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Issues:
1. Competency of the reference made by the Income-tax Appellate Tribunal under Section 66(1) of the Income-tax Act. 2. Application for rectification of the order by the Tribunal. 3. Interpretation of Section 35 regarding rectification of mistakes. 4. Timing of applications for reference to the High Court under Section 66(1) of the Act. 5. Consideration of the correctness of the reference by the High Court. Analysis: The judgment pertains to a reference made by the Income-tax Appellate Tribunal under Section 66(1) of the Income-tax Act at the instance of the Commissioner of Income-tax, Madras. The primary issue raised was the competency of the reference, challenged by the respondent assessee on the grounds of procedural irregularity. The Tribunal had allowed the appeal of the assessee concerning the liability of a Hindu undivided family after disruption, which was imposed on the family members. The Commissioner sought a reference to the High Court, but the timing of the application for the case to be stated was contested by the assessee, citing a delay in the application submission beyond the prescribed time limit of sixty days from the Tribunal's order. The Tribunal had also directed a rectification of the order, substituting certain words, which further complicated the issue. The judgment delves into the interpretation of Section 35 of the Act, which allows rectification of mistakes apparent from the record but does not provide for the reversal of an order through revision or review. The Court analyzed the implications of rectification on the timeline for applications under Section 66(1) and emphasized that rectification does not constitute a new order that would reset the time limit for reference applications. The Court rejected the argument that rectification of an error amounts to passing a new order, which would enable parties to apply for a case to be stated even years after the original order. Furthermore, the judgment highlighted the importance of adhering to the statutory timelines for seeking references to the High Court under Section 66(1). It emphasized that the time for making such applications commences from the date of service of the order and expires sixty days thereafter. The Court concluded that the rectification made by the Tribunal was not an order within the relevant sections of the Act for a case to be stated, rendering the subsequent application for reference out of time. In a dissenting opinion, Justice Yahya Ali agreed with the finding that the reference was incompetent. The judgment underscored the limited role of the High Court in such cases, stating that the Court's function is advisory and confined to answering the specific question referred, without delving into the correctness of the reference itself. The judgment ultimately upheld the preliminary objection raised by the assessee, declaring the reference incompetent and awarding costs to the assessee.
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