Law:

Section:

Section 154 of the Income-tax Act, 1961 [Corresponding to section 35(10) of Indian Income-tax Act, 1961] - Rectification of mistake - Apparent from records - Assessment year 1952-53 - For assessment year 1953-54, total income of assessee company was computed at loss - For that year it distributed dividend from profits and accumulated profits of calender years 1943 to 1945 representing amount of post war excess profits tax refund received by assessee in 1952 - Assessee tendered in evidence thereof its balance-sheet with report of directors for year 1952 and subsequent resolution passed at general meeting of shareholders - ITO without any data or material considered that assessee availed of undistributed profits of business year 1951 on which rebate was allowed and accordingly, passed order under section 35(10) of 1922 Act to recover rebate allowed for that year - Whether burden of establishing fact that undistributed profits of assessment year 1952-53 on which rebate had been granted was availed of by assessee for distribution of dividend for calender year 1952 lay on ITO - Held, yes - Whether on evidence tendered by assessee, it was not possible to say that assessee had availed of undistributed profits of year 1952 - Held, yes - Whether further, there being no suggestion that there was any deliberate device on part of assessee to escape operation of section 35(10) of 1922 Act, order of ITO was to be quashed and set aside - Held, yes FACTS For the assessment year 1952-53, the assessee was granted rebate on undistributed profits under proviso (i) to clause B , Part II of the First Schedule to the relevant Financial Act. For the assessment year the assessee mills declared dividends from reserve formed out of the profits and accumulated profits of the previous years ending 31-12-1943, 31-12-1944 and 31-12-1945. In March 1958 the ITO passed an order under section 35 (10) of the 1922 Act on ground that the dividend distributed by the assessee for the business year 1952 was out of its undistributed profits for business year 1951 in which assessee had received rebate. Accordingly, a notice of demand was also served on the assessee. On writ, the assessee contended inter…

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