Commissioner of Income Tax vs Bhooratnam and Co.

S.V. Maruthi

This petition is filed by the Revenue u/s 256 of the Income Tax Act, 1961 (for short "the Act").

The facts in brief are as follows :

The assessee-firm was engaged in the business of manufacture and supply of RCC spun pipes and PSC concrete pipes. The assessee also undertook the work of laying of RCC pipes and PSC concrete pipes. For the assessment years 1987-88 and 1988-89, the assessee was allowed investment allowance in a total sum of Rs. 10,22,341. The assessee claimed set-off of unabsorbed allowance against income for the assessment year 1989-90. The said unabsorbed allowance was set off against the income for the assessment year 1989-90. The said claim was accepted by the Assessing Officer while framing the assessment. But later, he initiated action u/s 154 of the Act proposing to withdraw the unabsorbed investment allowance relying on the judgment of the Supreme Court in the case of Commissioner of Income Tax, Orissa and Others Vs. N.C. Budharaja and Company and Others, . Accordingly, he passed the consequential order modifying the assessment made for the assessment year 1989-90 by withdrawing the set-off of unabsorbed investment allowance of the earlier years. On appeal, the Commissioner of Income Tax (Appeals) found that the judgment in Commissioner of Income Tax, Orissa and Others Vs. N.C. Budharaja and Company and Others, is not applicable to the facts of the case. On further appeal to the Tribunal, the Tribunal held that the Income Tax Officer in exercise of the power u/s 154 of the Act can only rectify the mistakes which are apparent from the record and he cannot go deep into the subject and upheld the order of the Commissioner of Income Tax (Appeals). The Tribunal also refused/rejected the petition filed by the Revenue u/s 256(1). Hence, the Revenue is before us u/s 256(2) of the Act.

Section 154 of the Act empowers the Income Tax authority to rectify any mistake apparent from the record. Admittedly, in this case, the Income Tax Officer exercised the power u/s 154 relying on the judgment of the Supreme Court in Commissioner of Income Tax, Orissa and Others Vs. N.C. Budharaja and Company and Others, . Interfering with the assessment order relying on a judgment of the Supreme Court cannot be said to be rectifying the mistake apparent on the record. On the other hand, it is an order on the merits taking a different view relying on the judgment of the Supreme Court. Therefore, we agree with the view expressed by the Tribunal that the Income Tax Officer should not have rectified the assessment order u/s 154 of the Act. The petition is, therefore, dismissed.

No costs.