1. This is an appeal filed by the assessee and is directed against the decision dt. 14th Dec, 2005 of the CIT (A) in the matter of rectification by the AO under Section 154 r/w Section 271(1)(c) of the IT Act, 1961.
2. Grievance of the assessee is that the CIT (A) ought to have held that the impugned rectification order passed by the AO is barred by limitation. The memorandum of appeal also sets out certain other grievances as well but learned Counsel for the assessee states at the bar that he does not wish to press those grievances. We must, therefore, confine ourselves to the issue regarding the order being barred by limitation of time.
3. The material facts are like this. On 20th July, 2005, the assessee was imposed a penalty of Rs. 2,82,560 under Section 271(1)(c) of the Act. The penalty order stated that the penalty was for the asst. yr.
1998-99. On 6th Sept., 2005, however, the AO issued a rectification order under Section 154 r/w Section 271(1)(c) stating that the assessment year was wrongly mentioned as 1998-99 and it was really 1997-98. Aggrieved, assessee carried the matter in appeal before the CIT (A) but without any success. The CIT (A) upheld the action of the AO, and further observed that in view of the provisions of Section 292B anyway this clerical mistake is protected by Section 292B as well.
There is no dispute that in the main body of the penalty order, the reference is for the asst. yr. 1997-98 and that mentioning of 1998-99 is nothing more than an inadvertent mistake. The order of the AO was thus confirmed, and in fact fortified, by the CIT (A). The assessee is not satisfied and is in further appeal before us.
4. We have heard Shri Khandelwal, learned Counsel for the assessee, and Shri Bains, distinguished Departmental Representative. We have also carefully perused the orders of the authorities below and duly considered factual matrix of the case as also the applicable legal position.
5. Learned Counsel's web of reasoning starts with his reliance on the judgment of Hon'ble Madras High Court in the case of Salem Co-operative Spg. Mills Ltd v. CIT in support of the proposition that it is the date of rectification order which is to be taken as the date of the order which is sought to be rectified. In effect, therefore, the date of penalty order is to be taken as 6th Sept., 2005.
The relevance of this contention should be considered in the background that the assessment order having been passed 17th Jan., 2005, the time-limit available to the AO to pass the impugned order was only till 31st Aug., 2005 i.e. six months from the end of the calendar year in which the assessment order was passed. Learned Counsel contends that 6th Sept., 2005, i.e. the date on which rectification order is passed, is required to be taken as the date of the penalty order, and that date being outside the time-limit available to the AO, under Section 275(1)(a), for passing the order, the penalty should be treated as time barred. We are thus urged to set aside the impugned order as time barred. The very foundation of this complex web of arguments rests on the proposition that it is the date of the rectification order which should be treated as the date of the order which is sought to be rectified, and for the purposes of computing time-limits set out under Section 275(1)(a).
6. In our humble understanding, however, the proposition so advanced by the learned Counsel, is fallacious.
7. Their Lordships, in the case of Salem Co-operative Spinning Mills Ltd. v. CIT (supra), were in seisin of the question about the time-limit for passing rectification orders in the cases in which more than rectification orders are passed. It was in this backdrop that their Lordships came to the conclusion that the date of the rectification order is to be taken as the date of the original order, for the purposes of computing time-limit available for subsequent rectification of mistakes. This issue has nothing to do with the question in which time-limit for imposition of penalties is to be computed. The observations made by their Lordships are being quoted and applied out of context. The words of the Judges are not to be interpreted as words appearing in the statutes. In the case of CIT v.Sun Engineering Works (P) Ltd. , Hon'ble Supreme Court has observed as follows: It is neither desirable nor permissible to pick up a word or sentence from the context of question under consideration and treat it to be complete "law" declared by this Court. The judgment must be read as a whole and the observations from the judgment should be considered in the light of the questions which were before the Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision in a later case, the Court must carefully try to ascertain the true principle laid down by the decision of this Court and not pick out words or sentences from the judgment, divorced from the context of questions under consideration by this Court, to support their reasoning.
8. The reliance placed by the learned Counsel on the observations made by the Hon'ble Madras High Court, in our considered view, is not incorrect. The question before the Hon'ble Madras High Court was different, the observations made in an altogether different context, and the these observations cannot be pressed into service to decide the issue before us. In our considered view, once a penalty order is passed within the time-limit set out under Section 275(1)(a), it cannot be held to be time barred just because a rectification order in respect thereof is passed outside the said time-limit. A subsequent event cannot anyway render an order passed with time-limit as having been passed beyond time-limit.
9. We may also add that in case we are to uphold the contentions of the assessee, we will end up in a situation that no order can be rectified after time-limit for passing that order expires. Such an interpretation will thus clearly lead to an absurdity and rendering the provisions of Section 154 meaningless. It is well settled that no law can be interpreted in such a manner so as to make a clause meaningless. The interpretation is required to be made ut res magis valeat quam pereat, i.e. making it effective rather than making it redundant. Viewed from this perspective as well, the interpretation sought to be canvassed by the learned Counsel is not sustainable in law. It is altogether a different matter that having rejected the grievance on merits, it is not necessary to go into these aspects of the matter at all. We must also not lose sight of the fact that what is in challenge before us is the rectification order and there is no dispute that the said order is passed within the time-limit set out under Section 154. The validity of the penalty order cannot be, and is not, an issue to be adjudicated in this matter.
10. For the reasons set out above, in our considered view, the grievance of the assessee is not sustainable in law and on the facts of the assessee. We, therefore, reject the same, and decline to interfere in the matter.