Rectification for omitted statutory interest upheld where levy was mandatory and the error was apparent from the record.

An omission to levy interest mandated by section 18A was a statutory error, not a matter of discretion, and therefore a mistake apparent from the record capable of rectification under section 35. The court distinguished the interest liability under section 18A(6) and section 18A(8) from the penalty provisions in section 18A(9), and rejected the argument that interest lay outside the assessment. It also held that rule 11(1) of the Merged States (Taxation Concessions) Order, 1949 did not assist the assessees on the facts. The rectification was valid, the levy of interest was sustained, and the petitions were dismissed with costs.

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Issues: Whether the Income-tax Officer could invoke section 35 to rectify the assessment by adding interest under section 18A(8), whether omission to levy such interest was a mistake apparent from the record, and whether the assessees' objections based on the scheme of section 18A and rule 11(1) of the Merged States (Taxation Concessions) Order, 1949, were sustainable.

Analysis: Section 18A created a scheme of advance-tax payment applicable both to assessees who had previously been assessed and to new assessees. The liability to pay interest under section 18A(6) and section 18A(8) was distinct from the penalty provisions in section 18A(9), which dealt with false estimates or failure to comply with the obligation to furnish an estimate. The omission to levy interest where no advance tax had been paid was not a matter of discretion but a statutory obligation. Such an omission was therefore a mistake apparent from the record and fell within the scope of rectification under section 35. The view that interest lay outside the assessment was rejected, because the interest was directly linked to the final assessment and could be adjusted in appeal against the regular assessment. Rule 11(1) of the Merged States (Taxation Concessions) Order, 1949 did not assist the assessees on the facts, and even if the officer had relied on it, that would still have been an error apparent from the record.

Conclusion: The challenge to the levy of interest failed. The rectification under section 35 was valid, and the Income-tax Officer was entitled to include interest under section 18A(8).

Final Conclusion: The petitions were dismissed with costs, and the impugned levy of interest was sustained.

Ratio Decidendi: Omission to levy interest that the statute mandates is a mistake apparent from the record and may be corrected by rectification under section 35.

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