SUHAS CHANDRA SEN, J. - (1.) THE Tribunal has referred the following question of law under s. 256 (1) of the IT Act, 1961 to this Court : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified to hold that the mistakes were obvious and patent mistakes apparent form the records, which could be rectified under s. 154? (2) Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in their decision to direct the ITO to consider in disposing of a petition under s. 154 the accessibility or otherwise of the amounts, which have been recorded in the accounts by way of tax credit certificate ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in setting aside the orders of the ITO's and the AAC?"
(2.) IN this proceeding the assessment years involved are 1966-67 to 1970-71 for which the relevant years of accounts are ending on 31st March, 1966, 31st March, 1967, 31st March, 1968, 31st March, 1969, 31st March, 1970 respectively. The Tribunal has recorded the following facts : "The assessment order was passed on 24th Dec., 1970 on the basis of a duly verified return filed on 31st Dec., 1966. The audited statement of accounts along with other details were filed for examination. The assessee was represented by V. Newaltia of Price Water house Peat Co. Mr. P. Sengupta of the assessee company also appeared before the ITO. The ITO completed his assessment for the asst. yrs. 1866-67 to 1970-71 under s. 143 (1). After completion of the assessment the assessee made an application under s. 154 on 12th Dec., 1972 claiming for rectification of the assessment for the asst. yr. 1966-67 stating that there was a mistake apparent from the record regarding certain allowance, which were made in the assessment under the head 'Excise duty']. The ITO rejected the application on the ground that the grounds shown by the assessee in its application did not come within the scope of s. 154. On 19th Aug., 1974 the assessee filed another application under s. 154 again claiming for rectification of the assessment no which no action was taken by the ITO on the ground that the matter had already been decided earlier by an order dt. 27th June, 1974. Thereafter the assessee filed a writ petition before this Court praying for a direction upon the ITO to dispose of the rectification application of the assessee dt. 19th Aug., 1974, since the ITO had failed to dispose of such application. This Court directed the ITO to dispose of that application within a month from the date of the order. The ITO thereafter passed another order under s. 154 on 12th June, 1975 for the asst. yr. 1966-67. The assessee claimed that it debited Rs. 1,92,58,458 on account of excise duty after adjusting Rs. 8,01,375 on account of tax credit certificate and while submitting the income-tax returns for that year, through oversight the assessee did not claim Rs. 8.,01,375 being also an excise liability of the assessee which was according to the assessee, allowable as deduction. The assessee also claimed that the entire amount of the excise duty paid but not claimed by the assessee through oversight, was an apparent mistake from the record inasmuch as at page 24 of the P&L A/c for the year ended on 31st March, 1965, a narration was given that the excise duty was given at Rs. 1,92,58,458 after deduction of Rs, 8,01,375. The assessee insisted that was a mistake apparent from record which was rectifiable under s. 154 for which there was no necessity for investigation of facts nor interpretation of law. The ITO given the assessee an opportunity of being heard. The assessee filed a written submission dt. 10th June, 1973 in which it was argued inter alia that had the tax certificate been issued, the amount covered by the certificates would be tax free and so it would not reduce the quantum of liability so far as the excise duty was corrected. It was also contended that the reduced claim of excise duty shown by the assessee in the accounts, was an oversight and that since the ITO did not take note of the narration given in the accounts, the ITO himself made a mistake in not allowing full amount of excise duty. The contention of the assessee was also that the ITO did not make adjustment that was required to be made before determining the actual excise duty payable and thus the assessee was not allowed full deduction to which it was entitled. The ITO was of the opinion that it was not relevant for the present purpose, whether tax credit certificate even if allowed was taxable. He noted that the assessee filed the return on the basis of its own computation in which it did not made any claim in respect of alleged additional excise duty, which was claimed later on. He mentioned that the claim was only what had been taken in the audited P&L A/c and that during the assessment proceedings also the assessee did raise this question nor did it agitate the point before any appellate authorities. He pointed out that in completing the assessment the ITO could not have taken any step to rectify the assessee's own alleged oversight or omission, unless it was pointed out to him. He also noticed that the assessment records clearly indicated that the ITO did not call for the books of accounts or vouchers etc., in course of the assessment proceedings, no the assessee did produce such papers, on their own accord. He therefore observed that the ITO had no occasion to examine the assessee's books of account and vouchers as the he completed that assessment on the basis of the statement and audited accounts filed by the assessee. The ITO was of the view that he cannot agree with the assessee's submission that the ITO has also made a mistake in not allowing part of the assessee's claim and that apart, the issue was not a point in dispute in the assessment proceedings as this dispute was not brought before and appellate authorities ever. He pointed out that whatever claims the assessee made in respect of the excise duty in the audited accounts, the same was allowed in full." The other application for the other assessment year was rejected by the ITO on similar grounds. On appeal the AAC held that the ITO was right in rejecting the application. The AAC observed that an analysis of the facts would show that the matter cannot be considered in isolation as the same was linked up with adjustment of amounts relating to tax credit certificates under s. 230D (sic s. 280ZD) and the amount was exempt under s. 10(28). The AAC went on to note that in fact the assessee had a litigation with the excise department regarding correct determination of the tax credit amount and the assessee's claim was substantially reduced as a result of such litigation which would be evident from the facts as available in the subsequent years which indicated that the exemption on the amount of tax credit certificate could not be granted without verification of proper details. He noted that the exemption under s. 10 (28) with regard to tax credit certificate would arise only when the amount shown on the tax credit certificate was produced before the ITO. He found that the assessee's case did not satisfy this condition and that the rectification as sought involved going into details or those things and that the claim for gross amount of excise duty was closely linked up with adjustment on account of tax credit certificate. He observed that if the assessee's contention for rectification was allowed, it would amount to allowing exemption under s. 10 (28) also as the amount had not been offered by the assessee for the purpose of taxation and the claim for exemption under s. 10(28) could not be considered without going into the details thereof. In the circumstances the AAC concluded that the said facts remained to be investigated and such things cannot be corrected by way of rectification, relying on the decision of the Supreme Court of India in the case of T. S. Balaram, ITO vs. Volkart Brothers (1971) 82 ITR 50 (SC). He also observed that it was found on analysis of the notes in the P&L A/c that the amount of adjustment on account of tax credit certificate was also not clear and in the asst. yrs. 1968-69, 1969-70 and 1970-71 the total amount of adjustment made was shown at Rs. 9,98,533, Rs. 13,12,816 and RS. 10,77,222 respectively. He noted that these included adjustment on account of tax credit certificate and rebate for expanded capacity of new machines. He noted that this did not indicate what was the adjustment on account of tax credit certificate out of the total amount. In the circumstance he concluded that the ITO was justified in rejecting both the petitions under s. 154 in respect of each of the assessment years under consideration." The Tribunal on further appeal held after considering the submissions of booth the parties that what that assessee sought for in the present petitions was not review or revision nor any new fact have to be brought into consideration. It pointed out that a glance at the accounts would be sufficient to show that the two entirely independent sets of items that is excise duty on the one hand and the item of tax credit certificate on the other were erroneously clubbed in the accounts by the assessee which the ITO also overlooked therefore there was clearly a mistake apparent on the face of the records in all the there was no dispute that the excise liability in its entirety constituted an admissible deduction. The Appellate Tribunal concluded that the mistake was clear and the same could be rectified. It considered the ratio of the decision in the case of Volkart Brothers & Ors. (supra). In the circumstances the Appellate Tribunal directed the ITO to pass fresh orders in the light of the observation and discussion made by the Appellate Tribunal in the present order. It clearly directed the ITO that while passing fresh orders in pursuance of its directions, the ITO will allow excise liability of the respective years in its entirety for those years and to consider the accessibility or otherwise of the amounts which would have been recorded in the accounts by way of tax credit certificates.
(3.) FROM the facts stated by the Tribunal it appears that the claim of the assessee in respect of payment of excise duty was allowed by the ITO in course of the original assessment proceedings. The ITO noted that the assessee had filed the return on the basis of its own computation in which no claim was made in respect of the additional excise duty. A further point noted by the ITO was that audited P&L A/c had raise this question nor did it agitate the pint before any appellate authority. The ITO pointed out that in completing the assessment the ITO could not have taken any step to rectify the assessee's own alleged oversight or omission. The ITO pointed out that he had no occasion to examine the assessee's books of account and vouchers as he complete the assessment on the basis of the statement and audited accounts filed by the assessee.;