SOMANY PILKINGSTONS LTD Vs. INCOME TAX OFFICER
LAWS(IT)-1989-9-4
INCOME TAX APPELLATE TRIBUNAL
Decided on September 04,1989

Appellant
VERSUS
Respondents

JUDGEMENT

G. Krishnamurthy, President - (1.)THIS is a misc. application filed by the assesses on 14-10-1988 bringing to the notice of the Tribunal that the allowance of an earlier misc. application filed by the I.T.O. Co. Cir., Rohtak on 28-1-1981, in his favour was out of time and was barred by limitation, was therefore wrong and should be cancelled.
(2.)The assessee claimed, inter alia, relief Under Section 80J of the Income-tax Act, stating that in computing the capital employed for the purpose of the business, the borrowed capital also should be included as capital. The Tribunal by its order in I.T.A. Nos. 361 to 364/1978-79 dated 27-8-1980 allowed the assessee's claim, following the law as then decided, understood and applied. Subsequently by Finance Act No. 2 of 1980, Section 80J was amended with retrospective effect, providing that in computing the capital employed for the purpose of Section 80J, the borrowed capital should be excluded. This amendment was made with retrospective effect which covered the years under appeal before the Tribunal. Since the Tribunal had not noticed the amendment and gave relief which was against the provisions of the Income-tax Act, as amended with retrospective effect. The Department had by a misc. application dated 28-1-1981 brought this mistake to the notice of the Tribunal and requested it to rectify its order. This Misc. application eventually came up for hearing before the Tribunal on different occasions and finally it was disposed of by its order dated 6-4-1985 whereby the Tribunal held that the mistake pointed out by the Department did exist in the order of the Tribunal and, therefore, it should be rectified. The operative portion of the order of the Tribunal was relevant and, we therefore, reproduce it below: -
At the time of hearing of this application, the learned counsel for the assessee Sh. C.S. Agarwal did not oppose this petition and concede the point because as on today the decision of the Supreme Court on Section 80J and the effect of retrospective amendment were all decided against the assessee. The order of the Tribunal, therefore, stands modified to this extent, namely, that the relief Under Section 80J will now have to be worked out excluding the loans taken by the assessee. The ITO will work out the capital accordingly. This order shall be treated as part and parcel of the order passed by the Tribunal in I.T.A. Nos. 361 to 364 of .1978-79 dated 27-8-1980.

In this present misc. application, filed by the assessee, it is now pointed out that Under Section 254(2) of the Income-tax Act, the Income-tax Appellate Tribunal is empowered to rectify any mistake apparent on record at any time within four years from the date of the order of the Tribunal so as to amend the earlier order passed by it and the Tribunal in every case of the mistake being brought to its notice shall make the rectification, that the aforesaid order passed by the Tribunal on 6-4-1985 was barred by limitation because the original order passed by the Tribunal was on 27-8-1980 and was, therefore, beyond the period of four years prescribed Under Section 254(2). This petition was filed by the assessee as we have pointed out above on 14th October, 1988.

(3.)THE filing of this misc. application, urging that the order passed by the Tribunal on the earlier misc. application was barred by limitation, give rise to a piquant situation. If as claimed by the assessee now in this misc. petition, the earlier order passed by the Tribunal was barred by limitation, by the same rule, logic, the present misc. application also must be deemed to have been filed out of time. THE earlier misc. application was filed by the Department on 25-1-1981 though it was disposed of on 6-4-1985. THE order of the Tribunal was dated 27th August, 1980. Reckoning the period of limitation of four years from the date of the order of the Tribunal namely 27th August, 1980, the order passed by the Tribunal on 6-4-1985 was clearly out of time, though the application for rectification was filed by the department on 27-1-1981 which was well within time. When an application was filed well within time, the time taken by the authority to rectify the mistake will not render the petition as time barred, even if the order was passed after the period of four years, because the crucial date is not the date of passing the order by the authority empowered to rectify the mistake but the date of filing of the petition, as otherwise the delay taken by the authority to rectify the mistake either voluntarily or involuntarily, may frustrate the very right given to an assessee to get his orders rectified. Similarly the petition filed by the assessee now, though was within time i.e. on 14-10-1988 from the date of the order passed by the Tribunal on the misc. application namely 6-4-1985, as on today that was barred by limitation because by today the period of four years had already expired. What the learned counsel for the assessee contends is that if an application was filed within time, the date of disposal by the Tribunal would not matter in any way but he contends that this rule would apply only to the applications filed by him and not to the applications filed by the Department in any way to the application filed by the I.T.O. on 27-4-1981. He seeks to distinguish the application filed by the Department on 27-4-1981 from the application filed by the assessee on 14-10-1988 placing reliance upon a decision of the Allahabad High Court in Vithaldas v. ITO [1969] 71 ITR 204. In this case, it was held by the Allahabad High Court that it was the duty of the ITO Under Section 35 of the Old Act (to make the rectification) and if he had failed to do so, the High Court had power to issue a writ directing the ITO to make a rectification even though the period of four years fixed Under Section 35 had expired. By relying upon this principle, the learned Advocate for the assessee very seriously contended that the time limit fixed to make a rectification could thus be lifted by the authority concerned if the application had been filed in time and since his application was filed in time, the Tribunal could pass an order now on his application holding that its earlier order of 6-4-1985 was barred by limitation even though the application for rectification for that order was filed by the Department. THE period of four years from the date of the order of the Tribunal. We fail to see how the decision of the Allahabad High Court helped the assessee in any manner nor how the law could be one for the assessee and another for the Department because the power given to the Tribunal to rectify the mistake i.e. apparent from any order passed by it must apply equally and with equal force either to the applications made to it by the assessee or by the Department or even suo motu. In so far as Section 254(2) is concerned, we do not find any distinction being made for orders to be passed on applications made either by the assessee or by the Department. In any case, the decision of the Allahabad High Court is totally on different set of facts and would not help the assessee in any manner because in that case, for the assessment year 1952-53 while making assessment, a sum of Rs. 21,291 was included as the share income of the assessee from a firm, subject to rectification Under Section 35 of the Act after the assessment of the firm was completed. THE firm's income was assessed in the year 1956 and the assessee's share income was found to be only Rs. 9678. THE assessee applied for rectification of his assessment and wrote several letters to the Income-tax authorities right from December, 1959. But the Department did not act on those applications. It filed a writ in the High Court in 1967 for a writ to compel the I.T.O. to rectify the assessment. It was pleaded on behalf of the Revenue that as the period of four years prescribed for rectification by Section 35(1) had expired in 1960, no writ to enforce rectification could be issued. It was in that context that the High Court observed that it was the duty of the I.T.O. Under Section 35 to make the rectification and as he had failed to do so, the High Court had power to issue a writ and directing the I.T.O. to make a rectification even though the period of four years fixed Under Section 35 had expired. THE High Court in. this case, after reviewing the relevant Law on the subject, including the Halsbury's Laws of England came to the conclusion that the period prescribed Under Section 35 could only be said to be the period within which proceedings and other section should be commenced and not that the power given on that section should be exercised within the period fixed in the section. In Halsbury's Law of England, to which reference was made, the law on the point was stated : -
If public officials or a public body fail to perform any public duty with which they have been charged, an order of mandamus will lie to compel them to carry it out, even though the time prescribed by statute for the performance of the duty may have passed.

It is applying this principle that the Allahabad High Court had stated in that case that since the assessee had moved the I.T.O. within the prescribed period of four years and since the I.T.O. failed to carry out his duty, he cannot take the plea of his own default in defence and deny the assessee the right to which it was entitled to. THE elementary principle of law is that no person can put forward his own default in defence to a right asserted by the other party (observations of the Chief Justice, Chagla in All India Groundnut Syndicate v. CIT [1954] 25 ITR 90 (Bom.). We are, therefore, of the opinion that the language of Section 254(2) and Section 35 being on pari materia the law as made applicable to Section 35 would also apply to Section 255(4) and, therefore, if an application has been made at any time within four years from the date of the order, with a view to rectify any mistake apparent from the record, the Tribunal may amend any order passed by it and in doing so, all that it has to see is whether the application was made in time. THE limit of time provided in Section 254(2) applies only to the commencement of the proceedings namely, filing of the application, bringing the mistake to the notice of the Tribunal and not to the orders to be passed by the Tribunal. Once the mistake has been brought to the notice of the Tribunal in time, that mistake can be rectified at any time even after the lapse of the period of four years otherwise it will lead to miscarriage of justice which is not the object of the Legislature, even though the Tribunal has to be careful . enough to pass the orders as quickly as possible.



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