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INCOME TAX APPELLATE TRIBUNAL, CALCUTTA
A. Satyanarayana, Vimal Gandhi, JJ.
Income-tax Officer -Appellant
Versus
Steward Dholakia (P.) Ltd. -Respondent
IT APPEAL NOS. 738, 739 AND 740 (CAL.) OF 1986 [ASSESSMENT YEAR 1978-79, 1979-80 AND 1980-81]
Decided On : 11-08-1988
Advocates Appeared:
K.L. Bhowmick,R.N. Bajoria
K.L. Bhowmick,R.N. Bajoria
ORDER
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Vimal Gandhi, J.M. - These three appeals by the Revenue of assessment years 1978-79, 1979-80 and 1980-81 are directed against common consolidated order of Commissioner (Appeals) dated 19th December 1986 cancelling rectification orders passed by ITO under section 154 of the Income-tax Act, 1961 (the Act).
2. Original assessment for the assessment year 1978-79 made by the ITO on 20th November 1980 was set aside by Commissioner (Appeals) vide his order dated 23rd September 1981 with direction to make fresh assessment. This set aside assessment for the assessment year 1978-79 was taken and completed along with assessments for the two subsequent assessment years i.e. assessment years 1979-80 and 1980-81. The ITO, in all the three years, allowed certain reliefs under section 35B of the Act as per orders dated 14th May 1982. Thereafter, on 22nd April, 1985, the successor ITO was of the opinion that relief allowed to the assessee in respect of expenditure on "blending of tea", "packages for export of goods" as also "bank interest" did not fall under clause (viii) of section 35B (1)(b) of the Act, as these expenditures were incurred in India and, therefore, relief under section 35B was wrongly allowed to the assessee. As per the successor ITO, the assessment for 1978-79 was to be completed in compliance with direction of Commissioner (Appeals) to apply Special Bench decision of Tribunal in the case of J. Hemchand & Co. v. ITO 1 SOT 150. The Special Bench decision was also to be applied in the two subsequent years. The ITO, therefore, held that in allowing relief under section 35B in order dated 14th May 1982 the ITO committed mistake "apparent from record" liable to be rectified. Accordingly, as per order dated 31st July 1985 the ITO withdrew relief allowed under section 35B on the following three items:
(1) Interest on deferred payment;
(2) Blending charges;
(3) Package tea material expenses.
The amounts of relief withdrawn in the three years are different but nature of item as also the basis for withdrawing relief are same.
3. On appeal, it was contended on behalf of the assessee that for the two subsequent assessment years 1979-80 and 1980-81, there was no direction to follow the case of J. Hemchand & Co. (supra) and, therefore, action of ITO in withdrawing relief on the ground that direction of Commissioner (Appeals) was not followed in those years was unmaintainable. It was argued that in 1978-79 as also in the two subsequent years, the ITO allowed relief under section 35B of the Act after considering fully the decision of Special Bench in J. Hemchand & Co. (supra). The Commissioner (Appeals) on consideration of points at issue held that rectification orders of ITO were not maintainable. He was of the opinion that order dated 14th May 1982 was passed by ITO after discussion and after consideration of direction of the Commissioner (Appeals) contained in order dated 23rd September 1981. Bank interest on deferred payment was allowed after full discussion and on basis of decision of Tribunal in Tribunal No. 291 of 1970 dated 26th May 1980. Likewise, relief in respect of blending charges and expenses incurred on package material was allowed by the ITO after applying his mind. He further observed that orders for the assessment years 1979-80 and 1980-81, were passed after directions under section 144B of the Act were issued by the IAC. That apart, as per Commissioner (Appeals) the points involved were arguable and, therefore, rectification, withdrawing relief under section 35B of the Act already allowed to the assessee, was not a mistake apparent from record. On the issue involved, two opinions were possible. The Commissioner (Appeals), accordingly, cancelled rectification orders in all the three assessment years. Hence these appeals by the Revenue.
4. Shri K.L. Bhowmick, learned departmental representative drew our attention to order dated 23rd September 1981 passed by Commissioner (Appeals) setting aside the assessment for the assessment
