Case Note & Summary
This case involved an appeal by the Income-tax Officer and the Union of India regarding the rectification of an assessment order under the Indian Income-tax Act, 1922. The respondent, Bombay Dyeing and Manufacturing Co. Ltd., was initially assessed on October 9, 1952, and credited with Rs. 50,603-15-0 as interest on advance tax under section 18A(5). Following the enactment of the Indian Income-tax (Amendment) Act, 1953, which introduced a proviso limiting the interest entitlement, the Income-tax Officer rectified the assessment to credit only Rs. 21,157-6-0, issuing a notice of demand for the excess amount. The respondent challenged this rectification in the Bombay High Court, which ruled that section 35 was not applicable as the mistake was not apparent from the record. The Supreme Court, however, found that the retrospective amendment must be treated as part of the law from April 1, 1952, and thus the original assessment was inconsistent with the amended provisions. The court concluded that the Income-tax Officer was justified in rectifying the order under section 35, emphasizing that a mistake of law apparent from the record could be rectified. The appeal was allowed, and the High Court's order was set aside.
Headnote
A) Income Tax - Rectification of Assessment - Justification for Rectification - Indian Income-tax Act, 1922, Section 35 - The Income-tax Officer rectified an assessment order based on a retrospective amendment, concluding that the original order was inconsistent with the amended law. The court held that the rectification was justified as the mistake was apparent from the record due to the legal fiction of the retrospective operation of the amendment (Paras 1-2).
Issue of Consideration
Whether the Income-tax Officer was justified in rectifying the assessment order under section 35 of the Income-tax Act due to a retrospective amendment.
Final Decision
The Supreme Court allowed the appeal, set aside the High Court's order, and upheld the rectification of the assessment order under section 35.
Law Points
- Income Tax
- Rectification of Assessment
- Retrospective Legislation
- Mistake Apparent from Record
