NURUDDIN AND BROTHERS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under s. 256(1) of the IT Act, 1961. The question before us is as follows :

(2.) THE assessment year is 1963-64. The IAC by his order dt. 4th March, 1970, imposed a penalty of Rs. 12,000 under s. 271(1)(c) r/w s. 274(2) of the IT Act, 1961, for the asst. yr. 1963-64. Subsequently, he noticed that there was a mistake in calculating the penalty which should be Rs. 61,000 instead of Rs. 12,000. Hence, he issued a notice under s. 154(3) of the IT Act, 1961, to the assessee to show cause why the aforesaid mistake in his order dt. 4th March, 1970, should not be rectified. In response to the said notice to assessee's representative appeared and filed a written submission by taking only a preliminary objection as to jurisdiction of the IAC to rectify the said mistake. In support of that objection it was argued that s. 154(1)(bb) which came into force on 6th Oct., 1964, was not applicable to the asst. yr. 1963-64 and, therefore, the IAC had no power to rectify the said mistake. The IAC rejected the argument and held that as s. 154(1)(bb) came into effect before the penalty order was passed, he had jurisdiction to rectify the mistake and, accordingly, he rectified the aforesaid mistake. The Tribunal has dismissed the appeal filed by the assessee and has referred the aforesaid question to us at the instance of the assessee.

(3.) NOW , s. 154(1)(bb) provides that with a view to rectify any mistake apparent from the record the IAC may amend any order passed by him in any proceeding under sub-s (2) of s. 274 of the Act. This provision was introduced by the Direct Taxes (Amendment) Act, 1964, w.e.f. 6th Oct., 1964. The penalty order was passed by the IAC on 4th March, 1970. Therefore, the aforesaid argument of Mr. Banerjee is not tenable in view of the facts and the circumstances of the case.