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Bombay High CourtIndian Cases

Commissioner Of Income Tax vs Oilseeds Trading Co. Pvt. Ltd. on 3 November 1977

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Bombay High Court
Commissioner Of Income Tax vs Oilseeds Trading Co. Pvt. Ltd. on 3 November, 1977
Equivalent citations: (1978)7CTR(BOM)309

Chandurkar, J.

1. In this reference at the instance of the Commissioner the following question of law has been referred to us under S. 256(1) of the Income-tax Act, 1961.

“Whether, on the facts, and in the circumstances of the case, the Income-tax Officer was justified in withdrawing the corporation tax rebate amounting to Rs. 28,461.30 by resorting to S. 154 of the Income-tax Act, 1961 ?”
2. The assessee is a private limited company and we are concerned with the year 1960-61 corresponding to the accounting period being S.Y. 2015 (30-11-1958 to 31-10-1959). We are concerned in this reference with rectification proceedings under S. 154. B. letters dated 13th and 26th March, 1964 the Income-tax Officer called upon the assessee to show cause why the original order of assessment should not be rectified under s. 154. We are concerned only with first of the three grounds which read as follows.

(i) The amount of Rs. 28,461.30 carried forward from the assessment year 1959-60 was to be withdrawn from the corporation tax rebate for the assessment year 1960-61.
(ii) Depreciation was allowed in excess of Rs. 400/-
(iii) Computation of total income consequent to the Tribunal’s order was done wrongly. The actual total income should have been Rs. 3,26,856/- as against Rs. 3,29,941/-. The difference of Rs. 3,085/- had to be considered as income from speculation which was to be set off against the speculation loss of the assessment year 1959-60.”
3. The assessee objected to the proposed rectification and contended that there was no apparent error to be corrected in the assessment for 1960-61. The Income-tax Officer did not accept the contentions of the assessee and rectified the assessment. The assessee preferred an appeal to the Appellate Assistant Commissioner who confirmed the action of the Income-tax Officer. Thereafter the assessee preferred an appeal to the Tribunal and challenged the validity of the proceedings under s. 154 taken for the withdrawal of the corporation tax rebate. It appears that at the Tribunal stage it was common ground that on the facts the decisions of the Bombay High Court in the case of National Rayon Corporation Ltd., vs. G. R. Bahamani, Income-tax Officer, Companies Circle-I(3), Bombay, applied, and by a short order the Tribunal, applying the said decision held that the action of the Officer was clearly unjustified. It was observed accordingly that the Officer had acted without jurisdiction in making the impugned order of rectification.

4. In the reference application made to the Tribunal wide question has been sought by the Commissioner which was on the basis of the previous assessment. In para 10 of the statement of the case it in observed that this asserting is not warranted by the previous assessment is not warranted by the previous assessment orders which are annexed as Exhibits K and L.

5. We are, however, not required in go into the correctness or otherwise of the assertion of the Commissioner. We have gone through the decision given by this Court is National Rayon Corporation Ltd.’s case which decision deals with an almost identical cam. On the facts which are very similar it was held by the Division Bench in the said can that the alleged mistake which the Income-tax Officer had purported to correction was not a mistake which could be said to be mistake apparent from the record and therefore, the Income-tax Officer had acted without jurisdiction in making the order a rectification. The Tribunal was bound be the said decision and Mr. Joshi has very fairly stated that the said decision still hold the field and the department had not gown in appeal to the Supreme court from the said decision or had the same reversed. It that be so, that decision is equally binding on us, and we are constrained to hold that the view of the Tribunal was correct and answer the question accordingly.

6. In the result, the question referred to us it answered in the negative and in favour of the assessee. But there will be in order as to costs of this reference.