Commissioner of Income Tax vs Cochin Malabar Estates and Industries Ltd.

K.S. Paripoornan, J.—This reference is at the instance of the Revenue. The respondent is an assessee to Income Tax. For the assessment year 1973-74, the order of assessment was originally passed on June 10, 1976. The Income Tax Officer later realised that some mistake had crept in the assessment order. He initiated proceedings to rectify the order of assessment u/s 154 of the Act. The respondent-assessee, in writing dated November 9, 1979, agreed to the rectification. The assessment was rectified by order dated November 22, 1979. The respondent-assessee filed an appeal from the said order of rectification before the Commissioner of Income Tax (Appeals). It was partly allowed by order dated August 6, 1981. The Revenue filed an appeal before the Appellate Tribunal and assailed the order passed by the Commissioner of Income Tax (Appeals) stating, among other things, that the appeal filed before the Commissioner of Income Tax (Appeals) itself was incompetent. The Tribunal, by order dated June 7, 1983, negatived this plea and in arriving at the conclusion observed that the consent or agreement by the assessee cannot confer jurisdiction on the Income Tax Officer to pass the rectification order u/s 154 of the Act. Thereafter, at the instance of the Revenue, the Appellate Tribunal has referred the following two questions of law for the decision of this court:

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the consent by the assessee will not confer jurisdiction on the Income Tax Officer to pass rectification order u/s 154 of the Income Tax Act, 1961 ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was no error apparent from the records which could be rectified u/s 154 of the Income Tax Act, 1961 ?"

We heard counsel. We are of the view that the appeal filed by the assessee-respondent before the Commissioner of Income Tax (Appeals) itself is incompetent regarding the allocation of overhead charges in rectification proceedings, since the respondent cannot be considered to be a "person aggrieved" by the order passed u/s 154 of the Act by the Income Tax Officer on this count. On this basis, the order passed by the Income Tax Officer dated November 22, 1979, is unassailable on this count and will stand. This position cannot be and was not seriously disputed at the Bar at the time of hearing. On this basis, we hold that the order passed by the Income Tax Officer will stand and that the Appellate Tribunal was in error in affirming the decision of the Commissioner of Income Tax (Appeals) which interfered with the said order of the Income Tax Officer regarding the allocation of overhead charges. We hold accordingly but decline to answer the questions in the form formulated by the Appellate Tribunal. We are of the view that the proper and correct question that arose for decision before the Appellate Tribunal should be and is hereby formulated as hereunder ;

"Was the appeal filed by the assessee before the Commissioner of Income Tax (Appeals) competent and sustainable in law, regarding the allocation of overhead charges ?"

We answer the question in the negative, against the assessee and in favour of the Revenue and hold that the Appellate Tribunal was in error in affirming the decision of the Commissioner of Income Tax (Appeals) which reversed the order of the Income Tax Officer rectifying the assessment by order dated November 22, 1979, regarding the allocation of overhead charges.

A copy of this judgment, under the seal of this court and the signature of the Registrar, shall be forwarded to the Income Tax Appellate Tribunal, Cochin Bench.