Delhi High Court

Commissioner Of Income Tax vs M. M. T. C. Ltd. on 17 August, 2000

Equivalent citations: 2001 112 TAXMAN 647 Delhi

Author: Pasayat

JUDGMENT

Pasayat, C.J.

This is an appeal under section 260A of the Income-tax Act, 1961 ('the Act') filed by the Commissioner in respect of an order of the Tribunal, Delhi Bench-E.

2. The dispute relates to the assessment year 1992-93. Two appeals were filed by the assessee against the order of the Commissioner (Appeals). An order under section 154 of the Act was passed by the Assessing Officer holding that interest allowed to the assessee under section 244A(1) was not allowable and had been allowed by mistake. Stand of the assessee that the action was not permissible under section 154 was not accepted. The assessee filed appeal before the Commissioner (Appeals) which yielded no relief for it. On further appeal, the Tribunal held that section 154 did not apply to a case of this nature.

3. Factual position which is undisputed is as follows:

For the assessment year in question, the return was processed under section 143(1)(a) of the Act on 19-3-1993 on a total returned income of Rs. 1,69,71,48,952 and total tax and interest payable was computed at Rs. 89,00,73,277. Total pre-paid taxes were as under:

Rs.

TDS

1,23,49,024

Advance tax

77,74,14,375

Tax paid under section 140A

50,28,95,272

Total :

1,29,26,58,671

Adjustment of total taxes and interest payable with total pre-paid taxes resulted in refund of Rs. 40,24,85,394. The assessee was allowed interest under section 244A(1) on the above refund. Later on, the Assessing Officer was of the view that such allowance of interest was impermissible as this case was not covered under Explanation to clause (b) of section 244A(1). Notice under section 154 was served on the assessee, who raised an objection stating that clause (b) of sub-section (1) of section 244A clearly comes into operation and withdrawal of interest is not permissible under section 154. Reliance was also placed on a Circular No. 54A, dated 31-10-1989 to claim interest. The Deputy Commissioner (Special Range), the Assessing Officer, held that there was no ambiguity about the non allowability of interest and provisions of section 244A(1) are crystal clear. Interest is not payable on refund arising out of payment other than those made as advance tax, TDS and in pursuance of notice of demand under section 156. Accordingly, interest allowed was withdrawn. As noted above, the appeal before the Commissioner (Appeals) did not yield any relief. In further appeal, the Tribunal held that this was not a case which was covered under section 154.

4. In support of the appeal, the learned counsel for the revenue submitted that the Tribunal has erred in its view that section 154 has no application. According to him, the position was clear in law and, therefore, interest which has been wrongly allowed had been rightly withdrawn.

5. A bare look at section 154 makes it clear that a 'mistake apparent from the record' is rectifiable. In order to attract the application of section 154, the mistake must exist and the same must be apparent from the record. The power to rectify the mistake, however, does not cover cases where a revision or review of the order is intended. 'Mistake' means to take or understand wrongly or inaccurately; to make an error in interpreting; it is an error; a fault, a misunderstanding, a misconception. 'Apparent' means visible; capable of being seen, obvious; plain. It means open to view, visible, evident, appears, appearing as real and true, conspicuous, manifest, obvious, seeming". A mistake which can be rectified under section 154 is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. In our view amendment of an order does not mean obliteration of the order originally passed and its substitution by a new order. What the assessee intends to do in the present case is precisely the substitution of the order which, according to us, is not permissible under the provisions of section 154 and, therefore, the Tribunal was justified in holding that there was no mistake apparent on the face of the record. In order to bring an application under section 154, the mistake must be 'apparent' from the record. Section 154 does not enable an order to be reversed by revision or by review, but permits only some error which is apparent on the face of the record to be corrected. Where an error is far from self-evident, it ceases to be an apparent error. It is, no doubt, true that a mistake capable of being rectified under section 154 is not confined to clerical or arithmetical mistakes. On the other hand, it does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. As observed by the Apex Court in Master Construction Co. (P) Ltd. v. State of Orissa (1966) 17 STC 360, an error which is apparent from record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law. Similar view was also expressed in Satyanarayan Laxminarayan Hegde v. Malikarajun Bhavanappa Tirumale AIR 1960 SC 137. It is to be noted that the language used in Order XLVII, rule 1, of the Code of Civil Procedure, 1908, is different from the language used in section 154 of the Income Tax Act. Power is given to various authorities to rectify any mistake 'apparent from record' under section 154. In the Code of Civil Procedure, the words are "an error apparent on the face of the record". The two provisions do not mean the same thing. The power of the Tribunal in section 154 to rectify "any mistake apparent from the record" is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an "error apparent on the face of the record" - T S. Balaram, ITO v. VolkartBros. (1971) 82 ITR 50 (SC). 'Mistake' is an ordinary word but in taxation laws, it has a special significance. It is not an arithmetical error which, after a judicious probe into the record from which it is supposed to emanate are discerned. The word 'mistake' is inherently indefinite in scope, as to what may be a mistake for one may not be one for another. It is mostly subjective and dividing line in border areas is thin and indiscernible. It is something which is a duly and judiciously instructed mind can find out from the record. In order to attract the power to rectify under section 154, it is not sufficient if there is merely a mistake in the orders sought to be rectified. The mistake to be rectified must be one apparent from the record. A decision on a debatable point of law or a disputed question of fact is not a mistake apparent from the record. The plain meaning of the word 'apparent' is that it must be something which appears to be so ex facie and it is incapable of argument or debate. It, therefore, follows that a decision on the debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectifications. On the facts of the present case we find that there was no mistake apparent from the record which could be rectified under section 154. The questions proposed dealt with conclusions on facts giving rise to no question of law.

6. The Tribunal recorded the following findings with reference to the submissions made before it:

" 10. Learned counsel for the assessee invited our attention on the provision of the Act. It was stated that clause (b) of section 244A(1) provides that where refund is out of tax other than advance tax or tax treated as paid under section 199 or tax collected at source, the interest is to be paid @ 1 per cent for every month or part of a month comprised in the period starting from the date of payment of such tax or penalty up to the date of the payment of such tax or penalty up to the date on which the refund is granted. It was clarified in the explanation that date of payment of tax and the penalty means the date on and from which amount of tax or penalty specified in the notice of demand is paid in excess of such demand.

11. It was stated that there is absolutely nothing in the section by which interest is denied on the payments made under section 140A. Besides, it cannot be said that 244 interest is allowable only on those excess payments of tax which are made on consequence of the service of notice of demand/intimation. The language of the Act is clear. There is no ambiguity in it. As per the interpretation of the section, the assessee is clearly entitled to get the interest on the excess amount paid.

12. Further alternatively it was argued that the interest allowed cannot be withdrawn by resorting to the provisions of section 154 of the Act. Reference was made to the decision of the Apex Court rendered in the case of T S. Balaram, ITO v. Volkart Bros. (1971) 82 ITR 50 (SC), wherein the Hon'ble Supreme Court has held that a mistake apparent on the record must be and obvious and patent mistake and not something which can be established by a long drawn process of reasoning of points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. Reference was also made to the departmental Circular No. 549, dated 31-12-1989 issued by the Central Board of Direct Taxes wherein it is stated that interest is to be allowed on the basis of refund due as a result of intimation issued under section 143(1)(a).

13. It transpires from the perusal of the impugned order that an attempt was made to make interpretation of section 244A. There is no clear-cut mandate in the section by which the Assessing Officer can deny interest to the assessee on the amounts paid under section 140A. Therefore, the question apropos the chargeability of interest is a debatable question. The Supreme Court has held that debatable questions fall beyond the scope of section 154. As such, in our opinion, the Assessing Officer was not correct in withdrawing the amount of interest by resorting to the provisions of section 154 of the Act. We hold that the case of assessee falls beyond the ken of section 154.*

7. In view the factual position highlighted above, the Tribunal was perfectly justified in holding that section 154 had no application. Whether in a particular case section 154 is applicable would depend on the facts and there cannot be a strait-jacket formula laid down. In view of the analysis made and the conclusion drawn by the Tribunal that the question apropos the chargeability of interest is debatable question, in this case no question of law arises. This is not a case to which provisions of section 260A can be said to be applicable. We do not entertain the appeal which is, accordingly, dismissed.