Law:

Section:

Section 154 read with sections 81 and 99 of the Income-tax Act 1961 – Rectification of mistake - Apparent from record - Assessment year 1963-64 – Whether mistake in matter of calculation of additional surcharge with reference to exempted income cannot be said to be an obvious and patent mistake so as to be rectifiable under section 154 – Held, yes – Assessee was co-operative society, exempt from income-tax and super-tax in respect of profits and gains of business carried on by it – ITO assessed assessee society in respect of income from other sources and levied proportionate additional surcharge on non-exempted income – Subsequent ITO being of view that levy of additional surcharge only on non-exempt income was not correct, rectified assessment under section 154 – Whether since two views were possible on construction of relevant provisions at time when succeeding ITO proceeded under section 154, rectification of assessment was not valid – Held, yes FACTS The assessee was a co-operative society engaged in the marketing of the agricultural produce of its members. It was exempt from income-tax and super-tax in respect of profits and gains of the business carried on by it by virtue of sections 81 and 99. The ITO assessed the assessee in respect of the income from other sources and levied proportionate additional surcharge on non-exempt income. The succeeding ITO holding that the levy of additional surcharge on the residual income proportionate to non-exempt income was not correct, rectified the assessment under section 154. The AAC and the Tribunal dismissed the assessee's appeal. On reference: HELD The mistake in the matter of calculation of additional surcharge with reference to the exempted income cannot be said to be an obvious and patent mistake so as to be rectifiable under section 154. The construction of the said provision bristles with various problems such as –1. as to whether the surcharge would apply to exempted income; and 2. whether the expression "the amount of income-tax...........increased by" occurring in the provision of Para A of Part I of the First schedule to the Finance Act, 1963, relating to the additional surcharge required a positive…

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