Commissioner of Income Tax vs Eklingji Trust

Rajesh Balia, J.—Heard learned counsel for the parties.

This is a reference made at the instance of the Revenue in connection with the proceedings u/s 154 of the Income Tax Act, 1961 (for short "the Act of 1961"), for rectifying the assessment order for the assessment year 1974-75.

The respondent-assessee is a public religious and charitable trust and was claiming exemptions in respect of its income under Sections 11 and 12 of the Act of 1961. The original assessment order in respect of the assessment year 1974-75 was completed on September 27, 1976, by the Income Tax Officer on a total income of Rs. 13,125.

It was found by the Income Tax Officer that part of the income was not applied to the charitable purposes in view of the applicability of Section 15(3). The reasons for this rejection 6f claim to exemption and subjection of the aforesaid sum to tax was that the assessee had carried forward a sum of Rs. 3.50 lakhs advanced to Lake Palace Hotels and Motels (P.) Ltd., Udaipur, at an interest of 5 per cent. per annum and had further advanced a sum of Rs. 1.50 lakhs during the previous year on interest at 10 per cent. per annum. With effect from January 1, 1974, the rate of interest on the advance of Rs. 3,50,000 was also enhanced to 10 per cent. per annum. In the said company Maharana Bhagwat Singh was having substantial interest and he also happened to be the managing trustee of the assessee-trust.

In view of these facts, the Income Tax Officer was of the view that the amount of Rs. 3,50,000 lent by the trust was to a person referred to in Sub-section (3) of Section 13 and the interest being inadequate the market rate of interest was applied at 10 per cent. and the difference of the estimated income, which was considered to be applied for the benefit of such trustee, was accordingly taxed. However, the claim of the assessee for exemption under Sections 11 and 12 in respect of other income was accepted.

Denial of exemption in respect of certain income because of investment made in Lake Palace Hotels and Motels (P.) Ltd., Udaipur, was subjected to appeal before the Appellate Assistant Commissioner who by his order dated January 15, 1977, agreed with the finding of the Income Tax Officer so far as inadequacy of interest charged for the period of nine months on the advance of Rs. 3,50,000 to Lake Palace Hotels and Motels (P.) Ltd. in the period up to December 31, 1973, was concerned. Deposit with the company at the rate of 5 per cent. was held to be inadequate and to that extent the income only was held to be taxable in view of the provisions of Section 13. The appeal in respect of other additions on account of jagir compensation amount was allowed by the Appellate Assistant Commissioner.

It can be noticed here that the factual matrix on the basis of which additions have been made by the Income Tax Officer was that the assessee-trust had advanced a sum of Rs. 3.50 lakhs to Lake Palace Hotels and Motels (P.) Ltd., Udaipur. At the beginning of the year, the pending balance was Rs. 3.50 lakhs which was lent at the interest rate of 5 per cent. per annum. During the year under reference the assessee gave a further loan of Rs. 1,50,000. This loan was advanced at the interest rate of 10 per cent. per annum. Subsequently, with effect from January 1, 1974, the interest rate was increased to 10 per cent. on the existing loan of Rs. 3,50,000 advanced to Lake Palace Hotels and Motels Pvt. Ltd., Udaipur. Thus, in nine months the interest on Rs. 3.50 lakhs has been charged at the rate of 5 per cent. and for the further remaining three months interest at the rate of 10 per cent.

Thereafter, the Income Tax Officer invoked the power u/s 154 of the Act of 1961 for rectifying the assessment for the year 1974-75 in respect of the alleged mistake apparent from the record in disallowing exemption in respect of the income referable to investment made in Lake Palace Hotels and Motels (P.) Ltd. only and subjected to tax only the part of interest to the extent benefit has been deemed to have been transferred to the company in which the managing trustee of the trust has substantial interest in terms of Section 13(3), in order to disallow all other incomes received by way of donations in different funds which was held to be exempted under Sections 11 and 12 of the Act.

The, plea of the assessee against the said action that the issue of eligibility of the entire income to tax was highly debatable, and the mistake, if any, was not rectifiable and, secondly, because the order of the Income Tax Officer dated September 27, 1976, in respect of the assessment of income arising to the trust on account of investment made in the company in which Maharana Chagwat Singh has substantial interest having been subjected to appeal and affirmed by the appellate authority, the order of the Income Tax Officer on the subject-matter merged with the order of the Appellate Assistant Commissioner, thereafter, the Income Tax Officer was left with no jurisdiction to initiate proceedings u/s 154, were not accepted by the Income Tax Officer. An order of rectification was passed on July 17, 1980, bringing the alleged income of the trust, from donation stated to be as per the original assessment, subject to charge of tax. However, a comparative reading of the two orders do not support this statement. It appears that only the income from donation was subjected to tax and such income was earlier not at all included in the total income. How the amount of income from donations has been computed is neither discernible from the original assessment order nor from the rectification order, both of which have been made part of the statement of case as separate annexures.

On appeal before the Commissioner of Income Tax (Appeals) the asses-see raised the same two-fold contentions that there was no mistake apparent from the record and that the matter has already been considered by the learned Appellate Assistant Commissioner and merged into the appellate order, the Income Tax Officer had no jurisdiction. The learned Commissioner of Income Tax (Appeals) agreed with the first contention of the assessee and did not go into the second objection raised by the assessee and allowed the appeal by setting aside the order of rectification of the assessment order. On further appeal by the Revenue, the order of the Commissioner of Income Tax (Appeals) was affirmed. The Tribunal held that the issue raised by the Assessing Officer in rectification proceedings in the circumstances being highly debatable, the jurisdiction has wrongly been exercised.

The Tribunal was of the view that the power of rectification is not the power of reviewing its order on the same matter.

It is in the aforesaid circumstances, the Tribunal on an application being made by the Commissioner of Income Tax has referred the following question of law arising out of its appellate order to this court for its opinion :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that notwithstanding the findings arrived at by the Income Tax Officer in the course of the original assessment that the provisions of Section 13(i)(c) or 13(2)(a) of the Act were applicable, the Income Tax Officer''s failures to deny exemption in terms of Sections 11 and 12 with respect to the assessee-trust''s income was not a mistake rectifiable u/s 154 of the Income Tax Act, 1961 ?"

Learned counsel for the Revenue has strongly contended as has been stated by the Income Tax Officer in his order that since the provisions of Section 13(i)(c) or 13(2)(a) were not taken into consideration at the time of the original assessment which was made merely on the basis of the provision of Section 13(3), it cannot be said that this issue was ever the subject-matter of the appeal and non-consideration of the legal provisions which are applicable to the case amounts to a mistake apparent on the face of the record. Therefore, the order passed by the learned Income Tax Officer was in valid exercise of his jurisdiction and has been correctly made.

Learned counsel for the respondent reiterated both the contentions raised throughout before the Revenue authorities, namely, that the issue involved is highly debatable which could not be the subject-matter of rectification proceedings and that the order of the Income Tax Officer having merged in the order of the Appellate Assistant Commissioner, the Income Tax Officer lost jurisdiction to resort to the power of rectification u/s 154 of the Act.

The contours of jurisdiction u/s 154 are well settled. Section 154 authorises every Income Tax authority to amend any order passed by it under the provisions of this Act with a view to rectifying any mistake apparent from the record. "Mistake apparent from the record" is an expression, which has received judicial interpretation time and again and the courts have held that any mistake which is not obvious, or self-evident or which is to be discovered by effort, or is plausibly debatable cannot be considered to be a mistake apparent from the record. In T.S. Balaram, Income Tax Officer, Company Circle IV, Bombay Vs. Volkart Brothers, Bombay, the principle was laid bare. It was said (page 53):

"The power of the officers mentioned in Section 154 of the Income Tax Act, 1961, to correct ''any mistake apparent from the record'' is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an ''error apparent on the face of the record''."

The court explained what can be termed as a mistake apparent from the record. It said (page 53) :

"A 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 conceivably be two opinions."

In coming to this conclusion, the principle enunciated by the court earlier in spelling" out the scope of the powers of the High Court under article 226 to issue a writ of certiorari in the case of Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale AIR 1960 SC 157, was reiterated.

It is also now well settled that a mistake apparent from the record must be one which is discernible from the existing record and not dependent on discovering new facts after holding enquiry in new proceedings. Therefore, the question which requires investigation into facts not emanating from the record or issues which were not raised and decided by the authority at the inception, cannot be considered to be a mistake apparent from the record nor does Section 154 confer jurisdiction of reviewing one''s own order, akin to the power conferred on a civil court under Order 47 Rule 1 of the Code of Civil Procedure. It is only a mistake which can be said to be self-evident and discernible without arguments or on which possibly there cannot be two opinions that can be said to be a mistake which falls within the ambit of the power of rectification. May be the power of Section 154 is not confined to correct arithmetical or clerical mistakes only but it does not extend either to raise some other contentions but by the very same authority which were not raised in the original order.

The Supreme Court in Master Construction Co. P. Ltd. v. State of Orissa [1966] 17 STC 360, while considering the expression used "mistake apparent from the record", under the provisions of the Orissa Sales Tax Rules, 1947, said (headnote) :

"The error should not be an error which depends for its discovery, elaborate arguments on questions of fact or law. The accidental slip or omission is an accidental slip or omission made by the court. However, wide the expressions in the rule are construed, they cannot countenance a re-argument on merits on questions of fact or law, or permit a party to raise new arguments which he has not advanced at the first instance."

A similar view was expressed by the Supreme Court in connection with the powers of rectification u/s 154 of the Income Tax Act, 1961, with which we are concerned, recently in Commissioner of Income Tax (CNTL), Ludhiana Vs. Hero Cycles Pvt. Ltd., Ludhiana, . Referring to the provisions of Section 154 of the Act of 1961 in Civil Appeal No. 7665 of 1996, out of a batch of petitions decided by the court, it was held that rectification is not possible if the question is debatable. Moreover, the point which was not examined on facts or in law cannot be dealt with as a mistake apparent on the record. It was a case in which in the original proceedings, the Income Tax Appellate Tribunal had not considered the claim of the assessee u/s 35B of the Act of 1961. On an application for rectification made by the assessee, the Income Tax Appellate Tribunal had resorted to the provisions of rectification and allowed the assessee''s claim in respect of matters like coloured albums, export staff u/s 35B of the Act of 1961. It is in those circumstances, the court further said (page 467) :

"Rectification u/s 154 can only be made when a glaring mistake of fact or law committed by the officer passing the order becomes apparent from the record. Rectification is not possible if the question is debatable. Moreover, the point which was not examined on fact or in law cannot be dealt with as a mistake apparent on the record."

If on the anvil of the aforesaid principles the contention of learned counsel for the Revenue is tested it must fail on both alternative grounds.

If the contention of learned counsel is accepted that the issue of exemption u/s 13(1)(c) and 13(2)a) was not at all considered in earlier proceedings, and, therefore, could not have been examined by the appellate order, then the power u/s 154 cannot be resorted to to raise and decide an altogether new issue because that cannot be considered to be s mistake apparent from the record on the principle enunciated in Master Construction Co. (P) Ltd. Vs. State of Orissa and Another, and Commissioner of Income Tax (CNTL), Ludhiana Vs. Hero Cycles Pvt. Ltd., Ludhiana,

On the other hand, if the Assessing Officer is taken to have addressed himself to those questions explicitly or impliedly and decided the question of denial of exemption on account of investment in a concern in which the managing trustee had substantial interest, for an inadequate rate of return, then the claim to exemption in respect of the income of the asses-see, as decided by the order of the Income Tax Officer, was subsequently subjected to appeal by the assessee. On a decision of the appeal, the order of the Income Tax Officer merged with the order of the Appellate Assistant Commissioner and, thereafter, the Income Tax Officer could not have exercised any jurisdiction to amend the order passed by the Appellate Assistant Commissioner in exercise of his power u/s 154 of the Act of 1961. In such an event splitting the question of applicability of Sections 13, 11 and 12 could not have been made which forms a component part of the whole scheme, to get over the binding nature of the appellate order on the Income Tax Officer.

In this connection, attention may be invited to a Bench decision of this court in Rajputana Mining Agencies and Others Vs. Income Tax Officer, ''A'' Ward, The Division Bench of this court was dealing with a group of petitions of which Writ Petition No. 132 of 1963 gave rise to this very question. It was a case in which the dividend income received by the petitioner from the company was grossed up and credit for the tax was given to them as a result of the decision of the Appellate Assistant Commissioner of the Income Tax in their appeals. After the appeal was decided by the Appellate Assistant Commissioner, the Income Tax Officer resorted to powers u/s 35 of the Indian Income Tax Act, 1922, for amending his own original order in respect of grossing up of the dividends. Against the exercise of jurisdiction u/s 35 of the Indian Income Tax Act, 1922 (the corresponding provision to Section 154 of the 1961 Act), the assessee has contended that in view of the merger of the order of the Income Tax Officer, in the case of grossing up the dividend income, in the order of the Appellate Assistant Commissioner, the Income Tax Officer had no jurisdiction to resort to Section 35 of the Act of 1922.

The court upheld the contention of the assessee and held (page 600 of 118 ITR) :

"The whole purpose of creating a hierarchy of authorities having appellate or revisional jurisdiction would be frustrated if the Income Tax Officer, who has passed the original assessment order, can set aside any order passed in appeal or revision, more particularly in respect of such questions which were expressly raised and decided by the appellate or revisional authority. Once the matter has been decided by the appellate or revisional authority, the order of the Income Tax Officer would merge with the'' order of the Appellate Assistant Commissioner or Commissioner, at least in respect of those questions which were expressly raised and decided by the appellate or revisional authority."

We are in agreement with the aforesaid view and may notice that the said principle now finds statutory recognition inasmuch as Sub-section (1A) has been inserted into Section 154 of the Act of 1961 which reads as under :

"(1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in Sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that Sub-section in relation to any matter other than the matter which has been so considered and decided."

The aforesaid provision envisages that where any matter has been considered by way of appeal or revision relating to an order referred to in Subsection (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under that Sub-section in relation to any matter other than the matter which has been so considered and decided.

It may be noticed here that Sub-section (1A) also does not permit rectification of the original order in respect of which an appeal has been taken to the superior authority and that matter has been subjected to appellate decision.

In the present case, it cannot be doubted that the only question which has been decided by the Income Tax Officer at the time of the original assessment, namely, denial of exemption in respect of income arising from the investment of the trust funds with Lake Palace Hotels and Motels (P.) Ltd. with reference to the provisions of Section 13 has been subjected to appeal before the Appellate Assistant Commissioner and the order was affirmed by the Appellate Assistant Commissioner. It would make no difference whether the appellate authority affirms or reverses or modifies the order passed by the lower authority. On such decision by the appellate authority, the order of the lower authority would stand merged in the order of appellate authority and the only order which thereafter could be amended is the order of the appellate authority accepted or decided.

That has been also the view taken by the Allahabad High Court in Krishna Rice and Oil Mills v. CST [1987] 67 STC 195. It was a case where the appellate authority has modified the order of the Assessing Officer which affirmed the order passed by the Appellate Assistant Commissioner in appeals filed by the Revenue. Thereafter, the Commissioner of Sales Tax sought to invoke the power of rectification in the original order of the appellate authority for the purpose of levy of surcharge. The application was opposed by the assessee on the main ground that as the order passed by the appellate authority dated February 3, 1981, has merged now in the subsequent order of the Tribunal dated October 23, 1982, the rectification of the said order was not possible by the lower appellate authorities. However, the appellate authority rejecting the objection rectified its earlier order which was affirmed by the Tribunal. The High Court, in revision, held that as the order dated February 3, 1981, passed by the appellate authority merged in the Tribunal''s order dated October 23, 1982, which confirmed the said order, the same cannot be rectified by the appellate authority under the provisions of Section 22 of the U. P. Sales Tax Act.

In the present case, the only object of the contention between the parties was about the investment made with Lake Palace Hotels and Motels (P.) Ltd. and its effect on the exemption to the income of the trust having been considered by the Income Tax Officer and subjected to appeal. It merged in the order of the Appellate Assistant Commissioner and, thereafter, any further consideration of applicability of Section 13 of the Act, on the income of the assessee, in our opinion, would not fall within the domain of the Income Tax Officer to consider in exercise of jurisdiction u/s 154 of the Act of 1961.

We do not rest our decision on that alone. Apart from the aforesaid, the alleged error which is said to be rectified by the Assessing Officer for the reasons stated in the order as well as contended by learned counsel, in our opinion, does not fall within the purview of power of rectification. Firstly, the only contention raised by learned counsel and disclosed in the order of rectification is that the Assessing Officer has not in the initial stage considered the question of exemption in the light of Section 13(1)(c) and Section 13(2)(a) but merely on the basis of the provisions of Section 13(3).

To test this contention on the touchstone of self-evident mistake or debatable issue on which possibly there can be two opinions, the provisions of Section 13 [are quoted] in extenso.

"13. (1) Nothing contained in Section 11 or Section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof-- . . .

(c) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof-

(i) if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or

(ii) if any part of such income or any property of the trust or institution (whenever created or established) is during the previous year used or applied,

directly or indirectly for the benefit of any person referred to in Sub-section (3) :

Provided that in the case of a trust or institution created or established before the commencement of this Act, the provisions of Sub-clause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of the trust or institution for the benefit of any person referred to in Sub-section (3), if such use or application is by way of compliance with a mandatory term of the trust or a mandatory rule governing the institution :

Provided further that in the case of a trust for religious purposes or a religious institution (whenever created or established) or a trust for charitable purposes or a charitable institution created or established before the commencement of this Act, the provisions of Sub-clause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of the trust or institution for the benefit of any person referred to in Sub-section (3), in so far as such use or application relates to any period before the 1st day of June, 1970. . .

(2) Without prejudice to the generality of the provisions of Clause (c) and Clause (d) of Sub-section (1), the income or the property of the trust or institution or any part of such income or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a person referred to in Sub-section (3),-

(a) if any part of the income or property of the trust or institution is, or continues to be, lent to any person referred to in Sub-section (3), for any period during the previous year without either adequate security or adequate interest or both ; . . .

(3) The persons referred to in Clause (c) of Sub-section (1) and Sub-section (2) are the following, namely :--

(e) any concern in which any of the persons referred to in Clauses (a), (b), (c), (cc) and (d) has a substantial interest.

(4) Notwithstanding anything contained in Clause (c) of Sub-section (1), but without prejudice to the provisions contained in Clause (d) of that Sub-section, in a case where the aggregate of the funds of the trust or institution invested in a concern in which any person referred to in Sub-section (3) has a substantial interest, does not exceed five per cent. of the capital of that concern, the exemption u/s 11 or Section 12 shall not be denied in relation to any income other than the income arising to the trust or the institution from such investment, by reason only that the funds of the trust or the institution have been invested in a concern in which such person has a substantial interest."

A perusal of the aforesaid provision goes to show that Section 13(3) cannot at all be invoked without having recourse to the provisions of Section 13(1)(c) or Sub-section (2). As a matter of fact, Section 13(3) of the Act only identifies the person referred to in Clause (c) of Sub-section (1) and Sub-section (2) of Section 13 and does not provide any substantive provi- sion independent of Sub-section (1) and Sub-section (2). It is only Section 13. Sub-section (1) and Sub-section (2) which provide the substantive provisions on which rests the denial of exemption under Sections 11 and 12 in the case of application of certain income of the trust to certain specified prohibited persons envisaged under Sub-section (3). Clause (c) of Section 13(1) envisages that any income of a trust for charitable or religious purposes or a charitable or religious institution is not to be included for the purpose of Sections 11 and 12 if any part of such income or any property of the trust or institution is during the previous year used directly or indirectly for the benefit of any person referred to in Sub-section (3). Likewise, Sub-section (2) of Section 13 creates a legal fiction. The provisions of Clause (c) of Sub-section (1) that for the purposes of Subsection (1)(c) the application of income or part of income in the manner enumerated in various sub-clauses is deemed to have been used or applied for the benefit of a person referred to in Sub-section (3) which, inter alia, deems to include in terms of Sub-section (2) of Section 13, if any part of the income or property of the trust or institution is, or continues to be, lent to any person referred to in Sub-section (3) for any period during the previous year without either adequate security or adequate interest or both.

Thus, Sub-section (1)(c), Sub-section (2) and Sub-section (3) of Section 13 are integral parts of the same scheme and Sub-section (3) does not operate and cannot be applied without reference to the provisions of Section 13(l)(c) and 13(2)(a). These are the only two provisions which the assessing authority is said to have ignored while considering the additions made at the time of the original assessment while making additions on account of investment made in Lake Palace Hotels and Motels Pvt. Ltd., Udaipur, in which Maharana Bhagwat Singh, the managing trustee of the assessee-trust had substantial interest in terms of Section 13(3) during the previous year. Sub-section (3) merely defines who are the persons who can be said to be a person for whose benefit the whole or a part of the income or property of the assessee has been used or applied in terms of Section 13(1)(c) and because of Sub-section (2)(a) read with Sub-section (3)(c) that investment made in the said company could be brought within the mischief. Merely by reading Sub-section (3), it is not possible to make any additions. It is only by a conjoint reading of Sub-sections (1)(c), (2) and (3) that any addition could be made in respect of income derived by such investments accruing or arising to a charitable and religious trust to which Sections 11 and 12 apply. In fact, it is to be noticed that Sub-section (3) has been enacted only to identify the persons referred to in Sub-section (1)(c) and it refers to no other purpose for which it is enacted. Therefore, Sub-section (3) cannot be read without reading Sub-section (1)(c). So also, Sub-section (2) only creates a legal fiction in aid of Section 13(1)(c) or 13(1)(d) only. It is not even the case set up by the assessing authority that Section 13(1)(d) was invoked so as to attract the application of Section 13(3). On the contrary, Sub-section (3) only refers to define persons for the purpose of Section 13(1)(c) persons referred to in Sub-section (3), and Sub-section (2) also creates a legal fiction as to which of the investments made can be deemed to be investments made for the benefit of persons mentioned in Sub-section 13(1)(c), which, in turn, only refers to persons referred to in Sub-section (3). It is only because of this clause that the investments which were continuing with Lake Palace Hotels and Motels Co. (P.) Ltd. in which the managing trustee of the trust had substantial interest were deemed to be for the benefit of the person referred to in Sub-section (3) in terms of Section 13(1)(c). The addition made in the original assessment itself was not possible without recourse to Sections 13(1)(c) and 13(2)(a), which refers to "in-adequacy" of interest.

It may be pertinent to notice that it is only on the finding that the income part of the funds of the trust has continued to be lent to Lake Palace Hotels and Motels Pvt. Ltd., in which the managing trustee of the trust has substantial interest for a period of nine months during the previous year at inadequate interest on the finding of that the reasonable rate of interest chargeable was 10 per cent. whereas money has been lent to the company for a period of nine months only at the rate of 5 per cent. Merely because the provision has not been referred to, it cannot be said that the additions in the income have been made without reference to those provisions.

Thus, in our opinion, the very basis for invoking jurisdiction in respect of the order passed by the Income Tax Officer does not exist.

Moreover, in the totality of the scheme of Section 13, Sub-section (4), too deserves consideration. It is a non obstante clause envisaging anything contained in Section 13(1)(c), if the aggregate of the funds invested in a concern in which any person referred to in Sub-section (3) of Section 13 has a substantial interest, does not exceed five per cent. of the total capital of the concern in which such investment is made, then disentitlement to exemption under Sections 11 and 12 is to be confined to the income arising to the trust from such investment by reason only that the funds of the institution has been invested in a concern in which such person has a substantial interest. Obviously, whether the exemption shall be confined to income derived from the investment made in Lake Palace Hotels and Motels Pvt. Ltd. only in breach of the provision of Section 13(1)(c) read with Section 13(2) and Section 13(3) or shall extend to the whole of the income depends on the finding of fact about the ratio of investment made by the trust with the capital of the company. This enquiry was never before the Assessing Officer and cannot be said to be apparent from the record nor could the Assessing Officer come to this conclusion even prima facie that Sub-section (4) is not attracted. The fact only discloses that funds continued to remain invested at five per cent. interest per annum, with Lake Palace Hotels and Motels (P.) Ltd., only for nine months during the relevant previous year which was considered to be inadequate. The ratio of interest was enhanced to 10 per cent. with effect from January 1, 1974, which was considered to be adequate and not in violation of Section 13(1)(c) read with Section 13(2). The additions made in the income of the trust in the original assessment was a sum equal to interest on Rs. 3,50,000 at five per cent. per annum for a period of nine months. That was equal to the income arising from such investment to the trust. This addition fits in the scheme of Sub-section (4) of Section 13 of the Act. Reference in this connection may be made to Commissioner of Income Tax Vs. Trustees of Shri Teckchand Chandiram Trust,

It may be noticed that neither reference to Section 13(1)(c) and Section 13(2) has been made, the alleged ground taken by the Assessing Officer for supporting his action, nor Sub-section (4) has been referred to. It has been demonstrated that no action could have been taken without reference to Sub-section (1)(c) and (2) by merely reading Sub-section (3). So also it cannot be doubted that Sub-section (4) provides provision in which undoubtedly the order passed by the Income Tax Officer fits in to be unmistakably correct. In the absence of any material it cannot be said that the order was not passed by taking into consideration relevant provision. If there is any ground to support the reasoning given by the Assessing Officer about non-consideration of Sub-section (1)(c) or (2) on the basis of no reference to such provision in the order for initiating proceedings for complete denial of exemption, there is equal probability of the Income Tax Officer having considered all the provisions including Sub-sections (1), (2) and (4) before making the order particularly when it is apparent that the original order was fully justified if made with the aid of Sub-section (4) when none of the provisions have been specifically referred to and the order is supportable under one of such provision which is part of the total scheme of Section 13, it cannot be said that the mistake alleged is obvious or self-evident which could be discovered without establishing the necessary facts. In these circumstances, there is nothing to presume that the additions made in the assessment of the trust by disallowing exemption to the extent of income derived from Lake Palace Hotels and Motels Ltd. was in ignorance of the provision of Sub-section (4) of Section 13.

In these circumstances, it is not only a case where the Assessing Officer wants to decide a new point which he has not considered and decided in the original assessment, but shall also require investigation into new facts to discover mistake, if any, in the original assessment order.

Such an error if it exists, in our opinion, falls outside the scope of Section 154 which confers jurisdiction to rectify apparent mistakes only on the principles enunciated by the Supreme Court in 7''. T.S. Balaram, Income Tax Officer, Company Circle IV, Bombay Vs. Volkart Brothers, Bombay, and Commissioner of Income Tax (CNTL), Ludhiana Vs. Hero Cycles Pvt. Ltd., Ludhiana, , as discussed hereinabove.

Thus, in the present case, not only the discovery of mistake depends on discovery of new material, yet to be made but it also raises a debatable issue on interpretation of statutory provisions.

As a result of the aforesaid discussion, we are of the opinion that the question referred by the Tribunal is required to be answered in the affirmative, that is to say, in favour of the assessee and against the Revenue, and it is held that in the facts and circumstances the Tribunal was right in holding that the Assessing Officer could not have invoked jurisdiction u/s 154 of the original assessment.

There shall be no order as to costs.