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Ved Parkash Madan Lal Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Reference No. 11 of 1971
Judge
Reported in[1976]102ITR213(P& H)
ActsIncome Tax Act, 1961 - Sections 154
AppellantVed Parkash Madan Lal
RespondentCommissioner of Income-tax
Appellant Advocate D.S. Nehra and; S.S. Mahajan, Advs.
Respondent Advocate D.N. Awasthy and; B.S. Gupta, Advs.
Cases ReferredVenkatachalam v. Bombay Dyeing and
Excerpt:
- sections 80 (2) & 89 & punjab motor vehicles rules, 1989, rules 85 & 80: [t.s. thakur, cj, jasbir singh & surya kant, jj] appeal against orders of state or regional transport authority imitation held, a stipulation regarding the period of limitation available for invoking the remedy shall have to be strictly construed. that is because any provision by way of limitation is in the nature of a restraint on the remedy provided under the act. so viewed two inferences are clear viz., (1) sections 80 and 89 of the act read with rule 85 of the rules make it obligatory for the authorities making the order to communicate it to the applicant concerned and (2) the period of limitation for any appeal against the order is reckonable from the date of such communication of the reasons would imply..........income-tax officer to rectify any mistake, reads as under :'154. (1) with a view to rectifying any mistake apparent from the record- (a) the income-tax officer may amend any order of assessment or of refund or any other order passed by him.' 5. from the bare perusal of the provision reproduced above, it is clear that the jurisdiction of the income-tax officer to make an order of rectification depends upon the existence of a mistake apparent on the face of the record. the mistake is a mistake apparent from the record when it is glaring, obvious or a self-evident mistake. from the language of this section, it is equally clear that a mistake capable of being rectified under this provision, is not confined to clerical or arithmetical mistakes only. however, it is also correct that this.....
Judgment:

1. This is a reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), by the Income-tax Appellate Tribunal (Chandigarh Bench).

2. Messrs. Ved Parkash Madan Lal, the assessee, is an excise contractor. While completing the assessment for the assessment years 1960-61 and1961-62, the Income-tax Officer held that two hotels (Dhabas) attached to the two liquor shops also belonged to the assessee-firm and accordingly included the income from those hotels in the total income of the assessee. The assessment for the year 1960-61 was completed on 8th October, 1963, and for the year 1961-62, on 10th June, 1964. For the assessment year1962-63 (with which we are concerned in this reference) the Income-tax Officer followed his earlier orders for the assessment years 1960-61 and1961-62 and included the income from these hotels in the total income of the assessee. It is the common case of the parties that the assessee did not go in appeal to the Appellate Assistant Commissioner of Income-tax against the order of assessment of the Income-tax Officer for the year1962-63. The assessee preferred an appeal to the Appellate Assistant Commissioner only against the orders of assessment for the years 1960-61 and 1961-62. The main contention of the assessee in the appeal was that one of the hotels belonged to Behari Lal and the other to Om Parkash, and that the income from the hotels could not be included in his income. The Appellate Assistant Commissioner upheld the order of the Income-tax Officer and rejected the appeal. On second appeal, the order of the Appellate Assistant Commissioner was set aside by the Tribunal and the appeal was remanded for fresh disposal after taking into consideration all the facts of the case and allowing the parties fresh opportunity of leading evidence. After remand, the Appellate Assistant Commissioner remanded the case to the Income-tax Officer for further enquiry. On receipt of the remand report, the Appellate Assistant Commissioner found that thetwo hotels did not belong to the assessee and the income from the two hotels was accordingly excluded from the total income of the assessee.

3. After the decision of the Appellate Assistant Commissioner, the assessee filed an application under Section 154 of the Act before the Income-tax Officer praying for the rectification of his order of assessment for the year 1962-63 and for the exclusion of the income from the two hotels from the total income. The Income-tax Officer rejected the application on the ground that the matter did not fall within the purview of Section 154 of the Act. A copy of the Income-tax Officer's order dated 19th October, 1967, forms part of the case as annexure 'A'. The assessee filed an appeal but the same was rejected by the Appellate Assistant Commissioner vide his order dated 23rd October, 1968 (copy annexure 'B'). Still dissatisfied, the assessee filed a further appeal before the Tribunal but did not succeed, as is evident from the order of the Tribunal dated 28th April, 1970 (copy annexure 'C'). Thereafter, the assessee filed an application requesting the Tribunal to refer to this court the question of law which arose out of the Tribunal's order and finding that the question of law did arise, the Tribunal has referred the following question for the opinion of this court:

'Whether, on the facts and in the circumstances of the case, and in view of the order for assessment year 1962-63 which had become final, it was within the competence of the Income-tax Officer to rectify the assessment order under Section 154 and exclude the income from the two hotels from the total income of the assessee ?'

4. The relevant portion of Section 154 under which power is given to the Income-tax Officer to rectify any mistake, reads as under :

'154. (1) With a view to rectifying any mistake apparent from the record- (a) the Income-tax Officer may amend any order of assessment or of refund or any other order passed by him.'

5. From the bare perusal of the provision reproduced above, it is clear that the jurisdiction of the Income-tax Officer to make an order of rectification depends upon the existence of a mistake apparent on the face of the record. The mistake is a mistake apparent from the record when it is glaring, obvious or a self-evident mistake. From the language of this section, it is equally clear that a mistake capable of being rectified under this provision, is not confined to clerical or arithmetical mistakes only. However, it is also correct that this provision may not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. When this case is scrutinized keeping in view the above-mentioned guiding principles, then there is no escape from this conclusion that the mistake in the order of assessment for the year 1962-63 was apparentfrom the record and the Income-tax Officer, in exercise of his powers under Section 154 of the Act, was competent to rectify the same. There is no dispute that the assessment order for the year 1962-63 was passed on the 'basis of the assessment orders for the years 1960-61 and 1961-62. In the order for the assessment year 1962-63, the Income-tax Officer only observed 'full facts of the case have been discussed in the assessment order for the preceding year in which it was held that the assessee himself was the owner of the hotel and income from running of hotel was estimated at Rs. 10,000. There is no change in the position this year. The estimate of last year is repeated'. (Quoted from the order of the Appellate Assistant Commissioner, Income-tax, annexure 'B', at page 6). From this order of assessment, it is clear that no evidence at all was recorded while passing the assessment order nor was the mind independently applied, and the same was passed merely on the basis of the assessment orders made in the years 1960-61 and 1961-62. When on appeal the assessment orders of 1960-61 and 1961-62 were set aside to the extent that the income from the two hotels was excluded, then the error became apparent from the record even with regard to the assessment of the year 1962-63. The Income-tax Officer would be competent to look into the records of the assessee for the years 1960-61 and 1961-62, to rectify the mistake with regard to the assessment order for the year 1962-63, and to bring it in conformity with the orders of assessment for the earlier two years. The view we have taken finds full support from the decision of their Lordships of the Supreme Court in Maharana Mills (Private) Ltd. v. Income-tax Officer : [1959]36ITR350(SC) . Porbandar, wherein it has been observed thus:

'The power under Section 35 is no doubt limited to rectification of mistakes which are apparent from the record. A mistake contemplated by this section is not one which is to be discovered as a result of an argument but it is open to the Income-tax Officer to examine the record including the evidence and if he discovers any mistake he is entitled to rectify the error provided that if the result is enhancement of assessment or reducing the refund then notice has to be given to the assessee and he should be allowed a reasonable opportunity of being heard.

The scope and effect of the expression 'mistake apparent from the record' and the extent of the powers of the Income-tax Officer under Section 35 of the Act were discussed by this court in Venkatachalam v. Bombay Dyeing and . : [1958]34ITR143(SC) where the facts were these: A sum of Rs. 50,063 being interest on tax paid in advance was given credit for under Section 18A(5) of the Act. Subsequently, there was an amendment of the Act by which the interest became allowable only on the difference between the amount of tax paid and what was actually determined. Asa consequence of this the Income-tax Officer purporting to act under Section 35 of the Act rectified the mistake and reduced the amount of interest credited to Rs. 21,157 and issued a demand for the difference. The assessee obtained a writ of prohibition against the Income-tax Officer on the ground that the mistake contemplated under that provision had to be apparent on the face of the order and it was not contemplated to cover a mistake resulting from an amendment of the law even though it was retrospective in its effect. The revenue appealed to this court. Thus, the question for decision in that case was whether an order proper and valid when made could be said to disclose a mistake apparent from the record merely because it became erroneous as a result of a subsequent amendment of the law which was retrospective in its operation. In delivering the judgment of the court, Gajendragadkar J. said:

'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.' The decision of the Privy Council in Commissioner of Income-tax v. Khemchand Ramdas [1938] 6 ITR 414 was referred to.

Counsel for the appellant sought to distinguish both these cases, Venkatachalam's case and Khemchand's case, on the ground that the record there considered was the assessment record of that year and the Income-tax Officer did not have to go to the records of the previous year. That is a distinction without a difference. If, for instance, the Income-tax Officer had found that in the assessment year 1952-53 there was an apparent arithmetical mistake in the account of the written down value of the properties which resulted in a corresponding mistake in the assessment of the year in controversy, could he not take the corrected figure for the purposes of the assessment and could it be said that the mistake was not apparent from the record. A fortiori if he discovered that the very basis of the different assessments was erroneous because of an initial mistake in determining the written down value, could it be said that this would not be a mistake apparent from the record. And if in order to determine the correct written down value the Income-tax Officer makes correctacalculations, can it be said that that is not rectifying a mistake apparent from the record but is de hors it.'

6. No other point was urged.

7. For the reasons recorded above, we answer the question in the affirmative but make no order as to costs.


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