1975 (3) TMI 1 - SC - Income Tax

Finding of the Tribunal as to the valuation of stock even though was recorded subsequent to the Appellate order of the Appellate Assistant Commissioner could be taken as forming part of the appeal - it could be considered for correcting the mistakes under s. 35 - assessee s appeal is dismissed

Issues Involved:

1. Jurisdiction of the Appellate Assistant Commissioner under Section 35 of the Indian Income-tax Act, 1922.
2. Interpretation of the term "record of the appeal" in Section 35.
3. Applicability of subsequent events to rectify mistakes under Section 35.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Appellate Assistant Commissioner under Section 35 of the Indian Income-tax Act, 1922:

The primary issue was whether the Appellate Assistant Commissioner had the jurisdiction to rectify his previous order under Section 35 of the Act. The assessee argued that there was no mistake apparent "from the record of the appeal" within the contemplation of Section 35. The court held that the Appellate Assistant Commissioner did have the jurisdiction to rectify his decision dated June 30, 1965, by referring to the Tribunal's subsequent order. The court emphasized that the closing stock of one year and the opening stock of the succeeding year must necessarily be the same, and thus the record of the assessment year 1959-60 was relevant to the assessment year 1960-61.

2. Interpretation of the term "record of the appeal" in Section 35:

The court examined the interpretation of the term "record of the appeal" and held that it is not limited to the documents present before the Appellate Assistant Commissioner at the time of the original hearing. The court referenced the Maharana Mills case to support the view that the "record" includes all proceedings on which the assessment order is based. Therefore, the Tribunal's decision, although subsequent, became part of the record of the appeal for the assessment year 1960-61. The court stated, "The words used in the section are 'apparent from the record' and the record does not mean only the order of assessment but it comprises all proceedings on which the assessment order is based."

3. Applicability of subsequent events to rectify mistakes under Section 35:

The court addressed the applicability of subsequent events in rectifying mistakes. It was argued that the Tribunal's order, which was passed after the original appellate decision, could not be considered part of the "record of the appeal." The court rejected this argument, noting that the Tribunal's finding on the closing stock for the assessment year 1959-60, which was Rs. 5,89,439, replaced the Income-tax Officer's finding and thus became relevant for the opening stock of the succeeding year. The court cited the Privy Council decision in Commissioner of Income-tax v. Khemchand Ramdas, which supported the view that subsequent orders affecting earlier assessments could be considered part of the record for rectification purposes.

Conclusion:

The court concluded that the Appellate Assistant Commissioner acted within his jurisdiction under Section 35 of the Act. The Tribunal's subsequent order was relevant and formed part of the "record of the appeal," allowing the rectification of the mistake regarding the opening stock for the assessment year 1960-61. The court dismissed the appeal with costs, stating that there is no room for apprehension regarding the misuse of Section 35, as each case must be judged on its own facts.

Final Judgment:

The appeal was dismissed with costs, affirming the jurisdiction of the Appellate Assistant Commissioner to rectify his earlier order based on the Tribunal's subsequent findings.

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