ASIAN TECHS LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) ACCEPTING an application under Section 256(1) of the Income-tax Act, 1961 (in short "the Act"), the following questions have been referred to this court for opinion by the Income-tax Appellate Tribunal, Cochin Bench (in short "the Tribunal") :

(2.) THE factual position, which is also undisputed, is as follows : THE assessee is a company carrying on business as engineers and contractors. During the course of assessment for the assessment year 1980-81, the assessee had claimed deductions under Section 35B(1)(b)(iv) and (vii) of the Act. THE Assessing Officer, by notice dated July 18, 1983, required the assessee to show cause as to why the said claims shall not be disallowed. THE assessee filed detailed objections on July 21, 1983, but in the assessment order dated September 14, 1983, there was no reference to the claim for deduction. Being aggrieved by the said order of the Assessing Officer, an appeal was preferred before the Commissioner of Income-tax (Appeals) (in short "the CIT(A)") on various grounds including denial of deductions as claimed. By order dated October 8, 1985, the Commissioner of Income-tax (Appeals) rejected claim of the assessee. THE matter was further carried by the assessee before the Tribunal on various grounds including denial of deductions as claimed. By order dated May 12, 1987, in ITA Nos. 835 to 835/Coch of 1985 (?) relating to the four assessment years including 1980-81, deductions as claimed were allowed. While the abovementioned appeals were pending before the Tribunal, the assessee made a claim by a petition filed on November 19, 1986, before the Assessing Officer for rectification of the assessment order for the year in question under Section 154 of the Act and to allow the claim under Section 35B(1)(b)(viii) in respect of the expenditure incurred wholly and exclusively for the performance of service in connection with the execution of contracts for supply of services and facilities at Bhutan. THE total expenditure was stated to be Rs. 34,22,367.19 and eligible deduction (one third thereof) was Rs. 11,40,189. THE Assessing Officer rejected the petition by order dated January 23, 1989. An appeal was preferred before the Commissioner of Income-tax (Appeals) against the order rejecting the application for rectification under Section 154. THE assessee's stand was that when the materials were available in the assessment record for grant of relief, the application under Section 154 was clearly maintainable and relief could not be refused merely on the ground that the assessee had omitted to claim the same originally. THE Commissioner of Income-tax (Appeals) dismissed the appeal by his order dated May 17, 1990. THE assessee preferred an appeal before the Tribunal. By order dated August 11, 1995, the appeal was dismissed on the ground that the order of the Assessing Officer had already merged with the order of the appellate authority and, therefore, the claim raised could not be entertained. THE assessee, in its application under Section 256(1) of the Act, pointed out that the application was made much before the order of the Tribunal, but the Assessing Officer had not disposed of the same expeditiously. In any event, the issue was not before the Tribunal in connected appeals. THErefore, the assessment order could not have merged with the appellate order. As indicated above, the Tribunal accepted the prayer for reference and referred questions, as set out above, for opinion.

(3.) SECTION 154 deals with rectification of mistakes. The said provision, at the relevant time, so far relevant, reads as follows :