Law: Income Tax Act, 1961

Section: 147

Income-tax----Company---Surtax---Rectification of mistake---Record---Income-tax assessment proceedings are part of record---Rectification of surtax assessment consequent upon reassessment of income-tax---Second rectification pursuant to cancellation of reassessment in appeal---Valid---Limitation---Second rectification was of earlier order of rectification---Not barred by limitation--¬Indian Companies (Profits) Surtax Act, 1964, S.13---Indian Income Tax Act, 1961, S.147. The assessee-company was assessed to surtax for the assessment year 1964-65 under the Companies (Profits) Surtax Act, 1964, on March 30, 1965. The income-tax assessment of the assessee-company for the year in question was reopened under section 147 of the Income Tax Act, 1961, and an additional sum of income-tax levied. Consequently, by order dated September 16, 1968, the Income Tax Officer rectified the surtax assessment under section 13 of the Companies (Profits) Surtax Act, 1964, allowing a deduction from the chargeable profits of the additional sum of income-tax determined as payable in terms of the order under section 147 of the Income Tax Act. On appeal by the assessee-company, the Appellate Assistant Commissioner cancelled the order passed under section 147 of the Income Tax Act and the Income Tax Officer, pursuant thereto, recomputed the income-tax liability. Consequently, the Income Tax Officer, by order dated April 21, 1971 under section 13 of the Companions (Profits) Surtax NO, rectified the surtax assessment withdrawing the deduction of the addition amount of income-tax. The Appellate Assistant Commissioner, the Appellate Tribunal and the High Court on a reference, held that the order of the income Tax Officer was justified. On appeal to the Supreme Court: Held, dismissing the appeal, (i) that if the Income Tax Officer could rectify the assessment order and give relief to the assessee-company whey order under section 147 of the Income Tax Act was passed, there was reason why he could not rectify the order of assessment once again when that order under section 147 was set aside by the Appellate Assistant Commissioner. No order of assessment could be passed under the Companies…

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