JUDGMENT
1. The present appeal under Section 260A of the IT Act 1961, hereinafter referred to as the Act has been preferred against the order dt. 28th Oct., 2004 passed by the Tribunal, Lucknow whereby the appeal preferred by the appellant has been dismissed.
2. Briefly stated the facts giving rise to the present appeal are as follows:
For the asst. yr. 1990-91 the appellant filed return of loss which was processed under Section 143(1)(a) of the Act. Prima facie adjustment to the extent of Rs. 36,28,690 was made resulting into liability of additional tax of Rs. 3,12,655. The intimation dt. 5th Dec, 1990 was issued. However, in view of the judgment of this Court in the case of Indo Gulf Fertilizers & Chemicals Ltd. v. Union of India and Anr. (1992) 103 CTR (All) 25 wherein it was held that where the income assessed is loss, additional tax is not chargeable with respect to the adjustment made, the intimation dt. 5th Dec, 1990 rectified vide order dt. 13th Oct., 1992. Consequently, the levy of additional tax of Rs. 3,12,665 was cancelled. Subsequently, the provision of Section 143(1A) was amended by Finance Act 1992, with retrospective effect from 1st April, 1989 nullifying the ratio of the decision of this Court in the case referred to above. Proceeding under Section 154 was again initiated and vide order dt. 5th June, 1996, the order dt. 13th Oct., 1992 was rectified and the additional tax demand of Rs. 3,12,655 was again created. The appellant contested the matter on the ground that the period of limitation is of four years as amended under Sub-section (7) of Section 154 of the Act has to be reckoned from the intimation dt. 5th Dec, 1990 and not from the order dt. 13th Oct., 1992 and therefore, the action was barred by limitation. The appeal preferred by the appellant before the CIT(A) and the Tribunal did not meet with any success.
We have heard Sri S.M.K. Choudhary learned Counsel for the appellant and Sri D.D. Chopra learned standing counsel appearing for the Revenue.
Learned Counsel for the appellant submitted that in view of the amendment made in Sub-section (7) of Section 154 of the Act by Taxation Laws (Amendment) Act, 1984 w.e.f. 1st Oct., 1984, the order passed within four years from the end of the financial year, means the financial year involved and not the financial year in which the order has been passed.
3. The Parliament has given an extended period of limitation for passing the orders of rectification. Earlier the limitation was four years from the end of the date of the order whereas at present it is from the end of the financial year in which the order has been passed. This can be illustrated by following example: Suppose the order has been passed on 3rd April, 1983, the rectification order under the old provision could be passed only uptill 2nd April, 1987 whereas after the amendment in the Sub-section (7) of Section 154 of the Act, the same can be passed upto 31st March, 1988. We further find that the apex Court in the case of Hind Wire Industries Ltd. v. CIT has held that the period of limitation for the purpose of rectification of an order has to be counted from the date of the order which is said (sic-sought) to be rectified and not from any other order.
4. The further submission is that on account of the order passed on 13th Oct., 1992, the demand of additional tax of Rs. 3,12,655 was deleted and it could not have been rectified vide order dt. 5th June, 1996. This submission proceeds on the misconception that the order dt. 13th Oct., 1992 had been given effect to. If the order is erroneous, it suffers from manifest error of law, which can be rectified in accordance with law. The power of rectification cannot be taken away or the authorities are not estopped from rectifying the mistake merely on the ground that the order has been given effect to.
5. Sri Choudhary further submits that on 13th Oct., 1992 when the first rectification was made, the law was well settled that no additional tax can be levied where the assessed income is also at a loss and therefore, by subsequent amendment, the liability cannot be fixed. He has relied upon a decision in the case of CIT v. Hindustan Electro Graphites Ltd. . In the aforesaid case, the issue of cash compensatory support was under consideration. Whether it amounted to an income or not? At the time of filing of return, the assessee had not disclosed the amount of cash compensation received from the Government. Subsequently, the law was amended and Clause 3(i)(b) [sic-(iiib)] in Section 28 of the Act was inserted by Finance Act, 1990, with retrospective effect from 1st April, 1967. The assessment year involved in the aforesaid case was 1989-90. The question of levy of additional tax arose and the apex Court has held that on the date when the return was filed, there was no liability for non-inclusion of the amount of cash compensatory support in the income and therefore, the law prevailing on the date of filing of return has to be seen for the purposes of levy of additional tax. The principle laid down by the apex Court in the aforesaid decision is not applicable in the facts of the present case, inasmuch as, the question as to whether a particular receipt is an income or not is not in question here. The issue is whether any additional tax can be levied where the assessed income after adjustment under Section 143(1)(a) results in a loss. The law has been clarified by the Parliament by making a retrospective amendment in the statute. For the aforesaid reasons the appellant cannot take the benefit of the ratio laid down by the apex Court in the case of Hindustan Electro Graphites Ltd. (supra).
6. In view of the foregoing discussions, we are of the considered opinion that the issues raised herein are squarely covered by the decision of the apex Court referred to above. The present appeal does not give rise to any substantial question of law and is accordingly dismissed in limine.