COMMISSIONER OF INCOME TAX vs. CHANDULAL ALIAS VALLABHDAS DAMJI

TAXAP/148420/2006 1/6 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 1484 of 2006 For Approval and Signature: HONOURABLE MR.JUSTICE K.A.PUJ Sd/- HONOURABLE MR.JUSTICE BANKIM.N.MEHTA Sd/- ==================================== 1. Whether Reporters of Local Papers may be allowed to see the judgment ? YES 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 4. Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5. Whether it is to be circulated to the civil judge ? NO ==================================== COMMISSIONER OF INCOME TAX - Appellant Versus CHANDULAL ALIAS VALLABHDAS DAMJI - Opponent ==================================== Appearance : MRS MAUNA M BHATT for Appellant. MR MANISH J SHAH for Opponent. ====================================

TAXAP/148420/2006 2/6 JUDGMENT CORAM : HONOURABLE MR.JUSTICE K.A.PUJ and HONOURABLE MR.JUSTICE BANKIM.N.MEHTA Date : 05/08/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE K.A.PUJ) 1. The revenue has filed this Tax Appeal under Section 260A of the Income-tax Act, 1961 for A.Y. 1997 – 98 proposing to formulate the following substantial questions of law for the consideration and determination of this Court:- A) Whether the Appellate Tribunal is right in law and on facts in dismissing the appeal filed by the revenue on the ground of low tax effect ? B) Whether on facts and circumstances of the case, the Appellate Tribunal was right in law in confirming the order of the CIT (A) holding that the addition of Rs.1,38,422/- made on account of short term capital gains by resorting to rectification of the order under Section 154 of the Act was invalid ? 2. This Court has admitted the Tax Appeal on 24.07.2007 in terms of the above referred substantial questions of law.

TAXAP/148420/2006 3/6 JUDGMENT 3. This appeal was heard by us along with other cognate matters. Submissions were made by both the sides. So far as Question (A) is concerned, we have passed a detailed order in Tax Appeal No.1402 to 1405 of 2007. We have decided the said tax appeal and the question paused therein was answered in affirmative i.e. in favour of the assessee and against the revenue. For the reasons stated and conclusion drawn therein, we answer Question (A) in affirmative i.e. in favour of the assessee and against the revenue. 4. So far as Question (B) is concerned, the assessment was framed under Section 143(3) r.w.s. 147 of the Act. Thereafter, on account of revenue audit, an objection was raised that the Assessing Officer has disallowed and added claim of Rs.1,93,983/- and again allowed short term capital gain offered by the assessee under Section 50 of the Act to the tune of Rs.1,38,422/-. On this basis, the Assessing Officer passed an order of rectification under Section 154 of the Act. The Commissioner of Income-tax (Appeals) held that there is no case of double benefit of set-off and hence, there

TAXAP/148420/2006 4/6 JUDGMENT is no mistake which required rectification. On further appeal, the appellate Tribunal upheld the said order. It is contended on behalf of the revenue that the Appellate Tribunal has overlooked that there was granting of dual benefit which was an error apparent on the record. The same could be rectified under Section 154 of the Act. The Appellate Tribunal has, therefore, erred in holding that there is no error by overlooking vital aspects of the claim made by the assessee with regard to the reduction of WDV of block of assets on sale of two trucks. In this view of the matter, the Question (B) was proposed to be formulated by the revenue. 5. We have considered the submissions made on behalf of the revenue and also gone through the orders passed by the authorities below. The CIT (Appeals) has categorically held in his order that the Assessing Officer has not appreciated the contents of the assessment order and has proceeded to invoke the provisions under Section 154 in an arbitrary manner. There is no case of double benefit of set off of capital

TAXAP/148420/2006 5/6 JUDGMENT gains as pointed out by the Assessing Officer. The CIT (Appeal), therefore, took the view that there was no mistake which needs rectification. He, therefore, cancelled the order passed by the Assessing Officer under Section 154 of the Act. The Tribunal has also observed in its order that it was clearly mentioned in the assessment order that in the assessment proceedings, the assessee agreed disallowance on appreciation on trucks and claimed for reducing the income offered of Rs.1,38,422/- as a short term capital gain under Section 50 of the Act. The Tribunal has further observed that the Assessing Officer has not appreciated the contents of the assessment order and has proceeded to invoke the proceedings of Section 154 in an arbitrary manner. The Tribunal has also given its finding that there is no case of double benefit of set off of capital gains as pointed out by the Assessing Officer. Since there was no mistake apparent on the face of the record, the Tribunal has confirmed the order of the learned CIT (Appeal) whereby the order passed by the Assessing Officer under Section 154 of the Act was cancelled. We are,

TAXAP/148420/2006 6/6 JUDGMENT therefore, of the view that the Tribunal was right in confirming the order of CIT (Appeal) holding that the addition of Rs.1,38,422/- made on account of short term capital gains by resorting to rectification of the order under Section 154 of the Act was invalid. Question (B) is, therefore, answered in affirmative i.e. in favour of the assessee and against the revenue. 6. This Tax Appeal is accordingly disposed of without any order as to costs. Sd/- Sd/- [K. A. PUJ, J.] [B. N. MEHTA, J.] Savariya