1958 (4) TMI 111 - HC - Income Tax

Income-tax Appellate Tribunal jurisdiction upheld for rectification under Income-tax Act Section 35

P. KUTTIKRISHNA NAIR Versus INCOME-TAX APPELLATE TRIBUNAL, MADRAS, AND ANOTHER

P. KUTTIKRISHNA NAIR Versus INCOME-TAX APPELLATE TRIBUNAL, MADRAS, AND ANOTHER - [1958] 34 ITR 540 (Mad) Issues Involved:1. Jurisdiction of the Income-tax Appellate Tribunal under Section 35 of the Income-tax Act.2. Validity of rectification orders made by the Tribunal.3. Locus standi of the Income-tax Department to request rectification.4. Procedural fairness and timeliness in serving the rectification order.Detailed Analysis:1. Jurisdiction of the Income-tax Appellate Tribunal under Section 35 of the Income-tax ActThe primary issue was whether the Tribunal acted within its jurisdiction in rectifying its earlier order under Section 35 of the Income-tax Act. The petitioner contended that the Tribunal could rectify mistakes apparent on the record only suo motu or on the application of the assessee, not at the instance of the Income-tax Department. The court analyzed Section 35(1) and (2) and concluded that the Tribunal has the power to rectify mistakes apparent from the record and can act suo motu. The Tribunal is bound to rectify mistakes when brought to its notice by the assessee but is not obligated to do so when the mistake is pointed out by the Department. However, the Tribunal retains the discretion to act on such information.2. Validity of Rectification Orders Made by the TribunalThe Tribunal had initially passed an order on November 8, 1956, which was later found to contain a mistake regarding the maximum cash credits. The Tribunal rectified this mistake on January 3, 1957, after the Department pointed it out. The petitioner argued that the Tribunal's rectification was invalid as it was based on the Department's application. The court held that the Tribunal's power to rectify mistakes is not negated by the source of the information about the mistake. The Tribunal acted within its jurisdiction to correct the mistake, thus validating the rectification order.3. Locus Standi of the Income-tax Department to Request RectificationThe petitioner argued that the Income-tax Department had no locus standi to request rectification. The court clarified that while the Department does not have a statutory right to demand rectification, it can still bring mistakes to the Tribunal's attention. The Tribunal is not bound to act on such requests but can choose to do so. The court cited precedents affirming that the Tribunal's power to rectify mistakes is broader than merely acting on applications from the assessee.4. Procedural Fairness and Timeliness in Serving the Rectification OrderThe petitioner contended that the rectification order was served on January 24, 1957, after the sixty-day period for requesting a reference to the High Court had expired, making the order procedurally unfair. The court dismissed this argument, noting that Section 35(1) allows rectification within four years, and this period applies to the Tribunal's actions under Section 35(2). The rectification was thus timely and procedurally valid.Conclusion:The court dismissed the writ petitions, holding that the Tribunal acted within its jurisdiction to rectify mistakes apparent on the record, regardless of who pointed out the mistake. The Tribunal's rectification order was valid, and the procedural fairness was maintained. The petitions were dismissed with costs of Rs. 250.