1984 (3) TMI 26 - HC - Income Tax

Summary

Issues:
Calculation of penalty under section 271(1)(c) for registered firm treated as unregistered firm, rectifiability of mistake under section 154 of Income-tax Act.

Analysis:
The judgment deals with penalties imposed on a registered firm under section 271(1)(c) for assessment years 1964-65 and 1965-66, calculated as if the firm were unregistered. The firm contended that annuity deposit payable should be deducted while calculating tax as an unregistered firm, which was denied by the Income-tax Appellate Tribunal. The firm then sought reference on two questions, but the Tribunal referred only one question regarding rectifiability of the mistake under section 154 of the Income-tax Act.

The High Court noted that the issue of deducting annuity deposit from the total income of a registered firm treated as unregistered for penalty calculation had been settled in previous cases. The court emphasized that the mistake of not deducting the annuity deposit was apparent, glaring, and fell within the scope of rectification under section 154. The court referred to precedents and held that the mistake was rectifiable, disagreeing with the Tribunal's view.

The court rejected the argument that the matter was debatable, emphasizing that the view in previous cases had been consistent and not open to multiple interpretations. The court cited the principle that a mistake apparent on the face of the record, involving a misreading of a section leading to a wrong calculation, can be rectified under section 154. The court agreed with the view that such mistakes are rectifiable and found the Tribunal's decision erroneous in this regard.

In conclusion, the High Court answered the referred question in favor of the assessee, stating that the mistake was rectifiable under section 154. The court awarded costs to the assessee, with agreement from the other judge on the bench.