ITR 34 (SC). We have been taken through these authorities and, in our opinion, these authorities have no bearing on the issue canvassed before us as both the cases were of actual rectification orders.
In the result, we have no hesitation in answering the question referred to us in the affirmative in favour of the revenue. The question is answered accordingly.
No order as to costs.
M.BA./1634/T Order accordingly.