ORDER
H.C. Shrivastava, Accountant Member
1. As all these appeals though concern different assessees involved same point, they are being disposed of together for the sake of convenience.
2. The facts of these appeals are as below :
(1) In all the cases the assessees had claimed deduction under Section 2(m) of the Wealth-tax Act on account of liability of income-tax raised against the assessees under Voluntary Disclosure Scheme of 1977.
(2} In all these appeals the Assessing Officer had refused to grant this deduction to the assessees in view of the Gujarat High Court decision in the case of CWT v. Ahmed Ibrahim Sahigara [1974] 93 ITR 288. All these orders were passed by the Assessing Officer on 15-12-1978.
(3) All the assessees of this group of appeal filed petitions under Section 35 of the Wealth-tax Act on 27-2-1979 inviting attention of the Assessing Officer to the unreported decision of the I.T.A.T. in the case of Sr. Inder Singh v. FTO.
(4) In the year 1981 the Hon’ble Supreme Court reversed the decision of the Gujarat High Court in Ahmed Ibrahim Sahigra Dhorqji v. CWT [1981] 129 ITR 314 (SC).
(5) The Assessing Officer, however, kept the petitions of the assessees pending with him from 1979 to August 1991.
(6) On 2-8-1991 the W.T.O passed the following order under Section 35 of the W.T. Act:-
The assessee has applied for rectification of mistake vide application dated 27-2-1979 vide acknowledgement No. 284912. Since there is no mistake apparent from the record hence [sic) the application is hereby rejected.
Besides above, nothing else is mentioned or discussed in the body of this order.
(7) All the assessees went in appeal to the Dy. CWT(Appeals) against the said orders of the W.T.O. The Dy. CWT (Appeals) by his order dated 29-1-1992 allowed the assessees’ appeals after taking into consideration the decision of the Supreme Court in Ahmed Ibrahim Sahigra Dhorqji’s case (supra) and Madhya Pradesh High Court decision reported in 51 CTR 352.
The Department is in appeal before us.
3. The Departmental Representative submitted that at the time when the Assessing Officer passed the orders, the decision of the Gujarat High Court was available to him and on the basis of that decision he did not allow the claim of the assessee. The assessee filed the petition under Section 35 by relying on the Tribunal’s decision. It was, therefore, submitted that at the time when the assessee filed the petitions there was no mistake apparent from record of the Assessing Officer either on facts or in law. Attention was also invited to the fact that there were conflicting decisions regarding the allowance of tax liability under Section 2(m) of the Act based on the disclosure made by the assessees under Voluntary Disclosure Scheme. Even if the Supreme Court has settled the issue the fact remains that there were conflicting decisions at the time when the Assessing Officer passed the order and, therefore, there was no mistake apparent from record. He therefore, relied upon the decision of the Supreme Court in the case of T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 to submit that the order of the Assessing Officer was rightly not rectified under Section 35 of the Act as the rectification would have involved detailed arguments and there was no mistake apparent from record.
4. The assessee’s counsel, however, submitted that the Assessing Officer was bound to follow circular issued by the Board in 1977. He invited our attention to the said circular which appears on page 6 of the paper book. He submitted that the Board had issued clear instructions that wherever the decisions of the Supreme Court are available and there are cases which were decided in past by taking a contrary view the same can be rectified under Section 35 of the Wealth-tax Act or 154 of the Income-tax Act. He further relied upon various decisions including the Supreme Court decision in S.A.L. Narayana Rao, CIT v. Model Mills Nagpur Ltd. [1967] 64 ITR 67.
5. We are of the opinion that the departmental appeals deserve to be dismissed. Whenever a decision of the Supreme Court is given the same becomes the law of the land. Although such a decision may not reopen a concluded decision, if an appeal is pending against an order at the time when a decision of the Supreme Court is rendered, the appeal will have to be decided in accordance with the decision of the Supreme Court by applying the law as declared by the Supreme Court, which under Article 141 of the Constitution is binding in all courts within the territory of India. Similarly, on the basis of the decision of the Supreme Court the assessee can take advantage of a provision of the rectification of the mistake by the original authority in the same way as he may take advantage of a provision for preferring an appeal against his order, provided the circumstances are such that the assessee can bring the case within the four corners of the legal provision for rectification. It has been held that the principle of retrospective legislation is not applicable to the decisions of the Supreme Court declaring the law or interpreting a provision in a statute. The law is laid down or a provision in a statute is interpreted by the Supreme Court only when there is a debate or doubt on the interpretation of any provision of a statute requiring the same by the Supreme Court or when there is a conflict of judicial opinion on a provision of a statute between the different High Courts of India which is required to be resolved and settled by the Supreme Court. Yet if the Central Board of Direct Taxes issues an instruction to the income-tax authorities the same becomes binding on them. Even if a matter is held to be of debatable nature but the Central Board of Direct Taxes believes that the benefit of the decision of the Supreme Court may be implemented in spirit as well as in law. If the decision is in favour of a view in favour of an assessee, the authorities below have to follow the same. The Department will not be justified in rejecting the claim of the particularly on a date which falls after the decision of the Supreme Court merely on the ground that it is possible to have two views on the said issue and at the time when the Assessing Officer followed one view, he was only preferring one view to the other view. But the Central Board of Direct Taxes by their Circular No. 68 dated 17-11 -1971 have given instructions to the authorities below as follows:-
It has, therefore, been decided that where an assessee moves an application under Section 154 pointing out that in the light of a later decision of the Supreme Court pronouncing the correct legal position, a mistake has occurred in any of the completed assessment in his case, the application shall be acted upon, provided the same has been filed within time and is otherwise in order.
In this case it is seen that when the Assessing Officer dismissed the assessee’s application under Section 35 of the W.T. Act the decision of the Supreme Court was very much available and was the law of the land. In view of the Circular dated 17-11-1971 (supra) the departmental authorities were bound to follow the same. As the matters stand today though the quasi-judicial function of the income-tax authority cannot be controlled by the Board in a particular case but they can be so controlled to the extent that general directions are issued by the Board – Nathuram Kapoor v. ITO [1979] 120 ITR 257 (MP). There have been several instances where the Board has waived the provisions of Income-tax Act in favour of the assessees. There have been various cases where the various time limits fixed under Income-tax Act caused genuine hardship to the affected assessees. The Central Board of Direct Taxes in exercise of the powers vested in them under Clause (b) of Sub-section (2) of Section 119 of the Income-tax Act can authorize the ITO to take action under Section 154. This view of the Board is contained in Circular No. 71 dated 20-12-1971. Therefore, we are of the opinion that at the time when the Assessing Officer was deciding the fate of the assessee’s application under Section 35 of the Act after sleeping over the same for a period of 12 years the decision of the Supreme Court was already available and in view of the same Board Circular was binding on the income-tax authorities. Therefore, we are of the opinion that the Assessing Officer was bound to allow the assessee’s petition under Section 35 of the Wealth-tax Act. Accordingly we hold that the W.T.O. shall allow the assessee necessary relief in view of the decision in Sahigara’s case (supra) and in view of the Board’s Instructions dated 17-11-1971.
6. In the result, the departmental appeals are dismissed.
