Case: Mahendra Mills Ltd Vs. P.B. Desai, Appellate Assistant Commissioner of Income Tax and Anr

the closing stock of assessment year 1959-60 formed a part of the evidence re1evant to the assessment for the assessment year 1960-61, Thus to the extent of ascertaining the closing and opening stock positions, the two assessments telescoped into each other. Indeed, it was on this basis that the Appellate Assistant Commissioner had by his decision dated 30-6-1965 allowed the assessees appeal regarding A. Y. 1960-61. The Tribunals finding, that the value of the closing stock for A. Y. 1959-60 should be Rupees 5,89,439/-, had completely replaced the Income-tax Officers finding in regard to that fact with effect from the date of the Income-tax Officers order relating to A. Y. 1959-60. If the I.T. Os, finding with regard to the closing stock for A. Y. l959-60 was relevant to any part of the "record of appeal" the Tribunals decision which superseded that finding was equally so within the contemplation of Section 35 of the Act. It cannot be gainsaid that the mistake in regard to the opening stock for A. Y. 1960-61 being Rs. 8.,04,121/-, was quite apparent when the Appellate Assistant Commissioner undertook to rectify his appellate order dated 30-6-1965. The correct figure of finally determined by the Tribuna1 being Rs. 5,89,439|-.Thus considered, it is clear that for the purpose of ascertaining the true stock position the record of the assessment for A. Y. 1959-60. including the Tribunals decision was not extraneous or irrelevant to the record of the appeal and could legitimately be looked into for the purpose of correcting the mistake by the Appellate Assistant Commissioner. 16. Thus the first contention of the appellant stands overruled. 17. The second point canvassed by Shri Desai is well-nigh covered by the ratio of the Privy Council decision in Khem Chands case. 6 ITR 414 = 65 Ind App 236 = (AIR 1938 PC 175 ) (supra). The assesses in that case did not produce his account books and the Income-tax Officer made an assessment on the best judgment basis. On the application of the assessee, however, he allowed registration of the assessee-firm on January 17, 1927. As it was a registered firm, he did not in the assessment order made under Section 23 (4) on the same day assess any super tax. The Commissioner of Income-tax in exercise of his powers under Section 33 of the Act called for the record, cancelled the registration on January 28. 1927, and directed the I.T. O. to take necessary consequential action The result was that by an order dated May 4. 1929, the assesses was assessed to super tax. Three days later a demand notice was issued. On these facts, delivering the opinion of the Judicial Committee. Lord Romer made these pertinent observations in regard to the applicability of S. 35: "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 assessments 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." 18. From the quotes above it is evident that the Judicial Committee considered the order of the Commissioner cancelling the registration of the assessees firm. - although passed about 11 days after the original assessment - to have formed part of the record of that assessment, for the purpose of rectifying the mistake as a mistake apparent from the record of the case. On parity of reasoning, in the instant case the finding of the Tribunal as to the valuation of the stock although recorded subsequently to the appellate decision of the Appellate Assistant Commissioner, could be taken as forming part of the record of appeal and taken into account for the purpose of correcting the mistake under Section 35 as to the value of the opening stock for A. Y. 1960-61 apparent from that record. 19. We do not want to overburden this judgment by a discussion of Ganapatho Subraya Hegdes case, 84 ITR 523 = (1972 Tax LR 2516) (Mys (supra) cited by Shri Desai. Suffice it to say that this was a case under Section 37 of the Mysore Agricultural Income-tax Act, 1957. The notice for rectification issued in that case and the orders of the authority were found to be defective inasmuch as they did not state that there was any mistake apparent on the record of the assessment proceedings for the previous three years in question. Maharana Mills case, 1959 Supp (2) SCR 547 = (AIR 1959 SC 881 ) and Khemchands case, 6 ITR 414 = 65 Ind App 236 = (AIR 1938 PC 175 ) (supra) were not noticed by the High Court in that case. 20. Lastly, Shri Desai urged that we should not lose sight of the startling results which might flow from a liberal interpretation of Section 35. It is apprehended that if the phrase "record of the appeal" is widely interpreted so as to cover the records of all collateral proceedings and subsequent events. it would leave the door wide open to endless harassment of assessees; the income-tax authorities would under the guise of correcting mistakes lightly reopen assessments long past and closed and thus introduce an element of disconcerting instability in the administration of the Act. 21. In our opinion there is no room for any such apprehension. It must be remembered that a decision is a precedent on its own facts. Each case presents its own features. The income-tax authorities and Tribunals are supposed to apply the ratio of a decision to the facts of Particular cases with due care and discernment bearing in mind the restricted scope of their jurisdiction under S. 35 and the object for which it is conferred.

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

Explanation:
0[ds]13. The interpretation of the words "record of appeal" is not a matter which is res integra15. The observations of this Court, quoted above, fully apply to the facts of the case in hand. It will bear repetition that the closing stock for the assessment year 1959-60 as entered in the books of the assesses was Rs. 5,89,439/- and as found by the Income-tax Officer was Rs. 8,04,121/-.Since the closing stock of one assessment year furnishes the figure of the opening stock for the succeeding year, it follows that the record showing the closing stock of assessment year 1959-60 formed a part of the evidence re1evant to the assessment for the assessment year 1960-61, Thus to the extent of ascertaining the closing and opening stock positions, the two assessments telescoped into each other. Indeed, it was on this basis that the Appellate Assistant Commissioner had by his decision dated 30-6-1965 allowed the assessees appeal regarding A. Y. 1960-61. The Tribunals finding, that the value of the closing stock for A. Y. 1959-60 should be Rupees 5,89,439/-, had completely replaced the Income-tax Officers finding in regard to that fact with effect from the date of the Income-tax Officers order relating to A. Y. 1959-60. If the I.T. Os, finding with regard to the closing stock for A. Y. l959-60 was relevant to any part of the "record of appeal" the Tribunals decision which superseded that finding was equally so within the contemplation of Section 35 of the Act. It cannot be gainsaid that the mistake in regard to the opening stock for A. Y. 1960-61 being Rs. 8.,04,121/-, was quite apparent when the Appellate Assistant Commissioner undertook to rectify his appellate order dated 30-6-1965. The correct figure of finally determined by the Tribuna1 being Rs. 5,89,439|-.Thus considered, it is clear that for the purpose of ascertaining the true stock position the record of the assessment for A. Y. 1959-60. including the Tribunals decision was not extraneous or irrelevant to the record of the appeal and could legitimately be looked into for the purpose of correcting the mistake by the Appellate Assistant Commissioner16. Thus the first contention of the appellant stands overruled17. The second point canvassed by Shri Desai is well-nigh covered by the ratio of the Privy Council decision in Khem Chands case18. From the quotes above it is evident that the Judicial Committee considered the order of the Commissioner cancelling the registration of the assessees firm. - although passed about 11 days after the original assessment - to have formed part of the record of that assessment, for the purpose of rectifying the mistake as a mistake apparent from the record of the case. On parity of reasoning, in the instant case the finding of the Tribunal as to the valuation of the stock although recorded subsequently to the appellate decision of the Appellate Assistant Commissioner, could be taken as forming part of the record of appeal and taken into account for the purpose of correcting the mistake under Section 35 as to the value of the opening stock for A. Y. 1960-61 apparent from that recordIt is apprehended that if the phrase "record of the appeal" is widely interpreted so as to cover the records of all collateral proceedings and subsequent events. it would leave the door wide open to endless harassment of assessees; the income-tax authorities would under the guise of correcting mistakes lightly reopen assessments long past and closed and thus introduce an element of disconcerting instability in the administration of the Act21. In our opinion there is no room for any such apprehension. It must be remembered that a decision is a precedent on its own facts. Each case presents its own features. The income-tax authorities and Tribunals are supposed to apply the ratio of a decision to the facts of Particular cases with due care and discernment bearing in mind the restricted scope of their jurisdiction under S. 35 and the object for which it is conferred.