IN HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) Original Side Present : Hon ble Justice Girish Chandra Gupta And Hon ble Justice Arindam Sinha 26th March, 2015 ITA 157 of 2005 C.I.T, Kolkata-II Vs. PCBL Industrial Finance Ltd. Mr. Ramesh Kumar Chowdhury, Advocate for appellant Mr. Ananda Sen, Advocate with Mr. A.K. Dey, Advocate Mr. Biswajit Mal, Advocate for respondent Court :- subject matter of challenge in appeal is judgment and order dated 25th August, 2004 by which learned Tribunal held that order made under Section 154 on 5th December, 2001 is inoperative. facts and circumstances of case including views expressed by learned Tribunal would appear from paragraph 5 of impugned judgment which reads as follows :- On perusal of assessment order made u/s. 143(3) it is clear that no set off of brought forward loss was allowed to be set off against total income of assessment year 1998-99 and as such there would or could not be any mistake in assessment order made u/s.143(3) on 26.02.01. It is only in order passed by AO u/s 154 on 25.06.01 that brought forward loss of assessment year 1996-97 has been allowed to be set off against total income of assessment year 1998-99. Therefore, if there is any mistake, it is in AO s order made u/s 154 on 25.06.01. It is also clear that AO s subsequent order u/s 154 dated 05.12.01 is intended to rectify 2 AO s earlier order made u/s 154 dated 25.06.01. Therefore, AO should have issued notice u/s 154 with view to rectify his earlier order made u/s 154 on 25.06.01 if, in any, it was case to be covered by sec.154 of Act. No question did or could arise to rectify original assessment order made u/s 143(3) on 26.02.01, in as much as, question of set off of brought forward business loss was not subject matter of that order. In this view of matter, we are of considered opinion that AO s notice u/s 154 dated 27.07.01 with view to rectify assessment order passed u/s 143(3) on 26.02.01 for assessment year under consideration was without any jurisdiction, inasmuch as, no mistake was intended to be rectified in connection with said assessment order. Hence, order made by AO u/s 154 on 05.12.01 is without any jurisdiction and is not valid in eye of law. Therefore, order made u/s 154 on 05.12.01 by AO is found to be not valid and operative inasmuch as, no notice u/s 154 with view to rectify AO earlier order made u/s 154 on 25.06.01 was ever issued. Therefore, AO s order u/s 154 dated 05.12.01 is cancelled on this count. For sake of clarity following four dates are tabulated herein : 1. 26.02.2001 Assessment Order under section 143(3) for year 1998-99 was passed. 2. 25.06.2001 assessment order was rectified under section 154 allowing set off of brought forward loss for year 1996-97. Tribunal has correctly appreciated point when it observed that Therefore, if there is any mistake, it is in AO s order made u/s 154 on 25.06.01. 3. 27th July, 2001 notice was issued seeking to rectify assessment order dated 26th February, 2001. 4. On 5th December, 2001 rectification was carried out. 3 From aforesaid events it would appear that order dated 26th February, 2001 was rectified on 25th June, 2001. Therefore order dated 26th February, 2001 stood merged in order dated 25th June, 2001 or conversely original order dated 26th February, 2001 stood rectified and order under section 143(3) became order under section 143(3)/154. When Assessing Officer realised that he had made mistake he therefore took steps for rectification of that mistake. He could not have withdrawn benefit given to assessee by order dated 25th June, 2001 simply by recalling that order because effect thereof had already been given and original order under section 143(3) had undergone change. Therefore, rectification could only be made by amending order as rectified and this is what Assessing Officer did but learned Tribunal did not realise that and erroneously held that order dated 5th December, 2006 is without jurisdiction. order passed by learned Tribunal is result of misconception. order is, therefore, set aside. appeal is allowed. (Girish Chandra Gupta, J.) (Arindam Sinha, J.) ANC. C.I.T. Kolkata-II v. PCBL Industrial Finance Ltd