1999 PLP 3554 (PTD)

MRS. K.K. USHA; J.

These references at the instance of the assessee arise from the order of the Income7tax Appellate Tribunal, Cochin Bench, in I.T.As. Nos.178 to 180/Coch of 1987. The relevant assessment years are 1978-79, 1979-80 and 1980-81. The following are the questions referred for the opinion of this Court. "Whether, on the facts and `m the circumstances of the case, the Tribunal is justified in holding that

(i) the rectification orders passed under section 154 of the Income-tax Act for all the three years are valid and proper? and (ii) the rectification orders passed under section 154 of the Income-tax Act for the assessment years 1978-79 and 1979-80 are not barred by limitation?" , The relevant facts are as follows: Under an agreement between the assessee and the Kerala State Electricity Board, the assessee had taken on contract, the work of construction of a diversion tunnel measuring 12,375 ft. from Erattayar to Idukki. The work of construction of 6,200 ft. of the tunnel was given by the assessee to another firm, Aruvikkal Tunnel Constructions, as sub-contract. At the time of payment of the bills, the Kerala State Electricity Board deducted 2 percent as income-tax. Under a. power of attorney executed by the managing partner of the assessee in favour of the managing partner of the firm of sub-contractors payment of the bills was received by the sub-contractors on behalf of the assessee. They collected the tax deduction certificate also. The amount of tax deducted was Rs.38,269, Rs.1,04,528 and Rs.1,37,257, respectively, for the assessment years 1978-79, 1979-80 and 1980-81. In the assessment year 1978-79, the Income-tax Officer gave credit for the tax deducted at source in hands of the sub- contractors. Subsequently, the Income-tax Officer by an order tinder section 154 of the Income Tax Act, 1961, withdrew the same and the credit for the tax deducted at source was given to the assessee. For the assessment year 1979-80 credit was even originally given to the sub contractors. The assessee itself moved for a rectification and by order, dated August 6, 1982, the assessing authority granted the credit for tax deducted at source to the assessee withdrawing the benefit already given to the sub-contractors. For the year 1980-81, the credit for the tax deducted at source was granted to the assessee in the original assessment itself. The sub-contractors challenged the order passed under section 154 before the Commissioner of Income-tax (Appeals), who affirmed the said order. On further appeals, the Appellate Tribunal took the view that the sub contractor was entitled to credit for the tax deducted at source. The matter was taken in reference before this Court by the Revenue in I.T.R. Nos. 29 to 31 of 1986. Since the Tribunal had heard the assessee in the present case also while allowing the appeals filed by the sub-contractors, the assessee was also a party to the income-tax reference abovementioned. By judgment, dated January.29, 1990, this Court affirmed the view taken by the Tribunal. It is submitted by learned standing counsel for the Revenue that the assessee herein had filed a petition for leave to file appeal before the Supreme Court, which was dismissed. It was contended by the assessee that section 154 cannot be invoked in its case as there was no mistake apparent from its assessment record requiring any rectification. The order passed by the Tribunal in the case of the sub-contractors cannot be treated as records in the assessee's own case. It was further contended that the order passed under section 154 in respect of the assessment year -1978-79 is beyond the period prescribed under subsection (7) of section

154. Learned standing counsel for the Revenue submits that even if the provision under which the order was passed by the Income-tax Officer was shown as section 154 in effect it is an order passed in implementation of the Tribunal's order in I.T.As. Nos. 156, 157 and 158 of 1984 filed by the sub contractors. When an order is, thus, passed in implementation of an appellate order it should be taken as one passed under section 143 of the Income-tax Act. A wrong caption given would not in any way affect the nature of the order. If the order is one, which is passed under section 143, the contention raised on the ground of limitation is not available to the assessee. In support of his contention, learned counsel relied on a decision of the Supreme Court in Modi Industries Ltd. v. CIT (1995) 216 ITR

759. It was observed therein as follows (page 767). "...but the fact remains that whether it is the original/first assessment or the revised assessment made pursuant to the appellate order, they are relatable to section 143 alone

and where it is a best judgment assessment, to section 144." Learned counsel further submits that in the facts of this case it is the provisions contained under subsection (3) of section 153 of the Income-tax Act that are to be applied. Subsections (1) and (2) of section 153 refers to the period of limitation for assessment under sections 143, 144 and

147. The relevant portion of subsection (3) of section 153 reads as follows: "(3) The provisions of subsections (1) and (2) shall not apply to the following classes of assessments, reassessments and recomputations which may, subject to the provisions of subsection (2-A), be completed at any time

(ii) where the assessment, reassessment or recomputation is made on the assessee or any person m consequence of or to give effect to any finding or direction contained in an order under sections 250, 254, 260, 262 and 263 or 264 or in an order of any Court in a proceeding otherwise than by way of appeal or reference under this Act." Learned standing counsel further contended that in the light of the wording of clause (ii) of subsection (3), the assessment, reassessment or recomputation can be made in implementation of an appellate order either on the assessee or any person. Therefore, there is no merit in the contention of the assessee that the order of assessment passed against him in implementation of the order of the Tribunal' in the appeals filed by the sub -contractors cannot be treated as one contemplated under subsection (3) of section

153. If we are accepting the contention raised by the Revenue that the assessment orders even though shown to have been passed under section 154 are to be taken as orders passed under section 143, it is not necessary for us to answer the first question. But even if the order has to be taken as one passed under section 154 we are of the view that those orders were passed in accordance with law. But of course then the question of limitation in respect of the assessment year 1978-79 will have to be considered. Admittedly, the assessee had taken part in the proceedings before the Appellate Assistant Commissioner as well as before the Tribunal in the appeals filed by the sub-contractors. He was a party to the income-tax reference cases before this Court and it is seen that he had made an attempt unsuccessfully to take up the matter to the Supreme Court. Therefore, the assessee cannot have any complaint that these proceedings were initiated behind his back. There is also no merit in the contention that the conditions necessary for invoking section 154 are not available in this case. The contention is that the rectification is being made not on the basis of mistake apparent from the assessment record of the assessee. If the Income-tax Officer obtains information that it is the sub-contractor who is entitled to the credit for the tax deducted at source then the error of granting such credit to the assessee is apparent from his own assessment record. Therefore, we find that even if the orders were issued under section 154 there was no lack of jurisdiction on the part of the Income-tax Officer. Now, we will consider the contention on the question of limitation for the assessment year 1978-79. If the order is one passed under section 154, the period of limitation is prescribed under subsection (7) of section

154. If the above provision is applied, then the order for 1978-79 was passed beyond the period limitation. But we find merit in the contention raised by learned counsel for the Revenue that the relevant orders even though captioned as passed under section 154 in effect are orders passed under section 143 of the Income-tax Act. The order passed by the Income-tax Appellate Tribunal in I.T.As. Nos.156, 157 and 158 of 1984, viz., appeals filed by the sub-contractor is produced as Annexure-F-1. A reading of the above order would show that there is a specific finding after elaborately considering the arguments on both the sides including the argument of the present assessee that the sub-contractor was entitled to claim credit for the tax deducted at source by the Electricity Board Ad not the present assessee. It was to implement the above order that the Income-tax officer had issued Annexure-A-2 proceedings, dated June 17, 1986. The subject of the proceedings is referred to as the order of the Income-tax Appellate Tribunal, dated April 25, 1985, in I.T.As. Nos.156 to 158/Cock of 1984-85 and withdrawal of credit of T.D.S. wrongly given for the assessment year 1978-79. Implementation of an order of the appellate authority is not under section

154. Such an order can be treated as one passed under section

143. A wrong reference to the provision of law in the order cannot change the real nature of the order or affect the jurisdiction of the Income-tax Officer. We are, therefore, of the view that the order, Annexure A-2, dated June 17, 1986, is not passed beyond the period of limitation. In the result, we answer question No.(i) in the affirmative, in favour of the Revenue and against the assessee. Question No.(ii) is also answered in the affirmative, in favour of the Revenue and against the assessee. A copy of this judgment under the seal of this Court and the signature of, the Registrar will be forwarded to the Income-tax Appellate Tribunal, Cochin Bench. M.B.A./3136/FC Reference answered.