TMI Blog1976 (5) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... The facts found or admitted as will appear from the statement of the case and the annexures thereto may briefly be noted. The assessee is General Electric Co. of India Ltd., Calcutta. At the relevant time, that is, during the assessment year 1959-60, the assessee was known as the Associated Electric Industries (India) Private Ltd. Subsequently, on and from the 29th March, 1967, the assessee first became a public limited company and thereafter suffered a merger pursuant to an order of this court dated the 27th February, 1969. The assessment year involved is 1959-60 in which the assessee was assessed to wealth-tax. In the order of assessment dated the 4th November, 1960, of income-tax, the Income-tax Officer allowed a deduction of the wealth-tax paid by the assessee. Thereafter, on the 5th August, 1964, the Income-tax Officer issued a notice alleging that there was a mistake apparent from the record within the meaning of section 154 of the Income-tax Act, 1961, in the said order of assessment and proposed to rectify the same. The assessee was allowed an opportunity of being heard. The mistakes which the Income-tax Officer had in contemplation were, firstly, that the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax which was reported in [1966] 60 ITR 277. The Supreme Court confirmed the view of the Kerala High Court in the case of Southern India Tea Estates Co. Ltd. [1964] 51 ITR 47. The Tribunal held that if the Supreme Court's decision had already been there when the Income-tax Officer passed his orders, then the omission to apply the law as laid down by the Supreme Court would be taken as a rectifiable mistake. At the time when the Income-tax Officer passed the order of assessment none of the decisions were in existence and, therefore, at the time when the Income-tax Officer was considering the problem two opinions were possible. The fact that subsequently only one of the said two views was held to be the correct view did not make the mistake or error in the original order a rectifiable mistake and did not justify the rectification proceedings. The Tribunal rejected the contentions of the revenue that the Income-tax Officer had not applied his mind to the facts at the time of the original assessment. The Tribunal held that the omission to charge interest under section 18A(7) was also not a rectifiable error. The Tribunal noted that sections 18A(6) and 18A(7) empowered the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of rectification was made under the wrong Act and was bad on that ground also. In fact, the Tribunal made it quite clear that if there were rectifiable errors in the order of assessment the Tribunal would have held that the correct Act and the correct section would be deemed to have been applied. The contentions of Mr. Sen are not without substance. We have carefully read the order of the Tribunal. It does not appear to us that the Tribunal has decided the matter on the ground that a wrong section has been applied. The actual decision of the Tribunal rests on the finding of the Tribunal as to whether there is a rectifiable mistake or not and this finding has been challenged by the questions in this reference. To come to the questions referred, Mr. Ray on behalf of the assessee rightly contended that question No. 2 is fully covered by the decision of the Supreme Court in the case of S. A. L. Narayan Row v. Ishwarlal Bhagwandas [1965] 57 ITR 149, fully discussed below. Mr. Sen on behalf of the revenue could not distinguish the facts and circumstances of this case from those before the Supreme Court. Accordingly, we answer question No. 2 in the affirmative and in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order in the instant case. Under this amended Act the assessee was entitled to a lesser sum than what was allowed to him originally on account of interest. After the amending Act was passed, the Income-tax Officer exercised his power under section 35 of the Indian Income-tax Act, 1922 and rectified the mistake in the order of assessment and demanded repayment of the sum which was allowed to the assessee in excess. It was held by the Supreme Court that the amendment to section 18A must be deemed to have been included in the principal Act as from 1st April, 1952 and, therefore, must be deemed to be the law on the date of the passing of the assessment order. Consequently, it was held that the assessment order was inconsistent with the proviso to section 18A and must be deemed to suffer from a mistake apparent from the record and that the Income-tax Officer was justified in exercising his power under section 35 and rectifying the mistake. The Supreme Court laid down further that a glaring and obvious mistake of law can be rectified under section 35 inasmuch as a mistake of fact apparent from the record. The Supreme Court also noted that the Amending Act specifically gave power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment made on the 31st March, 1953, it was found that the tax paid on the basis of the estimate of the assessee was less than 80 per cent. of the tax actually assessed. On the unpaid tax no interest was charged. In 1956 on objections from the audit, the Income-tax Officer proceeded under section 35 of the Indian Income-tax Act, 1922, and passed an order charging interest on the ground that the failure to charge interest under section 18A(6) was a mistake apparent from the record and could be rectified. This order was confirmed by the Commissioner of Income-tax under section 33A of the Act. Thereafter proceedings were held under article 226 of the Constitution at the instance of the assessee who prayed for quashing of the order of the Commissioner under a writ of certiorari. A Full Court of the High Court of Bombay quashed the orders passed by the Income-tax Officer and the Commissioner. An appeal was preferred from the judgment of the Bombay High Court to the Supreme Court. The Supreme Court held that the High Court was right, in setting aside the orders passed by the Income-tax Officer and the Commissioner of Income-tax. The Supreme Court found that section 18A(6) had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 540 (SC). Mr. Ray relied on the following passage in the judgment of the Supreme Court : " Science has not yet invented any instrument to test the reliability of the evidence placed before a court or tribunal. Therefore, the courts and tribunals have to judge the evidence before them by applying the test of human probabilities. Human minds may differ as to the reliability of a piece of evidence. But in that sphere the decision of the final fact-finding authority is made conclusive by law." Mr. Ray also cited the case of K. M. Shanmugam v. S.R.V.S. (P.) Ltd., AIR 1963 SC 1626. Mr. Ray relied on the following passage of the judgment of the Supreme Court : " Das Gupta J. makes yet another attempt to define the expression when he says in Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale, AIR 1960 SC 137, thus : ' An error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record. As the above discussion of the rival contentions show the alleged error in the present case is far from self-evident and if it can be established, it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de on the 4th November, 1960, and the order of rectification was passed on the 16th November, 1964. The law is well settled. If an Act is passed with retrospective effect the deeming provision must be given its full and logical effect. All the incidents which follow from retrospective legislation has to be given effect to. The proposition was laid down by Lord Asquith in the case of East End Dwellings Co. Ltd. v. Finsbury Borough Council [1952] AC 109, 132 ; [1951] 2 All ER 587, 599 (HL) in the following language : " If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of these in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs. It does not say that, having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs. " This passage has been quoted with approval by the Supreme Court in the case of Bombay Dye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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