COMMISSIONER OF INCOME TAX Vs. VARDHMAN SPINNING

JUDGEMENT

(1.) ON a petition filed under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), by the Commissioner of Income-tax, this court directed the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as "the Tribunal"), to refer the following two questions of law, along with the statement of the case, for the opinion of this court :

(2.) THE respondent-assessee is a limited company carrying on business in the manufacture of cotton staple yarn. THE assessment for the year 1967-68, relevant to the accounting period ending December 31, 1966, was completed by the Income-tax Officer on March 17, 1972. At that time, the Income-tax Officer did not allow the assessee's claim under Section 84 (now equivalent to Section 80J) of the Act for want of certain details and verification. Later on, the assessee moved an application under Section 154 of the Act along with charts of depreciation, development rebate and calculations under Section 84/80J of the Act. THE Income-tax Officer considered the claim of the assessee and passed an order under Section 154 of the Act on March 30, 1972. While allowing the claim of the assessee under Section 84 of the Act, the Income-tax Officer computed the capital' employed by the assessee in the industrial undertaking at Rs. 59,82,176 and on this amount, relief under Section 84 of the Act was worked out at Rs. 3,58,930. In working out the capital employed by the assessee, the Income-tax Officer did not deduct a sum of Rs. 18,43,287, being the average of the secured loans from the Punjab Financial Corporation, Chandigarh, against the mortgage of plant, machinery, land and building. THE Income-tax Officer passed another order under Section 154 of the Act on June 21, 1973, whereby he deducted the average of the secured loans amounting to Rs. 18,43,287 in view of Rule 19(3) of the Income-tax Rules, 1962, as it existed at that time and computed the capital employed at a sum of Rs. 34,75,491. Accordingly, a relief of Rs. 2,08,529 was allowed instead of Rs. 3,58,930.

(3.) UNDER Section 254(1) of the Act, the Appellate Tribunal, after hearing the contesting parties can pass such orders as it deems fit. Section 254(2) of the Act specifically empowers the Appellate Tribunal, at any time within four years from the date of an order, to amend any order passed by it under Section 254(1) of the Act with a view to rectify any mistake apparent from the record, either suo motu or on an application made. Similar powers have been conferred under Section 154 of the Act on every income-tax authority to rectify its mistakes which are apparent from the record. What can be rectified under these two Sections is a mistake which is apparent and patent, The mistake has to be such for which no elaborate reasons or inquiry is necessary. Where two opinions are possible, then, it cannot be said to be an error apparent on the basis of the record.