Full Judgment
The assessee's submission, through the present miscellaneous petition, is that the aforesaid Sub-section (3) should be so interpreted that it would also include cases where the assessment results in the determination of total income at a minus figure, i.e., losses, and if the loss in question exceeds Rs. 1 lac, a Single Member Bench will not be able to hear it.
2. The assessee had-filed his return of income for assessment year 1982-83 showing loss of Rs. 92,46,920. The assessing officer completed the assessment on 24th September, 1984 determining the net loss at Rs. 37,35,440. There was an appeal against the said order to the CIT (Appeals) and against the order of the latter a second appeal was filed to the Tribunal on 11-6-1987. It was allotted to a Single Member Bench and was accordingly disposed of by the SMC Bench on 19th December, 1989. Through the present petition the assessee's submission is that Single Member Bench did not have jurisdiction to hear the said appeal and to determine it because the (negative) total income as determined by the assessing officer was more than Rs. 1 lac.
3. On behalf of the revenue, the above submission is resisted and it is pointed out that a simple reading of Sub-section (3) leaves clear impression on the mind that for the purpose of determining the jurisdiction of a Single Member Bench of the Tribunal, the Legislature intended the total income exceeding Rs. 1 lac to be the dividing line.
Cases below this line were to be heard by a Single Member Bench and cases above this line were to be heard by Division Bench. Loss of whatever magnitude would always be less than Rs. 1 lac and, therefore, it would not be correct to say that, when loss of Rs. 37,35,440 was determined in the present case, it would mean that total income had exceeded Rs. 1 lac. It was certainly a case of a total income of less than Rs. 1 lac and, therefore, according to the learned departmental representative the appeal was properly decided by the Single Member Bench.
4. In rejoinder the submission of the learned counsel for the assessee was that income would include loss also for the purpose of assessment and, therefore, the words 'total income' would also cover loss figure.
5. In our opinion, the assessee's submission deserves to be rejected because a plain reading of Sub-section (3) of Section 255, extracted above, indicates that a Single Member Bench of the Tribunal can hear all those appeals, where total income determined by the assessing officer does not exceed Rs. 1 lac. The aforesaid phraseology does not suggest that the figure of Rs. 1 lac mentioned in the section should be understood in the Algebraical sense of either being a plus figure or a minus figure. The clause "total income does not exceed Rs. 1 lac" leaves a clear impression on the mind that Rs. 1 lac is positive figure and that the total income should not exceed the above positive figure.
Of course, for the purpose of assessment, income includes loss, but we are, at this stage concerned with the interpretation of the phraseology used in Sub-section (3) of Section 255, and not with the dispute as to whether for the purpose of assessment total income would include loss.
That it will, is beyond dispute but the question for determination here is as to what is the impression left on the mind by the use of the clause "total income as computed by the assessing officer... does not exceed Rs. 1 lac for determining the jurisdiction of Single Member Bench. Our answer is that the above clause clearly suggests a positive figure of Rs. 1 lac.
6. It may be noted here that the criterion adopted for determining the jurisdiction of the Single Member Bench is not the quantum of addition but the quantum of income. There may, for example, be cases where the loss return of more than Rs. 50 lacs may be converted to a positive figure of Rs. 1,000. The jurisdiction in such a case will not be of the Division Bench because the addition of Rs. 50,01,000 has been made but of the SMC because the total income assessed is Rs. 1,000. In the present case itself, the addition made by the ITO is of Rs. 55,10,850, that is why the total income is loss of Rs. 37,35,440 as against the loss returned of Rs. 92,46,290. If the addition had been Rs. 92,46,300 the resultant figure will be total income of Rs. 10. Jurisdiction in such case will definitely be of SMC. It is, therefore, futile, in the existing state of law, to look at the quantum of addition. What has to be looked at is the quantum of total income.
7. Then if one has loss of Rs. 1 lac, it is never said that his total income is Rs. 1 lac; what is said is that his total income is loss of Rs. 1 lac. Therefore, the argument of the assessee as above appears to us to be fallacious and we reject it 8. Besides, as will be seen from the above discussion, what is involved in the present case is the interpretation of the statute, and further even of the assessee's view be possible, it would mean two views about the interpretation of statute. In either of these eventualities, a rectification Under Section 254(2) would not be possible, as such a mistake is not one which can be said to be apparent from record.