1969 (3) TMI 6 - HC - Income Tax

Income Tax Officer rectified an order passed under section 23A - held that Income Tax Officer was not justified - Assessing Officer under section 35 can only rectify an order of assessment and order passed under section 23A not being an order of assessment, the same cannot be rectified

Summary

Issues:
Jurisdiction of Income-tax Officer to rectify an order under section 23A of the Income-tax Act, 1922.

Analysis:
The High Court of Allahabad addressed the issue of whether the Income-tax Officer had the jurisdiction to rectify an order passed under section 23A of the Income-tax Act. The petitioners contended that an order under section 23A is not an assessment order and therefore cannot be rectified under section 35 of the Act. On the other hand, the income-tax department argued that the term "assessment" has a broad meaning and includes any order creating a liability to pay tax. The court examined the relevant provision of section 35 which allows rectification of mistakes apparent from the record of assessment. The court noted that while the provision does not specifically mention rectification of mistakes in the assessment order, it grants the authority to rectify any mistake in the assessment record.

The court referred to previous Supreme Court decisions, particularly the case of S. Sankappa v. Income-tax Officer, where it was held that the liability to pay tax arises from the order of the Income-tax Officer, not just from the statutory charge. The court also cited the decision in M. M. Parikh, Income-tax Officer v. Navanagar Transport and Industries Ltd., which supported the interpretation that the charge to pay tax is created by the order of the Income-tax Officer. The petitioners argued that the Supreme Court's decision in S. Sankappa's case mandates that an order under section 35 must involve a charge created by the statute, not just by the Income-tax Officer's order.

Ultimately, the High Court allowed the writ petitions and quashed the orders passed by the Commissioner and the Income-tax Officer under section 35 of the Act. The court directed each party to bear their own costs, concluding the judgment on the jurisdictional issue regarding the rectification of orders under section 23A of the Income-tax Act.