ORDER
S.P. Kapur, Judicial Member
1. As a feedback of the facts, para 2 of the impugned order of the learned Appellate Asstt. Commissioner is being reproduced hereunder ;
The undisputed facts of the case are that the appellant was totally blind during the previous years, but she did not make a claim for the deduction available under Section 80U in these years. She made the aforesaid claim for the first time in the assessment year 1981-82 and the Income-tax Officer allowed the same. Later, she moved before the Income-tax Officer applications under Section 154 urging that the deduction admissible under Section 80U may be allowed to her for the years under consideration. The ITO (Shri S. Hussain), accepted the same by his orders under Section 154 dated 26-6-1981 and 27-6-1981. Thereafter, his successor ITO (Shri P.N. Chaudhary) noted that he had wrongly admitted the appellant’s claim under Section 154 in view of the Allahabad High Court judgments in the cases of Anchor Pressings (P.) Ltd. v. CIT [1975] 100 ITR 347 and Sharda Prasad v. CIT [1975] 100 ITR 373. The present ITO, therefore, issued to the appellant a notice under Section 154(3) on 16-11-1984 proposing withdrawal of the deduction allowed to her by the then ITO vide, orders under Section 154 dated 26-6-1981 and 27-6-1981. After taking into consideration her reply to the aforesaid notice he rectified under Section 154 the orders that his predecessor had passed on the date, mentioned above and withdraw the aforesaid deduction by his orders under appeal.
[Emphasis supplied]
2. The learned Commissioner of Income-tax (Appeals) held the ITO to be justified in passing orders under Section 154 of the IT Act, 1961 on 26-6-1981, and 27-6-1981, i.e., those orders of the ITO whereby deduction earlier allowed by the ITO (u/s 154 of the Act) was withdrawn. The learned AAC on his part strongly relied on the decisions as Anchor Pressings (P.) Ltd. v. CIT [1975] 100 ITR 347 (AIL), Sharda Prasad v. CIT [1975] 100 ITR 373 (All.) and Omega Sports & Radio Works v. CIT [1982] 134 ITR 28 (All.). He distinguished the reliance of the assessee on the cases as Bengal Assam Steamship Co. Ltd. v. CIT [1978] 1.14 ITR 327 (Cal.), Shree Jagannath Doll Mills v. ITO, Gadia Textile Industries v. ITO [1981] 12 TTJ 182 (Cuttack), 436 19 TTJ (All.)(Trib.) and 90 ITR 164 (Bom) (sic).
3. The assessee so naturally is aggrieved hence this appeal and we have heard, the parties at length.
4. Firstly, we will take up the reliance of the learned first appellate authority on the cases of Anchor Pressings (P.) Ltd. (supra), Sharda, Prasad (supra) and Omega Sports & Radio Works (supra).
5. Anchor Pressings (P.) Ltd.’s case (supra) is a decision of the Hon’ble Allahabad High Court. The ratio laid down by the Hon’ble High Court is that, ‘Section 154 of the Income-tax Act is not meant for preferring a claim which the assessee has omitted to prefer in the assessment proceedings. The section can operate only on the facts which are already on the record and cannot be resorted to, to introduce new facts.’
[Emphasis supplied]
6. The Hon’ble Allahabad. High Court as such held that Section 154 of the Act could not be resorted to, to introduce new facts. The Hon’ble Allahabad High Court’s decision could not have been applied on the facts of the present assessee’s case since as para 2 of the impugned order, of the learned first appellate authority reveals (as reproduced above), ‘the undisputed facts of the assessee’s case were that the assessee was totally blind during the previous years relevant to the assessment years in appeal. There were four assessment years under appeal viz. 1976-77, 1977-78, 1978-79 and 1979-80 whereas before us the assessment years involved are 1976-77 and 1977-78 because for the subsequent two years no tax incidence being involved, the assessee has chosen not to prefer appeals.’
[Emphasis supplied]
7. In view of the ratio of the decision of the Hon’ble Allahabad High Court as discussed above, vis-a-vis undisputed facts of the assessee’s case, the decision of the Hon’ble Allahabad High Court is distinguishable on facts or else we can safely say that the said ratio even helps the assessee.
8. Next is the decision in Sharda Prasad’s case (supra) which has been rendered by the same Hon’ble Allahabad High Court, in the case of Sharda Prasad (supra) and the earlier decision of the same Hon’ble Allahabad High Court in Anchor Pressings (P.) Ltd.’s case (supra) has been followed and the same ratio is laid down here also.
9. In both those cases, the claim involved was rebate allowable under Section 84 of the Act, (now Section 80J) and the Hon’ble Allahabad High Court, inter alia, held that “moreover Section 84 limits the relief to 6 per cent of the capital employed in the undertaking. The capital employed is to be computed in accordance with Rule 19. No such computation has been made. Clearly, the facts upon which Section 84 operates were not on the record.”
[Emphasis supplied]
10. The above observations and the reasoning of the Hon’ble High Court clarify the rationale behind the above two decisions. In fact, to support the claim of the assessee in the above two cases, which were before the Hon’ble High Court, the facts were not on record, hence those decisions were rendered on those facts. Those decisions of the Hon’ble High Court as such become distinguishable on the facts of this assessee’s case where facts were there and these were undisputed one.
11. Next is the decision in Omega Sports & Radio Works’ case (supra) this has been rendered by the Hon’ble Allahabad High Court in the case of Omega Sports & Radio Works (supra). The head note reads as under;
A mistake apparent from the record must be an obvious and patent mistake and not something which can toe established by a long drawn process of reasoning on points on which there can be two opinions. If there is a decision on a particular point by the High Court of a State, it is binding on the IT authorities in that State and merely because there is some judicial divergence of opinion on that point between some High Courts, it cannot be said that there is still scope for a debate on the points and that, therefore, Section 154 of the I.T. Act, 1961 is not attracted to the case.
12. The rationale behind the decision could not be disputed and in fact this is what the Hon’ble Supreme Court has laid down in the case of T.S. Balatam, ITO v. Volkart Bros. [1971] 82 ITE, 50. The Hon’ble Supreme Court has held that ‘a mistake apparent from the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there can be two opinions.’
13. Now on the facts of the assessee’s case, the undisputed facts remain, that the lady was totally blind. Section 80U provides for deduction in the case of totally blind or physically handicapped resident person. The deduction is allowable from computation of assessee’s total income as provided therein and the enabling Clause (0 of Sub-section (1) of Section 80U is in point.
14. The undisputed facts being that the lady was totally blind during the accounting periods relevant to assessment years under appeal, there was neither any controversy attached thereto nor was it a case where there could be two opinions much less that facts were not on record. Accordingly, there was a mistake apparent from the record and that mistake was not only an obvious and patent one but a glaring and floating on the surface.
15. Section 4 of the Act which is a charging section speaks of, ‘charge of income-tax’ and reads as under:
4. (1) Where any Central ‘Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with and subject to the provisions of, this Act in respect of the total income of the previous year or previous years, as the case may be, of every person:
Provided that where by virtue of any provision of this Act, income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly.
(2) In respect of income chargeable under Sub-section (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act.
16. A reading of the above section makes it clear that income-tax shall be charged, ‘in accordance with and subject to the provisions of the Act’,
17. Section 143 of the Act deals with the topic, ‘assessment’ and if the ITO is satisfied about the correctness of a return filed by the assessee under Section 139 of the Act, he will make the assessment accordingly but if he thinks otherwise then under Sub-section (3) of the said Section 143, after service of a notice under Sub-section (2) of the same Section 143 of the Act, a day is specified, i.e., a hearing is fixed and after ‘hearing such evidence as the assessee may produce and such other evidence as the ITO may require, on specific points and after taking into account all relevant material which he has gathered’, assessment is to be framed.
Now this Sub-section (3) of Section 143 speaks of three things:
(i) Such evidence as the assessee may produce ;
(ii) Such other evidence as the ITO may require ; and
(iii) After taking into account all relevant material which the ITO has gathered.
18. On the facts and in the circumstances of the present assessee, it being a matter on record, that she was totally blind, the assessment ought to have been framed, rather was statutorily required to have been framed after allowing the assessee relief provided under Section 80U of the Act and it is then and then only, that the assessment could have been said to be an assessment, ‘in accordance with and subject to the provisions of the Act’.
19. Visualising the difficulties of the assessees being what they can be inter alia–uneducated and located in far off corner of the country particularly in rural areas–the CBDT as earlier as in the year 1965, by letter F. No. 81/27/65-IT(B) dated 18-5-1965 issued following administrative instructions for the guidance of the ITO on matters pertaining to assessment:
Letter: F. No. 81/27/65-IT(B) dated 18-5-1965
442. Administrative instructions for guidance of Income-tax Officers on matters pertaining to assessment.
Clarification
1. The Board have issued instructions from time to time in regard to the attitude which the officers of the department should adopt in dealing with assessees in matters affecting their interests and convenience. It appears that these instructions are not being uniformly followed.
2. Complaints are still being received that while ITOs are prompt in making assessments likely to result into demands and in effecting their recovery, they are lethargic and indifferent in granting refunds and giving reliefs due to assessees under the Act. Dilatoriness or indifference in dealing with refund claims (either under Section 48 or due to appellate, revisional, etc., orders) must be completely avoided so that the public may feel that the Govt. are actually prompt and careful in the matter of collecting taxes and granting refunds and giving reliefs.
3. Officers of the department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly, in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate, that some refund or relief is due to him. This attitude would in the long-run, benefit the department, for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds, and reliefs rests with assessees on whom it is imposed by law, officers should:
(a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other ;
(b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs.
4. Public Relation Officers have been appointed at important centres, but by the very nature of their duties, field of activity is bound to be limited.
The following examples (which are by no means exhaustive) indicate the attitude which officers should adopt:
1. Section 17(1) of the 1922 Act (section 113 of the 1961 Act) while dealing with the asstt. of a non-resident assessee the officer should bring to his notice that he may exercise the option to pay tax on his Indian income with reference to his total world income if it is to his advantage.
2. Section 18(3), (3A) and (3D) of the 1922 Act [Sections 193, 197(1), 195(1), 195(2) and 194 of the 1961 Act] – The officer should in every appropriate case bring to the assessee’s notice the possibility of obtaining a certificate authorising deduction of income-tax at a rate less than the maximum or deduction of super tax at a rate lower than the flat rate, as the case may be.
3. Section 25(3) and 25(4) of the 1922 Act – The mandatory relief about exemption from tax must be granted whether claimed or not; the other relief about substitution, if not time barred must be brought to the notice of a taxpayer.
4. Section. 26A of the 1922 Act (Sections 184 to 186 of the 1961 Act) -The benefit to be obtained by registration should be explained in appropriate cases. Where an application for registration presented by a firm is found defective, the officer should point out the defect to it and give it an opportunity to present a proper application.
5. Section 33A of the 1922 Act (Sec. 264 of the 1961 Act) – Cases in which the ITO or the AAC thinks that an assessment should be revised, must be brought to the notice of the CIT.
6. Section 35 of the 1922 Act (Section 154 of the 1961 Act) -Mistakes should be rectified, as soon as they are discovered without waiting for an assessee to point them out.
7. Section 60(2) of the 1922 Act [Sections 89(1) and 103 of the 1961 Act] -Cases where relief can properly be given under the sub-section should be reported to the Board.
8. While officers should, when requested, freely advise assessees the way in which entries should be made in various forms, they should not themselves make any in them on their behalf. Where such advice is given, it should be clearly explained to them that they are responsible for the entries made in any form and that they cannot be allowed to plead that they were made under official instructions. This equally applies to the Public Relation Officers.
9. The intention of this circular is not that tax due should not be charged or that any favour should be shown to anybody in the matter of asstt. or that where investigations are called for, they should not be made. Whatever, the legitimate tax it must be assessed and must be collected. The purpose of this circular is merely to emphasise that we should not take advantage of a,n assessee’s ignorance to collect more tax out of him than is legitimately due from him.
20. Whenever, an authority goes wrong in law, it goes outside the jurisdiction conferred on it and its decision is void, because Parliament only conferred on it the jurisdiction on condition that it decide in accordance with the law. On the facts of this case the invoking of Section 154 second time by the Income-tax Officer for withdrawing Section 80U relief was outside the jurisdiction of the Income-tax Officer, hence the action was void.
21. The assessments for the years in appeal were framed without allowing the assessee deduction under Section 80U of the Act to which she was entitled to, on facts and in law, and in our considered opinion, the said assessments being not ‘in accordance with and subject to the provisions of the Act’ were erroneous and by invoking Section 154 of the Act, the ITO not only rectified the asstts. but in fact, rectified his mistakes and made the asstt. order in accordance with and subject to the provisions of the Act. What he did at the original stage by invoking Section 154 of the Act was not to undo an injustice but to correct and rectify his jurisdiction because earlier assessments being not in accordance with law, ‘no one gets a vested right in an erroneous order’ (82 ITR pages 555 & 556).
22. Subsequent action under Section 154 of the Act whereby deduction allowed under Section SOU of the Act was withdrawn not only was a controversial step but certainly could not have been invoked since there was no mistake apparent from the record. The decisions of the Hon’ble jurisdictional High Court having not been appreciated in toto, the said action was not tenable in law. We hold accordingly. In fact, the said action was not in terms of the ratio laid down by the Hon’ble jurisdictional High Court and the learned first appellate authority having upheld the said action, the impugned order also is not tenable in law.
23. Their Lordships of the Hon’ble Supreme Court of India, in the case of Distributors (Baroda) (P.) Ltd. v. Union of India [1985] 155 ITR 120 at page 124 have remarked that “To perpetuate an error is no heroism. To rectify it, is the compulsion of the judicial conscience. In this we derive comfort and strength from the wise and inspiring words of Justice Bronson.”
Thereafter their Lordships quoted Justice Bronson in Pierce v. Delameter [1847] 3 AMY 18 as under:
A judge ought to be wise enough to know that he is fallible and, therefore, ever ready to learn ; great and honest enough to discard all mere pride of opinion and follow truth wherever it may lead ; and courageous enough to acknowledge his errors.
24. The assessee is unfortunately not only a lady, but totally blind also and hails from a rural background. Granted that even guardians and for that purpose counsels may not be knowing tax laws thoroughly and the nature of tax laws in India being that complex what it is widely acclaimed to be, nobody can claim perfection much less even thoroughness. Here we will like to quote the Hon’ble Supreme Court of India in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 118 ITR 326 as under:
There is no presumption that every person knows the law. It is often said that every one is presumed to know the law, but that is not a correct statement, there is no such maxim known to the law.
25. On the facts and in the circumstances of the present case, the assessee having not been granted relief under Section 80U of the Act, the assessee could not suffer for the mistake of the authority as discussed above while discussing the provisions of Section 143 of the Act and the letter of the CBDT referred to above, since it was also the duty of the Assessing Officer to guide the assessee and grant relief. The Hon’ble Supreme Court of India in the case of Umed v. Raj Singh AIR 1975 SC 43 at page 58 observed that “it is also settled law of the land that the party cannot suffer for the mistake of the authority and the authority concerned cannot perpetuate illegality and miscarriage of justice, rather it is a judicial compulsion to rectify one’s own mistake.”
26. The Hon’ble Calcutta High Court has also in a` case of [1982] 10 ELT 902 at page 903 observed that ‘it is well settled that quasi judicial authorities exercising statutory powers cannot act contrary to law nor can they take advantage of their own illegality’.
27. Yet further we will like to quote the Hon’ble Supreme Court of India in B.R. Ramabhadriah v. Secretary AIR 1981 SC 1653 wherein their Lordships have observed, ‘as far as possible the anxiety and endeavour of the Court should be to remedy an injustice, when it is brought to its notice rather deny relief to an aggrieved party on purely technical and narrow procedural grounds’.
28. So far so good, on the facts and in the circumstances of the case, with which we are presently seized of, we will hold that, in the face of undisputed facts on record, grant of deduction to the assessee under Section 80U of the Act by the ITO by invoking Section 154 of the Act was on facts and in law legal and tenable but subsequent withdrawal by invoking Section 154 of the Act was not warranted either on facts or in law, since it was not only a controversial issue qua the subsequent invoking of Section 154 of the Act, but also not in accordance with law.
29. As regards the brushing aside of the decision of the ITAT on the point by the learned first appellate authority we will like to quote from a decision of the Hon’ble Supreme Court of India in Asstt. Collector of Central Excise v. Dunlop India Ltd. [1985] 154 ITR 172 at page 190. Their Lordships observed as under:-
We hope it will never be necessary for us to say so again that in the hierarchical system of the Courts’ which exists in our country, ‘it is necessary for each lower tier’ … to accept loyally the decisions of the higher tiers.
The Income-tax Appellate Tribunal being a higher tier in the hierarchy of the appellate authorities under the provisions of the Income-tax Act, 1961, the learned first appellate authority was bound to accept loyally the decisions, and we will leave it at that.
30. The impugned order of the learned first appellate authority, qua the assessment years under appeal stand reversed along with the order of the Income-tax Officer made under Section 154 of the Act whereby deduction granted to the assessee under Section 80U of the Act stood withdrawn. Original order made by the Income-tax Officer under Section 154 of the Act granting deduction to the assessee under Section 80U of the Act stands restored. Both the appeals succeed and stand allowed, but before parting’ we will like to re-call the observation of Bhagwati, J. (as he then was) in the case of State of Maharashtra v. Narayan Vyankatesh Deshpande AIR 1976 SC 1204, which are as under:
The State Governments should not adopt a litigious approach and waste public revenues on fruitless and futile litigation where there are no chances of success. It is unfortunately a fact that it costs quite a large sum of money to come to this Court and this Court has become untouchable and unapproachable by many litigants who cannot afford the large expenses involved in fighting a litigation in this Court. It is, therefore, all the more necessary that State Governments, which have public accountability in respect of their actions, should not lightly rush to this Court to challenge a judgment of the High Court which is plainly and manifestly correct and drag the opposite partly in unnecessary expense, part of which would, in any event, not be compensated by award of cost. The present appeal is an instance of the kind of unnecessary and futile litigation which the State Governments can and should avoid.
31. Appeals allowed.