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Judgment
K.S. Paripoornan, J.—The petitioner is a public limited company. It is an assessee on the files of the third respondent. The question raised in this original petition is, whether in making the assessment for the year 1974-75, the petitioner-assessee is entitled to interest on the advance tax paid beyond the due date. It was held in the negative, by the ITO in Exhibit P-2 order. The Commissioner (Appeals) upheld the plea of the assessee. In second appeal, the Tribunal, in Exhibit P-4 order dated 31-10-1981, held that the belated payments are not to be taken into account as advance tax for the purpose of section 214 of the income tax Act, 1961 (''the Act'') and so interest is inadmissible for such belated payments. The Tribunal held so, in view of the decision of this Court in A. Sethumadhavan Vs. Commissioner of Income Tax and Another, . The appeal preferred by the assessee in A. Sethumadhavan''s case (supra) was heard along with other cases and a Bench of this Court held that payments of advance tax made within the financial year but not within specified dates should be treated as advance tax and that the assessee is entitled to interest on excess tax so paid. The decision of the Division Bench is dated 22-1-1982, and in Santha S. Shenoy, A.S. Suresh, A.S. Sasidhara Shenoy, A.S. Narayana Shenoy, Sobhana V. Shenoy, A.V. Gopalakrishna Shenoy and A. Sethumadhavan Vs. Union of India (UOI) and Others, , the judgment of the learned Single Judge in A. Sethumadhavan''s case (supra) was reversed. The petitioner filed Exhibit P-5 before the Tribunal on 17-6-1982, praying that in view of the Division Bench decision of this Court in Santha S. Shenoy''s case (supra), the Tribunal may be pleased to pass appropriate orders and rectify Exhibit P-4 order dated 31-10-1981, and hold that interest is admissible even for belated payments of advance tax. By Exhibit P-6 order dated 14-10-1982, the Tribunal dismissed the petition filed by the petitioner/assessee u/s 154 of the Act. It was held that a rectification u/s 154 must be of a mistake which is a mistake in the light of the law in force at the time when the order sought to be rectified was passed and that the subsequent decision of the High Court has no retrospective operation as in the case of subsequent legislation or the decision of the Supreme Court. In this original petition, the challenge is against Exhibits P-2, P-4 and P-6 orders negativing the claim of the petitioner/assessee for interest on the advance tax paid beyond the due date. We heard the counsel for the petitioner as also the counsel for the respondent/revenue. The assessing authority in Exhibit P-2, as also the Tribunal in Exhibit P-4, have held that the assessee is not entitled to interest on the advance tax paid beyond the due date. It is common ground that this view is based solely on the decision of a learned Single Judge of this Court in A. Sethumadhavan''s case (supra). It is true that when the Tribunal rendered the decision (Exhibit P-4) dated 31-10-1981, the decision of the Single Judge in A. Sethumadhavan''s case (supra) was the law on the subject. Subsequently, on 22-1-1982, a Division Bench of this Court reversed the said decision which is in Santha S. Shenoy''s case (supra). Since the very decision relied upon by the Tribunal to hold that the assessee is not entitled to interest on the advance tax paid beyond the due date was reversed by a Bench of this Court in the decision in Santha S. Shenoy''s case (supra), the petitioner invoked the jurisdiction of the Tribunal u/s 154 and sought rectification of Exhibit P-4 appellate order in that behalf. The Tribunal refused the relief prayed for, by Exhibit P-6 order dated 14-10-1982. The question posed for consideration is this:
Where an authority has decided, on the basis of a decision of the High Court which is subsequently reversed, would there be a rectifiable mistake coming within section 154 of the income tax Act, 1961?
Salmond on Jurisprudence, 12th edn. by P.J. Fitzgerald, states as follows:
...the theory of case law is that a judge does not make law; he merely declares it; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence, any intermediate transactions made on the strength of the supposed rule are governed by the law established in the overruling decision. The overruling is retrospective, except as regards matters that are res judicata, or accounts that have been settled in the meantime. (p. 148)
An order of assessment, based upon an interpretation or application of law which is ultimately found to be wrong in the light of judicial pronouncements rendered subsequently, discloses a mistake apparent from the record. When the Court decides a matter, it does not make the law in any sense but all it does is that it interprets the law and states what the law has always been and must be understood to have been. Where an order is made by an authority, on the basis of a particular decision, the reversal of such decision in further proceedings will justify a rectification of the order based on that decision? See Bhagwandas Kevaldas Vs. N.D. Mehrotra and Another, , Parshuram Potterv Works Co. Ltd. Vs. D.R. Trivedi, Wealth Tax Officer, Morvi and Another, and Bhauram Jawahirmal Vs. Commissioner of Income Tax, .
In the light of the above position in law, we are of the view that the order passed by the Tribunal (Exhibit P-4) dated 31-10-1981, relying on the decision of a learned Single Judge of this Court in A. Sethumadhavan''s case (supra), discloses a mistake apparent from the record, in the light of the subsequent overruling of the very decision relied upon by the Appellate Tribunal, by a Bench of this Court in the decision reported in Santha S. Shenoy''s case (supra).
When the Bench of this Court overruled the decision of the Single Judge in A. Sethumadhavan''s case (supra), the said decision was never the law. The law on the point at all times was as stated by the Bench in the decision in Santha S. Shenoy''s case (supra). It cannot admit of any doubt that Exhibit P-5 application dated 17-6-1982, is within four years from the date of Exhibit P-4, and was one filed within the time allowed by law. So understood, we are of the view that Exhibit P-4 order, passed by the Tribunal in the appeal, discloses a mistake apparent from the record, namely, that the assessee is not entitled to interest on the advance tax paid beyond the due date, which should be rectified. This should have been done by the Tribunal in exercise of the powers vested in it u/s 254(2), read with section 154, of the Act.
The decision of the Tribunal to the contrary in Exhibit P-6 is unsustainable. The Tribunal has, in the circumstances, refused to exercise the jurisdiction vested in it under law. Exhibit P-6, therefore, deserves to be annulled. We hereby do so. We direct the Tribunal to restore Exhibit P-5 to its file and dispose of the same, in the light of section 254(2) read with section 154 and in accordance with law.
We would state, that the view of the Tribunal, that rectification contemplated by section 254(2) or section 154 must be of a mistake which is a mistake in the light of the law in force at the time when the order sought to be rectified was passed, is a clear error. A binding decision rendered by a Court is always retrospective and the decision which is overruled was never the law. The overruling decision should be deemed to have been in force even on the day when the order sought to be rectified was passed. We are further of the view that the Tribunal was in error in holding that the subsequent decision of the High Court has no retrospective operation as in the case of subsequent legislation or the decision of the Supreme Court. A subsequent binding decision of the Supreme Court or of the High Court has retrospective operation and overruling is always retrospective. We are afraid that the Tribunal misunderstood the ratio of the two decisions referred to by it in Jiyajeerao Cotton Mills Ltd. Vs. Income Tax Officer, "C" Ward and Others, and Commissioner of Income Tax (Central) Vs. Assam Oil Co. Ltd., . The said decisions are distinguishable. The question that arose for consideration in Jiyajeerao Cotton Mills Ltd.''s case (supra) was, whether the decision of the Supreme Court resolving conflict of judicial opinion on a particular point obliterates the existence of a debatable point prior to such decision. It was held that the law laid down by the Supreme Court cannot be said to have retrospective operation in the sense that although a debate or doubt or a conflict of judicial opinion is resolved and settled by the Supreme Court, yet that does not obliterate the existence of such debate or doubt or conflict that existed prior to the decision of the Supreme Court, setting at rest such debate or doubt or conflict. Assam Oil Co. Ltd.''s case (supra) was a case of reassessment, where the decision of the High Court that a particular kind of expenditure is not deductible was stated to be ''information'' within the meaning of section 147 of the Act. The plea in the said case was that the subsequent reversal of the decision by the Supreme Court will render the reassessment proceedings void ab initio. It was held that the Supreme Court does not make the law from the date it is pronounced but declares it to be so from the very inception. But the knowledge about that law is not always there. The question that arose for consideration in that case was whether the decision of the High Court will be ''information'' on the basis of which the reassessment proceedings were validly taken u/s 147(b). The said question is entirely different. Even so, in Assam Oil Co. Ltd.''s case (supra), the Calcutta High Court referred to the decisions in Walchand Nagar Industries Ltd. Vs. V.S. Gaitonde, Income Tax Officer, Companies Circle 1(3), Bombay and Another, , Parshuram Pottery Works Co. Ltd.''s case (supra), R. Kuppuswamy Mudaliar & Sons v. Board of Revenue (Commercial Taxes) [1980] 45 STC 152 (Mad.), K.M. Jamal Mydeen v. State of Madras [1968] 22 STC 45 (Mad.) and M.V. Govindaraju Chetty v. CTO [1968] 22 STC 46 (Mys.) and concluded that on principle it is true that the Supreme Court does not make the law from the date the decision is pronounced, but declares it to be so from the very inception. The two decisions of the Calcutta High Court, referred to by the Tribunal, are not relevant for deciding the question that arose for consideration before the Tribunal, namely, that when the Tribunal decided the appeal on the basis of the decision of a learned Single Judge of this Court in Sethumadhavan''s case (supra) which was subsequently reversed by a Bench of this Court in Santha S. Shenoy''s case (supra) there would be a rectifiable mistake within the meaning of section 254(2) read with section 154 of the income tax Act. In our opinion, the answer can only be in the affirmative. The decision of the Tribunal to the contrary is illegal.
Section 254(2) and section 154 of the income tax Act enable the concerned authorities to rectify any ''mistake apparent from the record''. The said expression has a wider meaning than the expression ''error apparent on the face of the record'' occurring in Order 47, rule 1 of the Civil Procedure Code. The restrictions on the power of review under Order 47, rule 1, Civil Procedure Code, do not hold good in the case of section 254(2) and section 154. Even so, a subsequent binding decision taking a different view in law was held to be a good ground for review which will constitute an error apparent on the face of the record within the meaning of Order 47, rule 1--See Thadikulangara Pylee''s son Pathrose Vs. Ayyazhiveettil Lakshmi Amma''s son Kuttan and Others, and Chandrasekharan Nair v. Purushothaman Nair [1969] KLT 687. These two decisions were overruled by a Bench of this Court in Board of Revenue and Another Vs. P.K. Syed Akbar Sahib, . But, the Supreme Court reversed the Bench decision aforesaid, holding that the Bench was not justified in refusing to entertain the review petition on super technical considerations which were ill-founded -- See State of Kerala and another Vs. P.K. Syed Akbar Sahib, . So, it appears that even for the purpose of Order 47, rule 1, which is more restrictive, a subsequent binding authority taking a different view of law is a good ground for review, on the ground that the order sought to be reviewed passed on an antecedent decision, which stands overruled, constitutes an error apparent on the face of the record. So far as this case is concerned, it is unnecessary for us to base our decision on the provisions of Order 47, rule 1 which is more restrictive. The original petition is allowed. Exhibit P-6 is quashed. The Tribunal is directed to restore Exhibit P-5, the petition filed by the petitioner dated 17-6-1982 [M.P. No. 9 (Coch.) of 1982], and dispose of the same in accordance with law and in the light of the observations contained hereinabove.