Law:

Section:

Section 154 of the Income-tax Act, 1961 - Rectification of mistake - Apparent from record - Assessment years 1959-60 and 1960-61 - Whether, where in original assessment ITO had deducted wealth-tax paid by assessee from total income, but, subsequently, jurisdictional High Court held that it was not deductible, mistake committed by ITO was a mistake apparent from record and he was within his jurisdiction in rectifying same under section 154 - Held, yes - Whether, where proceedings are initiated under section 147 and reassessment order is passed, entire assessment order originally passed does not cease to exist and, therefore, period of limitation for rectification of mistake under section 154 has to be computed from date of original assessment order and not from order of reassessment or from date when a mistake can be said to have crept into order sought to be amended - Held, yes FACTS In the original assessments of the assessee-company made on 27-5-1960, the income from business was arrived at after deducting the amounts of wealth-tax paid by the assessee. Subsequently, reassessments were made under section 147(b) on 23-11-1962. Though income was increased on account of certain additions the deduction of wealth-tax made in the original orders remained untouched, in the reassessment orders. Once again assessment was re-opened and re-assessment was made on 23-11-1964 without touching the deduction on account of wealth-tax. Subsequently, as a result of decision of the High Court, in Kumbakonam Electric Supply Corpn. Ltd. v. CIT [1963] 50 ITR 809 (Mad.), holding that wealth-tax paid by the assessee was not deductible from the income from the business for arriving at the taxable income, the ITO passed two separate orders dated 25-2-1965, for the two years under section 154 by which he added back the wealth-tax paid by the assessee to the total income from the business which he had originally deducted by way of rectifying the mistake said to be apparent from the records. Assessee's appeals were dismissed by the AAC. On further appeals, the Tribunal rejected the contention of the assessee, that there was no mistake apparent from the records which could be rectified…

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