Law: Income Tax Act, 1922

Section: 18,18A,35

[Indian Income Tax Act, 1922 (XI of 1922)].......Sections 18A, 35- Rectification of mistake-Mistake "apparent from the record", meaning of-Whether a mixed question of law and fact-Held yes-Discretian of Income Tax Officer to charge or waive interest-Whether a case of apparent mistake-Held no-Wealth Tax paid by assessee allowed as a deduction- Retrospective amendment disallowing wealth tax paid-Allowance of deduction whether a deemed mistake at the relevant time and not a mistake apparent from the record Held yes-Rectification whether valid in law- Held no India/1 Income Tax Act, 1961, S. 154. Sections 18A (6) and 18A (7) of the Act of 1922 empower the Income Tax Officer to charge interest but the proviso thereto gives a discretion to the Income Tax Officer to reduce or waive the interest. In view of the scope for exercise of the discretion by the Income Tax Officer an omission to charge interest under Section 18A(6) or (7) is not a mistake apparent from the record which can be rectified : S. A. L. Narayan Row V. Ishwarlal Bhagwandas [1965] 57 ITR 149 (SC) followed. A deduction was allowed for the assessment years 1957-58 and 1958- 59 in respect of the amount of wealth tax paid by the assessee. The assessment was made in 1960 under the Act of 1922. Subsequently, an amendment was made in 1972 in the Act of 1961, which laid down that wealth tax was not deductible. The amendment was made with retrospective effect from the commencement of the Act of 1961. On the question whether the allowance of wealth tax in the instant case could be withdrawn by an order of rectification: Held, that, in the instant case, the amending Act carne into existence long after the order sought to be rectified. Therefore, at the relevant time there was a deemed mistake but no mistake apparent from the record which could be rectified. An order of rectification could not be passed. Venkatachalam (M. K.), ITO v. Bombay Dyeing and Mfg. Co. Ltd. [1958] 34 ITR 143 (SC) and S. A. L. Narayan Raw v. Ishwarlal Bhagwandas [1965] 57 ITR 149 (SC) distinguished. The question whether there is a mistake apparent from the record is a mixed question of law and fact. Cases referred to: CIT V. Durga Prasad…

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