P.D. Dinakaran, J.
1. The Revenue has preferred the above tax case appeal against the order of the Income-tax Appellate Tribunal dated 31.1.2003 in M.P.No. 40(Mds)/2000 in ITA No. 719/Mds/1994 for the assessment year 1989-90 passed in exercise of power under Section 254(2) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), raising the following substantial questions of law for consideration:
1. Whether in the facts and circumstances of the case, the Tribunal was right in rectifying its order under Section 254 of the Income-tax Act, based on a judgment of the Supreme Court rendered six years after the date of the order rectified?
2. Whether in the facts and circumstances of the case, the Tribunal has the power or jurisdiction to rectify its order beyond, the time limit of four years specified under Section 254(2)?
2.1. The facts, in brief, are, the assessment for the assessment year 1989-90 was completed on 27.2.1992 on a total income of Rs. 26,24,137/- based on book profit under Section 115J of the Act amounting to Rs. 45,92,240/- in respect of transitional previous year of 21 months.
2.2. On the question of debiting additional depreciation relating to earlier years which was due on account of adopting Written Down Value method in place of Straight-line method permitted under the Company Law, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) challenging the computation of profit under Section 115J. The Commissioner of Income-tax (Appeals) upheld the order of assessing officer holding that the depreciation relating to earlier assessment years should not be adjusted as it would distort the profit of the current year.
2.3. On further appeal by the assessee, the Appellate Tribunal held that there was no finding on the issue whether the book profit shown by the assessee is in conformity with the provisions of the Companies Act and what is required to be taxed under Section 115J of the Act is only the profit that can be distributed as dividend and if the distribution of profit cannot be made without adjusting the unabsorbed depreciation of the earlier years consequent upon the change in the method, then the assessee would be entitled to make such an adjustment, which cannot be varied under Section 115J of the Act. Holding so, the Appellate Tribunal remitted the matter to the assessing officer for reconsideration, by order dated 22.3.1993.
2.4. Then, the assessing officer passed, a fresh order on 30.9.1993 showing the figure as same as in the original assessment order and the said order was confirmed by the Commissioner of Income-tax (Appeals) on appeal.
2.5. The Appellate Tribunal, on appeal, held that if the depreciation relating to earlier years was considered and allowed, the profit and loss accounts of the assessee would not reflect the correct picture for the assessment year in question and accordingly, dismissed the appeal filed by the assessee.
2.6. Thereafter, on 2.8.2000 the assessee filed a miscellaneous petition in M.P.No. 40/Mds./2000 under Section 254(2) of the Act for rectification of the order of Appellate Tribunal contending that in the order sought to be rectified the Appellate Tribunal did not consider the points, (i) whether the book profit shown by the petitioner is in conformity with the provisions of the Companies Act, 1956 and (ii) whether the petitioner can distribute its profit as dividend without adjusting the unabsorbed depreciation of earlier years consequent upon the change in the method and if the answer is no, whether the petitioner is entitled to adjust the earlier year depreciation which cannot be varied under Section 115J of the Act.
3. Of course, even though on the date when the miscellaneous petition for rectification was taken on file, viz., 2nd August, 2000, the decision of the Apex Court dated 3.5.2002 in Apollo Tyres Ltd. v. C.I.T. : [2002]255ITR273(SC) was not available, the Appellate Tribunal, while disposing of the miscellaneous petition for rectification by order dated 31.1.2 003, has chosen to follow the ratio laid down in Apollo Tyres Ltd. case wherein the Apex Court held as follows:
The Assessing Officer, while computing the book profits of a company under Section 115J of the Income-tax Act, 1961, has only the power of examining whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. The Assessing Officer, thereafter, has the limited power of making increases and reductions as provided for in the Explanation to Section 115J. The Assessing Officer does not hare the jurisdiction to go behind the net profits shown in the profit and loss account except to the extent provided in the Explanation. The use of the words 'in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act' in Section 115J was made for the limited purpose of empowering the Assessing Officer to rely upon the authentic statement of accounts of the company. While so looking into the accounts of the company, the Assessing Officer has to accept the authenticity of the accounts with reference to the provisions of the Companies Act, which obligate the company to maintain its accounts in a manner provided by that Act and the same to be scrutinised and certified by statutory auditors and approved by the company in general meeting and thereafter to be filed before the Registrar of Companies who has a statutory obligation also to examine and be satisfied that the accounts of the company are maintained in accordance with the requirements of the Companies Act. Sub-section (1A) of Section 115J does not empower the Assessing Officer to embark upon a fresh enquiry in regard to the entries made in the books of account of the company.
(Emphasis supplied)
4. The Appellate Tribunal also referred to the Circular No. 68 dated 17.11.1971 which provides that a mistake arising as a result of subsequent interpretation of law by the Supreme Court would constitute a mistake apparent from the records and ultimately held that in view of the subsequent decision of the Supreme Court in Apollo Tyres Ltd. case, there was an apparent mistake in the order of the Tribunal rectifiable under Section 254(2) of the Act and accordingly, allowed the rectification petition in favour of the assessee by order dated 31.1.2003. Hence, the above appeal on the substantial questions of law referred to above.
5. Mrs. Pushya Sitaraman, learned senior standing counsel for the Revenue invited our attention to Sections 249(2), 253(3),' 260A(2) of the Act which provide for limitation for filing appeal to the Commissioner of Income-tax Appeal, Appellate Tribunal and High Court respectively.
Our attention was also brought to Section 154(2),(5),(6),(7) & (8) and 254(2) and Proviso I and II of the Act. According to learned Counsel, when Section 254(2) specifically prescribes a period of four years as outer time-limit within which the Appellate Tribunal should have rectified the mistake apparent in the order passed by it, any such order passed beyond that period would be construed to be barred by limitation and the order passed by the. Appellate Tribunal under Section 254(2) of the Act recalling the original order dated 9.12.1996 is liable to be set aside and the consequential order dated 12.6.2003 passed by the Appellate Tribunal is also nothing but nullity in the eye of law.
6. She has further contended that in the case of Income-tax authorities, the rectification of mistake is governed by Section 154 of the Act and even though Section 154(8) provides that the Income-tax authorities shall pass an order of rectification within six months from the end of the month in which the application is received, the said period of six months shall be read into the total period of four years from the date of original order. She has further stated that when the statute prescribes outer time-limit, it may not be proper for this Court to go beyond the same.
7. On the other hand, placing reliance on the decision of Rajasthan High Court in Harshvardhan chemicals and Minerals v. U.O.I. , learned Counsel appearing for the assessee contended that if the application is made within the period of four years, the Tribunal is bound to decide the application on merits and not on the ground of limitation. He has also contended that when the Circular No. 68 dated 17.11.1971 provides that a mistake arising as a result of subsequent interpretation of law by the Supreme Court would constitute a mistake apparent from the record, in the light of subsequent decision of the Supreme Court in Apollo Tyres Ltd. case, the Tribunal was correct in recalling its earlier order.
8. We have given our careful consideration to the submissions made on behalf of the appellant as well as the respondent/assesses.
9. The point involved in this appeal revolves on the scope and ambit of Section 254(2) of the Act and hence, it is profitable to refer to Sections 154 and 254(2) which reads as under:
154. Rectification of mistake.-- (1) With, a view to rectifying any mistake apparent from the record, an income-tax authority referred to in Section 116 may amend any order passed by it under the provisions of this Act.
(1A) xxx
(2) Subject to the other provisions of this section, the authority concerned--
(a) may make an amendment under Sub-section (1) of its own motion, and
(b) shall make such amendment for rectifying any such mistake which has been brought to its notice by the assessee, and where the authority concerned is the Deputy Commissioner (Appeals) or the Commissioner (Appeals), by the Assessing Officer also.
(3) xxx
(4) xxx
(5) Subject to the provisions of Section 241, where any such amendment has the effect of reducing the assessment, the Assessing Officer shall make any refund which may be due to such assessee.
(6) Where any such amendment has the effect of enhancing the assessment or reducing a refund already made, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be issued under Section 156 and the provisions of this Act shall apply accordingly.
(7) Save as otherwise provided in Section 155 or Sub-section (4) of Section 186 no amendment under this section shall be made after the expiry of four years from the end of the financial year in which the order sought to be amended was passed.
(8) Without prejudice to the provisions of Sub-section (7), where an application for amendment under this section is made by the assessee or after the 1st day of June, 2001 to an income-tax authority referred to in Sub-section (1), the authority shall pass an order, within a period of six months from the end of the month in which the application is received by it, --
(a) making the amendment; or
(b) refusing to allow the claim.
254. Orders of Appellate Tribunal.--(1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.
(2) The Appellate Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under Sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer:
Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard.
Provided further that any application filed by the assessee in this Sub-section on or after the 1st day of October,- 1998, shall be accompanied by a fee of fifty rupees.
10. Section 254(2) has got two limbs;
(i) the Appellate Tribunal may, at any time, within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under Sub-section (1), and;
(ii) shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer.
11. The first limb of Section 254(2) enables the Tribunal to rectify its own order suo motu as provided in Section 154(2)(a), even though the words, 'of its own motion' as found in Section 154(2) are not found in first limb of Section 254(2). The second limb of Section 254(2) is in pari materia to Section 154(2)(b), that is to say, the Tribunal under second limb of Section 254(2) and income-tax authorities under Section 154(2)(b), can rectify the mistake apparent from the record either on the application made by the assessee or at the instance of the assessing officer because the power conferred under Section 154(8) shall be exercised by the Tribunal without prejudice to Section 154(7) of the Act, which prescribes the outer limit for passing an amendment, in view of the words used in Section 154(7) 'no amendment under this Section shall be made after the expiry of four years from the end of the financial year in which the order sought to be amended was passed'. However, an opportunity is required to be given to the parties concerned in either case of rectification, as found in Section 154(6) and the first proviso to Section 254(2).
12. Placing reliance on the decision of Rajasthan High Court in Harshvardhan Chemicals and Minerals Ltd. case, cited supra, the learned Counsel for the assessee submitted that if the assessee makes an application for rectification within the time prescribed, the application should be disposed of by the Tribunal or the income-tax authority on merits even it exceeds the maximum period of four years, which, in our view, is not acceptable as Section 254(2) specifically provides for the outer time-limit of four years for passing an order of rectification, which, as already observed by us, cannot be extended when the language of the section is plain and unambiguous.
13. The Rajasthan High Court in Harshvardhan Chemicals and Minerals Ltd. case, cited supra, while construing Section 254(2) of the Act, held that if the assessee has moved the application within four years from the date of the order, the Tribunal is bound to decide the application on the merits and not on the ground of limitation.
14. It is true that the Supreme Court in Apollo Tyres Ltd. case, cited supra, has held that the assessing officer has to accept the authenticity of the accounts with reference to the provisions of the Companies Act and Section 115J(1A) does not empower the assessing officer to embark upon fresh enquiry with regard to the entries made in the books of account of the company. It is equally true that the Circular No. 68, dated 17.11.1971 provides that a mistake arising as a result of subsequent interpretation of law by the Supreme Court would constitute a mistake apparent from the records, and probably, on the basis of which the assessee approached the Appellate Tribunal for rectification in the light of decision of the Apex Court in Apollo Tyres Ltd. case. It is not in dispute that: as per Circular No. 68, dated 17.11.1971, the assessee is entitled to approach the Appellate Tribunal for rectification of mistake apparent from the record, in view of interpretation of law by the Supreme Court in Apollo Tyres Ltd. case, but when Section 254(2) provides an outer time-limit of four years, it is not open to the Appellate Tribunal to rectify such a mistake beyond the period of four years and the Appellate Tribunal should have passed the order of rectification- within the ouster time-limit of four years. Because, Section 154(8), which was inserted with effect from 1.6.2001, contemplates that the authority shall pass an order of rectification of mistake within a period of six months from the end of the month in which the application is received. The said period of six weeks, as rightly contended by the learned senior standing counsel for the Revenue, should be computed within the maximum period of four years from the date of original order sought to be rectified. For instance, even though the assessee or the Revenue is entitled to file an application for rectification at any time within four years, to say, after three years and eight months, the authority is barred from passing order of rectification beyond the period of four years from the, date of original order as prescribed in Section 154(7) of the Act.
15. We are, therefore, with great respect, not accepting the view taken by the Rajasthan High Court in Harshvardhan Chemicals and Minerals Ltd. case, cited supra, as Section 254(2) prescribes the outer limit for passing an order of rectification as below,
the Appellate Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record,
which means that the Appellate Tribunal should pass the order of rectification within the period of four years.
16. In our view, the power and jurisdiction provided under Section 254 should be construed, as far as language permits, so as to give effect to the scope and object of the statute and the intention of the legislature. The elementary principle of interpreting or construing a statute is to gather the mens or sententia legis of the legislature. It is well settled principle in law that the court cannot read anything into a statutory provision which is plain and unambiguous, [vide: Vemareddy Kumaraswamy Reddy v. State of A.P. : AIR2006SC3517 ]. A construction which reduces the statute to a futility has to be avoided. A statute is designed to be workable and the interpretation thereof by a court should be to secure that object unless crucial omission or clear direction makes that end unattainable [vide: CIT v. Hindustan Bulk Carriers : (2003)179CTR(SC)362 ].
Applying the above principle, when Section 254(2) is clear in its terms, viz.,
'the Appellate Tribunal may, at any time, within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it meaning thereby that the order of rectification should be passed within the outer time limit of four years, and it is not possible for the Court to read anything else into the said provision, viz., 254(2) of the Act, which is plain and unambiguous, which would otherwise extend the outer-limit prescribed therein. In this view of the matter, we are of the considered opinion that the order passed by the Appellate Tribunal beyond the period of four years is nothing but a nullity.
17. Furthermore, the power under Section 254(2) of the Act, intended to rectify an error apparent from the record, is not remedial in nature, but it is rectifiable in nature in the sense that it is to rectify a mistake committed in an order which is apparent and not to provide a remedy to the aggrieved party whether it is asses see or the Revenue.
The power in respect of remedial action has to be exercised within the time limit prescribed and such period cannot be elastically extended by the Court. Similarly, the power to rectify an mistake apparent from the record should also be exercised by the income-tax authorities in the same manner. Otherwise, it would amount to conferring enormous power on the income-tax authority or the Tribunal under one pretext or the other.
18. It is true that there is no provision in Section 254, similar to Section 154(8), which contemplates the income tax authorities to pass an order of rectification of mistakes within a period of six months from the end of the month in which the application is received. But, in our considered opinion, merely because there is no provision in Section 254 as similar to that of Section 154(8), which prescribes the period of limitation for the income tax authorities to pass an order of rectification rectifying the mistakes in their order, it cannot be construed that the power of the appellate Tribunal to rectify the mistake could be extended indefinitely beyond four years, which time is specifically spelled out by the legislature in Section 254(2) itself for passing an order of rectification, either suo-motu by the Tribunal or on application either by the assessee or by the assessing officer. The mere usage of 'and' between two limbs of Section 254(2) will not, in any way, enlarge the limitation prescribed for passing the order of amendment under Section 254(2) of the Act. Consequently, any order of amendment that would be passed by the Appellate Tribunal beyond the period of four years would lack jurisdiction, assuming the Appellate Tribunal has got a right to pass an order of rectification to rectify the mistake in the light of the subsequent interpretation of law by any Court, as per the Circular No.68 dated 17.11.1971. Therefore, it follows that in any case of rectification, the income tax authorities and the Appellate Tribunal are within their power and jurisdiction to amend their respective orders, under Sections 154 and 254 respectively, in the light of subsequent interpretation of law by the Courts, but such power and jurisdiction could be exercised statutorily only within the time of four years, not beyond the period of four years.
19. For all these reasons, when the section is plain and unambiguous, any other interpretation, if made, would lead to a situation where the authority would exceed its jurisdiction. We are therefore of the view that the Appellate Tribunal should have passed the order of rectification within four years from the date of order sought to be rectified.
20. In fine, without going into the merits of the case, we hold that the order passed by the Appellate Tribunal is barred by limitation. Accordingly, the order impugned and the consequential order dated 12.6.2003 are set aside as it is settled that when initiation of proceedings under a statute lacks jurisdiction, the final or consequential order is also liable to be struck down. The questions are answered in favour of the Revenue and against the assessee. The appeal stands allowed. No costs.