Law:

Section:

Section 155(3), read with section 154, of the Income-tax Act, 1961 - Rectification of mistakes - Other amendments - Assessment years 1944-45 to 1947-48 - Assessee-HUF was allowed a deduction in respect of excess profits tax for all years in question - Subsequently notices under section 13(1) of the Excess Profits Tax Act, 1940, were issued to assessee which were subsequently quashed by High Court - On appeal by revenue Supreme Court by its order dated 28-8-1972 upheld order of High Court - Assessee called upon department to refund amount paid by it on account of excess profits tax during assessment years in question - It was then that ITO initiated proceedings of rectification of mistake on account of deduction of excess profits tax allowed to assessee - Whether on facts, provisions of section 155(3) were applicable and, thus, ITO was competent to revise assessments - Held, yes FACTS While completing the assessments pertaining to the assessment years 1944-45 to 1947-48 the excess profits tax payable by the assessee-HUF for each of the aforesaid years was allowed as deduction. Subsequently notices under section 13(1) were issued to the assessee. The assessee contended that the HUF having got disrupted on 1-10-1951, proceedings for assessment of excess profits tax could not be initiated against it. The High Court allowed the assessee's contention. On appeal by the revenue the Supreme Court by its order dated 28-8-1972 upheld the order of the High Court. After the decision of the Supreme Court the assessee called upon the department to refund the amount paid by it on account of excess profits tax during the aforesaid years. It was then that the ITO initiated proceedings for rectifying the assessment orders for the aforesaid years under section 154 read with section 155(3). Therefore, the assessment orders were revised, withdrawing the deduction granted on account of excess profits tax. On appeal, the AAC upheld the ITO's order. On second appeal, the Tribunal held that on its language sub-section (3) of section 155 was not attracted and was not applicable and, therefore, the orders of rectification were bad on the ground that merely because notices issued for…

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