Skip to content


Addl. Commissioner of Income-tax, Delhi-i Vs. Motors and General Finance Ltd. - Court Judgment

LegalCrystal Citation
Subject Direct Taxation
CourtDelhi High Court
Decided On
Case NumberIncome-tax Reference No. 189 of 1974
Judge
Reported in(1983)35CTR(Del)412; [1983]142ITR424(Delhi)
ActsIncome Tax Act, 1961 - Sections 143(3), 147, 148, 154 and 256(1)
AppellantAddl. Commissioner of Income-tax, Delhi-i
RespondentMotors and General Finance Ltd.
Excerpt:
- - a decision on a debatable point of fact and failure to apply the law to a set of facts which remain to be investigated cannot corrected by way of rectification......the income-tax officer was not justified in rectifying the mistake by describing the assessed as a public limited company in which public was not substantially interested ?' 2. m/s motor & general finance ltd., new delhi, the assessed, is a company doing the business of financing. the assessment year in question is the year 1964-65 and the corresponding precious year is the year ended june 30, 1963. the assessed filed the return of income for the easement year 1964-65. the assessment was completed and made under s. 143(3) of the act by the ito on august 21, 1968. the status of the assessed was described as 'public limited company'. the ito had reason to believe that the income chargeable to tax had escaped assessment for the assessment year 1964-65 and issued a notice under s. 147(b)/148.....
Judgment:

S.S. Chadha, J.

1. By these references under s. 256(1) of the I.T. Act, 1961 (hereinafter referred to as 'the Act'), the following question of law has been referred to this court for its opinion :

'Whether, on the facts and in the circumstance of the case, the Tribunal was right in holding that the Income-tax Officer was not justified in rectifying the mistake by describing the assessed as a public limited company in which public was not substantially interested ?'

2. M/s Motor & General Finance Ltd., New Delhi, the assessed, is a company doing the business of financing. The assessment year in question is the year 1964-65 and the corresponding precious year is the year ended June 30, 1963. The assessed filed the return of income for the easement year 1964-65. The assessment was completed and made under s. 143(3) of the Act by the ITO on August 21, 1968. The status of the assessed was described as 'public limited company'. The ITO had reason to believe that the income chargeable to tax had escaped assessment for the assessment year 1964-65 and issued a notice under s. 147(b)/148 of the Act in response to which the assessed filed a return on June 17, 1969, in which he declared the income as per return filed and assessed. Total income was computed by the ITO on March 5, 1970. At the time of completing the supplementary assessment, the ITO described the status of the assessed as 'private limited company'.

3. The assessed by its letter addressed to the ITO stated that from a perusal of the assessment order completed under s. 147(b), the ITO had wrongly mentioned the status of the assessed as 'private limited company'. whereas the assessed is a 'public limited company' as would be see from the original order. The assessed asserted that since the mistake was apparent from the record, the same should be rectified and the status of the company changed to 'public limited company'. The ITO passed the orders under s. 154 on December 21, 1970, and noted the contention of the assessed that it is not a 'private limited company'. The ITO rectified the mistake in these words :

'The correct status of the company is 'public limited company' in which public is not substantially interested'.

4. The assessed filed an appeal against the said order dated December 21. 1970, under s. 154 of the Act passed by the ITO. The ACC accepted the appeal and directed the ITO to rectify the status to that of 'public limited company' in the order under s. 154 The Department filed an appeal before the Income-tax Appellate Tribunal. The appeal was rejected on the ground that the order of the AAC did not call for any interference. The question of law as extracted above was drawn up at the instance of the Commissioner of income tax for the opinion of this court.

5. Section 154 of the Act has a very limited application and enable the rectification of any mistake apparent from the record. In other words, it must be a case of a mistake and that mistake must be apparent from the record. The power could be exercised by the ITO to correct obvious errors of law and those mistake which are apparent from the record obvious errors of law and those mistake which are apparent from the record. A decision on a debatable point of fact and failure to apply the law to a set of facts which remain to be investigated cannot corrected by way of rectification. The jurisdiction of the ITO was invoked by the assessed in its application dated July 29, 1970, and a request was made that the status of the assessed be rectification in the supplementary assessment order made under s. 147(b) of the Act from that of 'private limited company' to 'public limited company'. The ITO passed the order on December 21, 1970 and specifically mentioned in the order that it was passed under s. 154 of the Act. In the order of the ITO under s. 147(b), there is no discussion as to why the status was changed to that of a 'private limited company'. On an application under s. 154 the assessed could either get the relief or he could be denied the relief as requested. The ITO finds a mistake apparent on the record and states that the correct status of the company is 'public limited company'. The ITO could not in the rectification proceedings under s. 154 changed the status of the assessed to 'public limited company in which public was not substantially interested'. The ITO could not rectify this status in an order under s. 154 because that needs enquiry and argument as to whether the public was or was not substantially interested. Any such change of status on a debatable point of fact, which remains to be investigated cannot be corrected by way of an order under s. 154 which has a very limited application. The ITO was not justified on the facts and circumstances of the case in rectifying the mistake by describing the assessed as a 'public limited company in which the public was not substantially interested'. The obvious effect of this is that the orders of the AAC directing the ITO to rectify the status of the assessed to that of a 'public limited company' would stand.

6. The reference is answered against the Revenue and in favor of the assessed with no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //