2003-VIL-329-CAL-DT

Equivalent Citation: [2003] 262 ITR 237, 184 CTR 119, 134 TAXMANN 552

CALCUTTA HIGH COURT

Date: 03.02.2003

GEO MILLER AND CO. LTD.

Vs

DEPUTY COMMISSIONER OF INCOME-TAX AND OTHERS.

BENCH

Judge(s)  : GIRISH CHANDRA GUPTA.

JUDGMENT

GIRISH CHANDRA GUPTA J.-The petitioner is an assessee under the Income-tax Act, 1961. Assessment of the income of the petitioner for the assessment year 1988-89 was completed under section 143(3) on March 4, 1991, and similarly for the assessment year 1989-90 on March 26, 1992, allowing relief under various provisions of the Income-tax Act. Based on a judgment of the apex court in the case of CIT v. N.C. Budharaja and Co., delivered on September 7, 1993, reported in [1993] 204 ITR 412, the income-tax authorities contended that as per the interpretation of law made by the apex court certain deductions were not admissible and therefore there, was "a mistake apparent from the record" and therefore rectifiable under section 154 of the Income-tax Act. Accordingly, notices dated January 16, 1995, for both the aforesaid assessment years under section 154 of the Income-tax Act, 1961, were issued to the petitioner. It is these notices which are under challenge in this writ petition on the ground, inter alia, that the same were issued without jurisdiction and therefore bad and liable to be quashed.

Dr. Pal, learned senior advocate appearing for the petitioner, submitted that in the case of a retrospective legislation either by way of a fresh enactment or by way of amendment of the existing law, it can be contended that the retrospective legislation had always been the law but the same is not true in the case of a law laid down by the Supreme Court. In other words, the law laid down by the Supreme Court cannot have retrospective operation so as to afford any room for the contention that the law subsequently laid down by the Supreme Court had always been the law and therefore the deductions previously granted were unwarranted and therefore there was a mistake apparent on the record. In support of his submission, Dr. Pal relied on a Division Bench judgment of this court in the case of Jiyajeerao Cotton Mills Ltd. v. ITO [1981] 130 ITR 710, wherein a Division Bench of this court took the following view:

"We are, however, unable to accept the contention of Mr. Pal that the principle of retrospective legislation is applicable to the decisions of the Supreme Court declaring the law or interpreting a provision in a statute. The law is laid down or a provision in a statute is interpreted by the Supreme Court only when there is a debate or doubt on the interpretation of any provision of a statute requiring interpretation by the Supreme Court or when there is a conflict of judicial opinion on a provision of a statute between the different High Courts of India which is required to be resolved and settled by the Supreme Court. The law laid down by the Supreme Court, in our opinion, cannot be said to have retrospective operation in the sense that although a debate or doubt or a conflict of judicial opinion is resolved and settled by the Supreme Court, yet still that does not obliterate the existence of such debate or doubt or conflict that existed prior to the decision of the Supreme Court setting at rest such debate or doubt or conflict."

Dr. Pal also drew the attention of this court to Order 47 of the Code of Civil Procedure which provides for review on account of some mistake or error apparent on the face of the record. Dr. Pal submitted that by the 1976 Amendment an Explanation was added which reads as follows:

"The fact that the decision on a question of law on which the judgment of the court is based has been reversed or modified by the subsequent decision of a superior court in any other case, shall not be a ground for the review of such judgment."

Dr. Pal contended that the Explanation goes to show that a subsequent reversal or modification of the existing interpretation does not render the earlier judgment open to review nor does the same constitute mistake or error apparent on the face of the record.

He therefore, submitted that the attempt on the part of the income-tax authorities to find a mistake in the earlier assessment based on a subsequent ruling of the Supreme Court on the ground of a mistake apparent on the record is wholly misplaced. By reason of the subsequent exposition of the law it cannot be said that the earlier assessment was wrong or that there is a mistake apparent on the face of the record and in case there is no mistake apparent on the record there is no jurisdiction to reopen the case under section 154 of the Income-tax Act, 1961, He accordingly, invited this court to quash the aforesaid notices.

Mr. Shome, the learned senior advocate appearing for the Department, drew the attention of this court to the case of Kil Kotagiri Tea and Coffee Estates Co. Ltd. v. ITAT [1988] 174 ITR 579 (Ker), wherein a view was taken that the mistake envisaged under order 47 of the Civil Procedure Code is not the same as the mistake envisaged in section 154 and that a subsequent reversal or modification would afford a ground for review under Order 47 of the Code of Civil Procedure. This decision, with great respect to the learned judges, is per incuriam since they failed to notice the Explanation quoted hereinabove. He also drew attention of this court to the case of B.V.K. Seshavataram v. CIT [1994] 210 ITR 633 (AP), wherein a Division Bench took the view that a subsequent exposition of law by the apex court may afford a ground for reopening the assessment on the ground of mistake apparent on the face of the record. This court is unable to accept the proposition that Parliament intended that mistake on the face of the record for the purpose of review under Order 47 cannot be based on a subsequent exposition of law by the apex court while mistake apparent on the record for the purpose of reopening an assessment under section 154 can be based on a subsequent exposition of law by the apex court. This is something which is contrary to the common sense and does not commend itself to reason.

This court is of the view that the Explanation added to rule 1 of Order 47 of the Code of Civil Procedure in order to define an error or mistake apparent on the face of the record is equally applicable to section 154 of the Income-tax Act, 1961. In construing section 154 of the Income-tax Act, 1961, the court is justified in taking into consideration other enactments where identical provision has been defined by the same Legislature.

Moreover, the law laid down by the Division Bench of this court adverted hereinabove is binding on me. If any authority for this proposition is needed, reference can be made to the judgments reported in Ram Jivan v. Smt. Phoola [1976] 1 SCC 852 and State of Tripura v. Tripura Bar Association [1998] 5 SCC 637.

In the result, this application succeeds. The notices dated January 16, 1995, being annexure F to the petition are quashed and declared null and void. There will be no order as to costs.

 

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