COMMISSIONER OF INCOME TAX Vs. SWARN TANEJA MISS

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961 (in short "the Act"), at the instance of the Revenue. The Tribunal has referred the following question of law arising out of the Tribunal's consolidated order dated October 11, 1984, passed in ITA Nos. 183 and 184 of 1983 for the assessment years 1976-77 and 1977-78 for the opinion of this court :

(2.) THE assessment orders for both the years 1976-77 and 1977-78 were passed under Section 143(1) of the Act on October 29, 1977. Later on, certain mistakes in the assessment orders were detected by the Income-tax Officer and, therefore, notices were issued to the assessee for rectification of the mistakes. THE assessee filed her reply on October 24, 1981, and was also heard on the very day. THE Income-tax Officer purported to have passed his order under Section 154 of the Act on the said date. THE rectification resulted in enhancement of tax payable by the assessee. But the demand notices for both the years were served on the assessee only on March 27, 1982. THE assessee preferred appeals before the Appellate Assistant Commissioner of Income-tax and contended that the orders under Section 154 were not passed on October 24, 1981, but were actually passed sometime in March, 1982. Accordingly, it was contended that the orders were barred by time. It was further contended that the purported orders dated October 24, 1981, were not complete rectification orders as they did not determine the tax payable by the assessee. It was urged that the calculation of tax payable by the assessee having been made after October 24, 1981, the rectification was barred by time. No finding was recorded by the Appellate Assistant Commissioner as to whether the purported orders dated October 24, 1981, under Section 154 of the Act were made on the very date or on any subsequent date. He, however, recorded a finding that the calculation of the tax payable by the assessee was not made within the period of limitation, i.e., on or before October 25, 1981, and held that the rectification was barred by time, because rectification formed part of assessment which required determination of tax liability of the assessee. Accordingly, the rectification orders purported to have been made on October 24, 1981, were set aside as barred by time. THE Revenue preferred appeals before the Tribunal against the orders made by the Appellate Assistant Commissioner of Income-tax. It was argued on behalf of the Revenue that the calculations of tax in ITNS-150 forms, prepared in pursuance of the orders passed under Section 154 of the Act by the Income-tax Officer, were made on October 24, 1981 itself which was evident from the date mentioned on the calculation forms and, therefore, the entire exercise of passing an order under Section 154 of the Act and the determination of tax liability was completed within the period of limitation. It was admitted by the departmental representative before the Tribunal that the calculation of tax and/or of refund was an integral part of the assessment proceedings which included rectification and that the said calculation also had to be made within the period of limitation. THE Tribunal held that the calculations of tax payable by the assessee in Form No. ITNS-150 was not made on October 24, 1981, but were made somewhere in March, 1982. Accordingly, the Tribunal was pleased to uphold the orders passed by the Appellate Assistant Commissioner of Income-tax and to dismiss the appeals filed by the Revenue. Being aggrieved, the Revenue applied for a reference under Section 256(1) of the Act. THE application was allowed and the aforesaid question of law was referred to us by the Tribunal for our opinion.

(3.) LEARNED counsel for the Revenue relied on a decision of the Madras High Court in Velu (S. T.) v. CIT [1958] 33 ITR 463, in support of his contention that the limitation under Section 154(7) of the Act would start from the date of an order of rectification and not from the date of determination of the tax liability of an assessee or from the date of service of a notice of demand under Section 156 of the Act. The decision of the Madras High Court in Velu's case [1958] 33 ITR 463 does not appeal to us because it overlooks the possibility of ante-dating the order under Section 154(1) by the Income-tax Officer with a view to bringing it, within the limitation under Section 154(7) of the Act. The materials brought on record in the present case would show that the reply to the show-cause notice was filed and the arguments of the assessee were heard on the very date, i.e., October 24, 1981, when the order under Section 154(1) of the Act was said to have been passed by the Income-tax Officer. The calculations of tax were also shown to have been made on October 24, 1981, in the ITNS-150 forms whereas the notices of demand were served on the assessee on March 27, 1982. Had the assessment order been passed and calculations of tax made on October 24, 1981, the notices of demand would also have been served on the assessee on October 24, 1981, itself. As a matter of fact, the Tribunal and the Appellate Assistant Commissioner have both held that though the calculations of tax were shown to have been made on October 24, 1981, they were, in fact, made somewhere in March, 1982. In the light of these facts, no credence can be attached to the date mentioned in the rectification orders under Section 154(1) of the Act by the Income-tax Officer nor is the purported date sacrosanct. Accordingly, it must be held that the orders of rectification under Section 154 were barred by limitation.