1979 (9) TMI 60 - HC - Income Tax

Application For Rectification Rectification Of Mistakes Rectification Proceedings Undisclosed Income

Summary

Issues:
- Application for reference under section 256(2) of the Income-tax Act, 1961
- Refusal of application for rectification by the Tribunal
- Allegation of error apparent on the face of the record in the Tribunal's order

Analysis:
The judgment pertains to two connected applications made by the assessee under section 256(2) of the Income-tax Act, 1961, against the order of the Income-tax Appellate Tribunal. The first application sought to refer questions of law arising from the Tribunal's appellate order dated August 23, 1973, while the second application related to an order dated March 25, 1974, refusing rectification of the appellate order. The issues raised by the assessee included the justification of rectification, the correctness of the Tribunal's decision, and the presence of apparent mistakes on record.

The case involved an assessment year of 1964-65 where discrepancies were found in the assessee's cash book regarding an entry of encashment of a fixed deposit. The Income Tax Officer included the amount in the assessment as income from undisclosed sources, but the Appellate Authority accepted the assessee's explanation. Subsequently, the Tribunal examined the accounts and concluded that the entry was not bogus, leading to the restoration of the Income Tax Officer's order. The assessee then sought rectification, claiming errors in the Tribunal's decision regarding debit entries that could counter-balance the disputed credit entry.

The Tribunal rejected the rectification application, stating that it would require a re-examination of the entire issue, which was impermissible in rectification proceedings. The assessee then applied for reference to the High Court, arguing that errors were apparent on the face of the record due to the Tribunal's alleged oversight of relevant entries. However, the High Court dismissed the application, emphasizing that the Tribunal's findings were based on facts and the subsequent entries could not explain the initial credit entry. The Court concluded that no error was apparent on the face of the record and that the assessee's attempt to re-argue the case was beyond the scope of rectification.

In summary, the High Court upheld the Tribunal's decision, emphasizing that the assessment was based on factual findings and that no error was evident in the Tribunal's order. The Court rejected the application for reference, stating that the assessee's attempt to re-argue the matter did not fall within the purview of rectification under the Income-tax Act, 1961. The judgment highlighted the importance of factual accuracy in tax assessments and the limitations of rectification proceedings in challenging established findings.