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Addl. Commissioner of Income-tax, Poona Vs. Pakco Engg. Pvt. Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome tax Referance No. 140 of 1973
Judge
Reported in(1982)30CTR(Bom)232; [1983]143ITR415(Bom); [1982]11TAXMAN62(Bom)
Acts Income Tax Act, 1961 - Sections 297(2)
AppellantAddl. Commissioner of Income-tax, Poona
RespondentPakco Engg. Pvt. Ltd.
Excerpt:
- - 23a is rectifying a mistake in the record of assessment and clearly falls within the ambit of the power conferred upon the ito under s......not per se vitiate the order, if there is some other power under which the order could lawfully be made.4. with respect, we are in complete agreement with the view expressed by the gujarat high court. in the present case, although the reference was made in the order of rectification of s. 154 of the said act and not s. 35(1) of the indian i.t. act, 1922, that would not make any difference to the validity of the order, because it is clear that the power sought to be exercised by the ito was the power of rectification. it only so happens that there was a reference to a wrong section, namely, s. 154 of the said act, in the order. as far as the assessee is concerned, unfortunately, the counsel for the assessee has not appeared before us at all, although the matter was on the board and the.....
Judgment:

Kania, J.

1. This is a reference under s. 256(1) of the I.T. Act, 1961, (referred to hereinafter as 'the said Act'). The assessment year with which we are concerned is the assessment year 1960-61. The order of assessment on the assessee in respect of the said assessment year was passed on March 10, 1961, the said order being under s. 23A of the Indian I.T. Act, 1922. A notice to show cause against the rectification of mistake was issued to the assessee under s., 154 of the said Act, no objection was taken by the assessee to the proposed application and the ITO proceeded to correct the mistake apparent on the record by raising the additional super-tax liability by his order dated May 20, 1969. On an appeal to the AAC, it was contended by the assessee that as the action for rectification was then under s. 154 of the said Act, it was without jurisdiction and invalid on the ground that the said Act had no the coming into effect of the said Act and that the rectification if at all could have been done only under s. 35 of the Indian I.T. Act, 1922. These contentions were rejected by the AAC. On an appeal to the Tribunal, it was contended by the assessee that there was a marked difference in the phraseology of s. 35 of the Indian I.T. Act, 1922, and the phraseology of s. 154 of the said Act. It was held by the Tribunal that in view of s. 297(2)(e) of the said, in the present case it was the provisions of the Indian I.T. Act, in the present case it was the provisions of the Indian I.T. Act, 1922, which would be applicable to all matters arising out of the order passed under s. 23A of the Indian I.T. Act, 1922, in respect of the aforesaid assessment year and that s. 35 of that Act did not vest any jurisdiction in the ITO to rectify an order passed under s. 23A of that Act. On the basis of these contentions, the Tribunal set aside the order of rectification. It is from this order of the Tribunal that the following question is referred to us for determination :

'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the Income-tax Officer had no jurisdiction under section 154 of the Income-tax Act, 1961, or section 35 of the Indian I.T. Act, 1922, to rectify the mistake apparent from the record pertaining to the order dated March 10, 1961, passed under section 23A of the Indian I.T. Act, 1922 ?'

2. Mr. Joshi, learned counsel for the Commissioner, did not dispute that it was the Indian I.T. Act, 1922, which was applicable to the question of rectification and not the provisions of the said Act. It was, however, contended by him that under s. 35 of the Indian I.T. Act, 1922, it was open to the ITO to rectify an order of assessment passed under s. 23A of that Act and that merely because the order was purported to be made under s. 154 of the said Act and not s. 35 of the Indian I.T. Act, 1922, that did not invalidate the order. In support of his contention, Mr. Joshi relied upon the decision of the Supreme Court in CIT v. J.K. Commercial Corporation Ltd. : [1976]105ITR219(SC) . In that case it was held by the Supreme Court that although in a narrow sense an order under s. 23A of the Indian I.T. Act, 1922, may not be called an order of assessment, it is a part of the assessment proceedings and may be called a supplementary assessment order directing a company to pay an additional amount of super-tax on the undistributed balance of the total income as assessed and determined in accordance with the provisions of s. 23A. In the context of s. 35(1), the expression 'assessment order' would include or order made under s. 23A also; as such, an order undoubtedly forms part of the record of assessment. Correcting an apparent error in an order made under s. 23A is rectifying a mistake in the record of assessment and clearly falls within the ambit of the power conferred upon the ITO under s. 35(1). That order of rectification could be passed under s. 35(1) of the Indian I.T. Act, 1922, even in respect of an order under s. 23A of that Act.

3. In P.M. Bharucha & Co. v. Venkatesan, ITO : [1969]74ITR513(Guj) , it has been held by the Gujarat High Court, applying the decision of the Supreme Court in Hazari Mal Kuthiala v. ITO : [1961]41ITR12(SC) , that though the order of rectification could not be made by the ITO under s. 154 of the said Act, it cannot be said that he had no power to make it, as he had power to make an order of rectification could not, therefore, be regarded as having been made without jurisdiction under s. 35(1) of the Indian I.T. Act, 1992, and the order of rectification could not, th erefore, be regarded as having ben made without jurisdiction. A wrong reference to the the power under which an order is made does not per se vitiate the order, if there is some other power under which the order could lawfully be made.

4. With respect, we are in complete agreement with the view expressed by the Gujarat High Court. In the present case, although the reference was made in the order of rectification of s. 154 of the said Act and not s. 35(1) of the Indian I.T. Act, 1922, that would not make any difference to the validity of the order, because it is clear that the power sought to be exercised by the ITO was the power of rectification. It only so happens that there was a reference to a wrong section, namely, s. 154 of the said Act, in the order. As far as the assessee is concerned, unfortunately, the counsel for the assessee has not appeared before us at all, although the matter was on the Board and the hearing commenced on April 14, 1982. It remained part hared on that day, and it has thereafter reached hearing today, when, too, the counsel for the assessee is not present. We do not have, therefore, the benefit of hearing his arguments.

5. In the result, the question referred to us is answered in the negative and against the assessee. The assessee to pay the Commissioner the costs of the reference.


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