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TMI Blog1958 (4) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 35 of the Income-tax Act read with section 1, sub-section (2), and section 13, of the Indian Income-tax (Amendment) Act, 1953 (XXV of 1953). It arises in this way. The Income-tax Officer, by his assessment order made on October 9, 1952, for the assessment year 1952-53, assessed the respondent, the Bombay Dyeing and Manufacturing Co. Ltd., under the Act. In the said assessment order the respondent was given Credit for Rs. 50,603-15-0 as representing interest at 2% on tax paid in advance under section 18A of the Act. This credit was given to the respondent in pursuance of the provisions contained in section 18A, sub-section (5), of the Act as it then stood. On May 24, 1953, the Amendment Act came into force. Section 1, sub-section (2), of the Amendment Act provides that "subject to any special provision made in this behalf in this Act, it shall be deemed to have come into force on the first day of April, 1952". By section 13 of the Amendment Act, a proviso was added to section 18A(5) of the Act. The effect of the amendment made by the insertion of the said proviso to section 18A(5) was that the assessee was entitled to get interest at 2% not on the whole of the advance amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus the short question which arises before us in the present appeal is whether an order which was proper and valid when it was made can be said to disclose a mistake apparent from the record if the said order would be erroneous in view of a subsequent amendment made by the Amendment Act when the Amendment Act is intended to operate retrospectively ? It is unnecessary to refer to the provisions of section 18A(5) as well as the provision of the proviso which was subsequently added by section 13 of the Amendment Act. It is common ground that, in the absence of the subsequently inserted proviso, the assessee would be entitled to obtain a credit for Rs. 50,603-15-0. It is also common ground that, if the subsequently inserted proviso covered the assessee's case, he would be entitled to a credit only of Rs. 21,156-9-0. It is thus obvious that the order giving the relevant credit to the assessee was valid when it was made and that it would be erroneous under the subsequent amendment. Under these circumstances, was the first appellant justified in exercising his power of rectification under section 35 of the Act ? In deciding this question it would be necessary to determine the true ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of the retrospective operation of the Amendment Act. In support of this contention, reliance is placed on the observations of the Privy Council in Delhi Cloth and General Mills Co., Ltd. v. Income-tax Commissioner. Lord Blanesburgh who delivered the judgment of the Board referred to the Board's earlier decision in Colonial Sugar Refining Co. V. Irving, where it was in effect laid down that, while provisions of a statute dealing merely with matters of procedure may properly, unless that construction be textually inadmissible, have retrospective effect attributed to them, provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment. The learned Judge then added that "their Lordships can have no doubt that the provisions which, if applied retrospectively, would deprive of their existing finality orders, which, when the statute came into force, were final, are provisions which touch existing rights." The argument for the respondent is that the assessee has obtained a right under the order passed by the Income-tax Officer to claim credit for the specified amount under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the commencement of the Amendment Act of 1953. It would be noticed that the main object of this sub-section is to extend the retrospective operation of the relevant provisions of the Amendment Act beyond the first April, 1952, mentioned by section 1, sub-section (2), of the Amendment Act. Since it was intended to provide for such further retrospective operation of the relevant provision the Legislature thought it advisable to clarify the position by saying that the said extended retrospective operation would cover all assessments whether they had been completed or not before the commencement of the Amendment Act. Section 7, sub-section (1), adds two provisos to section 9 of the principal Act by clauses (a) and (b). Sub-section (2) of section 7 then lays down that the amendments made in clause (a) of sub-section (1) shall be deemed to be operative for any assessment for the year ending the 31st day of March, 1952, whether made before or after the commencement of this Act and where any such assessment has been made before such commencement, the Income-tax Officer concerned shall revise it whenever necessary to give effect to this amendment. The position under section 30, sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Officer's power under section 35 to rectify mistakes apparent from the record must be determined ; and, in doing so, the scope and effect of the expression "mistake apparent from the record" has to be ascertained. At the time when the Income-tax Officer applied his mind to the question of rectifying the alleged mistake, there can be no doubt that he had to read the principal Act as containing the inserted proviso as from April 1, 1952. If that be the true position then the order which he made giving credit to the respondent for Rs. 50,603-15-0 is plainly and obviously inconsistent with a specific and clear provision of the statute and that must inevitably be treated as a mistake of law apparent from the record. If a mistake of fact apparent from the record of the assessment order can be rectified under section 35, we see no reason why a mistake of law which is glaring and obvious cannot be similarly rectified. Prima facie it may appear somewhat strange that an order which was good and valid when it was made should be treated as patently invalid and wrong by virtue of the retrospective operation of the Amendment Act. But such a result is necessarily involved in the legal fiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercised his powers under the section within one year from the date on which the earlier demand was served upon the respondents". The judgment shows that their Lordships took the view that "looking at the record of the assessments made upon them as it stood after the cancellation of the respondents' registration---and the order effecting the cancellation would have formed part of that record---it would be apparent that a mistake had been made in stating that no super-tax was leviable." This decision clearly shows that the subsequent cancellation of the assessees' registration was held by their Lordships of the Privy Council to form part of the record retrospectively in the light of the said subsequent event, and the order was deemed to suffer from a mistake apparent from the record so as to justify the exercise of the rectification powers under section 35 of the Act. It is because their Lordships thought that section 35 would have been clearly applicable that they did not decide the question as to whether section 34 could also have been invoked. This decision lends considerable support to the view which we are disposed to take about the true meaning and scope of the expression "the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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