Rectification orders survive wrong statutory citation when the same substantive power exists under the corresponding income-tax provision.

A rectification order is not invalid merely because it cites section 154 of the Income-tax Act, 1961, where the assessment arose under the Indian Income-tax Act, 1922. Sections 35(1) of the 1922 Act and 154 of the 1961 Act are in pari materia as both permit correction of mistakes apparent from the record. The mistake of not setting off business loss against capital gains was treated as rectifiable under the 1922 Act, and the order was sustained by reference to the jurisdiction that actually existed. A wrong statutory citation does not vitiate an order otherwise within power.

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Issues: Whether a rectification order passed under section 154 of the Income-tax Act, 1961, was invalid merely because the assessment sought to be rectified had been made under the Indian Income-tax Act, 1922, when the mistake was otherwise one apparent from the record and rectifiable under section 35(1) of the 1922 Act.

Analysis: Section 35(1) of the Indian Income-tax Act, 1922, and section 154 of the Income-tax Act, 1961, are in pari materia in so far as both confer power to rectify mistakes apparent from the record. The mistake in the original assessment, namely failure to set off business loss against capital gains, was accepted as a mistake apparent from the record and as one capable of rectification under section 35(1) of the 1922 Act. The mere fact that the Income-tax Officer referred to section 154 of the 1961 Act did not destroy the order if the power exercised was otherwise available under the corresponding provision of the old Act. An order is to be sustained by reference to the jurisdiction that validates it, and not defeated by citation of a wrong statutory provision.

Conclusion: The rectification order was not illegal merely because it cited section 154 of the Income-tax Act, 1961; it was sustainable as an order under section 35(1) of the Indian Income-tax Act, 1922. The issue is answered in favour of the Revenue.

Final Conclusion: The reference was answered against the assessee, and the rectification was upheld on the footing that a wrong citation of the statutory source did not vitiate an order otherwise within jurisdiction.

Ratio Decidendi: An order passed under a wrong provision is not invalid if it is otherwise supportable under a corresponding provision conferring the same substantive power, especially where the mistake rectified is one apparent from the record.

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