COMMISSIONER OF INCOME-TAX VS BIMETAL BEARINGS LTD.
2000 P T D 647
[232 I T R 542]
[Madras High Court (India)]
Before K. A. Thanikkachalam and S. M. Siddick, JJ
COMMISSIONER OF INCOME-TAX
versus
BIMETAL BEARINGS LTD.
Tax Cases Nos. 1170 and 1171 of 1980 (References Nos.373 and 374 of 1980), decided on 05/02/1997.
Income-tax---
----Rectification of mistakes--Mistake must be obvious--Date on which tax on self-assessment is due is a debatable issue---Rectification proceedings cannot be taken to deduct tax due on self-assessment while computing capital for purposes of granting relief under S.84---Indian Income Tax Act, 1961, Ss.84, 140A & 154.
When there is a mistake apparent from the records, section 154 of the Income Tax Act, 1961, would apply. The mistake apparent on the record must be an obvious and patent mistake and not something, which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions.
For the purpose of granting relief under section 84 .of the Act, the Income-tax Officer in the original assessment failed to deduct the self assessment tax which was due on the date when the returns were filed. Hence, he invoked the provisions of section 154 and rectified the mistake and deducted tax due as a debt in the capital base for the purpose of granting relief under section 84. The Appellate Assistant Commissioner and the Tribunal, however, held that section 154 could not be applied. On a reference:
Held, that in both the assessment years 1966-67 and 1967-68, the assessee was liable to pay self-assessment tax under section 1.40A of the Act. According to the Department, self-assessment tax would become due on the date when the return was filed under section 139. Section 140A does not say that the self-assessment tax is payable on the day when the return was field under section 139 of the Act. In fact it says that the Self-Assessment tax is payable Within 30 days from the date of furnishing the return under section 139. Therefore, a reading of section 140A and rule 19(3), sub clause (a) to the proviso there under would show that the question as to where tax payable under section 140A would first become due, is highly debatable and something, which could be established only by a long drawn. process of reasoning. Therefore, the Tribunal was correct in saying that section 154 was not applicable in the instant case.
C.V. Rajan for the Commissioner.
P,P.S. Janarthana Raja for the Assessee.
JUDGMENT
K. A. THANIKKACHALAM, J.----In compliance with the direction given by this Court in T.C.P. Nos. 58 and 59 of 1978, dated November 9, 1978, the Tribunal referred the following question,. for the assessment years 1966-67 and 1967-68, for the opinion of this Court, under section 256(2) of the income Tax Act, 1961 (hereinafter referred to as the "Act"):
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the mistake sought to be rectified by the Income-tax Officer under section 154 of the Income-tax Act was not an apparent one in the case of the assessee for the assessment years 1966-67 and 1967-68?"
In the case of this assessee, the assessment for the assessment year 1966-67 was reopened under section 147(b) of the Act and the revised assessment was made. Subsequently that order was rectified for granting further depreciation allowance for certain assets. Later on, the Income-tax Officer initiated action under section 154 of the Act, on the ground that there was a mistake in the regular assessment itself in the computation of capital for the purpose of grant of relief under section 84 read with rule 19. The mistake alleged was that for the earlier assessment year, viz., 1965-66, the assessee filed' its return of income on June 30, 1965 and under section 140A a sum of Rs.12,81,274 became due, that for the assessment year 1966-67 the average liability on July 1, 1964, being the first day of the computation period and the liability on June 30, 1965, being the last of .the computation period amounting to Rs.6,40;637 should have been deducted as a liability from the capital and that this was not done. The assessee objected to the proposal for revising the assessment on the ground that while completing the regular assessment for 1965-66 and 1966-67, the Income-tax Officer had considered the tax liabilities and had mentioned that the tax liabilities need not be taken into account and that, therefore, there was no mistake apparent from the record. The Income-tax Officer rejected the assessee's contention and passed the order under section 154 of the Act. For the next assessment year 1967-68 on the same date, the Income-tax Officer following the reasons mentioned by him in respect of the assessment year 1966-67, recomputed the relief under section 84.
On appeal, the Appellate Assistant Commissioner held that the provisions of section 154 would not apply to the facts of this case, since the issue involved was highly debatable. On further appeal, filed by the Revenue before the Tribunal, it was held that the Appellate Assistant Commissioner was correct in holding that the provisions of section 154 of the Act would not apply to the facts of this case. Accordingly, the Revenue's appeal was dismissed.
Before us, learned standing counsel appearing for the Department, relying upon role 19(3) and sub-clause (a) of the proviso there under, submitted that the tax under section 140A would become due when the payment first became due. According to learned standing counsel even though under section 140A the assessee shall pay the tax so payable within 30 days of furnishing the return, the tax would become due on the day when the payment first became due. Learned standing counsel submitted that there cannot be any debate or long drawn process of reasoning involved in understanding when the tax under section 140A would become due. Hence, it cannot be said that section 154 will not apply to the facts of this case. Inasmuch as the self-assessment tax payment was due as on the last date of the accounting year when the return is liable to be submitted, if it is not paid within that period, the self-assessment tax liability under section 140A of the Act would become a debt, and therefore, cannot be included in the capital base for granting relief under section 84 of the Act. It was, therefore, submitted that the Tribunal was not correct in holding that there is no mistake apparent from the record, warranting application of the provision under section 154 of the Act. On the other hand, learned counsel appearing for the assessee, while supporting the order passed by the Tribunal, submitted that inasmuch as there are two views possible in the matter when the payment of section 140A tax would first become due, section 154 of the Act cannot be invoked.
We have heard both learned standing counsel appearing for the Department as well as learned counsel appearing for the assessee. The fact remains that in both the assessment years 1966-67 and 1967-68 the assessee is liable to pay Self-Assessment tax under section 140A of the Act. According to the Department, self-assessment tax would become due on the date when the return was filed under section 139 of the Act. Such payment of tax would become due on the date of furnishing the return. Even though under section 140A the assessee can pay such a tax within 30 days from the date of filing the return under section 139, it would not mean that the tax would become due first after the expiry of 30 days.
For the purpose of granting relief under section 84 of the Act, the Income-tax Officer, in the original assessment, failed to deduct the self assessment tax which was due on the date when the returns were filed. Hence, he invoked the provisions of section 154 of the Act and notified the mistake and deducted the tax due as a debt in the capital base for the purpose of granting relief under section 84 of the Act.
The point for consideration is, whether section 154 of the Act would apply to the facts of this case.
When there is a mistake apparent from the records, section 154 of the Act would apply. The mistake apparent on the record must be an obvious and patent mistake and not something, which can be established by a long drawn process or reasoning on a point on which there may be conceivably two opinions. In the present case, admittedly, the self-assessment tax under section 140A of the Act for both the assessment years under consideration was not paid on the date of filing- the return under section 139; presumably section 140A tax might have been paid within 30 days from the date of furnishing the return. 'This can be vouchsafed, since there was no penalty proceeding for non-payment of tax under section 140A.
Section 140A of the Act as originally inserted by the Finance Act, 1964, with effect from April, 1, 1964 stood thus-
"140A. Self-Assessment.--(J) Where a return has been furnished under section 139 and the tax payable on the basis of that return as reduced by any tax already paid under any provision of this Act exceeds rupees five hundred, the assessee shall pay the tax so payable within thirty days of furnishing the return. "
Therefore, under section 140A, the assessee can pay the self assessment tax within 30 days after furnishing the return under section 139 of the Act. Now it remains to be seen whether the self-assessment tax would become due soon after the filing of the return under section 139 or after the expiry of 30 days given for payment of self-assessment tax. Rule 19(3), sub-clause (a) of the proviso there under states that "in the case of any advance tax due under the provisions of the Act or of any tax payable under section 140A or under section 141, on the date on which, under the provisions of section 211 or section 212 or section 213 or section 140A or section 220, as the case may be, the payment first-becomes due." Now what is to be considered is, when the payment first became due, payable under section 140A of the Act. Section 140A did not say that the self-assessment tax is payable on the day when the return was filed under section 139 of the Act. In fact, it says that the self-assessment tax is payable within 30 days from the date of furnishing the return under section 139 of the Act. Therefore, a reading of section 140A and rule 19(3), sub-clause (a), to the proviso there under would go to show that the mistake which occurred in the present case is not apparent, obvious or patent, to warrant application of section 154 of the Act. The tax payable under section 140A would first become due at what point of time is highly debatable and something, which can be established only by long drawn process of reasoning. Therefore, .the Tribunal was correct in saying that section 154 of the Act will not be applicable to the facts of this case. In view of the foregoing discussion we answer the question referred to us in the affirmative and against the Department. No costs.
M.B.A./3280/FCReference answered