COMMISSIONER OF INCOME-TAX VS GANGARAM CHAPOLIA & CO.
1992 P T D 1066
[Orissa High Court (India)]
[187 ITR 594)
Before S. C. Mohapatra and J.M. Mahapatra, JJ.
COMMISSIONER OF INCOME-TAX
versus
GANGARAM CHAPOLIA & CO.
S.J.C. Nos. 28 and 29 of 1980, decided on 19/07/1990.
Income-tax--
----Rectification of mistakes---Condition precedent---Opportunity to assessee to be heard to be given---Order passed without giving assessee an opportunity to be heard is a nullity.
The assessment orders on a firm for the assessment years 1968-69 and 1969-70 were passed on July 16, 1971, and October 26, 1971, respectively. The Income-tax Officer later discovered errors in his calculation of interest under sections 139 and 215 of the Indian Income-tax Act, 1961, and rectified his order on October 20, 1975, and enhanced the interest. The Appellate Assistant Commissioner set aside the order because he found that the Income-tax Officer had not given the assessee an opportunity to be heard. On receipt of the appellate order, the Income-tax Officer passed an order under section 154 on November 18,1976, after giving a reasonable opportunity to the assessee of being heard. The assessee again assailed the orders in appeal on the ground that exercise of power under section 154 was barred by limitation as provided under section 154(7). The Tribunal accepted the contention of the assessee. On reference:
Held that any order passed without following the principles of natural justice is a nullity. The order of the appellate authority could not save the limitation under section 154(7). There was no provision like section 5 of the Limitation Act, 1908, for condoning delay if there was sufficient cause. Accordingly, the Tribunal was correct and the order of rectification passed on November 18,1976, was barred by limitation.
Sovesh Ray for the Commissioner.
A.C. Jena, R. Chimanka and D.P. Kanungo for the Assessee.
JUDGMENT
S.C. MOHAPATRA, J.--Under section 256(2) of the Income-tax Act, 1961, this Court required the Appellate Tribunal to state a case and to refer the following question of law:
Whether the Tribunal was justified in its conclusion that the order of rectification was barred by limitation?"
The assessee was a partnership firm. In respect of the years 196&69 and 1969-70, assessments were made on July 16, 1971, and October 26, 1971, respectively. The Income-tax Officer directed charge of interest under sections 139 and 215 of the Act which were calculated accordingly. Later, however, the Income-tax. Officer found errors in calculation. He; therefore, rectified the mistakes in exercise of his power under section 154 by order dated October 20, 1975, by increasing the amount of interest. Orders of amendment were set aside by the appellate Assistant Commissioner on the finding that the Income-tax Officer did not follow the principles of natural justice by giving reasonable opportunity to the assessee of being heard as required under section 154(3) of the Act. On receipt of the appellate order, the Income-tax Officer passed an order under section 154 on November 18, 1976, after giving a reasonable opportunity to the assessee of being heard. The assessee again assailed the orders in appeal on the ground that the exercise of power under section 154 of the Act was barred by limitation as provided under section 154(7). The appellate authority having dismissed the appeals, the assessee preferred appeals before the Appellate Tribunal which accepted the contention of the assessee. The Revenue filed applications under section 256(1) which being rejected, applications under section 256(2) were filed on the basis of which a statement was called for on the aforesaid question.
Limitation for exercise of power under section 154 of the Act has been provided in section 154(7). During the relevant period it read as follows:
"Save as otherwise provided in section 155 or subsection (4) of section 186. no amendment under this section shall be made after the expiry of four years from the date of the order sought to be amended."
The dates of orders which were amended being July 16, 1971 and October 26, 1971 the period of limitation as provided under section 154(7) would expire on July 16, 1975, and October 26, 1975. Orders of the Income-tax Officer sought to be challenged are dated November 18, 1976. On the face of it, the orders are barred by limitation.
Learned standing counsel submitted that the orders of amendment were actually passed within the period of limitation of 4 years from October 16, 1971. Even if the contention of learned standing counsel is accepted, the amendment of the order dated July 16, 1971, is barred by limitation.
Learned standing counsel submitted that the orders being set aside on appeal only on the ground of violation of the principles of natural justice, the subsequent order would not be governed under section 154(7). This is not acceptable. Any order passed without following the principles of natural justice is a nullity. The order of the appellate authority cannot save the limitation under section 154(7). There is no provision like that in section 5 of the Limitation Act for condoning delay if there is sufficient cause. Accordingly, the Tribunal is correct in its conclusion that amendment to the orders dated July 16, 1971, and October 26, 1971, under section 154 of the Act is barred by limitation under section 154(7) of the Act.
In view of the aforesaid discussion, the answer to the question is made in the affirmative, against the Revenue and the Tribunal was justified in its conclusion that the order of rectification was barred by limitation. There shall be no order as to costs.
J. M. MAHAPATRA, J.--I agree.
M.B.A./1583/T??????????????????????? ??????????????????????? ??????????????????????? ??????????? Reference answered