1988 (7) TMI 54 - HC - Income Tax

Sections 254(2) and 154 I-T Act allow rectification for errors apparent on record; later binding decision justifies review

HC allowed the petition, holding that sections 254(2) and 154 of the Income-tax Act permit rectification of mistakes apparent from record and have broader ... Advance Tax - rectification under section 154 - Whether in making the assessment for the year 1974-75, the petitioner-assessee is entitled to interest on the advance tax paid beyond the due date - HELD THAT:- Section 254(2) and section 154 of the Income-tax Act enable the concerned authorities to rectify any 'mistake apparent from the record'. The said expression has a wider content than the expression 'error apparent on the face of the record' occurring in Order 47, rule I of the Civil Procedure Code. The restrictions on the power of review under Order 47, rule 1, Civil Procedure Code, do not hold good in the case of section 254(2) and section 154 of the Income-tax Act. Even so, a subsequent binding decision taking a different view in law was held to be a good ground for review which will constitute an error apparent on the face of the record within the meaning of Order 47, rule 1, Civil Procedure Code. It appears that even for the purpose of Order 47, rule 1, Civil Procedure Code, which is more restrictive, a subsequent binding authority taking a different view of law is a good ground for review, on the ground that the order sought to be reviewed passed on an antecedent decision, which stands overruled, constitutes an error apparent on the face of the record. So far as this case is concerned, it is unnecessary for us to base our decision on the provisions of Order 47, rule 1, Civil Procedure Code, which is more restrictive. The original petition is allowed. Exhibit P-6 is quashed. Issues involved: Whether a public limited company is entitled to interest on advance tax paid beyond the due date for the assessment year 1974-75, and whether rectification under section 154 of the Income-tax Act is permissible when a decision of the High Court, relied upon in the original order, is subsequently reversed.Judgment Summary:The petitioner, a public limited company, sought interest on advance tax paid beyond the due date for the assessment year 1974-75. The Income-tax Officer and the Appellate Tribunal initially denied the claim based on a previous decision. However, a subsequent Division Bench decision reversed the earlier ruling, allowing interest on excess tax paid. The petitioner filed for rectification under section 154 of the Income-tax Act, which was rejected by the Appellate Tribunal. The main issue was whether rectification is possible when a High Court decision, relied upon in the original order, is later overturned.The Court held that an order based on a mistaken interpretation of the law, subsequently corrected by a higher authority, constitutes a rectifiable error. The Tribunal's refusal to rectify the order was deemed unsustainable. The Court emphasized that a decision overruling a previous judgment is retrospective, and rectification is warranted in such cases. The Tribunal's view that rectification must align with the law at the time of the original order was deemed erroneous.The Court cited legal principles to support its decision, emphasizing that rectification under the Income-tax Act allows for correction based on subsequent authoritative decisions. The judgment concluded by allowing the original petition, quashing the Tribunal's decision, and directing the Tribunal to reconsider the petitioner's claim in light of the corrected legal position.In summary, the Court ruled in favor of the petitioner, allowing for rectification of the original order based on the subsequent reversal of the High Court decision and directing the Tribunal to reconsider the claim for interest on advance tax paid beyond the due date.