1. These fifteen appeals arise out of the orders of AAC, Madurai, in the cases of the five different assessees who are all HUFs. S/Shri P.K.Inbarajan and P.K. Yogarajan are kartas of two families, one a larger family including a son and the other a smaller one without him. That is why there are five different assessees with three names. Since common facts are involved and a single common issue arises in all these cases, they are conveniently dealt with together.
2. All these assessees had claimed and were allowed the following rebates under Section 80C of the Income-tax Act, 1961 ('the Act') in respect of their contributions to public provident fund as under :------------------------------------------------------------------------------------IT Appeal Name of the assessee Asst.
Amount of Amountof No. year relief Under Section 80C tax rebate------------------------------------------------------------------------------------1307/81 P.K. Ramaswamy Nadar 1976-77 1,906 6271308/81 P.K. Ramaswamy Nadar 1977-78 1,856 5111309/81 P.K. Ramaswamy Nadar 1978-79 1,856 6421310/21 P.K. Ramaswamy Nadar 1979-80 2,000 8431312/81 P.K. Inbarajan (Larger HUF) 1976-77 2,004 1,1001313/81 P.K. Inbarajan -do- 1977-78 1,954 1,0731314/81 P.K. Inbarajan -do- 1977-78 4,050 2,2281315/81 P.K. Inbarajan -do- 1978-79 4,000 1,8401316/81 P.K. Inbarajan (Smaller HUP) 1978-79 1.954 1,1211317/81 P.K. Inbarajan -do- 1979-80 2,000 1,1501318/81 P.K. Inbarajan -do- 1979-80 4,000 9831319/81 P.K. Yogarajan (Larger HUF) 1976-77 550 3631320/81 P.K. Yogarajan -do- 1977-78 4,050 2,2821321/81 P.K. Yogarajan (Smaller HUF) 1978-79 4,000 1,8081322/81 P.K. Yogarajan -do- 1979-80 872 506------------------------------------------------------------------------------------ All the above assessees are HUFs. The assessees were unaware of the fact that the law allows relief under Section 80C only to individuals or certain AOPs/BOIs. It is the case of the assessees that none of the handouts warned them about this limitation. In fact it is claimed that the assessees had chosen this low-yielding investment because of its tax benefit in preference to other better outlets at the instance of the organisers of savings schemes. When these kartas wanted to open separate account for a different HUF with the same kartas and the bank had some misgivings about opening two accounts in the same name, they sought the intervention of the ITO (also in charge of Public Relations) who advised the bank to open such accounts. Even at that stage, the assessees were not informed of the correct legal position. Different ITOs at different times allowed such relief without question. Years later, the assessments were sought to be rectified under Section 154 of the Act and notices were issued on the assessees proposing to withdraw the relief. The assessees took as many as seven objections. The assessees claimed that the HUFs through its kartas could make contributions on behalf of its members and could be entitled to the same benefits as are available to its members. It was pointed out that the handouts did not indicate the non-availability of this relief to families. It was, therefore, sought to be suggested that either relief is available to HUFs or, at least, the right of HUFs to this relief is so debatable as to take it out of the scope of action under Section 154. The action of successive ITOs in allowing the relief, failure of the handouts and canvassers to warn the 'assessees and even the intervention of the ITO to enable the assessees to open a public provident fund account with the bank, it was sought to be suggested, constituted a sort of contributory negligence or an estoppel against the subsequent ITO to reopen the matter. Constitutionally of such discriminating treatment as between HUF and individuals was also questioned. Lastly, equity, fairness and good conscience, it was claimed, were against the proposed action. The ITO was not impressed by the arguments. He held that it was a clear mistake and, therefore, rectifiable under Section 154. The first authority agreed with him and, hence, the second appeals.
3. The learned representative took us over the records and repeated the detailed arguments which he had unsuccessfully advanced before the authorities below. He pointed out that the assessees attached the receipts and claimed relief under Section 80C. If the first assessments had held that the families were not eligible for relief, subsequent deposits by the same family and other families could not have been made and the present plight and expenses would have been avoided. None of the promoters of savings scheme, the ITO, who gave the clarification, and the many officers who allowed the relief, had any doubts as to the correctness of the allowance. The very fact that so many had actively taken the view that it is allowable, makes it impossible to justify the conclusion that it is not a patent mistake within the scope of Section 154. It shows that it is certainly not a glaring mistake, since, if it were so, it would have caught the attention of one or the other. He also cited a number of authorities in support of his propositions. He pointed out that the rule relating to non-applicability of the principle of res judicata to income-tax matters is not such an absolute rule as held by the Bombay High Court in H.A. Shah & Co. v. CIT [1956] 30 ITR 618. A decision once settled and repeatedly followed cannot be so easily upset. He placed particular reliance on the decision of the Calcutta High Court in ITO v. India Foils Ltd. [1973] 91 ITR 72 which held that where a computation of depreciation had been accepted by three ITOs, it could not be treated as a mistake which is an 'obvious, clear and patent' mistake capable of rectification under Section 154.
He further relied upon the decision of the Madras High Court in CIT v.Dr. V.K. Ramachandran [1981] 128 ITR 727 and the Delhi High Court in CIT v. Indian Institute of Public Opinion Co. (P.) Ltd. [1982] 134 ITR 23 for his proposition that the mistake should be a glaring one and not ascertainable after long arguments. He also repeated the other arguments mentioned before the authorities below.
4. The learned departmental representative claimed that there is much extraneous and irrelevant arguments raised on behalf of the assessee.
The single question is whether there is a mistake apparent from the records. Relief under Section 80C is not available to a HUF. A plain reading of the section would make that clear. It is not disputed that the status in the case of each assessee is that of the HUF. These facts are enough to justify action under Section 154. Any other fact is irrelevant. While he sympathised with the assessees for their mistakes in assuming wrongly that Hindu families have rights no different from those of the individuals in respect of relief under Section 80C, he pointed out that the reliefs under Section 80C are with reference to status. Companies, for example, do not get similar relief under Section 80C. He urged that the issue is not, in the least, debatable. No assessee has a vested right to retain the relief that was wrongly allowed to it. If somebody had misled them by wrong advice, the assessee might have a private remedy against such a person but the public right of the revenue cannot thereby be frustrated. He relied on the decision in CWT v. Kamala Ganapati Subramaniam [1981] 127 ITR 175 wherein the Madras High Court distinguished jurisdiction from merits and had pointed out that the assessee cannot question jurisdiction under Section 154 by creating a fresh dispute and rely on it to question jurisdiction.
5. We have carefully considered the facts and the circumstances of the cases before us. Scheme of Section 80C is to list out the relief available to each class of assessees, viz., individuals, HUFs and certain AOPs, BOIs. Deduction in respect of contribution to notified provident fund is available under Section 80C(2)(a)(iv) where the assessee is an individual and under Section 80C(2)(g)(i)(2) where the assessee is an AOP or BOI. The concession to individuals was introduced by the Finance Act, 1968, with effect from 1-4-1969. The requisite notification was issued in SO 2431 on 2-7-1968 in [1968] 69 ITR (St.) 1. It was extended to AOP/BOI of married persons, following the system of community property in erstwhile Portuguese territories, by the Finance Act, 1970 with effect from 1-4-1971. Assessees being HUFs, the only clause applicable to them is Clause (b) of Section 80C(2) which authorises deduction in the following words : (b) where the assessee is a Hindu undivided family, any sums paid in the previous year by the assessee out of its income chargeable to tax, to effect or to keep in force an insurance on the life of any member of the family ; It is, therefore, patent that an HUF is not eligible for this relief.
The assessees, who are all HUFs, bona fide believed that they were eligible for relief. In fact, they were prompted by the prospect of this relief to invest in them. No one-neither their advisor nor even the ITOs-bothered to correct them. In fact, the officers themselves were under a misapprehension on this behalf. That is why they allowed such relief in different cases in different years until they suddenly woke up to discover the mistake. Notwithstanding these factual positions, it is clear that no deduction is admissible to an HUF for contribution made to a notified Public Provident Fund. Even if we assume that the payment is made by the HUF on behalf of the individual members, though there is no factual basis for such assumption, only the individual concerned will be eligible for relief and not an HUF. Hence, in any view of the matter there is no scope whatever for allowance of relief under Section 80C in respect of contribution to Public Provident Fund in the case of an assessee who is an HUF. There cannot be two opinions on this issue. The matter is not debatable at all. The fact that the ITOs themselves had a different understanding or that the mistake was repeated by many on different occasions does not make the mistake any the less a mistake. The fact that deposits are accepted by such notified funds does not mean that relief under Section 80C is promised on them. There are many persons who may not have any taxable income but still invest in them for their own reasons. Tax benefit is not the sole purpose of such investments. The benefits spelt out for individuals and families are distinct and separate. For example, the premium paid for a contract of a deferred annuity will be available for relief under Section 80C to an individual but not to the HUF on the life of a member, though both are treated alike in respect of insurance on life. There is absolutely no basis for assuming that a benefit available to one class of assessees will be available to another. The grant of a relief not warranted by law by overlooking a clear statutory provision, would always justify action under Section 154. Under the circumstances, we must hold that there is a clear demonstrable mistake in the original assessment in granting of the relief purportedly under Section 80C.6. There was considerable attempt to show that the mistake, if any, is not capable of rectification within the meaning of Section 154.
Authorities were sought to be cited by both sides. We do not think that we have to discuss this matter in any detail, The law is now well established. The mistake, in order that it can be rectified, should be a mistake 'apparent from the record'. Such a mistake may well be a mistake of law also. Overlooking a mandatory provision of law which leaves no option or discretion to the taxing authority, e.g., omission to charge tax, surcharge or interest, is a mistake apparent from the record. These propositions are now well established. No doubt, a debatable question of law or failure to apply the law to a set of facts which remain to be investigated cannot justify the jurisdiction under Section 154. Section 154 will certainly not justify a review. A mistake which can be established by a long process of reasoning cannot obviously be a mistake apparent from record. These again are the principles about which there is and could be no controversy. It follows, therefore, on the plain reading on the relevant statutory provisions as done in the immediately preceding paragraph, that the ITO had both jurisdiction and merits on his side for passing the orders under Section 154. The assessees being HUFs, were not eligible for relief under Section 80C in respect of their deposits in the notified Public Provident Fund. In granting this relief, though not admissible under Section 80C, the ITO committed a mistake which is palpable, and therefore apparent from the records. The orders of the authorities below have, therefore, to be upheld.7. We will briefly advert to the other objections made on behalf of the assessees. The question on the constitutionality of the alleged discrimination between individual and HUF cannot obviously be gone into by this Tribunal which is the creature of the very law that is sought to be challenged. As regards charges regarding alleged contributory negligence and claims based upon the concept of promissory estoppel, these are indeed very vague. Neither the handouts nor the actions of the ITOs had held out a promise to the assessee that they will be eligible for relief under Section 80C, though not authorised by the statute. Their failure to advise the assessee as to the limited scope of relief in respect of contributions to notified Public Provident Fund cannot be a foundation for resisting the claim of the revenue to correct a mistake apparent from the records. The authorities, no doubt, helped the assessee to open the accounts and they mistakenly allowed the relief and probably shared the same wrong misconception of law, a misconception which should have got cleared by a most cursory look at the statute. These actions may make them parties to the mistake. In fact they were parties who had mistakenly accepted the assessee's claim. Their mistakes, even if negligent, were as bona fide as the mistakes of the assessees in claiming the relief. We know of no authority which will rule out jurisdiction under Section 154 merely because the ITO was privy to the mistake. In fact, rectifications under Section 154, are precisely meant to correct the mistakes of the authorities themselves. If the assessees were lulled into a sense of false security into making fresh deposits, we can only sympathise with them but cannot, on that ground, direct cancellation of orders of rectification of mistakes merely to enable them to retain the benefits to which they were not rightly entitled. The learned representative for the assessees claimed that the length of the orders of authorities below, the number of arguments cited on behalf of the assessees and the time taken by him before us all clearly show that Section 154 is not applicable if so much effort is required to sustain it. We are afraid that he is mistaken in this argument. What may come in the way of jurisdiction under Section 154 is a lengthy discussion about the question whether there is a mistake at all. Here there is hardly any doubt or debate possible about the fact that the assessee was mistakenly allowed relief under Section 80C. The debate, if any, is only in the attempt to meet the feeling of hurt on the part of the taxpayer when attempt is made to divest them of the relief initially given wrongly to them. Hence, the merits of the questions do not become debatable in this sense. As for citation of law on behalf of the assessees there is really no need to discuss them as there is unanimity between the parties that what is rectifiable is only a palpable and clear mistake. The citation that would merit some comments is the decision of the Calcutta High Court in the case of India Foils Ltd. (supra) from where certain passages were read out. It was made to appear that this decision lays down a principle that what had been settled by one ITO and accepted by three others can never be a mistake apparent from the records. Actually the remarks were made in the context of the facts that the nature of the mistake was not pointed out in the show cause notice. It was further pointed out in India Foils Ltd.'s case (supra) : . . .Quite plainly, two views are possible on the basis on which depreciation is to be allowed on the fixed assets of the respondent and the first appellant had taken a view different from that which found favour with the Income-tax Officers who made the assessment orders for the years 1962-63, 1963-64, 1964-65 and 1965-66.(p.82) In the assessee's case, no such two views or possibility of any debate or controversy is indicated. Similarly, we find no support for the view that a mistake once committed should not be rectified merely because such a mistake has been repeated by the other officers, in the decision of the Bombay High Court in H.A. Shah & Co.'s case (supra), where the High Court merely expressed the desirability of taking a consistent view (apparently where more than one view is possible) notwithstanding the fact that principle of estoppel and resjudicata are inapplicable to income-tax matters.
8. Before parting with this case, we would like to record our regret at the fact that none of the publications and the handouts shown to us and issued by the agencies of the Government of India had cautioned the intending contributors about the provisions of law which restricted the relief only to individual from 1969 to 1971 and thereafter extended the relief only to a specified categories of AOPs/BOIs consisting only of husband and wife governed by the system of community of property in force in the Union territories of Dadra and Nagar Haveli and Goa, Daman and Diu. We are no doubt unaware of the legislative policy behind making this concession unavailable to the HUF as none is discernible from the object of the relevant amendments. We are informed that repeated representations have been sent to the Government as to lack of justification in not extending this relief to HUF. We have no doubt that if these representations bear fruit retrospectively, persons in the position of these assessees will also be given such benefit notwithstanding the present orders, especially because of lack of publicity for the restricted nature of the concession in the past.