Case: M/S. Maharana Mills (Private) Ltd Vs. The Income-Tax Officer, Porbandar

of AIR) Lord Romer observed:"In the present case it is a debatable question whether the circumstances were such as to bring it within the provisions of S. 34. It is not necessary to determine that question inasmuch, as, in their Lordships opinion, the case clearly would have fallen within the provisions of section 35 had the Income-tax Officer exercised his powers under the section within one year from the date on which the earlier demand was served upon the respondents. For, looking at the record of the assessment made upon them as it stood after the cancellation of the respondents registration-and the order affecting the cancellation would have formed part of that record-it would be apparent that a mistake had been made in stating that no super-tax was leviable."Thus the order effecting the cancellation of the assessees firm was considered to have formed part of the record of the case.16. In Sidramappa Andannappa v. Commissioner of Income-tax, 1952-21 ITR 333: (AIR 1952 Bom 287 ) the facts were that a debt belonging to a joint family fell on partition to the share of the assessee. This debt was held not to be recoverable by a judgment of the Bombay High Court dated September 29, 1941. Holding it to be within the accounting year the Appellate Tribunal allowed this sum to be taken into consideration for the purpose of the accounting year. It subsequently corrected the error. It was held that under S. 35 the Tribunal was entitled to rectify the mistake and was competent to pass a consequential order dismissing the appeal instead of allowing it.17. The power under S. 35 is no doubt limited to rectification of mistakes which are apparent from the record. A mistake contemplated by this section is not one which is to be discovered as a result of an argument but it is open to the Income-tax Officer to examine the record including the evidence and if he discovers any mistake he is entitled to rectify the error provided that if the result is enhancement of assessment or reducing the refund then notice has to be given to the assessee and he should be allowed a reasonable opportunity of being heard.18. The scope and effect of the expression "mistake apparent from the record" and the extent of the powers of the Income-tax Officer under S. 35 of the Act were discussed by this Court in Venkatachalam v. Bombay Dyeing and Mfg. Co. Ltd., 1958-34 ITR 143 at p. 149): (AIR 1958 SC 875 at p. 879) where the facts were these: A sum of Rs. 50,063 being interest on tax paid in advance was given credit for under S. 18A(5) of the Act. Subsequently there was an amendment of the Act by which the interest became allowable only on the difference between the amount of tax paid and what was actually determined. As a consequence of this the Income-tax Officer purporting to act under S. 35 of the Act rectified the mistake and reduced the amount of interest credited to Rs. 21,157 and issued a demand for the difference. The assessee obtained a writ of prohibition against the Income-tax Officer on the ground that the mistake contemplated under that provision had to be apparent on the face of the Order and it was not contemplated to cover a mistake resulting from an amendment of the law even though it was retrospective in its effect. The Revenue appealed to this Court. Thus the question for decision in that case was whether an order proper and valid when made could be said to disclose a mistake apparent from the record merely because it became erroneous as a result of a subsequent amendment of the law which was retrospective in its operation. In delivering the judgment of the Court Gajendragadkar J., said:-"At the time when the Income-tax Officer applied his mind to the question of rectifying the alleged mistake, there can be no doubt that he had to read the principal Act as containing the inserted proviso as from April 1, 1952. If that be the true position then the order which he made giving credit to the respondent for Rs. 50,603-15-0 is plainly and obviously inconsistent with a specific and clear provision of the statute and that must inevitably be treated as a mistake of law apparent from the record. If a mistake of fact apparent from the record of the assessment order can be rectified under S. 35 we see no reason why a mistake of law which is glaring and obvious cannot be similarly rectified."The decision of the Privy Council in 1938-6 ITR 414 : (AIR 1938 PC 175 ) was referred to.19. Counsel for the appellant sought to distinguish both these cases; Venkatachalams case, 1958-34 ITR 143 : (AIR 1958 SC 875 ) and Khem Chands case, 1938-6 ITR 414 : (AIR 1938 PC 175 ) on the ground that the record there considered was the assessment record of that year and the Income-tax Officer did not have to go to the records of the previous year. That is a distinction without a difference. If, for instance, the Income-tax Officer had found that in the assessment year 1952-53 there was an apparent arithmetical mistake in the account of the Written Down Value of the properties which resulted in a corresponding mistake in the assessment of the year in controversy could he not take the corrected figure for the purposes of the assessment and could it be said that the mistake was not apparent from the record? A fortiori if he discovered that the very basis of the different assessments was erroneous because of an initial mistake in determining the Written Down Value could it be said that this would not be a mistake apparent from the record? And if in order to determine the correct Written Down Value the Income-tax Officer makes correct calculations, can it be said that that is not rectifying a mistake apparent from the record but is de hors it?

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]7. The power under S. 35 is no doubt limited to rectification of mistakes which are apparent from the record. A mistake contemplated by this section is not one which is to be discovered as a result of an argument but it is open to the Income-tax Officer to examine the record including the evidence and if he discovers any mistake he is entitled to rectify the error provided that if the result is enhancement of assessment or reducing the refund then notice has to be given to the assessee and he should be allowed a reasonable opportunity of being heard.18. The scope and effect of the expression "mistake apparent from the record" and the extent of the powers of the Income-tax Officer under S. 35 of the Act were discussed by this Court in Venkatachalam v. Bombay Dyeing and Mfg. Co. Ltd., 1958-34 ITR 143   at p. 149): (AIR 1958 SC 875   at p. 879) where the facts were these: A sum of Rs. 50,063 being interest on tax paid in advance was given credit for under S. 18A(5) of the Act. Subsequently there was an amendment of the Act by which the interest became allowable only on the difference between the amount of tax paid and what was actually determined. As a consequence of this the Income-tax Officer purporting to act under S. 35 of the Act rectified the mistake and reduced the amount of interest credited to Rs. 21,157 and issued a demand for the difference. The assessee obtained a writ of prohibition against the Income-tax Officer on the ground that the mistake contemplated under that provision had to be apparent on the face of the Order and it was not contemplated to cover a mistake resulting from an amendment of the law even though it was retrospective in its effect. The Revenue appealed to this Court. Thus the question for decision in that case was whether an order proper and valid when made could be said to disclose a mistake apparent from the record merely because it became erroneous as a result of a subsequent amendment of the law which was retrospective in its operation. In delivering the judgment of the Court Gajendragadkar J.,the time when the Income-tax Officer applied his mind to the question of rectifying the alleged mistake, there can be no doubt that he had to read the principal Act as containing the inserted proviso as from April 1, 1952. If that be the true position then the order which he made giving credit to the respondent for Rs. 50,603-15-0 is plainly and obviously inconsistent with a specific and clear provision of the statute and that must inevitably be treated as a mistake of law apparent from the record. If a mistake of fact apparent from the record of the assessment order can be rectified under S. 35 we see no reason why a mistake of law which is glaring and obvious cannot be similarlydecision of the Privy Council in 1938-6 ITR 414  : (AIR 1938 PC 175  ) was referred to.19. Counsel for the appellant sought to distinguish both these cases; Venkatachalams case, 1958-34 ITR 143  : (AIR 1958 SC 875  ) and Khem Chands case, 1938-6 ITR 414  : (AIR 1938 PC 175  ) on the ground that the record there considered was the assessment record of that year and the Income-tax Officer did not have to go to the records of the previous year. That is a distinction without a difference. If, for instance, the Income-tax Officer had found that in the assessment year 1952-53 there was an apparent arithmetical mistake in the account of the Written Down Value of the properties which resulted in a corresponding mistake in the assessment of the year in controversy could he not take the corrected figure for the purposes of the assessment and could it be said that the mistake was not apparent from the record? A fortiori if he discovered that the very basis of the different assessments was erroneous because of an initial mistake in determining the Written Down Value could it be said that this would not be a mistake apparent from the record? And if in order to determine the correct Written Down Value the Income-tax Officer makes correct calculations, can it be said that that is not rectifying a mistake apparent from the record but is de hors it?