1971 (12) TMI 22 - HC - Income Tax

Income-tax Officer issued a notice under section 35 of the Act for each assessment year pointing out that there was an error apparent on the record which called for rectification. It appears that having regard to the amount of dividend distributed by the assessee in the respective previous years, the super-tax rebate should have been reduced. As that had not been done, the super-tax payable by the assessee had been under-charged - omission to give effect to the provisions of Finance Acts, 1958 and 1959 was a mistake apparent from the record. Therefore, the rectification proceedings were valid - Appeal dismissed

Summary

Issues:
1. Validity of the order under section 35 of the Indian Income-tax Act for the assessment years 1958-59 and 1959-60.
2. Whether the Income-tax Officer acted within the scope of section 35 of the Act.
3. Determination of whether there was a mistake apparent from the record.
4. Application of relevant provisions of the Finance Acts of 1958 and 1959.
5. Comparison of provisions of the Finance Act, 1951, with the Finance Acts of 1958 and 1959.
6. Interpretation of the term "mistake apparent from the record."

Detailed Analysis:
The judgment pertains to a special appeal challenging the dismissal of a petition under article 226 of the Constitution of India by a learned single judge. The appellant was assessed to income-tax and super-tax for the assessment years 1958-59 and 1959-60. The Income-tax Officer issued notices under section 35 of the Act for rectification, citing an error in the super-tax rebate calculation due to the omission of applying relevant provisions of the Finance Acts of 1958 and 1959. The appellant objected to the rectification, leading to two separate orders under section 35 for the respective assessment years, resulting in the withdrawal of specific amounts from the super-tax rebate.

One contention raised was regarding the timing of the order under section 35 for the assessment year 1959-60, post modification in appeal, questioning the Income-tax Officer's authority to rectify an assessment order after it had been altered in appeal. However, as no such ground was included in the petition or special appeal, and no appellate order was provided, this argument was not considered. The second contention was that the Income-tax Officer exceeded the scope of section 35 as there was allegedly no mistake apparent from the record. The appellant argued that the provisions of the Finance Acts of 1958 and 1959 were invalid, drawing a comparison with a previous case where a provision was declared invalid by the Bombay High Court and affirmed by the Supreme Court.

The court determined that the omission to apply the relevant provisions of the Finance Acts of 1958 and 1959 constituted a mistake apparent from the record. It was emphasized that the provisions of the Finance Act, 1951, which were invalidated, differed significantly from those in the Finance Acts of 1958 and 1959, making any comparison irrelevant. The court rejected the appellant's argument that the Income-tax Officer's failure to apply the provisions of the Finance Acts was debatable, citing a precedent that clarified a mistake apparent from the record must be obvious, not a debatable legal point. Ultimately, the court upheld the dismissal of the petition, concluding that the learned single judge was correct in his decision, and the appeal was dismissed with costs.