C.I.T.JALANDHAR vs. M/S R.V.STEELS ROLLING MILLS. JAITU

ITR/71/1990HC Punjab & HaryanaPHHC01021626199014 March 2007Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE M.M. KUMAR4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the question of law had to be answered against the revenue and in favour of the assessee. The Court agreed with the ITAT's reasoning that the power under Section 154 of the Income-tax Act, 1961, can only be exercised in cases of an error apparent on the record, where there are no two opinions possible. Given that the retrospective amendment to Section 80J was under challenge before the Supreme Court, there was a doubt regarding its applicability. Consequently, the Court found that the power under Section 154 could not be exercised in these circumstances. The reference was answered against the revenue and in favour of the assessee. The operative direction was to uphold the ITAT's order, reversing the AO's reduction in deduction and restoring the original assessment stage position.

What were the facts?

The assessee, M/s R.V. Steel Rolling Mills, filed its return for assessment year 1977-78. The Assessing Officer (AO) initially allowed a deduction of Rs. 1,03,045/- under Section 80J. Subsequently, the AO reopened the issue under Section 154, citing a retrospective amendment to Section 80J by the Finance (No. 2) Act, 1980. This amendment affected the calculation of capital employed. The AO reduced the deduction to Rs. 10,155/-. The assessee appealed to the Assistant Commissioner, who dismissed the appeal. The assessee then appealed to the Income Tax Appellate Tribunal (ITAT). The ITAT allowed the assessee's appeal, holding that the AO could not revise the assessment under Section 154 as there was no error apparent on the record, especially since the retrospective amendment was under challenge before the Supreme Court.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the ITAT is right in law in holding that there is no mistake apparent from the record within the meaning of section 154 of the Income-tax Act, 1961, when the retrospective amendment of section 80J of the Income-tax Act is challenged before the Supreme Court? Assessee's contention: The ITAT held that the Assessing Officer could not reopen the assessment under Section 154 as there was no error apparent on the record. The retrospective amendment to Section 80J was under challenge before the Supreme Court, creating doubt about its applicability for the assessment year 1977-78. Therefore, the AO was not justified in reducing the deduction under Section 154. Revenue's contention: The revenue referred the question of law to the High Court, challenging the ITAT's finding that there was no mistake apparent from the record. The revenue implicitly argued that the retrospective amendment should have been considered, and the ITAT erred in not allowing the AO to rectify the assessment under Section 154.

Which sections of the Income-tax Act were involved?

Section 80J,Section 154,Section 143(3)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
In the High Court of Punjab and Haryana at Chandigarh I.T.R. No. 71 of 1990 Date of Decision: 14.03.2007 The Commissioner of Income-Tax, Jalandhar …Petitioner Versus M/s R.V. Steel Rolling Mills, Jaitu …Respondent CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE RAJESH BINDAL Present: Mr. Sanjeev Bansal, Advocate, for the petitioner-revenue.

JUDGMENT M.M. KUMAR, J. On the direction issued by this Court in Income Tax Case No. 32 of 1985, as well as the order dated 31.8.1984, passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar in I.T.A. No. 645 (CHANDI)/1983, in respect of assessment year 1977-78, the revenue has referred the following question of law for the opinion of this Court:- “Whether on the facts and in the circumstances of the case, the ITAT is right in law in holding that there is no mistake apparent from record within the meaning of section 154 of the Income-tax Act, 1961, when the ITR No. 71 of 1990 retrospective amendment of section 80J of Income-tax Act, is challenged before the Supreme Court?” As per the statement of the case forwarded by the Tribunal, the assessee is a firm engaged in the business of steel re- rolling. For the assessment

The order continues below.

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