M. Subbaraja Mudaliar vs Commissioner of Income Tax and Another

Rajagopala Ayyangar, J.—The order of the Income Tax Officer, Cuddalore, revising the assessment of the petitioner u/s 35 of the Income

Tax Act is challenged in this petition as beyond the jurisdiction and power of the Officer.

The proceedings are concerned with the assessment year 1953-54. The petitioner who is the assessee was a non-resident and he was residing

at Penang. For the assessment year in question the Income Tax Officer completed the assessment and issued an order on 31st December, 1953,

computing the total income of the assessee at Rs. 27,560 and treating the assessee as a non-resident. Section 17(1) of the Act provides for the

determination of the tax payable in certain cases including that by individuals not resident in the taxable territories. The tax payable by a non-

resident assessee is under this section computed on the basis of the maximum rate applicable to his total income liable to tax. The assessee is,

however, given an option by the first proviso to Section 17 of the Act to effect a declaration and on this being made, the tax would be assessed on

the basis of the rate applicable to his total world income the relevant words being

such tax shall be the amount bearing to the total amount of tax including super-tax which would have been payable on his total world income had it

been his total income the same proportion as his total income bears to his world income.

Before the assessment was completed, that is, before 31st December, 1953, the petitioner made a declaration contemplated by the first proviso to

Section 17(1) on 29th September, 1953 and the Income Tax Officer treated this as a proper exercise of the option conferred by the statute and

computed the tax liability on the basis of that set out in the words of the first proviso which I have extracted. Subsequently in May, 1955, the

Income Tax Officer issued a notice to the petitioner stating that a mistake apparent from the record had been committed in regard to the

assessment which required rectification. The mistake pointed out was that the first proviso to Section 17(1) of the Act made provision for the

option being exercised by the declaration made on or before the dates specified in the proviso and that the declaration made on 29th September,

1953, would not be deemed to be a proper declaration within the words of the proviso and that if this were so, the declaration should have been

treated non est and that the computation of the tax should have been on the basis of the maximum rate applicable u/s 17(1) and not under the first

proviso. The assessee raised an objection to the jurisdiction of the Income Tax Officer stating that no mistake had been committed to justify any

rectification u/s 35. This was overruled and an order was passed on 10th May, 1955, rectifying the assessment and demanding a sum of Rs. 3037-

2-0 as excess tax payable u/s 35(4) of the Act. The assessee preferred a revision to the Commissioner of Income Tax u/s 33-A(2) but this was

dismissed and he has consequently filed this petition seeking relief at the hands of this Court under Article 226 of the Constitution.

The jurisdiction of the Officer to rectify a mistake is dependent on the mistake being apparent from the record. It is no doubt true that a mistake

capable of being rectified u/s 35 is not confined to clerical or arithmetical mistakes. On the other hand, it does not cover any mistake which may be

discovered by a complicated process of investigation, argument or proof. In the present case that a declaration which purported to be under the

first proviso to Section 17 was filed by the assessee though out of time, if regard were had only to the dates specified in the first proviso, is not in

controversy. That this declaration was treated by the Assessing Officer as one within the first proviso and that the assessment proceeded on the

basis that the assessee had properly exercised his option is also not in dispute. The point, however, on which the mistake is said to have crept in

was that the assessing authority had misconstrued the scope of the second proviso to Section 17(1) as enabling him to condone the delay in the

exercise of the option. This would certainly not be a mistake apparent from the record. The scope of the second proviso is, to say the least, not so

absolutely clear as to preclude an argument that it would apply to the petitioner''s case. In this view I am clearly of the opinion that the mistake,

assuming one existed, was not apparent from the record within the meaning of Section 35(1) of the Act and the order of the Income Tax Officer

rectifying the mistake with which the Commissioner refused to interfere is clearly beyond the jurisdiction of the assessing authority u/s 35 of the

Act.

The result is that the petition succeeds and the rule is made absolute. The order of the Income Tax Officer is set aside. The assessee is entitled

to his costs. Counsel''s fee Rs. 100.