Retrospective deeming provision defeats rectification for penal interest; revisional order sustaining the levy was also vulnerable.

A retrospective deeming proviso to section 18A(6) was treated as having vested the discretion to reduce or waive penal interest at the time of the original assessment. On that basis, the Income-tax Officer could not later invoke rectification under section 35 merely because interest had not been charged initially, since the omission was not an apparent error. The revisional order sustaining the rectification also disclosed an apparent error because it wrongly rejected the jurisdictional objection. The rectification order and the revisional order were therefore liable to be quashed in certiorari.

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Issues: Whether the Income-tax Officer's rectification of the assessment to levy penal interest under section 18A(6), and the Commissioner's revisional order modifying that levy, were without jurisdiction or suffered from an error apparent on the face of the record so as to be quashed in certiorari.

Analysis: The levy of penal interest arose under section 18A(6) of the Income-tax Act, 1922, in the setting of advance tax, provisional assessment and later rectification under section 35. The retrospective proviso inserted into section 18A(6) had the effect of treating the discretion to reduce or waive interest as existing on the date of the original assessment order. On that footing, the failure to charge interest in the original order could not justify subsequent rectification on the basis of an apparent error. Once the Commissioner was called upon in revision to examine whether the Income-tax Officer had jurisdiction to rectify, an erroneous rejection of that plea itself amounted to an apparent error on the face of the record. The order under revision therefore had to be set aside as well, because effective certiorari relief required quashing the operative order that sustained the levy.

Conclusion: The rectification order and the revisional order were held to be liable to be quashed, and the writ petition succeeded.

Ratio Decidendi: Where a retrospective deeming provision treats a discretionary power as having existed at the time of the original order, a later rectification premised on the contrary assumption is without jurisdiction, and an adverse revisional order sustaining such rectification discloses an error apparent on the face of the record.

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