COMMISSIONER OF INCOME TAX Vs. AISWARYA TRADING CO

JUDGEMENT

(1.) This appeal is filed against the order issued by the Tribunal refusing to entertain a rectification application filed by the Revenue under Section 254(2) of the Income Tax Act to rectify the order issued by the Tribunal in an earlier rectification application filed by the Assessee to rectify the very same appellate order.

(2.) We have heard standing counsel appearing for the Appellant and Adv. Sri A. Kumar appearing for the Respondent Assessee.

(3.) The Respondent Assessee contested its income tax assessment for the year 1994-95, in appeal before the Commissioner of Income Tax (Appeals) and later before the Tribunal, which remanded the matter to the assessing officer for reconsideration mainly on estimation of income from arrack business. The assessing officer issued revised order, which was again taken up in appeal on second round before the C.I.T. (Appeals), who enhanced the assessment, after notice to the Assessee. On second appeal filed by the Assessee, the Tribunal refixed the net income from arrack at Rs. 10 per litre. However, while deciding the appeal, the Tribunal did not consider one of the grounds raised by the Assessee pertaining to the levy of interest under Section 220(2) of the Act in the revised assessment after the first round. Therefore, the Assessee filed rectification application, M.P. 30 of 2001 before the Tribunal to rectify the appellate order, which was allowed by the Tribunal. The Tribunal allowed the Assessee's rectification application by holding that interest could not be levied under Section 220(2) on the demand of tax pursuant to first round of remand order by the Tribunal. The Department thereafter filed a rectification application M.P. 42/2003 for rectifying the order issued by the Tribunal in Assessee's rectification application, M.P. 30/2001. The Tribunal, however, held that Department's rectification application is on the very same issue agitated by the Assessee in their rectification application and allowed by the Tribunal and therefore it is not maintainable under Section 254(2) of the I.T. Act. The Tribunal relied on the decision of the Orissa High Court in Commissioner of Income Tax and Anr. v. Income Tax Appellate Tribunal and Ors.,196 ITR 838 against which this appeal is filed. The standing counsel relied on Anr. decision of the very same Bench of the Orissa High Court reported at page 640 of the very same volume of the I.T.R. and contended that, by virtue of the merger of the rectification order in the appellate order, the application filed under Section 254(2) by the Revenue is still maintainable. According to the standing counsel, the rectification order issued under Section 254(2) merges with the original appellate order issued under Section 254(1) and so much so a further application under Section 254(2) is maintainable. Counsel appearing for the Assessee contended that, since the very same issue agitated by the Revenue in their rectification application is the one decided by the Tribunal, in the application filed by the Assessee it is not maintainable.