1. These are appeals of two assessees belonging to the same group challenging orders dated 22.12.2004 and 25.1.2005 of the CIT(A)-III, Hyderabad, as erroneous. Facts of the cases, issues involved, rival submissions thereon as well as the assessees herein, happening to be almost the same, these proceedings are consolidated together for the sake of convenience by this common order.
2.2 Assessee, Dr. B. Padmaja, who is a medical practitioner by profession, practicing at Karimnagar, has filed her return for the assessment year 2001-02 on 27.3.2002, declaring an income of Rs. 1,05,560. The Assessing Officer completed the assessment by his order under Section 143(3) dated 29.3.2004, on a total income of Rs. 2,59,125, making additions of Rs. 48,565 disallowing 20% of various expenses aggregating to Rs. 2,42,826; and of Rs. 1,05,000 on account of unexplained investment under Section 69 of the Act.
2.3 Similarly, assessee, Dr. B. Ldvanya, a dental doctor by profession, filed her return of income for the assessment year 1999-2000 on 20.3.2001, declaring total income of Rs. 60,000. Though the said return was initially processed under Section 143(1) on 17.9.2001 and returned income was accepted, in the reassessment under Section 143(3) read with Section 147 made on 29.3.2004, assessee's total income was determined at Rs. 3,68,000 after making an addition of Rs. 3,08,000 under Section 69 of the Act, on account of unexplained investment.
2.4 On appeals preferred by the assessees against the above assessments, the CIT(A) in the first instance, by his separate orders dated 22.12.2004, confirmed the additions made by the Assessing Officer and dismissed the appeals of the assessees on merits.
2.5 Subsequently, the CIT(A), from a letter dated 29.12.2004 received from the Assessing Officer, having came to know that the assessment order as well as demand notice were served on the assessees on 31.3.2004, and not on 15.4.2004 as stated by the assessees against appropriate column of Form No. 35, viz. Form of Appeal before the Commissioner, and as such there was delay in the filing of the appeal by the assessees before him, issued a notices under Section 154, proposing to rectify the appellate orders dated 22.12.2004 passed by him. In the absence of any response from the assessees, he passed separate orders dated 25.1.2005, whereby he held that the appeals filed on 14.5.2004 by the assessees were out of time and the same should have been rejected. He accordingly concluded that "Accordingly, the appellate order dated 22.12.2004 should be considered as 'Appeal not Admitted' and, hence considered as dismissed for statistical purposes.
2.6 Aggrieved by the separate orders of the CIT(A) dated 22.12.2004 dismissing the appeals on merits and corrigendum orders dated 25.1.2005 dismissing the appeals for statistical purposes, by not admitting the appeals, assessees preferred separate appeals before us.
3.1 Learned Counsel for the assessees submitted in common THAT: On merits, the Appellate Commissioner erred in confirming the action of the Assessing Officer in treating Rs. 3,08,000 in the case of Dr. B.Lavanya and Rs. 1,08,000 in the case of Dr. B. Padmaja, as the income under Section 69A of the Act, in spite of clear explanations submitted by the assessees. He also erred in confirming the action initiated under Section 148 in the case of Dr. B. Lavanya. The CIT(A) also erred in the case of Dr. Padmaja in confirming the addition of Rs. 48,565 being disallowance of 20% of various expenses aggregating to Rs. 2,42,826. Petitions for admission of additional evidence in terms of Rule 29 of ITAT Rules are also filed alongwith relevant affidavits in support thereof.
3.2 That apart, insofar as appeals against corrigendum orders of the CIT(A) dated 25.1.2005 are concerned, the CIT(A) erred in holding the appeals as not admitted, without considering the fact that the appropriate appeals were filed before the CIT(A). He has erred in passing the corrigendum order on 25.1.2005, amending the appellate orders dated 22.12.2004.
4. On the other hand, the learned representative for the Revenue, countered, to say in brief, by defending the orders impugned.
5.1 Rival submissions heard and relevant orders read including the orders of the authorities below and the paper-books filed before us.
After doing so, we are of the considered opinion that the stand of the assessee has some force for the reasons following- 5.2 Before going deeply into the issues concerned on merits, we have to state that while the CIT(A) has passed his orders dated 22.12.2004 on merits too rejecting the contentions of the assessees, he passed the subsequent corrigendum orders dated 25.1.2005 holding that "the appellate orders dated 22.12.2004 should be considered as 'appeal not admitted' and, hence, considered dismissed for statistical purposes." In other words, not only the CIT(A) has rejected the assessees appeals before him on merits, but also by his corrigendum orders held that the earlier appellate orders passed on merits should be considered as Appeals not admitted and hence dismissed for statistical purposes, as there was a delay of 14 days in filing those appeals.
5.3 The delay was brought to the notice of the CIT(A) by a communication of the Assessing Officer dated 29.12.2004 pointing out that the assessment order alongwith DN was served on the assessee on 31.3.2004 and not on 14.4.2004, as stated by the assessee against appropriate column of Form No. 35, viz. Form of Appeal before the Commissioner, and consequently there was a delay of 14 days in the filing of the appeals. Since by the time of receipt of the said letter dated 20.12.2004, he has already disposed of the appeals on merits, he issued a notice under Section 154 alongwith a letter addressed to the assessee proposing to rectify the appellate orders dated 22.12.2004, and fixing the date of hearing on 24.1.2005. As there was no response from the assessees, the CIT(A) opined that the assessees have nothing to say in this regard. He therefore concluded as follows- As discussed above, the correct date of service of assessment order along with demand notice for A.Y. 2001-02 was 31.03.2004. Thus, the appeal should have been filed on or before 30.4.2004 whereas the appeal was actually field on 14.05.2004, i.e. with a delay of 14 days. The appellant failed to give reasons for the delay in filing the appeal but made a false claim in Form No. 35 mentioning the date of service of the assessment order alongwith DN as 15.04.2004 and obtained the appellate order by deceit. In the absence of any request from the appellant for condonation of the delay of 14 days in filing the appeal, I hold that the appeal field on 14.05.2004 was out of time and the same should have been rejected. Accordingly, the appellate order dated 22.12.2004 should be considered as 'Appeal not Admitted' and, hence considered dismissed for statistical purposes.
5.4 The above order of the CIT(A) amounts to review of his earlier orders on merits. Further, it was without giving sufficient opportunity to the assessee, as the notice was issued to the assessees only once, fixing the date of hearing on 24.1.2005. The corrigendum orders were passed on the very next day, i.e. on 25.1.2005. We are unable to find in the corrigendum order as to what is the date of such notice issued under Section 154, much less the date on which the same was served on the assessees, the same having not been furnished therein. When the date of hearing was fixed on 24^th January, immediately, i.e. on the very next day, the corrigendum orders have been passed without waiting any further, for response by way of adjournment petition etc. from the assessees. All these facts and factors make us feel that there has been haste and hurry on the part of the CIT(A) and only for formality sake, to escape from the charge of violation of principles of natural justice, notice seems to have been issued to the assessee by the CIT(A). What all that has happened, in our view of the matter, still the CIT(A) is not absolved of the violation of principles of natural justice on account of inadequacy of opportunity given. Having made serious allegations against the assessees of having made false claims in Form No. 35 as to the date of service of the assessment order alongwith DN, and of having obtained the appellate orders by deceit, the CIT(A) should have given adequate opportunity to the assessees to put forth their say, in the face of the letter of the Assessing Officer dated 29.12.2004, which prompted the CIT(A) to draw the above adverse inferences against the assessees. Further, the notice is issued by the CIT(A) under Section 154 of the Income Tax Act, which deals with the rectification of mistakes apparent from record. In the instant case, even though in the result, both the kinds of appeals before the CIT(A) have been rejected, the earlier order discussing in detail on merits dismissed the appeals of the assessee, while the latter corrigendum orders of the CIT(A) considered the earlier orders as 'not admitting the appeals' and dismissing the appeals of the assessee for statistical purposes. Thus, in our view of the matter, both the orders are on two different issues, viz. former order on the merits of the appeals and the latter order on the preliminary point of limitation, which was communicated by the Assessing Officer to the CIT(A) after the dismissal of the appeals on merits by the CIT(A). Therefore, questions arise as to- (a) Whether the corrigendum orders are really corrigendum done on account of mistake apparent from record rectifiable under Section 154 or do they amount to mere review of the orders passed earlier on merits on 22.12.2004, more so having extinguished the original orders dated 22.12.2004, by the CIT(A) without-having any such power, as indeed even the second appellate authority, i.e. the Tribunal, too does not have such power of review except higher forum like the High Court? This question arises because though for rectification of any obvious and patent mistake by the Revenue authorities, the statute prescribed a procedure under Section 154 of the Act, and though the CIT(A) in the instant cases initiated the proceedings under that Section, passed orders titled 'Corrigendum'.
Indeed and in fact, a corrigendum is akin to errata and so distinct and different from a rectificatory order contemplated under Section 154/254 of the Act. While a corrigendum, in general, is intended to rectify only clerical or typographical errors of peripheral nature, having no bearing on the material part of the decision, by the corrigendum orders passed in the instant case, the CIT(A) has simply substituted the earlier orders passed by him on merits. Thus, the corrigendum, did not merely rectify any mistake in the earlier orders, but simply eclipsed the same, and therefore, the same amounts to review by the CIT(A) of his earlier orders dismissing the appeals on merits.
(b) Whether the CIT(A) could go into the point of limitation having decided the appeal on merits? This question arises because it is only valid appeals, devoid of defects, are decided on merits. Hence, preliminary points going to the root of the matter and against the very maintainability of the appeals have to be adjudicated at the out set, and only if they are held maintainable, the appeals have to be adjudicated consequently on merits. Thus, in the event of any defect in an appeal, it is the order on the preliminary points, which, in general, precedes an order on merits which is passed only if the defects are cured or condoned by such preceding orders.
(c) When once an order on merits has been passed by the CIT(A), is it not that the point of limitation is deemed to have been considered and delay, if any, condoned? The reason is that the appeals remain for consideration on merits, only if the defects are cured or condoned and the appeal is held maintainable.
5.5 However, we are not adjudicating these aspects in the aforesaid questions that are emerging in these appeals, which were earlier in our contemplation, as after hearing the parties and going through the record, we find, suffice it to say, that corrigendum orders impugned herein are clearly orders passed in hurry and haste, not having given sufficient opportunity to the assessee. For the reasons already stated, hardly one notice appears to have been issued to the assessees, date of even that notice issued under Section 154 has not been furnished in the corrigendum order, much less the date of service of such notice to the assessees. When the date of hearing has been fixed for 24^th January, the corrigendum orders have been passed on 25^th January itself.
Therefore, no more material or information is necessary than to hold that principles of natural justice have been violated by the CIT(A) towards the assessee. For all these reasons, the corrigendum orders of the CIT(A) dated 25.1.2005 qualify to be quashed.
5.6 Regarding the earlier appellate orders dated 22.12.2004 by the CIT(A), deciding the appeals on merits, against which the assessees have come on appeal before us raising grounds contesting the additions sustained by the CIT(A), we note in the first place that the same having been extinguished by the subsequent corrigendum orders dated 25.1.2005, the appeals of the assessee have perhaps become infructuous, and on that count are liable to be rejected, rather in favour of the assessee 5.7 In any event, the assessees having filed petitions seeking admission of additional evidence in support of their claims, not accepted by the lower authorities, which led to the impugned additions under Section 69A and disallowance out of expenses claimed by Dr.
Padmaja, considering totality of facts and entirety of the circumstances of the cases on merits and the preliminary point of limitation, we deem it just, fit and proper to set aside all the four orders impugned in these appeals, and restore the matter to the CIT(A)'s file with the following directions- (a) Considering the fact that the CIT(A) has made serious allegations of falsity and deceit of criminal nature against the assessees in the corrigendum orders dated 25.1.2005, we direct that the CIT(A) shall in the first place, ascertain the correct date of service of the Assessment Orders alongwith the DN, on the assessees, duly confronting the assessee with the letter of the Assessing Officer dated 29.12.2004.
(b) In case it will be found that the appeals have indeed been filed late by 14 days, the CIT(A) shall give reasonable opportunity to the assessees to explain the reasons for the delay, and shall examine the reasonableness of the same, on petitions and affidavits therefore being filed by the assessees.
(c) If satisfied with such reasons for the delay in the filing of the appeals, the CIT(A) may condone the delay in the filing of the appeals, and decide the appeals before him on merits afresh, after giving reasonable opportunity of being heard particularly to the assessees, and if necessary, to the assessing officer too, and also duly considering, including the additional evidence sought to be filed by the assessees before this Tribunal, any relevant stand or material that would be relied upon in support thereof by both the parties respectively, before passing a speaking order in accordance with law.
6. In the result, all the four appeals of the assessees are allowed for statistical purposes.