Satyanarayana Raju, J.
1. The short point for decision in the present case is whether the Appellate Tribunal was justified in rejecting an application made under Section 66(1) of the Income-tax Act on the ground that it was tarred by time.
2. The facts material for the purposes of this petition are these: The petitioner was assessed to Capital Gains tax on a sum of Rs. 79,494/. Aggrieved by the said assessment, he preferred an appeal before the Appellate Tribunal, Bombay Bencb (C), Hyderabad, contesting his liability. By its order dated the 24th November 1955, the Tribunal allowed the appeal holding that no tax was payable on the aforesaid sum of Rs. 79,494/. The petitioner's substantial contention having been upheld, there was no need for him to take any further proceedings. The Commissioner of Income-tax, the respondent herein, filed an application under S, 66(1) of the Income-tax Act before the Appellate Tribunal to state a case to the High Court. He also filed an application under Section 35 seeking rectification of the order passed by the Tribunal.
What was in effect sought by the respondent was a reconsideration of the decision on the ground that certain documents and other relevant material had not been considered by the Tribunal on the earlier occasion. The application was allowed by the Tribunal on 8-3-1957, as a result of which the original assessment was restored. This order of the Tribunal was served on the petitioner on 16-4-1957. Within a period of sixty days from the date of the service of the order the petitioner filed an application before the Appellate Tribunal under Section 66(1) of the Income-tax Act to make a reference to the High Court of certain questions of law which, according to him, arose out of the Tribunal's later order. On 28-7-1959, the Tribunal rejected the application holding that the later order, which it termed 'an order of rectification under Section 35', related back to the date of the original order and that since the application under Section 66(1) was admittedly filed beyond the period of 60 days prescribed under that section, it was barred by time.
3. It is contended by the learned counsel for the petitioner that the latter order, though purporting to have been made under Section 35, was really one under Section 33(4) and that, therefore, his application was within the period prescribed under Section 66(1).
4. In order to appreciate the point debated before us, it is necessary to refer to the relevant provisions of the Income-tax Act.
5. Section 33(4) reads:
'The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner.'
6. Section 35, in so far as it is material, is in the following terms:
'1. The Commissioner or Appellate Assistant Commissioner may, at any time within four years from the date of any order passed by him in appeal or, in the case of the Commissioner, in revision under Section 33-A and the Income-tax Officer may, at any time within four years from the date of any assessment order or refund order passed by him on his own motion rectify any mistake apparent from the record of the appeal, revision assessment or refund as the case may be, and shall within the like period rectify any such mistake which has been brought to his notice by an assessee;
Provided that no such rectification shall be made, having the effect of enhancing an assessment or reducing a refund unless the Commissioner, Appellate Assistant Commissioner or the Income-tax Officer, as the case may be, has given notice to the assessee of his intention so to do and has allowed him a reasonable opportunity of being heard;
Provided further that no Such rectification shall be made of any mistake in any order passed more than one year before the commencement of the Indian Income-tax (Amendment) Act, 1939. '2. The provisions of Sub-section (1) apply also in like manner to the rectification of mistakes by the Appellate Tribunal.'
Section 66(1) provides as follows:
'Within sixty days of the date upon which he is served with notice of an order under Sub-section (4) of Section 33, the assessee or the Commissioner may, by application in the prescribed form, accompanied where application is made by the assessee by a fee of one hundred rupees, require the Appellate Tribunal to refer to the High Court any question of law arising out of such order, and the Appellate Tribunal shall within ninety days of the receipt of such application draw up a statement of the case and refer it to the High Court.'
7. Now, Section 66(1) requires the application to be made within sixty days of the date on which the applicant is served with notice of an order under Sub-section (4) of Section 33. Under Section 33(4) the power of the Appellate Tribunal is wide, for, in an appeal properly before it, it can make an order as it thinks fit. But no reference lies from an order of the Tribunal passed under Section 35. Under Section 35 the Appellate Tribunal has limited jurisdiction. That provision does not empower the Tribunal to reverse the entire decision but permits only some error which is apparent, on the face of the record to be corrected. The granting of an application for rectification is not an order within Section 33(4), nor is it one in respect of which Section 66(1) enables a case to be stated. This was the view taken by a Division Bench of the Madras High Court, consisting of Gentle, C. J., and Yahya Ali J. in Commissioner of Income-tax, Madras v. Sevugan : 16ITR59(Mad) . The Tribunal indeed relied upon this decision in support of its view that the application made by the petitioner under Section 66(1) was barred by time. The facts of that case, however, were somewhat peculiar. There what happened was this. An appeal by an assessee was allowed by the Appellate Tribunal, by its order dated 11-7-1944. On 7-10-1944 long after the disposal of the matter by the Tribunal, the Income-tax Officer made an application to the Tribunal to correct an apparent mistake in the order, which was that the assessment had been made on a firm whereas, in fact, it had been made on the kartha of a quondam joint family. Admittedly the application was pursuant to Sub-sections (1) and (2) of Section 35. On 17-1-1945, the Tribunal directed a rectification of the mistake contained in the earlier order. Although that rectification was made, there was no alteration in the original order allowing the assessee's appeal. On the 7th October, 1944, the date on which the Income-tax Officer made the application for correction of the mistake, the Commissioner also filed an application under Section 66(1) requiring the Tribunal to refer to the High Court of Madras the question as to the correctness of its decision in the order of 11-7-1944. That application was withdrawn by the Commissioner and was dismissed. Subsequently on 29-3-1955, the Commissioner filed an application before the Tribunal for a case to be stated. This application was admittedly long after tile period of sixty days provided under Section 66(1) of the Act had expired but it was in time if the order on the application for rectification made on 7-1-1943, was an order within the contemplation of Section 33(4) and Section 66(1). On these facts, it was held by the Madras High Court that the reference was incompetent inasmuch as the order granting an application for rectification was not an order within the contemplation of Section 33(4) and Section 66(1) and as the application to the Tribunal for a case to be stated had been made more than sixty days from the date of service of the order.
8. The facts of the present case are completely different. Here, in the initial order passed by the Tribunal, the assessee was given all the relief which he claimed in the appeal. His claim having been allowed, the assessee had obviously no grievance against that order of the Tribunal and there was no need for him to ask for a case to be stated under Section 66(1). Subsequently the initial order was wholly reversed by the Tribunal and the original assessment was completely restored. Therefore, though the later order purports to have been made under Section 35, it was in substance and effect an order under Section 33(4). The later order having substantially affected the rights of the assessee, he should be entitled to claim that the later order was in effect a new order under Section 33(4) and that, therefore, a right under Section 66(1) would arise from the date of that order. Though there is no direct decision bearing on this question, there are observations in the decision of the Punjab High Court in Commissioner of Income-tax, Delhi v. Jodh Raj Bhalla, , which lend support to this view.
9. As was rightly held by the Madras High Court, if the rectification made by the Tribunal is one of form only and not of substance, it would be an order coming under Section 35 which would not entitle the assessee to ask for a reference under Section 66(1). Here, the assessee was substantially prejudiced. He could not and need not have asked for a case to be stated against the initial order because he was not aggrieved thereby. It was the later order that had resulted in the assessment being confirmed by the Appellate Tribunal. The period of limitation prescribed by S 66(1) must, therefore, be computed as commencing from the date of service of the later order. To hold otherwise would amount to denying to the assessee the substantive right conferred by Section 66(1). We do not think that this result was in the contemplation of the Legislature. On a fair reading of the provisions of the Income-tax Act, we are led to conclude that, where an order, though purporting to have been made under Section 35, is in substance and effect one made under Section 33(4), it would give the assessee a right to apply under Section 66(1).
10. That being our conclusion, we must set aside the order of the Tribunal and allow this petition. The Tribunal is directed to treat the application as one made within the time allowed under Sub-section (1) of Section 66 of the Income-tax Act and to dispose of it in accordance with law. In the circumstances of the case, we make no order as to costs.