1976 (9) TMI 1

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e Income-tax Officer issued a notice under section 35(1) of the Act for rectification of the mistakes committed in the previous orders passed under section 23A on January 21, 1957. The assessee-companies in response to the notices objected to the proposed rectification by the Income-tax Officer, inter alia, on the ground that he had no power to rectify any mistake in an order under section 23A of the Act. The Income-tax Officer overruled the objection raised by the companies, rectified the mistakes in his previous orders and increased the amounts of additional super-tax payable by the companies in relation to the two assessment years. The companies' revision applications filed before the Commissioner of Income-tax, U. P., were dismissed. Thereupon, four writ applications were filed in the High Court to challenge the orders passed by the Income-tax Officer under section 35(1) of the Act as affirmed by the Commissioner of Income-tax in revisions. A Bench of the High Court feeling compelled to follow the decisions of this court in M. M. Parikh, Income-tax Officer v. Navanagar Transport and Industries Ltd. and in S. Sankappa v. Income-tax Officer has allowed the writ applications and q....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... therefore, the assessment is of the total income of the assessee and then in the same order the sum payable by the assessee is determined which would include income-tax, surcharge, super-tax, etc. Under section 24 of the Act, loss is computed and is allowed to be set off against the income of the same year or carried forward to the next year. If one were to go upon the use of the literal words, then section 24 is for computation of the loss. Yet it is a step in the assessment proceeding and will form part of the order of assessment itself. Section 23A as the marginal note indicates is the "power to assess companies to super-tax on undistributed income in certain cases". The relevant words of sub-section (1) of section 23A are the following: " Where the Income-tax Officer is satisfied...... the Income-tax Officer shall, unless he is satisfied...... make an order in writing that the company shall, apart from the sum determined as payable by it on the basis of the assessment under section 23, be liable to pay super-tax" at the rates specified "on the undistributed balance of the total income of the previous year........" It would thus be seen that although in a narrow sense an order ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... 23A by the Income-tax Officer. Viewed in that light it follows as a matter of construction that the Income-tax Officer can rectify any mistake apparent from the record of assessment which expression is wide enough not only to cover an order of assessment made under section 23 but also an order computing loss under section 24 and an order made under section 23A directing the assessee company to pay additional super-tax. It is neither advisable nor necessary in these appeals to give a complete list of the types of orders apparent mistakes in which can be rectified by the Income-tax Officer under section 35(1) of the Act. Obviously the first proviso to sub-section (1) of section 35 and sub-section (3) lends support to the view that rectification of apparent mistakes in anorder computing loss an order under section 23A is permissible and may have the effect of enhancing the assessment or reducing it. The provisions of sub-section (7) of section 35 of the Act also give an indication that the opinion which we have recorded above as to the power of the Income-tax Officer to rectify a mistake in an order made under section 23A is correct. By a deeming provision sub-section (5) gives power....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....r undoubtedly forms part of the record of assessment. Mr. Gupte, learned counsel for the respondents, in his usual fairness conceded, and rightly, that the power of rectification of mistake conferred on the Income-tax Officer under section 35(1) of the Act cannot be confined within the very narrow limit of an order of assessment made under section 23 only. Counsel submitted that it does embrace some other kinds of order relating to assessment. Having conceded so far, Mr. Gupte endeavoured in vain to take an order made under section 23A of the Act outside the purview of the power of the Income-tax Officer for rectification of mistakes. In Sankappa's case, as we have said above, the same Bench which decided Parikh's case, after stating on the basis of certain earlier authorities that the word "assessment " under certain circumstances in a given context has a more comprehensive meaning, finally said at page 764 of 68 ITR thus: "It is clear that, when proceedings are taken for rectification of assessment to tax either under section 35(1) or section 35(5) of the Act of 1922, those proceedings must be held to be proceedings for assessment. In proceeding under those provisions, what....