Implicit Rectification requests treated as Section 35 applications where substance seeks annulment; illegal additional tax levies warrant refund.

An implicitly framed petition seeking annulment and repayment of an unlawfully collected tax may be treated as a rectification request under the statutory rectification and revision scheme, and examined accordingly; where the levy is found illegal, the taxpayer is entitled to refund. The note clarifies that an application that does not name the statutory provision but substantively seeks declaration of unlawful collection and refund can be processed as a rectification/ revision plea, and that established illegality of an additional tax on dividend mandates restitution to the assessee.

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Issues: (i) Whether the respondent company's application for refund of additional tax on excess dividend amounted to a request for rectification under Section 35 of the Income-tax Act, 1922 (and related revision under Section 33A), and whether the tax paid should be refunded in view of the illegality of the levy.

Analysis: The company paid additional tax on excess dividend which, in light of this Court's decision in Commissioner of Income-tax v. Khatau Makanji Spinning & Weaving Co. Ltd., was held to be an unlawful levy. The company's application to the Income-tax Officer, though not expressly invoking Section 35, sought declaration that the tax was unlawfully collected and refund thereof; the application was therefore properly treated as a request for rectification. The Commissioner considered the application in that light under Section 33A and declined relief on limited grounds; the High Court examined the matter under Article 226 of the Constitution and found the levy to be illegal and directed refund. The Court endorsed the view that an implicitly made request for rectification may be treated as an application under Section 35 when the substance of the petition seeks annulment of an unlawfully imposed tax, and that refund follows where the levy is established to be illegal.

Conclusion: The Court upholds the High Court's order directing refund of the tax; the appeal is dismissed and relief is in favour of the assessee.

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