IN
THE ITAT, MUMBAI BENCH, ‘G’
Megji
Mathradas
v.
Assistant
Commissioner of Income-tax
SMT. P.
MADHAVI DEVI, JUDICIAL MEMBER
AND K.K.
BOLIYA, ACCOUNTANT MEMBER
I.T. APPEAL
NO. 5425 (MUM) OF 2004
[Assessment
year - 1998-99]
August 21,
2007
Section
234B read with sections 147 and 154 of the Income-tax Act, 1961 - Interest
chargeable - Assessment year 1998-99 - For assessment year 1998-99 assessee’s
return was initially processed under section 143[1][a] and regular assessment
was completed under section 147 read with section 143[3] on 31-12-2002 -
Assessing Officer initially charged interest under section 234B(3) from
1-4-1998 to 31-12-2002 when regular assessment was completed - Subsequently,
Assessing Officer rectified said order under section 154 and charged interest
from date of intimation under section 143(1)(a) (i.e. 24-9-2000) to date of
regular assessment (i.e. 31-12-2000) - Thereafter, Assessing Officer issued
notice for rectifying assessment order for second time by holding that interest
under section 234B(3) was wrongly charged from 24-9-2000 and instead it was to
be charged from 1-4-1998 as per section 234B(1) - Assessee submitted that
provisions of sub-section [1] and sub-section [3] of section 234B operate in
different fields and provisions of sub-section [3] are applicable to his case
as assessment under section 147 is a case of re-assessment, thus attracting
provisions of sub-section [3] of section 234B - Whether as per Explanation 2 to
sub-section [1] of section 234B, assessment done under section 147 is regular
assessment for purposes of section 234B and not re-assessment / recomputation
under section 147 as claimed by assessee - Held, yes - Whether therefore,
provisions of sub-section [1] of section 234B were applicable to case of
assessee and Assessing Officer was justified in rectifying such a mistake under
section 154 - Held, yes
For
assessment year 1998-99 assessee’s return was initially processed under section
143[1][a] and regular assessment was completed under section 147 read with
section 143[3] on 31-12-2002. The
Assessing Officer initially Charged interest under section 234B(3) from
1-4-1998 to 31-12-2002 when regular assessment was completed - Subsequently,
the Assessing Officer rectified said order under section 154 and charged
interest from date of intimation under section 143(1)(a) (i.e. 28-9-2000) to
the date of regular assessment (i.e. 31-12-2000). Thereafter, the Assessing Officer issued
notice for rectifying the said assessment order for second time by holding that
the interest under section234B (3) was wrongly charged from 24-9-2000 and
instead it was to be charged from 1-4-1998 as per section 234B (1). He therefore, rectified the said order for
second time. On appeal, the Commissioner
(Appeals) confirmed the order of the Assessing Officer. In the instant appeal, the assessee submitted
that the Assessing Officer had duly applied his mind while passing the
rectification order under section 154 in the first instance and had correctly
charged interest under section 234B from 24-9-2000 and, therefore, it was not
open for the Assessing Officer to rectify the same under section 154, as it
would amount to change of opinion and not a mistake apparent from record. He also submitted that the provision of
sub-section (1) and (3) of section 234B operate in different fields and
provisions of sub-section are applicable to his case as the assessment under
section 147 is a case of reassessment thus attracting provision of section
234B(3).
To assume
jurisdiction under section 154, the basic requirement is that there must be a
mistake apparent from record. In
taxation law, mistake is not merely an arithmetical or clerical error, but it
may be a mistake either of law or of fats.
The Supreme Court in the case of Satyanarayan Laxminarayan Hegde
v. Mallikarjun Bhavanappa Thirumale AIR 1960 SC 137, has held that a
mistake apparent from record must be an obvious and apparent mistake and not
something which can be established by a long drawn process by reasoning on
points on which there may be conceivably two opinions. It is also a settled
principle of law that if a statutory provision is capable of two
interpretations, taking one such interpretation, cannot give rise to an error
if one is of the view that the other interpretation was more correct in the
context. In the instant case, assessee sought application of sub-section (3) of
section 234B, whereas the Assessing Officer had applied sub-section (1) of
section 234B. [
Sub-section
(3) of section 234B is applicable to a case where an order of
reassessment/recomputation is made under section 147 or section 153A, whereas
the provisions of sub-section (1) of section 234B are applicable to cases where
the assessee is liable to pay advance tax and has failed to pay such tax or has
paid less than 90 per cent of the assessed tax. Explanation 2 to
sub-section 1 of section 234B also provides that where an assessment for the
first time is made under section 147 or under section 153A, the assessment so
made shall be regarded as the regular assessment for the purpose of this
section. In the instant case, the return was initially processed under section
143(1)(a) and subsequently assessment was completed under section 147 read with
section 143(3). As held by the
jurisdictional High Court in the case of CIT v. Rajkumar Dipchand
Phade [2001] 249 ITR 520/116 Taxman 783 (Bom.) the intimation under section
143(1) is a summary assessment. By
applying the Explanation 2 to sub-section (1) of section 234B, the
assessment done under section 147 is the regular assessment for the purposes of
section 234B and not the case of re-assessment/recomputation under section 147
as claimed by the assessee. In this view
of the matter, the provisions of sub-section (1) of section 234B were
applicable to the case of the assessee.
The provisions of law are clear and the Assessing Officer had committed
a mistake in applying the correct provisions of law. The Commissioner (Appeals) had rightly
considered the provisions of law and had rightly held that no two views were
possible in the instant case and the Assessing Officer was justified in
rectifying such a mistake under section 154. The Tribunal was, therefore, not
inclined to interfere with the order of the Commissioner (Appeals) and the
grounds of appeal raised by the assessee were rejected. [
The appeal was
dismissed, accordingly.
CASE
REVIEW:
CIT v. Rajkumar
Dipchand Phade [2001] 249 ITR 520/116 Taxman 783 (Bom) [