The appellate authority's decision on the issue of penalty under section 271 (l)(c) of the Income Tax Act, 1961 bars the Income Tax Officer from rectifying the order of penalty under section 154 of the Act.

Headnote:
INCOME TAX ACT, 1961 - SECTION 154 - RECTIFICATION OF ORDER - JURISDICTION OF INCOME TAX OFFICER - APPEAL AGAINST PENALTY ORDER - APPELLATE AUTHORITY CONSIDERING AND DECIDING THE ISSUE - SUBSEQUENT RECTIFICATION ORDER BY INCOME TAX OFFICER WITHOUT JURISDICTION.
Fact of the Case:

The petitioner, a registered partnership firm, was levied a penalty under section 271 (1) (c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income. The petitioner appealed the penalty order to the Commissioner of Income Tax (Appeals), who confirmed the imposition of the penalty. Subsequently, the Deputy Commissioner, Income Tax Assessment Range I purportedly exercised power under section 154 of the Act and rectified the order of penalty, imposing a further sum as penalty treating the petitioner as URF under section 271 (2) of the Act.
Finding of the Court:

The court held that the rectification order passed by the Income Tax Officer was without jurisdiction and illegal. The matter of penalty under section 271 (l)(c) was fully considered and decided by the appellate authority vide its order dated 21.12.89 and the appeal filed by the petitioner was dismissed the same holding that the penalty was correctly imposed. In that view of the matter the rectification order passed by the Income Tax Officer subsequently on 31.10.90 was without jurisdiction and illegal.
Issues: Whether the Income Tax Officer had the jurisdiction to rectify the order of penalty under section 154 of the Act after the appellate authority had considered and decided the issue of penalty.
Ratio Decidendi: The court held that under section 154 (1A) of the Act, where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the authority passing such order may notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided. In the present case, the matter of penalty under section 271 (l)(c) was fully considered and decided by the appellate authority vide its order dated 21.12.89 and the appeal filed by the petitioner was dismissed the same holding that the penalty was correctly imposed. Therefore, the Income Tax Officer had no jurisdiction to rectify the order of penalty under section 154 of the Act.
Final Decision: The court made the Rule absolute and quashed and set aside the order dated 31.10.90 and notice dated 14.11.90.

The petitioner is a registered partnership firm and is a regular assessee under the Income Tax Act, 1961. In the instant case by an order dated 31st March of 1989 Deputy Commissioner of Income Tax, Guwahati levied a sum of Rs.28,3 51 as penalty under section 271 (1) (c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income. As against the said order of penalty petitioner went in appeal before the Commissioner of Income Tax (Appeals) Guwahati. The said Commissioner heard the appeal and confirmed the imposition of penalty vide its order dated 21.12.89 holding that "I am of the opinion that the penalty has correctly been levied by DCTT (Asstt) Special Range in view of the Explanation 1 (a) and (b) of section 271 (1) (c) and thus I confirmed the imposition of penalty and dismissed the appeal of the appellant." Subsequent to the passing of the said order by the appellate authority the Deputy Commissioner, Income Tax Assessment Range I purportedly exercising power under section 154 of the Act rectified the order of penalty dated 31.3.89 holding that there was mistake apparent from the record. The assessing authority imposed a further sum of Rs.36,618 treating the petitioner as URF under section 271 (2) of the Act. The petitioner has challenged the said rectification order by the writ application filed before this Court on the ground that the respondents have no authority or jurisdiction to rectify the order under section 154 since the order imposing penalty was appealed against and the appellate authority had considered and decided the issue of penalty. According to the petitioner after the passing of the aforesaid order on the question of imposition of penalty the Income Tax Officer sought to rectify the order of assessment relating to the same matter ie imposition of penalty under section 271 (1) (c) of the Act. Dr. Saraf appearing for the petitioner submits that such an attempt by the Income Tax Officer is not permissible under the provision of section 154 of the Act. If in a matter in appeal or revision the authority passing the said order has considered and decided a particular matter the assessing authority can no longer pass an order by way of rectification under section 154 of the Act. Under section 154 (1) and (1 A) of the Act which reads as follows:

" 154. (1) With a view to rectify .any mistake apparent from the record an income tax authority referred to in section 116 may :

(a) amend any order passed by it under the provisions of the Act

(b) amend any intimation sent by it under sub-section (1) of section 143 or enhance or reduce the amount of refund granted by it under that sub-section.

(1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1) the authority passing such order may notwithstanding anything contained in any law for the time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided."

2. On the basis of the aforesaid provisions, Dr. Saraf submits that matter of penalty under section 271 (l)(c) was fully considered and decided by the appellate authority vide its order dated 21.12.89 and the appeal filed by the petitioner was dismissed the same holding that the penalty was correctly imposed. In that view of the matter the rectification order passed by the Income Tax Officer subsequently on 31.10.90 was without jurisdiction and illegal. In support of his contention Dr. Saraf referred to the decision of Madras High Court in Commissioner of Income Tax, Tamil Nadu vs. Indian Auto Stores reported in 129 ITR 554 where a similar question arose before the Madras High Court. According to Dr. Saraf the present case falls squarely within the parameters of the Madras judgment wherein also an assessment was made and the penalty imposed under section 271 (1) (c) which was appealed against and the appeal was dismissed. Subsequentl

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Judicial Analysis

1995 Supreme(Gau) 207

GAUHATI HIGH COURTS.L.Saraf, J.P.Das and Co -AppellantVersusDeputy Commissioner of Income Tax, Special Range I -RespondentCivil Rule No. 2248 of 1990Decided On : 06-09-1995

The appellate authority's decision on the issue of penalty under section 271 (l)(c) of the Income Tax Act, 1961 bars the Income Tax Officer from rectifying the order of penalty under section 154 of the Act.

Judicial Analysis

GAUHATI HIGH COURT
S.L.Saraf, J.
P.Das and Co -Appellant
Versus
Deputy Commissioner of Income Tax, Special Range I -Respondent
Civil Rule No. 2248 of 1990
Decided On : 06-09-1995