N.P.GUPTA, J. - (1.) THIS appeal has been filed by the Revenue against the judgment of the learned Tribunal dt. 29th July, 2004, affirming the order of the learned CIT(A) dt. 15th March, 1999, whereby the learned CIT(A) had set aside the order of the AO. The AO had dismissed the assessee's application filed under Section 154 of the IT Act, for rectification of the mistake. The appeal was admitted by framing following substantial question of law: Whether on the facts and in the circumstances of the case, the learned Tribunal is justified in upholding the order passed by the learned CIT(A) by holding that the impugned adjustment made by the AO was outside the purview of Section 143(1)(a) of the IT Act.?
(2.) BEREFT of unnecessary details the facts are, that the assessee had filed the return, and thereupon after taking recourse to procedure provided under Section 131 etc., and giving necessary opportunity of hearing to the assessee, the assessment order was made on 26th Aug., 1996. In the return the assessee had claimed deductions under Section 80HHC, but then, the assessee did not enclose the required documents. This return was filed on 31st Oct., 1995. On account of absence of the requisite report, the deduction was not allowed, and addition was made in the income to that extent, with all necessary consequences. Thereafter the assessee filed an application under Section 154 of the Act, claiming inter alia, that since the auditor of the assessee was of the opinion, that since the sale proceeds were not received within six months, and permission for extension has not been received from the CIT; the report cannot be given, and regarding delay in receipt of payments on account of the exports, relied upon the Board's circulars dt. 24th Aug., 1994 [(1994) 120 CTR (St) 31] and 25th Oct., 1993 [(1993) 115 CTR (St) 2]. According to which, in case such requisite report is subsequently filed, a rectification under Section 154 should be carried out. As appears from the order of the learned AO, that to verify the fact about enclosures, the Inspector was directed to make enquiry, who in turn recorded the statement of the partner of the assessee, and it was established that it was falsely noted in the return that a report under Section 80HHC is enclosed. Thus, it was found that a false verification was made. Then, it was found that Section 154 has a very limited scope, as it is applicable only for the purpose of rectifying the mistake apparent on record as to facts or law, while there is no mistake, either of fact or law, apparent on the record, because no report as is required for relevant deduction under Section 80HHC, was enclosed with the return of the income, and therefore, the same was not allowed, and the amount was added to the total income of the assessee, by making adjustment of the income, under Section 143(1)(a). Certain circulars of the Board were also pressed into service, but then they were found to be not applicable, as in the case in hand, from the enquiries made it transpires that there was no report even available with the assessee at the time of filing return, and the report was filed only along with the application under Section 154. The report is dt. 16th Sept., 1996, while the return was filed on 31st Oct., 1995. Thus, the application was dismissed. The learned CIT(A) relied upon certain judgments of some other High Courts, taking the view, that filing of audit report for relief under Section 80, along with the return was directory, and it was found, that the time -limit was a matter of mere procedure, and should be taken to be directory. Then, Board's circular dt. 24th Aug., 1994 was also considered, and it was found, that the revised return was filed by the assessee along with the audit report in Form No. 10CCAC, which has been accepted by processing the said revised return, and the claim of the appellant for deduction under Section 80HHC has been fully allowed. It was found that filing of the audit report is only a procedural requirement, and that the AO was not empowered to make any adjustment under Section 143(1)(a) on the ground of audit report having not been filed with the return. The claim was found to be perfectly in order, and the audit report was submitted along with the application under Section 154, which was before the AO, while deciding the application. It was also held, that there was reasonable cause with the appellant, for not filing the audit report along with the return of income, and that, since the claim of the appellant, for deduction under Section 80HHC was not found otherwise inadmissible, the AO was not found to be justified in rejecting the application under Section 154, and charging additional tax. Thus, the appeal was allowed, and additional tax, as levied, was ordered to be deleted. This order has been upheld by the learned Tribunal, by holding, that the impugned adjustment made by the AO, was outside the purview of Section 143(1)(a); this being a mistake of law apparent on record, the AO ought to have accepted the application under Section 154. We have heard learned Counsel for either side, and have gone through the impugned orders, so also various judgments considered by the learned authorities below.
(3.) FIRST of all we take up the cases considered by the learned CIT(A). So far as the first judgment relied upon, said to be in CIT v. Shivanand Electronics : [1994]209ITR63(Bom) , is concerned, despite best efforts, even with the assistance of the learned Counsel for either side, we could not locate the judgment.;