1958 (4) TMI 107

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....h as the assessee had not paid any advance tax in respect of the income of Rs. 49,808 shown in the assessment order. On the 14th February, 1956, a notice was issued by the Income-tax Officer calling upon the petitioner to show cause against a rectification order which the Income-tax Officer proposed to pass in respect of the penal interest amounting to Rs. 7,562-10-0, and ultimately the order of rectification was passed on the 9th October, 1956, by which the Income-tax Officer rectified the assessment order by adding penal interest in the sum of Rs. 7,562-10-0 On the 11th October, 1956, a notice of demand was issued by the Incometax Officer, and the petitioner filed this petition challenging the order of rectification as being without jurisdiction. In Sidhramappa v. Commissioner of Income-tax (1), we have pointed out what is the jurisdiction of the authority under section 35 to rectify an order and we have stated in our judgment that the power under section 35 is limited ; it is not a power of revision or review ; it is a power of rectification in respect of a mistake which is apparent on the face of the record ; and we have further pointed out as to what is the exact signifi....

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....t a statutory duty imposed upon the officer or in acting in a manner which is contrary to the mandate of the Legislature ; and in this case if the statute required the Income-tax Officer to impose a penal interest upon the assessee and that obligation is clear from the record, then the failure to discharge that obligation would be an error which would be susceptible of being corrected and rectified under section 35. Mr. Palkhivala has contended that if there are any facts to be inquired into before it could be said that there is a failure to discharge a statutory duty, then it would not be a case of rectification. We agree and that is exactly what we have stated in Sidhramappa v. Commissioner of Income-tax ([1952] 21 I. T. R. 333). But we must consider whether on the record as we have before us in this petition it could be said that any facts had to be ascertained before it could be said that there was a statutory obligation upon the Income-tax Officer impose the penalty. Mr. Palkhivala says that before section 18A(6) can be applied, it has to be ascertained that the income was not assessable under section 18 and also that the failure to pay the requisite advance tax was not ....

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....p;        (1) when the relevant assessment is completed more than one year after the submission of the return, the delay in assessment not being attribute able to the assessee . . . . . and (5) any case in which the Inspecting Assistant Commissioner considers that the circumstances are such that a reduction or waiver of the interest payable under section 18A(6) is justified. " Mr. Palkhivala has drawn our attention to the fact that in this case the assessment order was completed on the 10th March, 1953, much more than a year after the submission of the return. Now, let us first of all consider what the position would have been if this proviso was in force on the 10th March, 1953. In fact it came into force on the 24th May, 1953, but for the purpose of testing the argument advanced before us by Mr. Palkhivala we must first consider what the effect of this proviso being in force at the date the assessment order was made would be. If this proviso was in force, it is clear that the Income-tax Officer had the discretion to reduce or waive the interest payable by the assessee. Therefore, looking at the record and looking at the assessment order, it c....

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....ification order should act to the prejudice of the assessee in this sense that he should be deprived of a right of appeal by resorting to rectification proceedings because a particular order was not made in the original assessment. But let us now deal with the situation as existed as far as the facts of this petition are concerned. When the assessment order was made Act XXV of 1953 had not come into force, and Mr. Joshi says that whatever might be the case if the proviso was in force on the 10th March, 1953, in this particular case in the absence of the proviso there was a clear duty upon the Income-tax Officer, which duty he has failed to discharge. Now, bringing this Act into force on the 24th May, 1953, and making the proviso come into force from the 1st April, 1952, the Legislature has introduced a legal fiction and that legal fiction is that for all purposes the law must be considered to be that from the 1st April, 1952, section 18A(6) had incorporated in it the fifth proviso. When a legal fiction is introduced, its implications must be worked out in full. The court must not stop at a particular stage and say " I will go so far and no further. " Whatever the consequences, o....

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....here was nothing on the record to show that he had not given that relief. The Supreme Court also quotes with approval on the same page an observation of Lord Asquith in East End Dwellings Co. Ltd. v. Finsbury Borough Council ([1952] A. C. 109), which very forcefully brings out the full effect of a legal fiction :              " If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it . . . The statute says that you must imagine a certain state of affairs ; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs. " Mr. Joshi wants our imagination to boggle at a point which according to him must not be crossed, and that point is the fact that on the 10th March, 1953, the fifth proviso was not in force. Reference may be made to a judgment in Meka Venkatappaiah v. Additional Income-tax Officer, Bapa....