1965 (12) TMI 19 - HC - Income Tax

Whether all or any of the conditions mentioned in rule 48 of the IT Rules 1922 have been satisfied - It is necessary to conduct an investigation to find out whether a discretion is vested in the ITO or not by determining whether any part of the rule rule 48(1) , had been satisfied and if it is possible to decide whether there was an error or not only after coming to the conclusion whether r. 48(1) has been satisfied, it appears to me the error is not an error apparent on the face of the record

Summary

Issues:
Challenge to an order for charging interest under section 18A(8) of the Indian Income-tax Act, 1922 based on an alleged error apparent on the face of the record.

Analysis:
The writ applicant contested an order, exhibit P-1, issued under section 18A(8) of the Indian Income-tax Act, 1922, for charging interest. The petitioner argued that the order was without jurisdiction as there was no apparent error on the face of the record justifying the action taken under the section. Reference was made to the limited nature of the power under section 35 of the Act, akin to rectification for patent errors only. The petitioner emphasized that the discretion vested in the Income-tax Officer under the fifth proviso to section 18A(6) and rule 48 necessitated a detailed analysis of facts, not a mere correction of an apparent mistake.

The petitioner relied on precedents from the Bombay High Court and the Supreme Court to support the argument that the discretion to charge interest under section 18A(6) should be exercised based on specific conditions outlined in rule 48. It was contended that unless these conditions were met, the Income-tax Officer had no discretion, rendering the omission to charge interest not a patent error. The judgment highlighted that the mere absence of interest charge did not automatically imply an error by the Income-tax Officer.

Additionally, the judgment discussed the imperative nature of section 18A(8) for charging interest in the assessment order, emphasizing that interest should only be added when chargeable under sub-section (6) of section 18A. The argument that the absence of interest in the assessment order indicated an error was refuted, with the judgment emphasizing the need for adherence to the specific provisions of the Act.

Ultimately, the court concluded that the order under challenge, exhibit P-1, was unsupported by any valid basis other than section 35 of the Indian Income-tax Act, 1922. It was determined that the Income-tax Officer lacked jurisdiction to issue such an order under that section, leading to the quashing of exhibit P-1 and the allowance of the writ application. No costs were awarded in the matter.