Rectification power limited to errors apparent on record; cannot be used to reopen facts and reassess business income.

The note addresses limits on the income tax rectification power, clarifying that rectification permits correction only of mistakes apparent on the face of the record and not substantive reopening of assessments. It explains that determining whether activities form the "same business" is a fact sensitive inquiry (common ownership, accounts, ancillary relationship, staff, control, financing) requiring factual determination rather than summary correction. Applying that principle, using rectification to split business income and withdraw a previously allowed carry forward loss is characterised as reassessment beyond rectification jurisdiction and therefore invalid.

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Issues: Whether the Income-tax authority exceeded its jurisdiction by invoking the rectification provision to split business income and deprive the assessee of set-off of a previously allowed carried-forward loss.

Analysis: The Court examined the scope of the rectification power under the applicable income-tax provisions and distinguished errors apparent on the face of the record from matters requiring factual inquiry, revision or reassessment. The Court noted that determining whether two lines of activity constitute the "same business" is a fact-sensitive inquiry involving multiple considerations (common ownership, common accounts, ancillary relationship, common staff, control and financing, etc.). Authorities cited establish that sectional rectification powers permit correction only of mistakes patent on the record and do not permit re-opening assessments for fresh factual determination or reassessment. Applying these principles, the Court found that the respondent's splitting of business income between tobacco and cashew and consequent withdrawal of the earlier set-off amounted to a substantive reconsideration and reassessment rather than correction of an apparent clerical or manifest error on the face of the assessment record.

Conclusion: The rectification orders purporting to separate the businesses and to deny the previously allowed carry-forward set-off exceeded the Income-tax authority's jurisdiction and are quashed; decision in favour of the assessee.

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