N.C.R. Rajagopala Chettiar vs Fourth Income Tax Officer, Coimbatore, and Another

Veeraswami, J.—For the assessment year 1958-59 for which the accounting year ended on October 21, 1957, the petitioner was, in the

status of an individual, assessed on a total income of Rs. 44,367. Part of this income related to the assessees minor son from two partnership firms

in each of which he was a member. This was included in the petitioners income and brought to tax u/s 16 (3) of the Income Tax Act, 1922. On this

portion of the income an additional surcharge at 15 per cent. was levied, treating the same as unearned income under the provisions of the Finance

Act, 1958. It is common ground now that this levy could not be supported in view of the decision in Commissioner of Income Tax v. Marimuthu

Nadar. The view which found favour in this decision was also the view held earlier by this court in S. A. S. Marimuthu Nadar v. Commissioner of

Income Tax. The result was that the minors share of income was only liable to surcharge at the rate of 5 per cent.

On January 10, 1962, the assessee applied to the first respondent, who was the Fourth Income Tax Officer, Coimbatore, u/s 35 for rectification

of the mistake but without success. He therefore moved the second respondent, the Commissioner of Income Tax, Madras, by a petition dated

July 27, 1962, to revise the order of the first respondent. The second respondent by an order dated September 17, 1962, declined to interfere and

while doing so observed that since the assessment order had been made as early as July 14, 1958, it became final and the petition u/s 35 was out

of time. This was on the view that the petition before the second respondent was substantially to revise the original assessment order. He was also

of opinion that the original order of assessment could not be reopened under guise of an apparent mistake. He thought that if the assessment was

based on a particular view of the law and later on in different proceedings a higher or superior court took a different view of the law, this would not

be a mistake within the meaning of section 35. The petitioner seeks to quash the order of the second respondent and also a rule directing the first

respondent to rectify the mistake.

That the assessment order in so far as it related to the levy of additional surcharge was on a wrong view of the law in the light of the decision of

the Supreme Court subsequently rendered, there can be doubt. Section 35 vests in the respondents a limited power to rectify mistakes. The

mistake should, however, be a mistake apparent from the record. Whether this will cover a mistake as in this case, might have been open to

argument had it not been for Walchand Nagar Industries Ltd. v. C. S. Gaitonde, which followed Venkatachalam v. Bombay Dyeing and

Manufacturing Co. Ltd. On facts and on principle it is difficult to distinguish the instant case from them and they would cover this case.

But Mr. Balasubrahmanyan for the revenue contends that, inasmuch as the power to rectify a mistake could be exercised only within the period

allowed to the officer concerned, no mandamus could go out to him which will have the effect of compelling him to do something beyond that

period. The mistake can be rectified u/s 35 within four years from the date of an assessment order. In one sense, the argument for the revenue

bears force. If the power of rectification is available to the officer only within the period mentioned, it may stand to reason that no direction

compelling him to rectify can go out beyond that period. But the matter has been approached in a different way in N. V. S. Kadirvel Nadar v.

State of Madras. That related to section 34 of the Madras Agricultural Income Tax Act. Sub-section (2) of that section, inter alia, provided that

the Commissioner of Agricultural Income Tax shall not revise any order which had been made more than three years previously. Under the old

Agricultural Income Tax Act the period was one year. In that case an application to rectify the mistake was filed within the period of limitation. But

by the time this court dealt with the matter, the period of limitation. But by the time this court dealt with the matter, the period had expired.

Nevertheless, this court gave direction with the following observations :

So long as the proceedings have commenced within the period fixed, the power of the Commissioner can be exercised at any time thereafter, and

it is not necessary that the power should be exercised within the period fixed.

The language employed by section 35 of the Income Tax Act is not entirely in pari materia. It is not possible in our view to say that section 35

lays down limitation for application for application to rectify a mistake rather than exercise of the power of rectification vested in the relative

officers. There are other sections in the Income Tax Act which limit exercise of their powers within a stated period of limitation, whether suo moto

or on an application. It is doubtful, therefore, whether having regard to the language of section 35, notwithstanding expiry of the time prescribed by

it, the court by its own fiat can compel him to go outside the limits prescribed by legislature. As a matter of fact, we find that in Venkatachalam v.

Bombay Dyeing & Manufacturing Co. Ltd. and Walchand Nagar Industries Ltd. v. V. S. Gaitonde a direction to the concerned officer to rectify

went out far beyond the prescribed time of four years. The point which is now raised for the revenue does not appear to have been argued in

whose two cases. In the present case, however, on the view we take, it seems to us to be unnecessary to go into this question and express a final

opinion.

In substance the petition before the Income Tax Officer as well as the Commissioner of Income Tax was to rectify or revise the original

assessment order and in effect the petitions before us also have the same object. Though therefore one of these petitions is to quash the

Commissioners order, in substance and effect, it is to rectify the mistake in the original assessment order. On that view, we think that the prayer in

the petition covers quashing of the mistake in that order.

Writ Petition No. 446 of 1963 is allowed and that portion of the assessment order dated July 14, 1958, which treated the minors share of

income as unearned income for purpose of additional surcharge is quashed. In view of this, the first respondent will suitably alter the assessment

order, as we have quashed a portion of the assessment order as we mentioned. It follows that both the orders of the first respondent and the

second respondent would also stand cancelled.

Writ Petition No. 447 of 1963 is dismissed. In the circumstances, we make no order as to costs.