1974 (2) TMI 4 - HC - Income Tax

Jurisdiction of High Court - inherent powers to delete an erroneous sentence in judgment on an income-tax reference - It is paramount that court must do justice and if any errors arising from accidental slips or omissions creep into judgments, which can result in injustice, such errors must be removed - We allow this petition and delete the sentence Imposition of penalty by the Inspecting Assistant Commissioner was, therefore, justified, from our judgment

Summary

Issues:
1. Interpretation of the Explanation to section 271(1)(c) of the Income-tax Act, 1961.
2. Application of the Explanation to a specific case for the assessment year 1963-64.
3. Jurisdiction of the court to delete a sentence from a judgment due to accidental slip or omission.

Analysis:
1. The judgment involved a petition under section 256 of the Income-tax Act, 1961, seeking clarification or deletion of a sentence in the judgment related to the imposition of penalty under section 271(1)(c) and the Explanation to the Act. The key issue was the correct interpretation of the Explanation and its applicability to the case at hand.

2. For the assessment year 1963-64, the Income-tax Officer imposed a penalty under section 271(1)(c) based on the Explanation. The Inspecting Assistant Commissioner upheld the penalty, citing that the assessee failed to prove that the difference in income arose without default as per the Explanation. However, the Appellate Tribunal quashed the penalty, stating that the Explanation affected vested rights and did not apply retrospectively. The High Court clarified that the Explanation applied to the case as the act occurred after its introduction, thus upholding the penalty.

3. The High Court acknowledged an accidental inclusion of a sentence in the judgment that led to confusion regarding the court's decision on the penalty imposition. The court exercised its inherent power to rectify the error, emphasizing that courts are constituted to deliver justice. The judgment highlighted the court's authority to correct accidental slips or omissions to prevent injustice, even if specific statutory provisions were not directly applicable.

Overall, the judgment clarified the interpretation and application of the Explanation to section 271(1)(c) for the specific assessment year, emphasizing the importance of ensuring clarity and accuracy in judicial decisions to uphold justice and fairness.