1. This is an appeal against the order of the A AC wherein he has dismissed the appeal preferred by the assessee against the order of the ITO made under Section 154 of the Income-tax Act, 1961, wherein he had refused to accede to the rectification of the mistakes pointed out by the assessee.
2. The assessee is a firm. The assessment year is 1975-76 and the relevant previous year is the financial year ended 30-5-1975.
3. Inspired by the following observation made by the AAC, while disposing of the appeal for the assessment year 1976-77, The next contention of the appellant relates to the addition of Rs. 4,644 out of law charges claimed at Rs. 10,285. A sum of Rs. 1,800, which relates to the preceding year, is obviously to be disallowed and with regard to the other item debited in this account, the expenses are vouched and verifiable. The addition in this behalf will, therefore, be limited to Rs. 1,800 only and a reduction of Rs. 2,844 is allowed here.
the assessee moved an application under Section 154 of the Act before the ITO, the relevant contents of which read as under- We beg to invite your kind attention to para 2 of the appellate order dated 3-8-1978 passed by the Commissioner of Income-tax (Appeals), Allahabad, for the assessment year 1976-77 wherein it was held that a sum of Rs. 1,800, out of law charges claimed in that year, obviously relates to the preceding year. Accordingly, our assessed income for assessment year 1975-76 is liable to be reduced by Rs. 1,800. Since the mistake is apparent from record, it is requested that it may be rectified under Section 154 of the 1961 Act.
The ITO, however, rejected the assessee's claim with the remarks that "from the perusal of the record it appears that that is not a mistake apparent on record". In appeal, the AAC upheld the action of the ITO.4. Being aggrieved by the order of the AAC, the assessee has come up in appeal before us. Relying on the decisions of the Hon'ble Supreme Court in the cases of S. Sankappa v. ITO [1968] 68 ITR 760, Mahendra Mills Ltd. v. P.B. Desai, AAC [1975] 99 ITR 135 and Maharana Mills (P.) Ltd. v. ITO [1959] 36 ITR 350 the learned counsel for the assessee vehemently argued that the income-tax authorities ought to have accepted the assessee's application made under Section 154 of the Act.
According to him, the subsequent event in the assessment year 1976-77 was sufficient for the assessee to make an application under Section 154 requesting the ITO to allow deduction of Rs. 1,800. On a query raised by us, the learned counsel for the assessee was fair enough to state that in the original assessment proceedings for the year under appeal, the assessee had neither claimed deduction of Rs. 1,800 nor had he placed any material on record in this regard. Me, however, hastened to state that this fact by itself would not prevent the assessee to request the ITO to pass a suitable order under Section 154.
5. The learned representative for the department on the other hand strongly relied on the orders of the income-tax authorities and justified their action. According to him, if the stand taken by the assessee were to be accepted then there would be flood of such applications which was not the intention of the Legislature for making a provision like Section 154 He further submitted that the decisions relied on behalf of the assessee have no application to the facts and circumstances obtaining in the present case. In this connection, he pointed out that in the case of Maharana Mills (P.) Ltd. (supra), the point involved was about the proper amount of depreciation allowable to the assessee and in the case of Mahendra Mills Ltd. (supra), the point involved was regarding the opening/closing stock balances of the assessee. In other words, he wanted to impress upon us that in those cases the decision given in one year would have very vital bearing in respect of the subsequent years. According to the learned representative for the department, "records" would mean only that material which was necessary to frame an assessment. Since it is an admitted fact that the assessee had neither claimed deduction of Rs. 1,800 nor relevant material was placed before the ITO at the time of original assessment proceedings, the decision given by the AAC in the subsequent year could not be treated as "record" contemplated under Section 154.
6. We have carefully considered the rival submissions of the parties and we do not find any merit in the submissions made on behalf of the assessee. In our view, the aforesaid decisions of the Hon'ble Supreme Court were given on the appreciation of peculiar facts obtaining in those cases. In this connection, the following observation made by the Hon'ble Supreme Court in the case of Mahendra Mills Ltd. (supra) is very illuminating : Lastly, Shri Desai urged that we should not lose sight of the startling results which might flow from a liberal interpretation of Section 35. It is apprehended that if the phrase 'record of the appeal' is widely interpreted so as to cover the records of all collateral proceedings and subsequent events, it would leave the door wide open to endless harassment of asses-sees ; the income-tax authorities would under the guise of correcting mistakes, lightly reopen assessments long past and closed, and thus introduce an element of disconcerting instability in the administration of the Act.
In our opinion, there is no room for any such apprehension. It must be remembered that a decision is a precedent on its own facts. Each case presents its own features. The income-tax authorities and Tribunals are supposed to apply the ratio of a decision to the facts of particular cases with due care and discernment bearing in mind the restricted scope of their jurisdiction under Section 35 and the object for which it is conferred. (p. 143) 7. Both in the cases of Mahendra Mills (supra) as well as in Maharana Mills, (supra), the mistake which was required to be rectified was very much interlinked and interconnected with other years and that is why the Supreme Court has held that the action taken under Section 154 was quite proper and in order. In the aforesaid observation, the Hon'ble Supreme Court has cautioned that each case has to be decided on its own facts. Therefore, we are of the view that the aforesaid decisions would not be of much help to the assessee. In the instant case, it is an admitted fact that the assessee had neither claimed deduction of Rs. 1,800 nor had placed relevant materials before the ITO in this regard at the time of original assessment proceedings. It is also clear from the order of the AAC (reproduced above) that he had simply stated that "a sum of Rs. 1,800 relates to the preceding year is obviously to be disallowed." It is a trite law that in order to claim deduction from the total income, it is for the assessee to lead proper evidence and material. As already stated above, this was not done by the assesses and, therefore, a mere observation without any material on record would not justify the assessee to move an application under Section 154. We have, therefore, no hesitation in upholding the order of the AAC under appeal.