Rectification of development rebate under tax law remains valid where substantive jurisdiction exists despite a wrong statutory citation.

Section 155(5) of the Income-tax Act, 1961 was construed to permit rectification withdrawing development rebate even where the original assessment had been made under the Indian Income-tax Act, 1922, because the provision expressly extends to rebate granted under the corresponding earlier law and authorises recomputation on sale of the machinery within the specified period. The article also states that a rectification order is not invalid merely because the Income-tax Officer cited the wrong statutory provision, provided substantive jurisdiction otherwise existed. The rectification order was upheld as legally sustainable.

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Issues: (i) Whether rectification withdrawing development rebate allowed in an assessment made under the Indian Income-tax Act, 1922 could validly be made under section 155(5) of the Income-tax Act, 1961. (ii) Whether an order of rectification is invalid merely because the Income-tax Officer referred to a wrong statutory provision, if jurisdiction to make the order otherwise existed.

Issue (i): Whether rectification withdrawing development rebate allowed in an assessment made under the Indian Income-tax Act, 1922 could validly be made under section 155(5) of the Income-tax Act, 1961.

Analysis: The provision in section 155(5) expressly covers development rebate allowed in respect of machinery installed after 31 December 1957, including rebate granted under the corresponding provisions of the Indian Income-tax Act, 1922. It also contains a non obstante clause and authorises recomputation and amendment where the machinery is sold within the specified period. On that construction, the power of rectification was not confined to the old Act merely because the original assessment was made under it.

Conclusion: The rectification was valid under section 155(5) of the Income-tax Act, 1961 and was in favour of the Revenue.

Issue (ii): Whether an order of rectification is invalid merely because the Income-tax Officer referred to a wrong statutory provision, if jurisdiction to make the order otherwise existed.

Analysis: The controlling principle applied is that the validity of an order depends on whether the authority had power to make it, and a mistaken reference to the source of power does not by itself invalidate the order if some other provision confers lawful jurisdiction. The authorities relied on this principle in the context of rectification and assessment powers.

Conclusion: The order was not invalid merely because the officer cited the wrong provision, since jurisdiction to make the order existed; this issue was also in favour of the Revenue.

Final Conclusion: The reference was answered against the assessee and the rectification order was upheld as legally sustainable.

Ratio Decidendi: A rectification order is valid where the authority has substantive jurisdiction to make it, and a wrong citation of the enabling provision does not vitiate the order if the power can be traced to another applicable statutory source.

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