Law:

Section:

Section 154 of the Income-tax Act, 1961 [Corresponding to section 35 of the Indian Income-tax Act, 1922] - Rectification of mistakes - Apparent from records - Assessment year 1943-44 - Pursuant to dismissal of suit filed by assessee for recovery of bad debts by trial Court, he filed an appeal to High Court but with no success - Assessee claimed that amount of bad debt as deduction - ITO disallowed assessee's claim - Tribunal, however, held that debt had become a bad debt when of High Court was delivered and took erroneous view that date of fell within relevant accounting year - It, accordingly, allowed assessee's appeal - Subsequently, Tribunal rectified its mistake at instance of Commissioner and dismissed assessee's appeal holding that date of of High Court did not fall within accounting year and, thus, assessee could not claim to include bad debt in relevant assessment year - Whether power of Tribunal is not only confined to mere rectification of mistake which is patent on record, but, after mistake is corrected, it also has power to pass all consequential orders - Held, yes - Whether, therefore, Tribunal was perfectly competent in rectifying mistake made by it under section 35(1) of 1922 Act, and having rectified it, it was equally competent to pass consequential order which was that assessee's appeal was to be dismissed and not to be allowed - Held, yes FACTS The joint family, of which the assessee was at one time a member, had advanced certain loans to the 'W' family. On partition of that joint family the debts due to the family came to the share of the assessee. A suit was filed by the assessee for recovery of those debts against the 'W' estate but the suit was dismissed by the trial Court. There was an appeal to the High Court but the Court dismissed the appeal on the 29-9-1941. The question that arose for consideration by the Income-tax authorities was as to when these loans advanced by the family to the 'W' estate became a bad debt. The ITO held that the loans were not advanced in the course of the joint family business and, therefore, the claim of the assessee to deduct the amount as a bad debt was disallowed. The AAC on appeal held that the debt had…

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