Kendriya Sahakari Upbhokta Bhandar vs Commissioner of Income Tax

S.B. Sakrikar, J.—At the instance of the applicant/assessee, the Tribunal stated the case and referred the undernoted questions for answer with reference to the order of the Tribunal dated 18-8-1994 passed in IT Appeal No. 156 (Indore) of 1994 for the assessment year 1985-86 : "(i) Whether, on the facts and in the circumstances of the case, the assessment completed u/s 143(1) of the income tax Act, 1961, cannot be termed as ''order'' within the meaning of section 154 of the Act and as such the Assessing Officer had no jurisdiction to amend the same by invoking the provisions of section 154 of the Act?

(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of section 154 of the income tax Act, 1961, can be applied to an assessment completed u/s 143(1) of the said Act ?

(iii) Whether, on the facts and in the circumstances of the case, the IT AT was right in holding that there was mistake apparent on record, inasmuch as the loss said to have been incurred by the assessee in earlier years was never determined by the Assessing Officer and the same could be rectified by the Assessing Officer ?"

The facts of the case lie in narrow compass. The applicant/assessee is a co-operative society. No return of income was filed by it in the past. In the year under consideration, the return of income was filed on 29-3-1986. In the said return, the assessee had claimed set off of the losses of the earlier years amounting to Rs. 3,58,812. The returned income was accepted by the Assessing Officer on 29-7-1986 under the provisions of section 143(1) of the income tax Act, 1961 and intimation was sent to the assessee accordingly. Later on, the Assessing Officer initiated proceedings u/s 154 of the Act for the reason that carry forward of the losses of earlier years has been wrongly claimed by the assessee and that claim could not be entertained. In response to the show-cause notice issued by the Assessing Officer, the assessee had stated that the return was filed under the Amnesty Scheme and action u/s 154 was wholly without jurisdiction. The Assessing Officer did not accept the submissions of the assessee and passed an order u/s 154 on 8-11-1989 disallowing the claim of the assessee for set off of the losses of the earlier years. The order of the Assessing Officer is marked as Annexure ''A''. The assessee appealed before the Commissioner (Appeals). By order dated 18-12-1990, the Commissioner (Appeals) dismissed the same. The order of the Commissioner (Appeals) is Annexure ''B''. Aggrieved by the order of the Commissioner (Appeals), the assessee filed the appeal before the Tribunal. It was reiterated that the return was filed under the Amnesty Scheme and since the return was accepted by the Assessing Officer, the same could not be reopened or rectified. That after acceptance of the returned income under the Amnesty Scheme, the Assessing Officer had no jurisdiction to apply the provisions of section 154 that full income of the year was disclosed by the assessee and as such the disclosure made by it was full and complete. It was also submitted that the circulars issued by the CBDT under the said scheme nowhere provided that losses of earlier years cannot be claimed in the return filed under the Amnesty Scheme. The submissions of the assessee were strongly opposed by the Department. On considering rival submissions and the material available on record, the Tribunal rejected the contention of the assessee and dismissed the appeal. While dismissing the appeal, the Tribunal held as under :

"We have considered the rival submissions as also the material available on record and the decisions cited before us. A copy of the return filed by the assessee has been placed on record. A perusal of the said return shows that the assessee did not indicate that the same was filed under the Amnesty Scheme. It is true that the Amnesty Scheme was in force, when the return was filed by the assessee. However, the mere fact that the return was filed during the currency of the Amnesty Scheme, would not necessarily lead to the conclusion that the return was filed under that scheme and the assessee desired benefit of the same. All returns filed during the currency of the scheme, cannot, ipso facto, be treated as the returns filed under the Amnesty Scheme. That being so, the reliance placed on the various circulars issued under that scheme, are of no help in the matter. Moreover, the crux of all the circulars issued under the Amnesty Scheme is that the disclosure made by an assessee should be full and true disclosure of his income and wealth. In the instant case, the assessee did not disclose the true particulars of the loss. The assessee failed to disclose the year of the loss, as also the fact that the loss said to have been incurred by the assessee was never determined by the Assessing Officer. In absence of such determination, the assessee was not entitled to claim set off. That being so, there was a mistake apparent on record and the same could have been rectified by the Assessing Officer. There is nothing in the Act or in the circulars issued by the Board under the Amnesty Scheme that the provisions of section 154 cannot be applied, where a return is accepted u/s 143 (1) or if the declared income is accepted under the Amnesty Scheme. The contention that once the income declared is accepted by the assessee, the assessment cannot be reopened by the Assessing Officer is of no relevance, because in the instant case, the assessment has not been reopened by the Assessing Officer or by the Commissioner. We also do not find any force in the stand of the assessee that there is any ambiguity about the applicability of section 154 of the facts of the present case and, therefore, the same require to be resolved in favour of the assessee. The contention that if there are two opinions, the matter has to be decided in favour of the assessee is also of no help in the matter, since we are of the opinion that there is no scope of two opinions on the point."

Aggrieved by the order of the Tribunal, the applicant/assessee filed an application u/s 256(1) proposing certain questions of law arising out of the order of the Tribunal for reference to this Court. On the application of the assessee, the Tribunal stated the statement of the case and referred only the aforesaid three questions of law for the opinion of this Court.

None appeared for the applicant/assessee. Shri A.M. Mathur the learned senior counsel appeared with Shri Vivek Saran for the Department. He is heard.

The learned counsel submitted that the applicant at whose instance reference is made has chosen to remain absent and has, thus, not enabled the hearing of this reference. Under these circumstances, this Court is not under an obligation to answer the reference and he, accordingly, prayed that we should decline to answer the reference. In support of his contention, the counsel placed reliance on the case reported in Jamunadas v. CST 1993 MPLJ 462.

In the case of Jamunadas (supra) considering the legal position on the point, this Court has held as under :

"For the foregoing reasons, we are of the opinion that if the party at whose instance the reference is made, fails to appear at the hearing or fails in taking steps for preparation of the paper-books so as to enable hearing of the reference, this Court is bound to answer the reference. We refuse to answer the reference and also saddle the assessee with the costs of the department quantified at Rs. 150."

In the instant case, the applicant/assessee at whose instance reference is made has chosen to remain absent and has, thus, not enabled the hearing of this reference. This Court is not under an obligation to answer the reference. In the circumstances, the objection raised on behalf of NA is proper and deserves to be permitted to prevail. The same view is reiterated in Smt. Durgadevi. v CIT [MCC No. 273 of 1992 dated 9-7-1996].

We, therefore, accept the contention raised by the counsel for the non- applicant and, accordingly, refuse to answer reference. The reference is, thus, not answered. There shall be no orders as to costs. The Tribunal be informed accordingly. Counsel fee is fixed at Rs. 500 if certified. This reference application is, thus, disposed of.