Law:

Section:

Section 154 of the Income-tax Act, 1961 (Corresponding to section 35 of the Indian Income-tax Act, 1922) - Rectification of mistake - Apparent from record - Assessment year 1960-61 - Whether an order under section 23A of 1922 Act cannot be said to be an order of assessment and, therefore, it cannot be rectified under section 35 of 1922 Act or section 154 of 1961 Act - Held, yes FACTS For the assessment year 1960-61, the ITO applied to the assessee-company section 23A. The additional super-tax payable by the assessee-companys was computed at 37 per cent i.e., the rate applicable to a trading company. Subsequently, the ITO arrived at the conclusion that the company, was an investment company to which the rate applicable was 50 per cent and not 37 per cent. Therefore, he revised his earlier order. The assessee unsuccessfully challenged the latter order before the AAC. On further appeal, the Tribunal held that section 154 of 1961 Act was not applicable to the case, and that section 35 of 1922 Act, also was not available to the revenue for the reason that that section does not provide for rectification of an order under section 23A of the 1922 Act. The Tribunal was further of the view, that there was no mistake apparent from the record. On reference: HELD Though the word 'assessment' in its comprehensive and wider sense may include not only computation of income, but also determination of liability, machinery for imposing liability and procedure in that behalf, an order under section 23A cannot be said to be an order of assessment. It, therefore, follows that the proceedings of the ITO, under section 23A are not proceedings for assessment of tax. The rectification proceedings in instant case, therefore, could not be said to arise out of any 'assessment'. Further section 35 of the 1922 Act does not enable the ITO to rectify mistakes in an order under section 23A of 1922 Act. That section 35 of the 1922 Act enables the ITO only to rectify a mistake apparent from the record of the assessment or refund at any time within four years from the date of any assessment order or refund order passed by him. As such, even assuming that the old Act were to govern this case,…

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