Law:

Section:

Section 154, read with sec 104 of the Income-tax Act, 1961 (Corresponding to section 35(1), read with section 23A of the Indian Income-tax Act, 1922) - Rectification of mistakes - Apparent from records - Assessment year 1955-56 - Whether section 35(1) of 1922 Act confers power on ITO to rectify a mistake apparent in order passed by him under section 23A of 1922 Act - Held, yes FACTS Subsequent to the passing of the assessment orders under section 23(3) of 1922 Act, the Income-tax Officer passed orders in respect of the relevant assessment years under section 23A of the 1922 Act on asking the companies to pay additional super-tax on the undistributed profits. Thereafter, the Income-tax Officer issued a notice under section 35(1) of the 1922 Act for rectification of the mistakes committed in the orders passed under section 23A of 1922 Act. The assessee in response to the notices objected to the proposed rectification inter alia, on the ground that ITO had no power to rectify any mistake in an order under section 23A of 1922 Act. The Income-tax Officer overruled the objection, rectified the mistakes and increased the amounts of additional super-tax payable. The assessee's revision applications filed before the Commissioner were dismissed. Thereupon, writ applications were filed in the High Court to challenge the orders passed by the Income-tax Officer under section 35(1) of 1922 Act. The High Court allowed the writ applications and quashed the impugned orders. On appeal to the Supreme Court: HELD Although in a narrow sense an order under section 23A of 1922 Act may not be called an order of assessment, surely it is a part of the assessment proceeding and may be called a supplementary assessment order directing a company to pay additional amount of super-tax on the undistributed balance of the total income as assessed and determined in accordance with the provisions of section 23 of 1922 Act. The Commissioner in revision, the Appellate Assistant Commissioner and the Tribunal in appeal can rectify a mistake in the record of the revision or the appeal, as the case may be, taken from the order of assessment under section 23, of 1922 Act the order computing loss under…

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