Rectification for apparent mistake requires an error visible on the record, not a later retrospective amendment.

A mistake is rectifiable under section 154 only if it is objectively apparent from the record at the relevant time. Omission to levy interest under section 18A(7) of the Indian Income-tax Act, 1922 was not an apparent mistake because the provision involved discretionary application, including possible reduction or waiver, so rectification was impermissible. Likewise, allowance of wealth-tax as a deduction could not be treated as a mistake merely because a later retrospective amendment changed the legal position; the amendment was not in existence when rectification was sought. The rectification orders were therefore not sustained and the reference was answered against the revenue.

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Issues: (i) Whether the omission to levy interest under section 18A(7) of the Indian Income-tax Act, 1922 could be rectified under section 154 of the Income-tax Act, 1961 as a mistake apparent from the record; (ii) Whether the allowance of wealth-tax as a deduction could be rectified as a mistake apparent from the record in the light of the subsequent retrospective amendment.

Issue (i): Whether the omission to levy interest under section 18A(7) of the Indian Income-tax Act, 1922 could be rectified under section 154 of the Income-tax Act, 1961 as a mistake apparent from the record.

Analysis: The charging of interest under section 18A(7) involved scope for discretion, including reduction or waiver in appropriate cases. Where the statutory provision itself admitted of discretionary application, omission to levy interest could not be treated as an obvious or self-evident error capable of rectification as a mistake apparent from the record.

Conclusion: The omission to charge interest was not rectifiable under section 154 and the issue was decided in favour of the assessee.

Issue (ii): Whether the allowance of wealth-tax as a deduction could be rectified as a mistake apparent from the record in the light of the subsequent retrospective amendment.

Analysis: A retrospective amendment operates by deeming the amended law to have existed earlier, but the apparency of a mistake must still be judged objectively from the record as it stood at the relevant time. On the dates of assessment and rectification, the retrospective amendment had not yet come into existence, so the earlier allowance could not be treated as an apparent mistake merely because later legislation altered the legal position. The court distinguished cases where the retrospective amendment was already in force when rectification was undertaken.

Conclusion: The retrospective amendment did not render the original allowance a mistake apparent from the record and the issue was decided in favour of the assessee.

Final Conclusion: The reference was answered against the revenue on both questions, and the rectification orders were not sustained.

Ratio Decidendi: A mistake is rectifiable only when it is objectively apparent from the record at the relevant time; a later retrospective amendment does not, by itself, make an earlier order a mistake apparent from the record for purposes of rectification when the amendment was not yet in existence at the time of the rectification proceedings.

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