TMI Blog1970 (11) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 23rd August, 1968. By this petition the petitioners seek an appropriate writ quashing and/or setting aside the order dated 21 st June, 1966, made by the 2nd respondent herein, as also for quashing and/or setting aside the order dated 24th March, 1966, made by the 1st respondent. The petition relates to the assessment year 1957-58. For the said year the said firm of J. B. Mangaram Co. was assessed by Shri B. R. Adwalpalkar, Income-tax Officer, Special Investigation Circle A. Nagpur, and the total income of the said firm was computed at Rs. 16,00,419. By an order dated 29th March, 1966, the said firm was duly registered, and by reason of such registration the share of profit of each partner in the firm was duly apportioned to each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evision application to the 2nd respondent under section 33A(2) of the Indian Income tax Act, 1922, and this was disposed of by the 2nd respondent by his order dated 21st June, 1966 ; copies of this revision application and the order made thereon are to be found as exhibits F and G, respectively, to the petition. In this petition the legality of the original order of rectification made on 24th March, 1966, by the 1st respondent and the order on the revision application made by the 2nd respondent on 21st June,1966, has been challenged. According to the petitioners, there are four grounds on which the aforesaid orders are bad and liable to be set aside These grounds are summarised in paragraph 9 of the petition. In the first place, according t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rectified. It is submitted that the alleged mistake sought to be rectified by the 1st respondent was not a mistake apparent on the face of the record, being one which can be rectified by the 1st respondent under the provisions of section 35 of the Income tax Act, 1922. In the affidavit-in-reply, the rectification is sought to be justified mainly on the basis of the definition of earned income to be found in section 2(6AA) of the Income-tax Act, 1922. it is submitted in the affidavit in reply that by reason of this definition any income which is exempt from tax under section 14(2) of the Act is not to be regarded as earned income, and that, therefore, it is deemed to be unearned income and surcharge is leviable thereon. It is further alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recognised commentator supporting either stand. On a technical interpretation of the provisions it is possible to take a view in favour of the department, viz., that this part of the income of the firm on which the, assessee is given an exemption and, therefore, partial relief, is to be treated as unearned income in his hands for the purpose of computing surcharge. From the commonsense point of view much can be said in favour of what is submitted by the counsel for the assessee in this petition and in the other petitions filed by the other partners of J. B. Mangaram Co. Ultimately, it has been submitted very strenuously by the counsel for the petitioners that the position is not absolutely clear, and is one which is arguable. It was then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act, 1961, is limited to rectification, of mistakes which are apparent from the record. An error apparent from the record is not only confined to an error of fact but may also include errors of law. But it is necessary that the error must be apparent on the examination of the record itself without entering into any fresh or additional investigation. It must be obvious and patent from the record and an error which is not obvious or patent and can only be discovered as a result of an argument cannot be an error apparent from the record The petitioner-firm, which was non-resident, was granted registration under the Income-tax Act and assessments for 1958-59, 1960-61, 1961-62 and 1962-63 were completed on such basis. Subsequently, the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etation of section 14(2)(aa) and section 2(6AA). It is not possible for me to say that the views canvassed on behalf of the petitioners cannot conceivably be taken. If this be so, then I am bound by the observations in the National Rayon Corporation's case and must hold that this was not a mistake apparent from the record, and the Income-tax Officer, therefore, acted without jurisdiction in making the impugned order of rectification. It is true that an error apparent on the face of the record is more than a mere clerical or mathematical error. But as the authorities stand, the failure to apply a section of the Income-tax Act, permitting higher taxation, particularly where the application is itself open to argument and debate can never be an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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