TMI Blog1973 (6) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... y he applied to the assessee-company section 23A of the Indian Income-tax Act, 1922. The additional super-tax payable by the assessee-company was computed at 37%, i.e., the rate applicable to a trading company. Subsequently, the Income-tax Officer arrived at the conclusion that the company is an investment company to which the rate applicable is 50% and not 37%. Therefore, he revised his earlier order as per annexure "B" order, dated July 13, 1966, fixing additional super-tax at 50% on the net distributable profit. The assessee unsuccessfully challenged the latter order before the Appellate Assistant Commissioner. On further appeal, the Tribunal held that section 154 of the Income-tax Act, 1961 (for short, "1961 Act"), is not applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in Kalawati Devi Harlalka v. Commissioner of Income-tax. Sikri J. (as he then was), delivering the judgment of the court, said : "In our view, section 6 of the General Clauses Act would not apply because section 297(2) evidences an intention to the contrary..... It is true that whether a different intention appears or not must depend on the language and content of section 297(2). It seems to us, however, that by providing for so many matters mentioned above some in accord with what would have been the result under section 6 of the General Clauses Act, and some contrary to what would have been the result under section 6, Parliament has clearly evidenced an intention to the contrary." Clauses (a), (c), (d)(i), (e) and (f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, in passing annexure "A" order. The question is whether the Income-tax Officer can rely on any of the provisions of the repealed Act to pass the rectification order (annexure "B"). This will depend upon the answers to the following questions : (A) Are proceedings for rectification, a matter arising out of assessment of a company or its shareholder in relation to which section 23A has continued operation ? and (B) Does section 35 of the repealed Act provide for rectification of an order under section 23A of that Act ? Though the word "assessment" in its comprehensive and wider sense may include not only computation of income, but also determination of liability, machinery for imposing liability and procedure in that behalf, an ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, follows that the proceedings of the Income-tax Officer under section 23A are not proceedings for assessment of tax. The rectification proceedings in this case, therefore, cannot be said to arise out of any "assessment". Further, we are of the view that section 35 of the repealed Act does not enable the Income-tax Officer to rectify mistakes in an order under section 23A of that Act. Sub-section (1) of that section reads (omitting the provisos) : "35. (1) Rectification of mistakes.--The Commissioner or Appellate Assistant Commissioner may, at any time within four years from the date of any order passed by him in appeal or, in the case of the Commissioner, in revision under section 33A and the Income-tax Officer may, at any t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pectively, and that proceedings under section 23A do not come within the scope of section 35. In Sankappa's case the question arose, with reference to section 26A of the 1922 Act. The assessees were all partners in two different firms. The Income-tax Officer refused registration of the firms and assessed them as unregistered firms. The orders refusing registration were taken up in appeal, which were allowed. Consequently, earlier assessments of the firms were revised. The Income-tax Officer thereafter issued notices proposing to rectify the individual assessments of the partners. This was impugned by them. Therein M. M. Parikh's case, which was pressed in support of the appellants' contention, was distinguished on the ground that what was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isted before the passage of the Act." First Additional Income-tax Officer v. Uppala Peda Venkataramanayya is another decision in point. Dealing with retrospective operation of the Income-tax Act, 1961, the Andhra Pradesh High Court said : " It is, therefore, clear from the statement of law made by recognised authorities that a statute affecting vested rights is prima facie prospective unless the statute expressly or by necessary implication indicates to the contrary. Even when it is retrospective in operation, courts should confine its operation only to the extent the language renders it necessary. Further, if an Act is to a certain extent retrospective, when we reach the line at which the words of the sections cease to be plain, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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