1978 (7) TMI 54 - HC - Income Tax

Summary

Issues:
1. Whether the mistake in granting a rebate on additional surcharge to a co-operative society engaged in banking was apparent on the face of the record?
2. Whether the Income Tax Officer (ITO) had the jurisdiction to rectify the mistake under section 154 of the Income Tax Act?

Analysis:

1. The case involved a co-operative society engaged in banking, which claimed a rebate on additional surcharge paid under the Finance Act, 1963. The Income Tax Officer (ITO) initially granted the rebate but later withdrew it after an internal audit pointed out that the additional surcharge was not income exempt under section 81(i)(a) of the Income Tax Act. The Assessing Officer of Income-tax Appeals (AAC) and the Tribunal held that the ITO had no jurisdiction to rectify the mistake as it was not apparent on the face of the record. The High Court analyzed the nature of the mistake and concluded that the ITO's error in granting the rebate on additional surcharge was indeed a mistake apparent on the face of the record. The court referred to the Supreme Court's decision in a similar case to establish that the additional surcharge was distinct from income-tax, and a society could not claim a rebate on it. Therefore, the mistake in allowing the rebate was apparent, justifying the ITO's correction.

2. The High Court further discussed the application of section 154 of the Income Tax Act, which allows rectification of mistakes apparent on the face of the record. It emphasized that the mistake must be patent and mandatory provisions should not be overlooked. In this case, since section 81(i)(a) did not provide for a rebate on additional surcharge, the ITO's error was considered apparent. The court disagreed with the AAC and the Tribunal, asserting that the mistake was indeed visible on the face of the record. Consequently, the High Court ruled in favor of the department, allowing the correction made by the ITO and awarding costs to the Commissioner of Income-tax.

In conclusion, the High Court determined that the mistake in granting a rebate on additional surcharge to a co-operative society engaged in banking was apparent on the face of the record, justifying the ITO's correction under section 154 of the Income Tax Act. The judgment highlighted the distinction between income-tax and additional surcharge, emphasizing that the latter was not eligible for a rebate under the relevant provisions.