Commissioner of Income Tax, Lucknow vs H.M. Sharif and Sons

The income tax Appellate Tribunal, Delhi has referred the following question of law u/s 256(1) of the income tax Act, 1961, hereinafter referred to as ''the Act'' for opinion to this Court: Whether on the facts and circumstances of the case the learned Members of the Tribunal was justified in law in setting aside the order of the Commissioner of income tax (Appeals) and directing him to decide the appeal on merits?

The present Reference relates to the Assessment Year 1980-81.

Briefly stated the facts giving rise to the present Reference are as follows:

The assessment year involved is 1980-81 with previous year having ended on 31-12-1979, the assessee a resident-registered firm and assessment has been framed u/s 143(3) of the Act on 31-7-1982 in which the net profit as per Profit and Loss account was taken at Rs. 1,64,774. Thereafter, the assessee had moved an application u/s 154 of the Act stating therein that the net profit as per Profit and Loss account should be taken at Rs. 1,35,692. The income tax Officer rectified this mistake u/s 154 of the Act vide order dated 22-12-1982. The assessee went in appeal before the Commissioner (Appeals), who dismissed the assessee''s appeal on the ground that the appeal was time barred as the original demand notice was served on the assessee on 8-9-1982 and the appeal was filed on 24-1-1983. The assessee again went in second appeal before the income tax Appellate Tribunal. The income tax Appellate Tribunal has set aside the order of the Commissioner of income tax (Appeals) and has set aside the order of the Commissioner of income tax (Appeals) and has directed to him to decide the appeal on merits on the ground that the order of the income tax Officer became final on 22-12-1982 and that the time for filing of appeal be counted from the date of service of order u/s 154 of the Act. The time for filing of appeal will be counted from the date of service of original demand notice and not from the date of service of order u/s 154 of the Act.

We have heard Sri A.N. Mahajan, learned Standing Counsel appearing for the revenue.

Sri Mahajan, learned Standing Counsel, submitted that in clause (a) of sub-section (1) of section 246 of the Act an appeal has been provided against the assessment order whereas in clause (c) of the aforesaid sub-section an appeal has been provided against an order u/s 154 of the Act. The limitation has been provided u/s 249 of the Act as thirty days from the date of the certified copy of the order.. According to him as the assessment order was passed on 31-7-1982, the appeal ought to have been filed under clause (a) of sub-section (1) of Section 246 of the Act read with Section 249(2) of the Act within thirty days and the Tribunal had committed an error in counting the limitation from the order passed on 22-12-1982 u/s 154 of the Act. The submission is misconceived. Even though under clauses (a) and (c) of sub-section (1) of section 246 separate appeals have been provided against the assessment order and the order u/s 154 of the Act yet in the present case we find that the assessment order which was passed on 31-7-1982 wherein net profit as per Profit and Loss account was taken at Rs. 1,64,774 was reduced vide order dated 22-12-1982 passed u/s 154 of the Act to Rs, 1,35,692. Thus, the effective order of assessment would be the order dated 22-12-1982, therefore, the appeal preferred by the assessee was well within the period of limitation as held by the Tribunal. In view of the aforesaid discussion, the question referred to us is answered in the affirmative i.e. in favour of the assessee and against the revenue. There shall be no order as to costs.