COMMISSIONER OF INCOME TAX Vs. SHRI RAM NIWAS

JUDGEMENT

(1.) FOLLOWING question of law has been referred for opinion of this Court by the Tribunal, Amritsar Bench, Amritsar, arising "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in interpreting the word 'reduction' and 'enhancement' as provided in s. 155(1)(b) as not to include such cases which are upheld by the appellate authority and thereby holding that action taken by the ITO under s. 154/155 is time -barred -

(2.) THE AO made assessments under s. 143(1) of the IT Act, 1961 in case of the assessees subject to rectification in relation to their share income from M/s Mahavir Cotton Ginning and Pressing Factory, New Delhi. The assessment of the from the end of the financial year in which order in case of the firm was passed was beyond limitation. The CIT(A) accepted this objection which view was upheld by the Tribunal rejecting the objection on behalf of the Revenue that that date. The CIT(A) held that limitation for rectification was to be counted from the date of original assessment unless rectification was as a result of enhancement or reduction.

(3.) FROM plain language of s. 155 of the Act, it is clear that in case rectification is carried out as a result of the assessment of the firm, period of limitation starts from that date and not from the date of the appellate order. The appellate order will have no relevance to rectification carried out with reference to the original order of assessment. We, thus, agree with the view taken by the CIT(A), which was affirmed by the Tribunal with the following observations : "I have given my careful consideration to the rival submissions. Sec. 155(1) at the material time was to the following effects : Rs.155 (1) Where in respect of any assessment of a partner in a firm it is found - -(a) on the assessment or reassessment of the firm, or (b) on any reduction or enhancement made in the income of the firm under this section, s. 154, s. 250, s. 254, s. 260, s. 262, s. 263 or s. 264, that the share of the partner in the income of the firm has not been included in the assessment of the partner, or, if included, is not correct, the ITO may amend the order of assessment of the partner with a view to the inclusion of the share in the assessment or the correction thereof, as the case may be and the provisions of s. 154 shall, so far as may be apply thereto, the period of four years specified in sub -s. (7) of that section being reckoned from the date of the final order passed in the case of the firm.' It provides that the assessment of a partner in respect of his share income from a firm can be rectified within a period of four years from the end of the financial year in which assessment or reassessment order was passed in the case of the firm or where there was any reduction or enhancement made in the income of the firm under ss. 155, 154, s. 250, or ss. 254, 260, 262, 263 or s. 264 then within four years from the end of the financial year in which such order was passed by the appellate or revisionary authority etc. was passed. The extended jurisdiction under cl. (b) of sub -s. (1) of s. 155 is available only in such cases where the income of the firm was reduced or enhanced. By the appellate order of the CIT income. The extended period as provided in cl. (b) aforesaid in my opinion, is, therefore, not available to the ITO for passing rectificatory order under s. 155(1)/154. I, therefore, do not find any merit in these appeals by the Revenue."