Assistant Commissioner of Income Vs. Pradeep Gupta - Court Judgment

Excerpt:
1. this appeal by the revenue arises out of the order passed by cit(a) on 3rd nov., 2004 in relation to the asst. yr. 2001-02. the only effective ground projects the grievance of the revenue as under: on the facts and in the present circumstances of the case, the learned cit(a) has erred in directing to charge tax at normal rate on the income of rs. 12,50,000 earned from tv programme "kaun banega kororepati" as against tax charged at the maximum marginal rate, ignoring that the income so earned by the assessee is covered by "other income of any sort" mentioned in section 2(24)(ix) of the it act and insertion of explns. (i) and (ii) w.e.f. 1st april, 2002 will not exclude the income under consideration.2. the facts leading to the controversy are that the assessee filed his return declaring total income of rs. 12,91,530, which was processed under section 143(1) on 25th feb., 2003 and the necessary intimation was sent to the assessee. on the perusal of the assessment records it was noticed by the ao that the assessee had received income of rs. 12,50,000 under a tv programme kaun banega crorepati (hereinafter called kbc). it was observed that such income was taxable at the flat rate of 40 per cent under section 115bb r/w section 2(24) instead of normal rate of taxation as applied by the assessee. notice under section 154 was issued in which the assessee claimed that the prize was won due to the indepth knowledge and skill etc. not convinced, the ao charged the tax at the rate of 40 per cent on the total receipt of rs. 12,50,000. in the first appeal the learned cit (a) overturned the action of the ao.3. before us it was strenuously argued by the learned departmental representative that the wining of prize from kbc was a sort of lottery in as much as it was a question of sheer luck to get selected to the hot seat of kbc and win the prize. it was further stated that one out of thousands was called for participation in this programme on the basis of lucky draw. it was thus summed up that the wining of prize was in the nature of lottery and hence the provisions of section 115bb were attracted. he further took us through the relevant provision to stress that the expression "other games of any sort' employed in this section was of widest amplitude and encompassed the games like kbc within its purview. it was still further argued that winnings from 'crossword puzzles' also requires a good level of intelligentsia and if such winnings are included within the scope of section 115bb then there is no reason to exclude the winnings from kbc, which too required a good level of knowledge. the learned departmental representative strongly objected to the view of the cit(a) in holding that explanation to section 2(24)(ix) inserted by the finance act, 2001, w.e.f. 1st april, 2002 including the winnings from tv programme, was effective from asst.yr. 2002-03. the sum and substance of his submissions was that this explanation was clarificatory in nature as the main sub-section using the expression 'other games of any sort' already covered the winnings from entertainment programme on tv or electronic mode and hence the case of the assessee was covered within the sub-section itself.4. per contra the learned counsel for the assessee reiterated the submissions advanced before the first appellate authority and on the basis of his reasoning urged that his order be sustained. he took us through cbdt circular no. 14 of 2001 (2002) 172 ctr (st) 13, copy placed at p. 36 onwards of the paper book to contend that the explanation inserted by the finance act, 2001 was effective from asst.yr. 2002-03 and argued that since the assessment year under consideration is 2001-02, the same would not apply and hence the income from kbc cannot be brought within the ambit of section 115bb. he further contended that there was no mistake in the intimation sent by the ao under section 143(1) and the provisions of section 154 could not have been pressed into service to take a contrary view. in the final analysis he strongly relied on the impugned order.5. we have heard both the sides and perused the relevant material on record. it is obvious that the assessee offered a sum of rs. 12.50 lakhs, being the winning from kbc in his return at the normal rate of tax by making a specific mention that it was earned on 6th jan., 2001.he also gave a note in his computation of income, as per pp. 7 and 8 of the paper book, to the effect that he is a chemical engineer (top ranker) and the amount was earned from the participation in kbc after a rigorous preparation and study and hence it was shown as normal income subject to tax as per the regular rates of tax in force. the ao, in rectification proceedings under section 154 opined that section 115bb was applicable and the amount was liable to be taxed at the rate of 40 per cent as stipulated in the section.6. it has been vehemently argued by the learned departmental representative that the amount in question is in the nature of "lottery" and hence covered under this section. it has been emphasized that the winning in this game is the result of luck and it is not possible to participate in the game without the luck smiling on a person. we are not convinced with this argument because the winning is not attached to participation in the programme alone. it is true that it is a question of luck to get selected for participation in the game, but the prize is not attached to mere participation. the question of winning arises only when the participant reaches the hot seat and then with his calibre and quickness answers the questions and starts winning the amount. so winning of the prize is associated with the giving of correct answers and not reaching the hot seat. thus to equate the winning from this game with the luck is an incorrect approach. here it would be relevant to note the meaning of lottery, which implies a small payment by many persons and then by a draw or lot, the winner is selected, who gets the chunk of the pool of contribution by all the participants, depending upon the terms and conditions of the scheme.thus the purchase of ticket or payment of some sort of contribution is sine qua non in order to be eligible for participation in the lottery.the hon'ble madras high court in cit v. dy. director of small savings considered the meaning of lottery by holding that "before a scheme can be regarded as lottery, there must be the element of distribution of prizes which should be by chance or lot and such distribution should be among those who had paid a price for participating in the scheme. mere gratuitous distribution without any price having been paid by the participants for acquiring the chance and receiving a prize that is ultimately distributed, would not amount to a lottery." amendment by the finance act, 2002, in the shape of insertion of expln. (i) to section 2(24)(ix) expanding the scope of 'lottery' laying emphasis on the winnings awarded by draw of lot or chance is posterior to the year under consideration. this contention of the learned departmental representative therefore, stands repelled.7. now the short controversy before us is to decide as to whether the action of the ao in charging the receipt from kbc to tax at the rate of 40 per cent, in the proceedings under section 154 is justified? income has been defined in an inclusive manner under section 2(24) and the relevant clause applicable is (ix), as per which any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever comes within the scope of income. normal income earned by the assessee from any source or under any head is accumulated and is put to tax as per the regular rates. the legislature is empowered to make provision for determination of tax in special cases.in this set of sections we find the placement of section 115bb, as per which tax on winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or betting of any form or nature whatsoever was charged at 40 per cent at the material time. there is no dispute about the legal position that the special provision always overrides general provision and holds the field when it is attracted in superiority to the general provision. but before bringing an item of income within its sweep, it has to be established that the concerned income strictly falls in its ambit. an item of income can be brought within the general or special provision only when it is covered within the controlling section 2(24) which defines income subject to the other provisions of the act. adverting to the facts of the case we find that section 115bb under scanner, is a special provision taxing the winning from lotteries, etc. thus, both the sections, viz., 2(24) (ix) and 115bb are to be read conjointly to reach any conclusion on the controversy. it is pertinent to mention that the following explanation was inserted to clause (ix) w.e.f. 1st april, 2002: (i) lottery' includes winnings from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever, under any scheme or arrangement by whatever name called; (ii) "card game and other game of any sort" includes any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game; here it would be apt to consider the memorandum explaining the provisions in the finance bill 2001 (2001) 166 ctr (st) 145 : (2001) 248 itr (st) 185 to note the rationale of the insertion of the explanation which is as under: it is also proposed to clarify that "lottery" shall include winnings from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever under any scheme or arrangement by whatever name called. it is further proposed to clarify that the "card game and other game of any sort" shall include any game show, an entertainment programme on television or electronic mode, in which people compete to win prize or any other similar game. these amendments will, take effect from 1st april, 2002, and will, accordingly, apply in relation to asst. yr. 2002-03 and subsequent years.the above referred circular no. 14 of 2001, being the explanatory notes on provisions relating to direct taxes in para 6, states as under: 6.1 sub-clause (ix) of clause (24) of section 2 of the it act refers to income as including any winnings from lotteries, crossword puzzles races including horse races, card games and other game of any sort of from gambling or betting of any form or nature whatsoever. 6.2 an explanation has been inserted by the act in the said sub-clause to clarify that "lottery" shall include winnings from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever under any scheme or arrangement by whatever name called. it has also been clarified that "card game and other game of any sort shall include any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game. 6.3 the amendment will take effect from 1st april, 2002 and will, accordingly, apply in relation to the asst. yr. 2002-03 and subsequent years.now the question which has been debated at length before us is to the nature of amendment to section 2(24)(ix), being whether the said explanation is retrospective or prospective. the claim of the learned departmental representative is that it is only clarificatory in nature as the circular in para 6.2 states that "it has been clarified that 'card games and other games of any sort' shall include any game show, an entertainment programme on television". on the contrary the learned authorised representative is relying upon para 6.3 of the circular for making out a case that the amendment will take effect from 1st april, 2002 and will accordingly apply in relation to the asst. yr. 2002-03 and subsequent years. no judgment or order of the tribunal has been brought to our notice by the either side in support of the rival claims.8. be that as it may we find that the ao processed the return under section 143(1) by accepting the assessee's claim as it is, despite the fact that the assessee had given note in the computation of income to the effect that he had earned the above sum from the kbc winning. no action was taken by the ao for making a regular assessment under section 143(3) and determine the rate of taxability of such income. at a later stage he initiated action under section 154 for charging the winning from kbc at special rate. here the question arises as to whether the action of the ao can be held to be justified section 154 empowers an it authority to amend any order passed by it under the provisions of this act or amend any intimation or deemed intimation under section 143(1), with a view to rectifying any mistake apparent from record. thus the provisions of section 154 can be invoked only when there is a glaring mistake in the order which is proved on the face of it. if however the alleged mistake is not apparent on record and requires to be settled down after extensive arguments, the same goes out of the purview of this section. the hon'ble supreme court in the celebrated case of t.s. balaram ito v. volkart brothers and ors. has held that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on the points on which there may conceivably be two opinions. it was emphatically held that a decision on the debatable point of law is not a mistake apparent from the record. this view has been reiterated by several courts of the country in innumerable decisions. the hon'ble apex court again in cit v. hero cycles (p) ltd rectification under section 154 can only be made when a glaring mistake of fact or law committed by the officer passing the order becomes apparent from the record. it was laid down in this case that a point which was not examined on facts or in law cannot be dealt with as a mistake apparent from the record. recently the hon'ble calcutta high court in hindustan lever ltd. v. jt. cit and ors.applied section 32(1) and thereafter a notice under section 154 was issued on the ground that he had ignored the provisions of expln. 2 to section 43(6). when the matter travelled to the hon'ble court it was held that the interpretation of the provision of law is per se a debatable issue. it was further made clear that 'if there is a wrong decision of law or misapplication of law then the same can be set right in an appropriate manner otherwise than by the provision of section 154 of the said act.' 9. the legal position discussed above in relation to the scope ofsection 154 makes it abundantly clear that only the patent mistakes can be rectified within the ambit of this section and if the issue is debatable or two views are possible on it, the same cannot be settled within the rectification proceedings. coming back to the facts of the case we find that the controversy raised in this appeal centers around the nature of explanation tosection 2(24)(ix) as to whether it is retrospective or prospective. if it is held to be retroactive then the amount in question would be taxable under the special provision of section 115bb and if it is decided as prospective then it would be taxed as per the normal rates. though this explanation has been inserted by the finance act, 2001 w.e.f. 1st april, 2002 thereby giving a broader idea of its being prospectively applicable, the contention of the learned departmental representative and the intention of the legislature as appearing from the memorandum explaining the provisions of the finance bill and the abovereferred circular, prima facie, puts it in the category of a clarifying provision and thereby retrospective.we are not expressing any opinion on the nature of the operation of this explanation. there would have been no difficulty in accepting the stand of the revenue if the assessment year under consideration had been 2002-03 or a later year and rectification proceedings would have been perfectly in order. but since we are dealing with asst. yr.2001-02 and that too the rectification proceedings, the claim of the revenue does not merit acceptance. suffice to say that two possible views exist on this point. as such this issue is certainly beyond the scope of section 154 and hence the ao was not justified in taxing the income @ 40 per cent in the rectification proceedings. we, therefore, uphold the final view of the learned cit(a) in accepting the assessee's case.

Judgment:
1. This appeal by the Revenue arises out of the order passed by CIT(A) on 3rd Nov., 2004 in relation to the asst. yr. 2001-02. The only effective ground projects the grievance of the Revenue as under: On the facts and in the present circumstances of the case, the learned CIT(A) has erred in directing to charge tax at normal rate on the income of Rs. 12,50,000 earned from TV programme "Kaun Banega Kororepati" as against tax charged at the maximum marginal rate, ignoring that the income so earned by the assessee is covered by "other income of any sort" mentioned in Section 2(24)(ix) of the IT Act and insertion of Explns. (i) and (ii) w.e.f. 1st April, 2002 will not exclude the income under consideration.

2. The facts leading to the controversy are that the assessee filed his return declaring total income of Rs. 12,91,530, which was processed under Section 143(1) on 25th Feb., 2003 and the necessary intimation was sent to the assessee. On the perusal of the assessment records it was noticed by the AO that the assessee had received income of Rs. 12,50,000 under a TV programme Kaun Banega Crorepati (hereinafter called KBC). It was observed that such income was taxable at the flat rate of 40 per cent under Section 115BB r/w Section 2(24) instead of normal rate of taxation as applied by the assessee. Notice under Section 154 was issued in which the assessee claimed that the prize was won due to the indepth knowledge and skill etc. Not convinced, the AO charged the tax at the rate of 40 per cent on the total receipt of Rs. 12,50,000. In the first appeal the learned CIT (A) overturned the action of the AO.3. Before us it was strenuously argued by the learned Departmental Representative that the wining of prize from KBC was a sort of lottery in as much as it was a question of sheer luck to get selected to the Hot Seat of KBC and win the prize. It was further stated that one out of thousands was called for participation in this programme on the basis of lucky draw. It was thus summed up that the wining of prize was in the nature of lottery and hence the provisions of Section 115BB were attracted. He further took us through the relevant provision to stress that the expression "other games of any sort' employed in this section was of widest amplitude and encompassed the games like KBC within its purview. It was still further argued that winnings from 'crossword puzzles' also requires a good level of intelligentsia and if such winnings are included within the scope of Section 115BB then there is no reason to exclude the winnings from KBC, which too required a good level of knowledge. The learned Departmental Representative strongly objected to the view of the CIT(A) in holding that Explanation to Section 2(24)(ix) inserted by the Finance Act, 2001, w.e.f. 1st April, 2002 including the winnings from TV programme, was effective from asst.

yr. 2002-03. The sum and substance of his submissions was that this Explanation was clarificatory in nature as the main sub-section using the expression 'other games of any sort' already covered the winnings from entertainment programme on TV or electronic mode and hence the case of the assessee was covered within the sub-section itself.

4. Per contra the learned Counsel for the assessee reiterated the submissions advanced before the first appellate authority and on the basis of his reasoning urged that his order be sustained. He took us through CBDT Circular No. 14 of 2001 (2002) 172 CTR (St) 13, copy placed at p. 36 onwards of the paper book to contend that the Explanation inserted by the Finance Act, 2001 was effective from asst.

yr. 2002-03 and argued that since the assessment year under consideration is 2001-02, the same would not apply and hence the income from KBC cannot be brought within the ambit of Section 115BB. He further contended that there was no mistake in the intimation sent by the AO under Section 143(1) and the provisions of Section 154 could not have been pressed into service to take a contrary view. In the final analysis he strongly relied on the impugned order.

5. We have heard both the sides and perused the relevant material on record. It is obvious that the assessee offered a sum of Rs. 12.50 lakhs, being the winning from KBC in his return at the normal rate of tax by making a specific mention that it was earned on 6th Jan., 2001.

He also gave a note in his computation of income, as per pp. 7 and 8 of the paper book, to the effect that he is a chemical engineer (top ranker) and the amount was earned from the participation in KBC after a rigorous preparation and study and hence it was shown as normal income subject to tax as per the regular rates of tax in force. The AO, in rectification proceedings under Section 154 opined that Section 115BB was applicable and the amount was liable to be taxed at the rate of 40 per cent as stipulated in the section.

6. It has been vehemently argued by the learned Departmental Representative that the amount in question is in the nature of "lottery" and hence covered under this section. It has been emphasized that the winning in this game is the result of luck and it is not possible to participate in the game without the luck smiling on a person. We are not convinced with this argument because the winning is not attached to participation in the programme alone. It is true that it is a question of luck to get selected for participation in the game, but the prize is not attached to mere participation. The question of winning arises only when the participant reaches the hot seat and then with his calibre and quickness answers the questions and starts winning the amount. So winning of the prize is associated with the giving of correct answers and not reaching the hot seat. Thus to equate the winning from this game with the luck is an incorrect approach. Here it would be relevant to note the meaning of lottery, which implies a small payment by many persons and then by a draw or lot, the winner is selected, who gets the chunk of the pool of contribution by all the participants, depending upon the terms and conditions of the scheme.

Thus the purchase of ticket or payment of some sort of contribution is sine qua non in order to be eligible for participation in the lottery.

The Hon'ble Madras High Court in CIT v. Dy. Director of Small Savings considered the meaning of lottery by holding that "before a scheme can be regarded as lottery, there must be the element of distribution of prizes which should be by chance or lot and such distribution should be among those who had paid a price for participating in the scheme. Mere gratuitous distribution without any price having been paid by the participants for acquiring the chance and receiving a prize that is ultimately distributed, would not amount to a lottery." Amendment by the Finance Act, 2002, in the shape of insertion of Expln. (i) to Section 2(24)(ix) expanding the scope of 'lottery' laying emphasis on the winnings awarded by draw of lot or chance is posterior to the year under consideration. This contention of the learned Departmental Representative therefore, stands repelled.

7. Now the short controversy before us is to decide as to whether the action of the AO in charging the receipt from KBC to tax at the rate of 40 per cent, in the proceedings under Section 154 is justified? Income has been defined in an inclusive manner under Section 2(24) and the relevant clause applicable is (ix), as per which any winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever comes within the scope of income. Normal income earned by the assessee from any source or under any head is accumulated and is put to tax as per the regular rates. The legislature is empowered to make provision for determination of tax in special cases.

In this set of sections we find the placement of Section 115BB, as per which tax on winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or betting of any form or nature whatsoever was charged at 40 per cent at the material time. There is no dispute about the legal position that the special provision always overrides general provision and holds the field when it is attracted in superiority to the general provision. But before bringing an item of income within its sweep, it has to be established that the concerned income strictly falls in its ambit. An item of income can be brought within the general or special provision only when it is covered within the controlling Section 2(24) which defines income subject to the other provisions of the Act. Adverting to the facts of the case we find that Section 115BB under scanner, is a special provision taxing the winning from lotteries, etc. Thus, both the sections, viz., 2(24) (ix) and 115BB are to be read conjointly to reach any conclusion on the controversy. It is pertinent to mention that the following Explanation was inserted to Clause (ix) w.e.f. 1st April, 2002: (i) lottery' includes winnings from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever, under any scheme or arrangement by whatever name called; (ii) "Card game and other game of any sort" includes any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game; Here it would be apt to consider the Memorandum Explaining the Provisions in the Finance Bill 2001 (2001) 166 CTR (St) 145 : (2001) 248 ITR (St) 185 to note the rationale of the insertion of the explanation which is as under: It is also proposed to clarify that "lottery" shall include winnings from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever under any scheme or arrangement by whatever name called. It is further proposed to clarify that the "card game and other game of any sort" shall include any game show, an entertainment programme on television or electronic mode, in which people compete to win prize or any other similar game.

These amendments will, take effect from 1st April, 2002, and will, accordingly, apply in relation to asst. yr. 2002-03 and subsequent years.

The above referred Circular No. 14 of 2001, being the Explanatory Notes on provisions relating to direct taxes in para 6, states as under: 6.1 Sub-clause (ix) of Clause (24) of Section 2 of the IT Act refers to income as including any winnings from lotteries, crossword puzzles races including horse races, card games and other game of any sort of from gambling or betting of any form or nature whatsoever.

6.2 An explanation has been inserted by the Act in the said sub-clause to clarify that "lottery" shall include winnings from prizes awarded to any person by draw of lots or by chance or in any other manner whatsoever under any scheme or arrangement by whatever name called. It has also been clarified that "card game and other game of any sort shall include any game show, an entertainment programme on television or electronic mode, in which people compete to win prizes or any other similar game.

6.3 The amendment will take effect from 1st April, 2002 and will, accordingly, apply in relation to the asst. yr. 2002-03 and subsequent years.

Now the question which has been debated at length before us is to the nature of amendment to Section 2(24)(ix), being whether the said Explanation is retrospective or prospective. The claim of the learned Departmental Representative is that it is only clarificatory in nature as the circular in para 6.2 states that "it has been clarified that 'card games and other games of any sort' shall include any game show, an entertainment programme on television". On the contrary the learned Authorised Representative is relying upon para 6.3 of the circular for making out a case that the amendment will take effect from 1st April, 2002 and will accordingly apply in relation to the asst. yr. 2002-03 and subsequent years. No judgment or order of the Tribunal has been brought to our notice by the either side in support of the rival claims.

8. Be that as it may we find that the AO processed the return under Section 143(1) by accepting the assessee's claim as it is, despite the fact that the assessee had given note in the computation of income to the effect that he had earned the above sum from the KBC winning. No action was taken by the AO for making a regular assessment under Section 143(3) and determine the rate of taxability of such income. At a later stage he initiated action under Section 154 for charging the winning from KBC at special rate. Here the question arises as to whether the action of the AO can be held to be justified Section 154 empowers an IT authority to amend any order passed by it under the provisions of this Act or amend any intimation or deemed intimation under Section 143(1), with a view to rectifying any mistake apparent from record. Thus the provisions of Section 154 can be invoked only when there is a glaring mistake in the order which is proved on the face of it. If however the alleged mistake is not apparent on record and requires to be settled down after extensive arguments, the same goes out of the purview of this section. The Hon'ble Supreme Court in the celebrated case of T.S. Balaram ITO v. Volkart Brothers And Ors.

has held that a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on the points on which there may conceivably be two opinions. It was emphatically held that a decision on the debatable point of law is not a mistake apparent from the record. This view has been reiterated by several Courts of the country in innumerable decisions. The Hon'ble apex Court again in CIT v. Hero Cycles (P) Ltd rectification under Section 154 can only be made when a glaring mistake of fact or law committed by the officer passing the order becomes apparent from the record. It was laid down in this case that a point which was not examined on facts or in law cannot be dealt with as a mistake apparent from the record. Recently the Hon'ble Calcutta High Court in Hindustan Lever Ltd. v. Jt. CIT And Ors.

applied Section 32(1) and thereafter a notice under Section 154 was issued on the ground that he had ignored the provisions of Expln. 2 to Section 43(6). When the matter travelled to the Hon'ble Court it was held that the interpretation of the provision of law is per se a debatable issue. It was further made clear that 'if there is a wrong decision of law or misapplication of law then the same can be set right in an appropriate manner otherwise than by the provision of Section 154 of the said Act.' 9. The legal position discussed above in relation to the scope ofsection 154 makes it abundantly clear that only the patent mistakes can be rectified within the ambit of this section and if the issue is debatable or two views are possible on it, the same cannot be settled within the rectification proceedings. Coming back to the facts of the case we find that the controversy raised in this appeal centers around the nature of Explanation tosection 2(24)(ix) as to whether it is retrospective or prospective. If it is held to be retroactive then the amount in question would be taxable under the special provision of Section 115BB and if it is decided as prospective then it would be taxed as per the normal rates. Though this Explanation has been inserted by the Finance Act, 2001 w.e.f. 1st April, 2002 thereby giving a broader idea of its being prospectively applicable, the contention of the learned Departmental Representative and the intention of the legislature as appearing from the memorandum explaining the provisions of the Finance Bill and the abovereferred circular, prima facie, puts it in the category of a clarifying provision and thereby retrospective.

We are not expressing any opinion on the nature of the operation of this Explanation. There would have been no difficulty in accepting the stand of the Revenue if the assessment year under consideration had been 2002-03 or a later year and rectification proceedings would have been perfectly in order. But since we are dealing with asst. yr.

2001-02 and that too the rectification proceedings, the claim of the Revenue does not merit acceptance. Suffice to say that two possible views exist on this point. As such this issue is certainly beyond the scope of section 154 and hence the AO was not justified in taxing the income @ 40 per cent in the rectification proceedings. We, therefore, uphold the final view of the learned CIT(A) in accepting the assessee's case.