Mistake apparent from the record can justify rectification where a binding Supreme Court ruling shows the levy was invalid

A patent mistake of law apparent from the record was held rectifiable under section 35 of the Income-tax Act, 1922, where an excess dividend tax levy was later shown by a binding Supreme Court decision to have been invalid from the outset. The fact that the assessment order was valid when made did not bar rectification once the true legal position emerged, because no elaborate reasoning was needed to identify the error. The availability of a prior revision remedy also did not defeat relief, as that remedy had been pursued and the assessee approached the Court promptly after rejection.

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Issues: Whether the levy of excess dividend tax, later declared invalid by the Supreme Court, constituted a mistake apparent from the record so as to permit rectification under section 35 of the Income-tax Act, 1922.

Analysis: A mistake apparent from the record includes an obvious mistake of law as well as fact. The fact that the assessment order was valid when made did not prevent rectification once the true legal position was established by a binding Supreme Court decision showing that the levy was never valid in law. No elaborate argument or long-drawn process was required to identify the error, and the rectification power under section 35 was available to correct it. The existence of a prior revision remedy did not defeat the application, since the petitioner had pursued that remedy and approached the Court promptly after its rejection.

Conclusion: The levy was held to involve a mistake apparent from the record, and rectification under section 35 was warranted in favour of the assessee.

Ratio Decidendi: A patent mistake of law apparent from the record is rectifiable under section 35 of the Income-tax Act, 1922, and a levy shown by a binding Supreme Court decision to have been invalid from the outset constitutes such a mistake.

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