Rectification for apparent mistake may rely on related records; pending proceedings can be governed by procedural law in force

Rectification under section 35 of the Income-tax Act, 1922 may be based on the assessee's own records, including material from other assessment years, where needed to verify an apparent mistake. An error is apparent when the relevant facts are admitted or otherwise self-evident from the record, leaving no real scope for debate. Sections 34 and 35 were treated as distinct powers, but not mutually exclusive, so rectification could proceed if the jurisdictional conditions were met. In pending matters, section 154 of the Income-tax Act, 1961 could apply retrospectively as procedural law. A certificate under article 133 was not justified because no substantial question of law was shown.

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Issues: (i) Whether, for rectification under section 35 of the Income-tax Act, 1922, the Income-tax Officer could look into the assessee's records for other assessment years; (ii) whether the alleged mistake was one apparent from the record; (iii) whether sections 34 and 35 of the Income-tax Act, 1922 were mutually exclusive; (iv) whether the rectification could validly be made under section 154 of the Income-tax Act, 1961 in pending proceedings; and (v) whether the case involved a substantial question of law or otherwise justified a certificate under article 133 of the Constitution of India.

Issue (i): Whether, for rectification under section 35 of the Income-tax Act, 1922, the Income-tax Officer could look into the assessee's records for other assessment years.

Analysis: The record showed that the rectification was based on the assessee's own records and the Tribunal's earlier finding regarding distribution of dividend. The relevant authorities were treated as settling the principle that an apparent mistake may be examined by reference to the assessee's records where necessary for the assessment in question.

Conclusion: The issue was answered against the petitioner.

Issue (ii): Whether the alleged mistake was one apparent from the record.

Analysis: The date of dividend distribution was admitted, and the Tribunal's order established the factual position on which the rectification proceeded. On those facts, there was no real scope for doubt or debate, and the error was self-evident from the record.

Conclusion: The issue was answered against the petitioner.

Issue (iii): Whether sections 34 and 35 of the Income-tax Act, 1922 were mutually exclusive.

Analysis: The two provisions were treated as conferring different powers, but not as excluding each other. The authority could proceed under either provision if the jurisdictional requirements of that provision were satisfied.

Conclusion: The issue was answered against the petitioner.

Issue (iv): Whether the rectification could validly be made under section 154 of the Income-tax Act, 1961 in pending proceedings.

Analysis: The proceedings were pending when the 1961 Act came into force. Procedural law was held to operate retrospectively in pending matters, and the power exercised was referable to the valid jurisdiction then in force. The rectification was therefore not invalid merely because the notice had been issued under the repealed Act.

Conclusion: The issue was answered against the petitioner.

Issue (v): Whether the case involved a substantial question of law or otherwise justified a certificate under article 133 of the Constitution of India.

Analysis: None of the questions raised was treated as a substantial question of law, and no material was shown to establish that the matter was otherwise fit for appeal to the Supreme Court under article 133(1)(c).

Conclusion: The issue was answered against the petitioner.

Final Conclusion: The application for certificate failed in entirety, as no substantial question of law or fit ground for appeal to the Supreme Court was established.

Ratio Decidendi: A rectification proceeding based on an apparent mistake may be sustained in a pending case under the procedural law in force at the time of the order, and a certificate of fitness under article 133 is not warranted unless a substantial question of law is shown.

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