The term "record" in section 35 of the Income-tax Act, 1922, includes the whole evidence on which the original assessment order was based, and a mistake in the assessment can be rectified under section 35 even if it is discovered subsequent to the original order.

JUDGMENT :

T.U. Mehta, J.

The petitioner in this case is a textile mill carrying on its business of manufacturing textiles. By this petition it has prayed for obtaining an appropriate writ quashing and setting aside the order of rectification passed by the concerned Appellate Assistant Commissioner on 28th June, 1969, rectifying his assessment order for the assessment year 1960-61.

2. Short facts leading to this petition are that the assessment of the petitioner's income for the assessment year 1959-60 was undertaken by the concerned Income-tax Officer. During the course of the said assessment, the Income-tax Officer found that there was some discrepancy between the stock of cotton shown in the records of the petitioner and in the records of the State Bank of India, with whom the petitioner had hypothecated its said stock of cotton. This discrepancy was sought to be explained by the petitioner by contending that it had given an incorrect figure of its stock to the bank with a view to obtain higher amount of overdraft. The explanation was not accepted by the Income-tax Officer with the result that the Income-tax Officer added the amount of Rs. 2,14,682 representing the additional closing stock which was not shown by the petitioner in its books of account. According to the accounts of the petitioner, its closing stock for the assessment year 1959-60 was Rs. 5,89,439 but on account of the above referred addition, its closing stock was calculated at Rs. 8,04,121. Against this order of the Income-tax Officer, the petitioner preferred an appeal before the concerned Appellate Assistant Commissioner but the petitioner failed even in that appeal. Thereafter, the petitioner preferred a second appeal to the Tribunal.

3. While that appeal was pending, the assessment of the petitioner's income for the next year, i.e., the assessment year 1960-61, was undertaken. During the course of that assessment, the valuation of the opening stock for that year was taken at the book value, i.e., at the figure of Rs. 5,89,439, without making the addition of Rs. 2,14,682. Thus, the value of the opening stock for the assessment year 1960-61 did not correspond with the value of the closing stock for the previous assessment year. The assessee being aggrieved by this decision of the Income-tax Officer, preferred an appeal to the concerned Appellate Assistant Commissioner. The Appellate Assistant Commissioner found that addition to the closing stock for the assessment year 1959-60 was confirmed in first appeal and, therefore, the opening stock for the assessment year 1960-61 should be valued in accordance with the closing stock for the previous assessment year. He, therefore, allowed the appeal and valued the opening stock for the assessment year 1960-61 at Rs. 8,04,121. This order of the Appellate Assistant Commissioner was made on 30th June, 1965.

4. Thereafter, the Tribunal gave its decision in the appeal preferred with regard to the assessment year 1959-60, on 22nd January, 1969. By this order, the Tribunal came to the conclusion that the explanation tendered by the petitioner-assessee with regard to the over-valuation of its stock hypothecated with the bank was acceptable and, therefore, the addition of Rs. 2,14,682 made by the Income-tax Officer with regard to the assessment year 1959-60 should be deleted. Thus, according to the final order which was passed by the Tribunal with regard to the assessment year 1959-60, the closing stock of the petitioner-assessee for the assessment year 1959-60 was as shown by the assessee in its account books, i.e., Rs. 5,89,439.

5. In view of the above order of the Tribunal, the Appellate Assistant Commissioner undertook to rectify the proceedings contemplated by section 35 of the Indian Income-tax Act of 1922. By these proceedings, the Appellate Assistant Commissioner wanted to rectify the valuation of the opening stock for the assessment year 1960-61 in order to make it consistent with the decision of the Tribunal on the valu