High Court of Delhi

Commissioner of Income Tax

v.

Modi Pon Ltd.

MADAN B.LOKUR AND DR. S. MURALIDHAR, JJ.

IT REFERENCE NO. 165 OF 1984

August 16, 2007

Section 154, read with Section 214 of the Income-tax Act, 1961 - Rectification of mistakes - Apparent from record - While exercising power of rectification under section 154(1), Assessing Officer withdrew refund of interest to assessee under section 214 - Whether following decision of Allahabad High Court that Assessing Officer could not exercise power under section 154(1) to rectify a mistake related to a question of law and of Supreme Court that no rectification of an assessment order could be made if there were different opinions possible on same issue, question as to existence of apparent mistake in ITO’s assessment order had to be determined in light of decision in case of National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India [1981] 130 ITR 928/1 Taxman 123 (Delhi) though that decision case to be reported subsequent to rectificatory order of ITO - Held, yes

FACTS

While exercising the power of rectification under section 154(1), the Assessing Officer withdrew the refund of interest to the assessee under section 214. The Tribunal held that the question as to the existence of apparent mistake in the ITO’s assessment order had to be determined not on basis of Allahabad ruling in the case of Sir Shadi Lal Sugar & General Mills v. Union of India [1972] 85 ITR 363, but in the light of decision in the case of National Agricultural Co-opt. Marketing Federation of India Ltd. v. Union of India [1981] 130 ITR 928/1 Taxman 123 (Delhi), though that decision came to be reported subsequent to the rectificationary order dated 07-06-1978 of the ITO?

On reference:

HELD

The Allahabad High Court in CIT v. Modi Industries [1999] 235 ITR 464 came to the conclusion that the Assessing Officer could not exercise power under section 154(1) of the Act to rectify a mistake related to a question of law. In Balram (T.S.), ITO v. Volkart Bros. [1971] 82 ITR 50 (SC) the Supreme Court has categorically held that no rectification of an assessment order can be made if there are different opinions possible on the same issue.

Following the above decisions, the Tribunal was right in taking the above view.