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PETITIONER: M/S. HIND WIRE INDUSTRIES LTD.

       Vs.

RESPONDENT: THE COMMISSIONER OF INCOME TAX, WEST BENGAL-V

DATE OF JUDGMENT20/01/1995

BENCH: SAWANT, P.B. BENCH: SAWANT, P.B. RAY, G.N. (J)

CITATION:  1995 AIR 1133            1995 SCC  (3) 136  JT 1995 (2)   317        1995 SCALE  (1)475

ACT:

HEADNOTE:

JUDGMENT: ORDER 1.   Special leave granted.  Heard counsel on both sides. 2.   What is challenged in these appeals is the decision  of the  Calcutta  High  Court interpreting  the  provisions  of Section 154 [7] of the Income Tax Act [hereinafter  referred to  as the ’Act’] as it stood at the time of the  assessment order dated 21st September, 1979. 3.   Shortly  stated, facts are that the  appellant-assessee was assessed for income tax originally under the  assessment order  dated  21st September, 1979.  The  assessee  filed  a petition  for rectification of the said order under  Section 154  of  the  Act as it stood then on the  ground  that  the Income  Tax  Officer had not taken  into  consideration  the shift allowance available to the 319 assessee.  Consequent upon this application, the  assessment order  was  rectified  on 12th July,  1982.  Thereafter  the assessee again applied for rectification of the fresh  order of  12th July, 1982 on 4th July, 1986 contending that  while he  was  entitled   to depreciation  allowance   on  factory building at the rate of 10% he was allowed the  depreciation only  at  only  at  the rate  5%.  The  Income  tax  Officer dismissed  the  assessee’s  claim on the  ground   that  teh application  was beyond time. This order was  confirmed   by the  Applicable  Assistant Commissioner. In the  appeal  the Tribunal  however allowed the application  holding that  the application   made on 4th July 1986 was  within 4 years   of the  fresh order of assessment made on 12 th July, 1982  and hence  wihtin  limitation.  On  reference   the  High  Court reversed the order of the Tribunal  holding that  the period of  4 years is to be calculated from the initial  orders  of assessment,  viz from 21st September 1979 and not  from  the fresh order of assessment passed on 12th July 1982. 4.  There is no dispute that the assessee would be  entitled to 105 depreciation allowance on the factory building and it

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has  to  be  granted  to  him  if  it  is  held  that   this rectification application was within time. 5. Section 154 of the Act, as it stood at the relevant time, read as follows:               "154. Rectification of mistake-               [1]  With  a view to  rectifying  any  mistake               apparent from the record-               [a] the Income-tax Officer may amend any order               of assessment or of refund or any other  order               passed by him.               x      x       x        x      x         x               [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 been so considered and decided.                x         x         x         x    x    x               [7]  Save as otherwise in Section 155 or  sub-               section [4] of section 186 no amendment  under               this section shall be made after the expiry of               four  years from the date of the order  sought               to be amended. 6.  What falls for consideration in the present case in  the interpretation of the expression"from the date of the  order sought to be amended " insub-section [7]  of Section 154  as it stood then. It is obvious  that the word ’order’ has  not been  qualified in any way and it does not necessarily  mean the   original  order. It can be any  order   including  the amended or rectified order. A similar expression in Rule  38 of  the  Mysore  Sales Tax Act  fell  for  consideration  in International  Cotton  Corporation v. C.T.O. [ (1975  2  SCR 345].  Dealing  with  the point raised this  court  held  as under;               "The other attack that the rectification order               is  beyond the point of time provided in  Rule               38  of  the  Mysore Sales Tax  Rules  is  also               without  substance.  What  was  sought  to  be               rectified  was the assessment order  rectified               as  a consequence of this court’s decision  in               Yaddalam’s case. After such rectification  the               original  assessment  order was no  longer  in               force  and that was not the order sought to be               rectified.   It  is  admitted  that  all   the               rectification  orders  would  be  within  time               calculated  from  the  original  rectification               order. Rule               320               38  itself speaks of "any order’ and there  is               no doubt that the rectified order is also "any               order" which can be rectified under Rule 38". 7.   This  decision was endorsed in Deputy  Commissioner  of Commercial Taxes v. H.R. Sri Ramulu [(1977) 39 STC 180] when this court observed there as follows::               "The  reason  for  that is that  once  an  as-               sessment  is reopened, the initial  order  for               assessment ceases to be operative.  The effect               of  reopening the assessment is to  vacate  or               set aside the initial order for assessment and               to  substitute in its place the order made  on               re-assessment.   The  initial  order  for  re-               assessment  cannot  be said  to  servive  even               partially,although the  justification for  re-

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             assessment arises because of turnover escaping               assessment  in  a limited field or  only  with               respect to a part of the matter covered by the               intial   assessment  order.   The  result   of               reopening    the  assessment is that  a  fresh               order  for reassessment would have to be  made               induding for those matters in respect of which               there   Ls  no  allegation  of  the   turnover               escaping  assessment.  As it Ls, we find  that               in the present case the assessment orders made               under  section 12A were  comprehensive  orders               and were not confined namely to matters  which               had   escaped  assessment  earlier.   In   the               circumstances   the only orders  which couldbe               subject-matter of revision   by the  appellant               were  the orders made under section 12A               of the     Act and not the initialassessment               orders.  In the case of J. Jaganmohan Rao v.     Commissioner               of Income-taxand Excess     Profits     Tax               Andhhra Pradesh  [(1970)  75 ITR  373  (SC)],               tins Court dealt with section 34 of the Indian               Income-tax   Act   1922,  which   relates   to               reassessment  in the case of  income  escaping               assessment.   It was held by this  Court  that               once  assessment is reopened, the previous un-               der-assessment  is  set aside  and  the  whole               proceedings  start  afresh.   Ramaswamy,   J.,               speaking for the Court observed:               "Section  34  in terms states  that  once  the               Income-tax  Officer  decides  to  reopen   the               assessment  he could do so within  the  period               prescribed  by serving on the personliable  to               pay tax a notice containing all or any of  the               requirements which may be included in a notice                             under section 22 [2] and may proceed to  asses s               or reassess such income, profits or gains.  It               is,  therefore, manifest that once  assessment               is reopened by issuing a notice under sub-sec-               tion  [2]  of section 22 the  previous  under-               assessment   Ls  set  aside  and   the   whole               assessment  proceedings  start  afresh.   When               once  valid  proceedings  are  started   under               section 34 [11 (b), the Income-tax Officer had               not only the jurisdiction but it was his  duty               to  levy  tax on the entiere income  that  had               escaped assessment during Om year."               In  the  case of Commissioner  of  Sales  Tax,               Madhya Pradesh v. - H.M Esufaii H-M.  Abdulaii               [(1973) 32 STC 77 (SC):90 ITR 271 (SC)],  this               Court  dealt  with  reassessment  made   under               section  19  of  the  Madhya  pradesh  General               Sales  Tax Act, 1958.  It was held  that  when               reassessment is made, the former assessment is                completely   reopened   and  in   its   place               assessment is made.  Hegde, J., speaking   for               the Court, observed:               "What  is true of the assessment must also  be               true  of reassessment because reassessment  is               nothing   but   a   fresh   assessment.   When               reassessment  is  made under Section  19,  the               former assessment is completely  reopened  and               in its place fresh               321

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             assessment  is  made.   While  reassessing   a               dealer,  the  assessing  authority  does   not               merely assess him on the escaped turnover, but               it   assesses  him  on  his  total   estimated               turnover.   While  making  reassessment  under               section 19, if the assessing authority has  no               power  to make best judgment  assessment,  all               that   the   assessee  need   do   to   escape               reassessment is to refuse to file a return  or               refuse  to produce his account books.  If  the               contention taken on behalf of the assessee  is               correct, the assessee can escape his liability               to  be reassessed by adopting  an  obstructive               attitude.   It is difficult to  conceive  that               such could be the position in law. 8.   What  fell  for  consideration in  this  decision  were Sections  12A, 21 and 21 [2] and 21 [3] of the Mysore  Sales Tax  Act.   The relevant provisions of Section  12A  are  as under:               "[1]  Where  for any reason the whole  or  any               part  of the turnover of a dealer has  escaped               assessment  to tax or licence fee or has  been                             assessed at a lower rate than the rate at whic h               it is assessable, the assessing authority may.               subject to the pro visions of sub-section  [2]               at any time within a period of five years from               the  expiry  of the year to winch the  tax  or               licence   fee relates, assess to the  best  of               its  judgment, the tax or licence fee  payable               on  the turnover referred to after  issuing  a               notice  to  the dealer and after  making  such               enquiry as it considers necessary" 9.   Section  21  of the said Act deals,  inter  alia,  with revisional powers of the Deputy commissioner.   Sub-sections [2] and [3] of that section read as under:               "[2]  The Deputy Commissioner may of  his  own               motion call for and examine the record of  any               order passed or proceeding recorded under  the               provisions  of  the Act by  a  Commercial  Tax               Officer  subordinate to him and against  which               no  appeal  has been preferred  to  him  under               section  20,  for the  purpose  of  satisfying               himself  as  to the legality or  propriety  of               such  order  or as to the regularity  of  such               proceeding  and pass such order  with  respect               thereto as he thinks fit.               [3]  In  relation to an  order  of  assessment               passed  under this Act, the power  under  sub-               section [1] and [2] shall be exercisable  only               within a period of four year from the date  on               which the order was passed." 10.While holding that the expression "the date on which  the order was passed" in sub-section [3] of Section 21, did  not qualify the word ’order’ and hence the period of four  years has  to be calculated from the date of the rectified  order, this Court referred to its earlier decision in International Cotton  case [supra] and also followed the decision of  this Court  in H.M. Esufali H.M. Abdulali case [( 1 973)  90  ITR 271 at 280] as under:               "What is true of the  assessment must also  be               true  of re-assessment   because re-assessment               is  nothing  but  a  fresh  assessment.   When               reassessment  is made under section   19,  the               former   assessment is completely reopened and

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             in its place fresh assessment is made.   While               reassessing a dealer, the assessing  authority               does  not   merely assess him on  the  escaped               turnover but it asses= him on his total  esti-               mated  turnover.   While  making  reassessment               under  section 19, if the assessing  authority               has no power to make best judgment  assessment               all   that  the  assessee need  do  to  escape               reassessement   is to refuse to file a  return               or refuse to produce taken on               322               behalf   of  the  assessee  is  correct,   the               assessee  can escape his liability to  be  re-               assessed by adopting an obstructive  attitude.               It is difficult to conceive that such could be               the position in law". 11.The  Court while dealing with the provisions of the  M.P. General  Sales Tax Act, 1958 quoted Section 19 and  Rule  33 [1] and [2] which read as under:               "19.    Assessment   of   turnover    escaping               Assessment.  -- [1] Whereas an assessment  has               been made under the Act repealed by Section 52               and if for any reasons any sale or purchase of               goods chargeable to tax under this Act or  any               Act  repealed by Section 52 during any  period               has   been  under-assessed  or   has   escaped               assessment or assessed at a lower rate or  any               deduction has been wrongly made therefrom, the               Commissioner  may,  at any  time  within  five               calendar  years  from  the date  of  order  of               assessment,   after   giving  the   dealer   a               reasonable  opportunity  of  being  heard  and               after  making  such enquiry  as  he  considers               necessary,  proceed in such manner as  may  be               prescribed to reassess within a period of  two               calendar  years from the commencement of  such               proceedings,  the tax payable by  such  dealer               and  the commissioner may, where the  omission               leading to such reassessment  is  attributable               to  the dealer, direct that the  dealer  shall               pay.  by  way of penalty in  addition  to  the               amount of tax so assessed, a sum not exceeding               that amount               Provided  that  in the case of  an  assessment               made under any Act repealed by section 52, the               period  for re-assessment escapement or  wrong               deduction  shall  be  provided  in  such   Act               notwithstanding the repeal thereof :               Provided   further   that   any   reassessment               proceedings    pending   on   the   date    of               commencement of the Madhya Pradesh               General Sales Tax [Amendment] Act, 1978 [No.25               of  1978] be completed in accordance with  the               provisions  in force before the date  of  such               commencement  and  within  a  period  of   two               calendar   years   from  the  date   of   such               commencement.               x        x         x        x        x               "33.   Manner of Assessment and  re-assessment               and imposition of penalty. -[1] Where -               [a]  a registered dealer has rendered  himself               liable to tax and penalty under subsection [1]               of Section 14-A, or               [a-i]  a  dealer has failed to comply  with  a               notice issued under sub-section (1) of Section

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             17, or                [b]  a registered dealer has  failed  without               sufficient cause to furnish prescribed returns               for  any  period  by the  prescribed  date  as               required by sub-section (1) of Section 17, or               [c]  a registered dealer has rendered  himself               liable  to  best  judgment  assessment   under               clauses  (a)  and (b) of  sub-section  (4)  of               Section 18, or               [d]  a dealer has rendered himself  liable  to               best  judgment assessement  under  sub-section               (6) or sub-section (7) of Section 18, or               (e)   a  dealer being liable to pay  tax,  has               willfully failed to apply for or                (f)  the  sale  or purchase  of  goods  by  a               dealer  during  any  period  has  been   under               assessed or has escaped                or  has               been assessed at a lower rate or any deduction               has  been  wrongly made therefrom  within  the               meaning of sub-section  (1) of    Section  19,               or               323               (g)   a dealer has deliberately concealed  his               turnover of sale or purchase in respect of any               goods or has furnished a false return then  in               every such case, the assessing authority shall               serve  on the dealer a notice which  shall  as               far  as may be, be in Form XVI specifying  the               default,  escapement  or concealment,  as  the               case  may  be, and calling upon  him  to  show               cause  by such date, ordinarily not less  than               30 days from the date of service of the notice               as may be fixed in that behalf, why he  should               not  be assessed or reassessed to  tax  and/or               penalty  should  not be imposed upon  him  and               directing him to produce on the sale date  his               books or account and other documents which the               assessing   authority  may  require  and   any               evidence  which  he  may wish  to  produce  in               support of his objection:               Provided  that  no such notice shall  be  nec-               essary  where  the  dealer,  having   appeared               before  the assessing authority,  waives  such               notice.               [2]  On  the date fixed in the  notice  issued               under  sub-rule  11 or in case the  notice  is               waived on such date which may be fixed in this               behalf  the  assessing authority  shall  after                             considering  the  objections  raised  by   the               dealer  and examining such evidence as may  be               produced  by him and after taking  such  other               evidence  as may be available, assess  or  re-               assess  the  dealer  to tax  and/or  impose  a               penalty or pass any other suitable order". 12.In  view  of these authorities taking the view  that  the word  ’any’ in the expression "order sought to  be  amended" would  mean even the rectified order, we are satisfied  that the  High Court was wrong in setting aside the  decision  of the  Tribunal.   Shri G. Vishwanatha  Iyer,  learned  senior counsel  cited  before  us the decisions  of  the  Calcutta, Gujarat,  Madras  and Orissa High Courts in  Bharat  Textile Works   &  Ors.  v.  Income-tax  Officer,  Circle-IV,   3-A, (Company]  [(1978) 114 ITR, 281, Ahmedabad  Sarangpur  Mills Co.  Ltd.  v. A.S. Manohar, Income-Tax Officer,  Circle  IV, Ward-A, [Companies, Ahmedabad [(1976) 102 ITR 7121,  Kothari

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(Madras)  Ltd. v. Agricultural Income Tax  Officer.  [(1989) 177  ITR  538] and commissioner of Income  Tax.  v.  Kalinga Tubes  [(1991) 187 ITR 595] respectively in support  of  his contention  that  the word ’order’ used  in  the  expression "order  sought to be amended" would mean the original  order of  the  assessment.  As against this,  Dr.  Shankar  Ghose, learned  senior counsel referred us to the decisions of  the Patna  and  Karnataka  High  Courts  in  Bihar  State   Road Transport Corporation v. Commissioner of Income Tax  [(1986) ITR  162  114  at  130]  and  Commissioner  of   Income-tax, Karnataka-II, Bangalore v. Mysore Iron & Steel Ltd.  [(1986) 157 ITR at 531] respectively which decisions have taken  the contrary  view.  However, in view of the decisions  of  this Court referred to above, we are of the opinion that the view taken  by  the Tribunal in the present case is  the  correct one.   We,  therefore, set aside the impugned order  of  the High  Court and restore that of the Tribunal.   The  appeals are allowed accordingly with no order as to costs. 326