Case: M.K. Venkatachalam, Income Tax Officer &amp; Another Vs. Bombay Dyeing &amp; Manufacturing Company Limited

ax Officer, by his assessment order made on October 9, 1952, for the assessment yearassessed the respondent, the Bombay Dyeing and Manufacturing Co. Ltd., under the Act. In the said assessment order the respondent was given credit for Rs.as representing interest at 2 per cent on tax paid in advance under S. 18A of the Act. This credit was given to the respondent in pursuance of the provisions contained in S.. (5) of the Act as it then stood. On May 24, 1953, the Amendment Act came into force. Section 1,(2) of the Amendment Act provides that "subject to any special provision made in this behalf in the Amendment Act, it shall be deemed to have come into force on the first day of April, 1952". By S. 13 of the Amendment Act, a proviso was added to S. 18A(5) of the Act. The effect of the amendment made by the insertion of the said proviso to S. 18A(5) was that the assessee was entitled to get interest at 2 per cent not on the whole of the advance amount of tax paid by him as before but only on the difference between the payment made and the amount at which the assessee was assessed to tax under the regular assessment under S. 23 of the Act. After the Amendment Act was passed, the first appellant exercised his power under S. 35 of the Act and purported to rectify the mistake apparent from the record in regard to the credit for Rs.allowed by him to the assessee. The first appellant held that the assessee was really entitled to a credit of only Rs.by way of interest on tax paid in advance as a result of the retrospective operation of the amendment made in S.(5) by the Amendment Act. In accordance with this order a notice of demand under S. 29 of the Act was issued against the assessee for the sum of Rs.on the ground that the assessee had been given credit for this excess amount through mistake. Aggrieved by this notice of demand, the respondent filed a petition in the High Court of Bombay on January 4, 1954, under Art. 226 of the Constitution praying for a writ against the appellants inter alia prohibiting them from enforcing the said rectified order and the said notice of demand. It appears that this petition was admitted by Tendolkar, J., on January 6, 1954, and a rule issued on it. Thereafter the said petition was referred to a Division Bench by the Honble the Chief Justice for final disposal. Accordingly on March 5, 1954, the petition was heard by Chagla C. J. and Tendolkar J. and a writ was issued against the appellants. The High Court held that S. 35 of the Act had no application to the facts of the case because the mistake apparent from the record contemplated by the said Section is not a mistake which is the result of the amendment of the law even though the amending law may be retrospective in operation. In other words, in the opinion of the High Court, the mistake mentioned by S. 35 had to be apparent on the face of the order and it can only be judged in the light of the law as it stood on the day when the order was passed. The appellants then applied for and obtained a certificate from the High Court on October 8, 1954;

Court's reasoning:
Thus, there can be no doubt that the effect of the retrospective operation of the Amendment Act is that the proviso inserted by the said Section in S.(5) of the Act would, for all legal purposes, have to be deemed to have been included in the Act as from April 1,same argument is put in another form by contending that the finality of the order passed by ther cannot be impaired by the retrospective operation of the relevantour opinion, this argument does not really help the respondents case because the order passed by theOfficer under S.cannot be said to be final in the literal sense of the word. This order was and continued to be liable to be modified under S. 35 of the Act. What theOfficer has purported to do in the present case is not to revise his order in the light of the retrospective amendment made by S. 13 of the Amendment Act alone, but to exercise his power under S. 35 of the Act; and so the question which falls to be considered in the present appeal centres round the construction of the expression "mistake apparent from the record" used in S. 35.That is why we think the principle of the finality of the orders or the sanctity of the existing rights cannot be effectively invoked by the respondent in the present case.5.The respondent then urged that the Amendment Act should not be given greater retrospective operation that its language and its general scheme render necessary. This contention is based on the provisions of S. 3,, S. 7,) and S. 30,(2) of the Amendment Act. Where the Amendment Act intended that its provisions should affect even concluded orders of assessment it is expressly so provided. Since S. 13 does not specifically authorise the reopening of concluded assessment it should be held that its retrospective operation is not intended to cover such concluded assessments. That in brief is the argument.We are, however, not satisfied that this argument is wellother words, a distinction can be drawn between these two provisions of the Amendment Act and the rest in respect of the power which theOfficer can purport to exercise to give effect to the amendments made by the Amendment Act.Whereas, in respect of the amendments made by S. 7 and S. 30 of the Amendment Act, theOfficer can and must revise his earlier orders covered by S. 7,) and S. 30,(2), such a power of revision has not been conferred on him in the matter of giving effect to the other amendments made in the Amendment Act. Even so, we do not think it would be legitimate or reasonable to hold that the provisions of S. 7(2) and S. 30(2) lead to the inference that the retrospective operation of the other provisions of the Amendment Act is not intended to affect concluded assessments in any manner whatever. In this connection, it would be pertinent to remember that the power to revise which has been conferred on theOfficer by S. 7(2) and S. 30(2) of the Amendment Act is distinct and independent of the power to rectify mistakes which theOfficer can exercise under S. 35 of the Act.In this connection it would be useful to refer to the decision of the Privy Council in the Commissioner ofBombay Presidency and Aden v. Khemchand Ramdas,ITR 414 : (AIR 1938 PC 175  )judgment shows that Their Lordships took the view that "looking at the record of the assessments made upon the respondents as it stood after the cancellation of the respondents registration and the order effecting the cancellation would have formed part of the recordit would be apparent that a mistake had been made in stating that nowas leviable. This decision clearly shows that the subsequent cancellation of the assessees registration was held by Their Lordships of the Privy Council to form part of the record retrospectively in the light of the said subsequent event, and the order was deemed to suffer from a mistake apparent from the record so as to justify the exercise of the rectification powers under S. 35 of the Act. It is because Their Lordships thought that S. 35 would have been clearly applicable that they did not decide the question as to whether S. 34 could also have been invoked. This decision lends considerable support to the view which we are disposed to take about the true meaning and scope of the expression "the mistake apparent from the record" occurring in S. 35.