1976 Supreme(SC) 325

SUPREME COURT OF INDIA
The Commissioner of Income-tax Kanpur, Appellant
Versus
M/s. J.K. Commercial Corporation Ltd. etc., Respondents.
Civil Appeals Nos. 1580-1583 of 1971.
D/- 3-9-1976
Advocates appeared
Mr. S. C. Manchanda, Sr. Advocate (M/s. J. Ramamurthi and S.P. Nayar, Advocates, with him), for Appellant; Mr. S.V. Gupte, Sr. Advocate and Mr. Rameshwar Nath Advocate with him (in C.A. No. 1580 of 1971); Mr. Rameshwar Nath, Advocate (in C. As. Nos. 1581-1583 of 1971) for Respondents.

Headnote:

Income Tax Act, 1922 - Section 23 (3) – Quash of order - Additional super-tax on undistributed profit - Income-tax Officer had jurisdiction - In court judgment High Court was not right in applying ratio of two decisions of this Court referred to above to facts of these cases - Court shall presently show that Income-tax Officer had jurisdiction and competency to rectify mistakes under Section 35 (1) of Act in his previous orders passed under Section 23-A - Chapter IV of Act is entitled Deductions and Assessment - In this chapter occur various sections relating to assessments of income determination of tax or super-tax tax payable on it payment of additional super-tax computation of loss provisions for appeal and revision and provisions for rectification of mistakes either by the Income-tax Officer or by Appellate or Revisional authorities - In one of earliest decisions of Privy Council - One of peculiarities of most Income-tax Acts is that word assessment is used as meaning sometimes computation of income sometimes determination of the amount of tax payable and sometimes whole procedure laid down in Act for imposing liability upon the tax-payer - Indian Income-tax Act is no exception in this respect - Dictum of Privy Council was quoted with approval by this Court – In case same Bench which had decided case and delivered judgment through as he then was speaking through followed case and the decision of this Court Income-tax wherein it has been stated that word assessment is capable of bearing a very comprehensive meaning in context it can comprehend whole procedure for ascertaining and imposing liability on tax payer - It is to be noticed that marginal note of Section 23 is Assessment and sub-section (3) says Income-tax Officer shall by an order in writing assess total income of assesses and then adds determine the sum payable by him on the basis of such assessment - Literally speaking therefore assessment is of total income of assesses and then in same order the sum payable by assesses is determined which would include income-tax surcharge super-tax etc - Under Section 24 of Act loss is computed and is allowed to be set off against income of same year or carried forward to next year – Held, Court need not say anything about that as we constitute a Bench of equal strength - But court are clear and definite in our mind that the ratio of case is neither applicable nor should be extended to cover the expression Assessment Order occurring in Section 35 (1) of Act - In context the said expression would include an order made under Sec. 23A also as such an order undoubtedly forms part of record of assessment - Learned counsel for the respondents in his usual fairness conceded and rightly that power of rectification of mistake conferred on Income-tax Officer under Section 35 (1) of 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 in vain to take an order made under Section 23-A of Act outside purview of power of Income -tax Officer for rectification of mistakes - 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 the Income-tax Officer does is to correct errors in or rectify orders making such corrections or rectifications are therefore clearly part of the proceedings for assessment - High Court in judgment under appeal has extracted the above passage from case but allowed itself to be misled by it - Correctly appreciate passage means that what Income-tax Officer does in a proceeding under Section 35 (1) is to correct errors in assessment or rectify orders of assessment made by him - Either of such orders is a part of proceeding of assessment - In court considered opinion correcting an apparent error in an order made under Section 23A of Act is rectifying a mistake in the record of assessment and clearly falls within the ambit of power conferred upon the Income-tax Officer under Section 35 (1) of Act - Although in appeals before us court are concerned with the Income-tax Act of 1922 only in passing we may make reference to corresponding provision in Income Tax Act of 1961 - Corresponding to Section 23A of the 1922 Act is Section 104 in 1961 Act - Section 154 (1) of the latter Act corresponds to Section 35 (1) of the former Act. Cl. (a) of Section 154 (1) says - With a view to rectifying any mistake apparent from record - Income-tax Officer may amend any order of assessment or of refund or any other order passed by him - Provision so made is very precise and definite giving power to Income-tax Officer to amend any other order passed by him apart from order of assessment or refund - Language of Section 35 (1) of 1922 Act perhaps is not wide enough conferring power on Income-tax Officer to amend any order passed by him under Act and may not be at par with wide powers conferred on him under Section 154 (1) (a) of 1961 Act - Yet it is not too narrow to cover only order of assessment or of refund in a very restricted or limited sense - It is wide enough to take within its sweep some other orders made under Act including an order under Section 23A - Appeals allowed