CALCUTTA C BENCH APEEJAY INSPECTING STRUCTURAL WORKS v. ASSISTANT (P) LTD. COMMISSIONER July 4, 1984 JUDGMENT Order S. K. JAIN, J. M.: In these three appeals two by M/s Apeejay Structural Works (P) Ltd. for asst. yrs. 1977-78 and 1978-79 and one by M/s Asain Signal Industry (P) Ltd. for asst. yr. 1978-79 against order of CIT (Central-I), Calcutta of even date (8th Jan., 1982) under s. 263 of IT Act, 1961 (for brevity Act'), common issues are involved and, therefore, they are disposed of by this common order. Assessments of income of M/s Apeejay Structural Works (P) Ltd. for both years framed by IAC (Assessment), Range A' (Central), Calcutta on 3rd Nov., 1980 and that of M/s Asian Signal Industry was also framed by same officer on 30th Jan., 1980. Thereafter, Finance (No. 2) Act, 1980 came into force and by that Act s. 80AA was inserted in Act with retrospective effect from 1st April, 1968. According to s. 80AA of Act, net amount and not gross amount of dividends is allowed to be deducted under s. 80M of Act. Since there was not such provision at time of framing assessments in question, IAC had allowed deduction of gross amount of dividends. With coming into force of s. 80AA with retrospective effect CIT considered that said assessments were erroneous insofar as they were prejudicial to interest of Revenue and, therefore, he after giving assessees opportunity of being heard passed impugned orders. Contention of ld. counsel for assessee is two fold first that assessment orders having been passed by IAC and not by ITO were not subject to revisional jurisdiction of CIT and secondly, on dates when assessment order were passed they were quite legal and valid according to then existing law. Under colour of retrospective operation of s. 80AA of Act, ld. counsel argued, already completed assessment could not be opened and at any rate such act of CIT was beyond his jurisdiction. Learned Departmental Representative, on other hand, while opposing appeals fully supported impugned orders of CIT. It is to be noticed that CIT is authorised by s. 125A(1) of Act to direct all or any of powers or functions of ITO to be performed by IAC and by virtue of that direction IAC acted as ITO and framed assessment. Line of argument of ld. counsel for assessee is that it is only order of ITO as such and not of any other officer though performing powers and functions of ITO, which can be revised by CIT. If we put in other words, contentions of ld. Counsel is that "the ITO" is persona designata and, therefore, any officer filling character of ITO cannot be included therein. Learned counsel compared ss. 263 and 264 of Act and argued that if intention of legislature was to cloth CIT with power to revise order passed by any authority sub-ordinate to him, instead of words "the ITO", words "an authority sub-ordinate to him" as used in s. 264 would have been used s. 263. According to ld. counsel general provisions contained in s. 125A(4) of Act that ITO shall be construed as references to IAC cannot be extended to s. 263 of Act. In support of his contention, ld. counsel placed reliance upon Gopaldas Gupta vs. Union of India (1971) 80 ITR 200 (Cal). Ramlal Kishorelal vs. CIT (1982) 84 ITR 138 (All) and Jeewanlal vs. Addl. CIT 1976 CTR (Cal) 399: (1977) 108 ITR 407 (Cal). We find no merit in arguments of ld. counsel. For better appreciation of matter, sub-s. (4) of s. 125A which was inserted by amendment is reproduced below: "125 A. (1) (2) (3) (4) Where order is made under sub-s.(1) and IAC excises powers or performs functions of ITO in relation to any area, or persons or classes of persons, or incomes or classes of income, or cases or classes of cases, references in this Act or any rule made thereunder to ITO shall be construed as references to IAC and any provision of this Act requiring approval of sanction of IAC shall not apply." It is plain from above sub-section that where IAC exercises powers or performs function of ITO, he shall be taken as ITO for all provisions of Act and Rules made thereunder. Sec. 263 of Act cannot be taken as exception to said provisions contained in s. 125A(4). Sec. 125A(4) is so comprehensive that it was not at all necessary to make consequential amendment of s. 263 to effect that ITO shall also include any other officer exercising power or performing functions of ITO. In s. 263, "the ITO" cannot, therefore, be read in seclusion as to limit its meaning to persona designata. Like investiture of powers of ITO upon IAC there was creation of post of Additional Commissioner by making amendment in ss. 166 and 130 of Act. While inter prating those sections in context with powers of CIT under. 263 of Act, Hon'ble High Court of Delhi in National Agricultural Co-operative Marketing Federation vs. CBDT (1972) 84 ITR 376 (Del) held that word Commissioner' in s. 263 of Act was not persona designata, and included Addl. CIT. On same analogy to s. 125A(4) apart, word "ITO" in s. 263 of Act cannot be taken as persona designate. IAC is though superior in rank to ITO but assessment order passed by him is nonetheless not placed on better footing inasmuch as, that similar to assessment order passed by ITO, appeal is provided from assessment order passed by IAC vide s. 246(2) of Act. Much insistence cannot be made to read word ITO in s. 263 of Act within limited sense. It has to be read with s. 125A, which according to rule of construction, is to be constructed in way which does not result in its misfiring or in denying its efficacy (vide principles of Statutory Interpretation by G. P. Singh, Third Edn., p.214). For purpose of relevant interpretation, it is not proper to compare s. 263 with s. 264. Sec. 264, has wider scope and it deals with cases of relief to assessee whereas s. 263 has narrower scope. It is, therefore, futile to argued that like words "an authority sub- ordinate to CIT" used in s. 264 comprehensive words would have been used in s. 263 in place of "the ITO". cases cited by ld. counsel for assessee are of no assistance to him. Gopal Das Gupta's case (supra) has been decided with reference to construction of s. 135 read with s. 131 of Act which had quite different bearing. powers of ITO conferred upon Director of Inspection by s. 135 were limited to making of enquiries and, therefore, all powers conferred upon ITO under s. 131 were not taken as conferred upon Director of Inspection in case. In cases of Ramlal Kishorelal (supra) and Jeevanlal Ltd. (supra), acts of IAC and AAC as such and not in capacity of ITO were under consideration, and therefore, none of two cases has any relevance to instant issue. In view of foregoing discussions, we hold that CIT had jurisdiction under s. 263 to revise assessment order passed by IAC functioning as ITO under s. 125A of Act. In support of his next argument, namely that retrospective operation of newly inserted s. 80AA cannot be extended to extent of reopening of assessment already completed long before, ld. counsel placed reliance upon CIT vs. General Electric Co. of India Ltd. (1978) 112 ITR 246 (Cal). said Case pertains to question as to rectification of mistake apparent from record and in that context Hon'ble High Court of Calcutta answered that mistake found in order in view of amending Act later coming into force and having retrospective effect cannot be taken as mistake apparent from record. Such is not case here. We are considering case under s. 263 of Act. Asstt. Commr. of Agrl. & ST vs. V. M. Ravi AIR 1974 SC 1369 is complete answer to arguments made by ld. Counsel for assessee. It is advantageous to refer following excerpts from said judgment of Hon'ble Supreme Court: "Dealing with scope of s. 35 of Indian IT Act, 1922, Gajendragadkar, J. as he then was, speaking for Court observed: "It is in light of this position that extent of ITO's power under s. 35 to rectify mistakes apparent from record must be determined; and in doing so, scope and effect of expression "mistake apparent from record" has to be ascertained. At time when ITO applied his mind to question of rectifying alleged mistake, there can be no doubt that he had to read principal Act as containing inserted proviso as from 1st April, 1952. If that be true position then order which he made giving credit to respondent for Rs. 50,603.15.0 is plainly and obviously inconsistent with specific and clear provision of statute and that must inevitably be treated as mistake of law apparent from record. If mistake of fact apparent from record of assessment order can be rectified under s. 35, we see no reason why mistake of law which is glaring and obvious cannot be similarly rectified. Prima facie it may appear somewhat strange that order which was good and valid when it was made should be treated as patently invalid and wrong by virtue of restropective operation of Amendment Act. But such result is necessarily involved in legal fiction about retrospective operation of Amendments Act. If, as result of said fiction we must read subsequently inserted proviso as forming part of s. 18A(5) of principal Act as from 1st April, 1952, conclusion is inescapable that order in question is inconsistent with provisions of said proviso and must be deemed to suffer from mistake apparent from record. That is why we think that ITO was justified in present case in exercising his power under s. 35 and rectifying said mistake." We, therefore, find no merit in contentions of assessee that assessments already completed could be reopened in view of amending Act. In view of foregoing discussions, appeals fail. However, we may observe that validity of retrospective effect of s. 80AA is under consideration before Hon'ble Supreme Court. ITO is, therefore, directed to give effect to decision of Supreme Court in this connection if and when he gets same and in meantime he shall finalise assessments. In result, appeal are dismissed. *** APEEJAY STRUCTURAL WORKS (P) LTD. v. INSPECTING ASSISTANT COMMISSIONER