- (1.) THE Tribunal, Allahabad, has under S. 256(1) of the IT Act, 1961, referred the following questions stated to be of law and to arise out of its order passed in ITA No. 377/All/1975 -76 for the asst. yr. 1971 -72 for the opinion of this Court : "1. Whether, on the facts and in the circumstances of the case, a second application under S. 154 of the IT Act, 1961, lies when there has been no change in the factual or the legal situation? 2. Whether a successor -AAC can entertain an application under S. 154 for adjudication of the same question?"
(2.) WE have heard Sri A.N. Mahajan, learned counsel for the CIT, and Sri R.S. Agarwal, learned counsel for the respondent. The ITO made an assessment of the total income of the assessee at Rs. 2,42,710 by an order dt. 7th March, 1972. The total income included an income of Rs. 52,952 as income from property. The assessee claimed relief under S. 80K of the Act in respect of certain dividends received from J.K. Synthetics Ltd. This claim was disallowed by the AO on the ground that the assessee had failed to produce the required certificate under S. 196(3) of the IT Act. The assessee appealed to the AAC. In appeal proceedings, the requisite certificate was filed and the assessee's appeal was allowed with the following observations : "1. The sole contention of the appellant in the present appeal is that the ITO was not justified in not allowing exemption of claim in respect of the dividend of J.K. Synthetics Ltd. The assessment order shows that the ITO did not allow the deduction in the absence of a proper certificate from the company. 2. According to the certificate dt. 19th May, 1972, granted by the ITO, J.K. Synthetics Ltd., copy filed before me the entire amount of dividends from J.K. Synthetics Ltd., is entitled to exemption under S. 80K. 3. I have discussed vide my appellate order of date for the asst. year 1968 -69 why the deduction under S. 80K is admissible in the hands of the firm only and not in the hands of the partners. 4. According to the scheme of the Act under S. 80A(1), the deduction admissible under S. 80K has to be allowed from the gross total income for computing the total income of the assessee. Gross total income is defined under Sub -S. (5) of S. 80B. It means the total income computed in accordance with the provisions of this Act before making any deduction under this Chapter. Thus, the gross total income for the purposes of the exemption being claimed by the appellant would be Rs. 52,952. Sub -s. (2) of S. 80A has prescribed the limit of deduction. According to this sub - section, the aggregate amount of deductions under this Chapter VI -A of the IT Act, 1961, shall not, in any case, exceed the gross total income of the assessee. In the instant case as the gross total income is only Rs. 52,952 is allowed a deduction of Rs. 52,952 which will reduce the gross total income of Rs. 52,952 to a nil figure of the total income." The assessee moved an application under S. 154 of the Act for rectification of the mistake stating that it was wrongly mentioned in the appellate order that the total income was Rs. 52,952 while actually the total income was Rs. 2,42,710. This application was rejected by the AAC with an order as under : "The appellant by his application under S. 154, dt. 21st June, 1973, has claimed that in para 4 of my predecessor's order dt. 31st May, 1973, for the asst. year 1971 -72 a mistake had occurred in para 4 where the figure of gross total income has been mentioned at Rs. 52,952 which should have actually been Rs. 2,42,710 and the appellant has prayed for necessary rectification in lines 8, 12, 13 and 14 of the above order. I have looked up the records and I find that no mistake has occurred. My predecessor deliberately took the figures of gross total income at Rs. 52,952 and there was no mistake through inadvertence or oversight. He has given his reasons for taking the gross total income at Rs. 52,952. It is, therefore, not open to the appellant to challenge his discretion in an order under S. 154. The application is rejected." Again the assessee moved another application under S. 154 of the Act pointing out the same mistake and this time the AAC who had in the mean time succeeded the earlier officer, allowed the application under S. 154 observing as under : "I find sufficient force in the contentions of the learned representative of the appellant. The ITO vide his order dt. 4th March, 1972, computed the total income at Rs. 2,42,710 as under : The appellant was entitled to a deduction of Rs. 4,03,797 under S. 80K being the amount of tax - free dividend received from the J.K. Synthetics Ltd. but as this deduction was claimed under Chapter VI -A of the IT Act, 1961, the provisions of ss. 80A and 80B are very relevant. Hence, these are reproduced hereunder : "80A. (1) In computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of this Chapter, the deductions specified in ss. 80C to 80U. (2) The aggregate amount of the deductions under this Chapter shall not, in any case, exceed the gross total income of the assessee. 80B. (5) 'gross total income' means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter or under S. 280 -O". From the above it is clear that the deductions under Chapter VI -A have to be restricted to the gross total income and which means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter or under S. 280 -O. The gross total income Rs. (i) Income from property 52,952 (ii) Income from business ( -) 2,89,815 (iii) Income from other sources 2,47,259 (iv) Income from capital gains 22,313 2,42,710 has been computed by the ITO at Rs. 2,47,710 and as the appellant's claim under S. 80K much exceeds the gross total income computed, the appellant is entitled to deduction to the extent of Rs. 2,42,710 only. Hence, I hold that the amount of Rs. 52,952 appearing in lines 1, 12, 13 and 14 of para 4 of my predecessor's order dt. 31st May, 1973, have been mentioned inadvertently and that, therefore, the amount of Rs. 2,42,710 would be substituted in its place in all the four lines. In the result, the application is allowed. The ITO is directed to give the relief accordingly." The ITO appealed to the Tribunal which dismissed the same holding that there was a mistake in the order of the AAC which was rightly rectified. The Tribunal observed as under : "7. In our opinion, there is no force in this appeal. We agree with the contention of the assessee's representative that there is no bar for filing petitions one after the other provided they are within limitation under S. 154 for rectification of mistake. The mistakes should be that apparent from the face of the record and they did not require any fresh investigation of facts and did not involve any debatable issue. In this case, we agree with the contention of the assessee's representative that the mistake was only in regard to figures of income assessed on which the assessee was entitled to relief. This figure as mentioned in the assessment year and also on the top of the AAC's order was Rs. 2,42,710. The assessee was entitled to relief on this figure. If by mistake the AAC had put the figure of Rs. 52,952 a figure representing the income from property only as against the total income asseesed at Rs. 2,42,710, the said mistake could be rectified under S. 154. Merely because one AAC has rejected the assessee's application in this regard, it cannot be said that the order of the later AAC, rectifying the mistake is in anyway incorrect or amounts to review of the earlier order of the AAC by a later AAC."
(3.) AT the instance of the CIT, the aforesaid questions have been referred by the Tribunal for the opinion of this Court.;