9911796707
TMI Blog1972 (9) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... this petition under article 226 of the Constitution, the petitioner company, which is a private limited company, has challenged the legality of the orders dated August 27, 1965, and September 23, 1965, made by the Income-tax Officer under section 35 of the Income-tax Act, 1922, whereby he rectified in respect of the assessment years 1960-61 and 1961-62 two previous orders made under section 23A of the Act on June 26, 1963. The only and main contention made on behalf of the petitioner-company to challenge the legality of the orders is that, having regard to the facts involved and the record before him, the Income-tax Officer had no authority, power and jurisdiction under section 35 of the Act to rectify the previous orders made under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business consists wholly or mainly in the dealing in or holding of investments, and at the rate of thirty-seven per cent. in the case of any other company. . ." Apparently by the above two orders made for the above respective years super-tax at the rate of 37% was directed to be charged and recovered on the footing of a finding that the petitioner-company was not a company whose business consisted wholly or mainly in the dealing in or holding of investments. Relevant part of section 35, under which the above impugned orders dated August 27 and September 23, 1965, were passed by the Income-tax Officer, runs as follows : ". . . the Income-tax Officer may, at any time within four years from the date of any assessment order or refund orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares, house property, loans and advances and call deposits amounted to Rs. 14,69,050. These investments were more than 50% of the total assets of the company. It is, therefore, apparent that the company is an investment company." In the second order the reason he recorded was : "For the assessment year 1961-62, the investment of the company in shares, house property, loans and advances and call deposits amounted to Rs. 15,73,007. These investments were more than 50% of the total assets of the company. It is, therefore, apparent that the company is an investment company." On the basis of the above findings, he rectified the previous orders and directed that the petitioner-company was liable to pay super-tax at the rate of 50% and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing jurisdiction and power of rectification under section 35 of the Act. In that connection it was emphasised that the Income-tax Officer who purported to exercise jurisdiction and power under section 35 was Y. D. Borwankar, and not the same officer, A. N. Gupta, who made the original orders under section 23A(1) of the Act. It was argued, with great emphasis, that the true effect of the phrase "any mistake apparent from the record" as contained in section 35 was mistake about jurisdictional fact and further that different opinions on questions of law involved did not constitute "a mistake" enabling exercise of jurisdiction under section 35. In connection with this contention it requires to be noticed that the real question which arises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following observations of the Supreme Court in the case of T. S. Balaram, Income-tax Officer, Company Circle IV, Bombay v. Volkart Brathers : "Therefore, the Income-tax Officer was not justified in thinking that on that question there can be no two opinions, It was not open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under section 154 of the Income-tax Act. A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions... A decision on a debatable point of law is not a mistake apparent from the record--see Sidhramappa Andannappa Manvi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
