1956 (11) TMI 46 - HC - Income Tax

Court upholds petitioner's win, stresses authority limits, deems settlement binding, quashes rectification order.

ABDUL RAHIMAN SAIT Versus INCOME-TAX OFFICER, ALLEPPEY

ABDUL RAHIMAN SAIT Versus INCOME-TAX OFFICER, ALLEPPEY - [1958] 33 ITR 106 (Ker) Issues:1. Jurisdiction of the Income-tax Officer to rectify a mistake in the assessment order.2. Authority to amend orders among different authorities under the Income-tax Act.3. Validity of a settlement reached between the assessee and the Tribunal.Analysis:1. The petitioner challenged a rectification order passed by the Income-tax Officer under Article 226 of the Constitution. The original assessment by the Income-tax Officer was set aside by the Commissioner for re-investigation. The subsequent reassessment by the Income-tax Officer was confirmed by the Appellate Assistant Commissioner and the Appellate Tribunal, with certain additions and disallowances. However, the Income-tax Officer later discovered an arithmetical mistake in the reassessment order and sought to rectify it. The petitioner contended that the Income-tax Officer had no jurisdiction to interfere with the Tribunal's order, and the rectification was beyond the officer's authority under the Travancore Act. The court held in favor of the petitioner on this issue, emphasizing that each authority under the Act can rectify its own mistakes, not those of others.2. The court analyzed the hierarchy of authorities under the Income-tax Act and concluded that the Income-tax Officer's original order was superseded by the Appellate Tribunal's order. Therefore, only the Tribunal had the authority to amend its order on grounds of apparent error. The court highlighted that the Income-tax Officer's rectification order was not valid as it was beyond his jurisdiction to modify the Tribunal's order unilaterally. The judgment emphasized the principle that the appellate authority alone can amend its decree or order, following a confirmation, reversal, or variation.3. The settlement reached between the assessee and the Tribunal was a crucial aspect of the case. The Tribunal suggested a compromise on the quantum of additions based on levels in comparable cases, to which the assessee agreed and withdrew other contentions. The Tribunal formalized the agreement with the written consent of the assessee. The court noted that this settlement represented a give-and-take process, and once agreed upon, should not be unilaterally altered. Drawing an analogy from civil procedure rules, the court concluded that absent exceptional circumstances like fraud or mistake, the order of the Tribunal must stand between the parties. Therefore, the Income-tax Officer had no authority to modify the order based on the settlement reached.In conclusion, the court issued a writ of certiorari, quashing the rectification order by the Income-tax Officer. The petitioner was awarded costs from the respondents, including counsel's fee.