INCOME TAX OFFICER ALWAYE Vs. ASOK TEXTILES LTD

JUDGEMENT

(1.) THIS is an appeal pursuant to a certificate of the High Court of Kerala against the judgment and order of that Court and the question for decision is the applicability of S. 35 of the Indian Income-tax Act (hereinafter termed the 'Act').

(2.) THE facts which have given rise to the appeal are these: THE respondent is a limited company which owns a spinning mill at Alwaye. It commenced business in January 1951, and its first accounting year ended on 31/12/1951 and the relevant assessment year is 1952-53. It filed its return showing an income of Rs. 3,21,284 without taking into account the amount allowable under S. 15-C of the Act. On 2/02/1953, the net assessable income of the respondent was determined at Rs. 1,47,083 after deducting Rs. 1,79081 under S. 15-C. THE respondent however declared a dividend of Rs. 4,72,415 which attracted the application of S. 2 of the Finance Act, 1952, read with Part B, proviso (ii) of First Schedule and thus it became liable to the payment of additional income-tax and this fact was overlooked by the Income-tax Officer. After giving notice under Section 35 of the Act, the Income-tax Officer by an order dated 25/01/1954, rectified this error and imposed an additional tax at the rate of one anna in the rupee. He later discovered that this was also erroneous and the rate should have been 5 annas in a rupee. By an order dated 12/08/1954, he rectified the error. Under S. 18 A, advance income tax had to be paid and the respondent company had deposited only Rs. 5,000 and therefore became liable to penal interest under S. 18A (8) of the Act. By the same order this omission to impose penal interest was corrected and this error was thus rectified.

(3.) THE learned Judges of the High Court seem to have fallen into an error in equating the language and scope of S. 35 of the Act with that of Order 47, Rule 1. Civil Procedure Code. THE language of the two is different because according to S. 35 of the Act which provides for rectification of mistakes the power is given to the various income tax authorities within four years from the date of any assessment passed by them to rectify any mistake "apparent from the record" and in the Civil Procedure Code the words are 'an error apparent on the face of the record" and the two provisions do not mean the same thing. This Court in Maharana Mills (Private) Ltd. v. Income-tax, Officer, Porbandar, 1959 36 I T R 350 has laid down the scope of S. 35 n the following words: