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TMI Blog1958 (4) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions contained in section 18A, sub-section (5), of the Act as it then stood. On May 24, 1953, the Amendment Act came into force. Section 1, sub-section (2), of the Amendment Act provides that "subject to any special provision made in this behalf in this Act, it shall be deemed to have come into force on the first day of April, 1952". By section 13 of the Amendment Act, a proviso was added to section 18A(5) of the Act. The effect of the amendment made by the insertion of the said proviso to section 18A(5) was that the assessee was entitled to get interest at 2% not on the whole of the advance amount of tax paid by him as before but only on the difference between the payment made and the amount at which the assessee was assessed to tax under the regular assessment under section 23 of the Act. After the Amendment Act was passed, the first appellant exercised his power under section 35 of the Act and purported to rectify the mistake apparent from the record in regard to the credit for Rs. 50,603-15-0 allowed by him to the assessee. The first appellant held that the assessee was really entitled to a credit of only Rs. 21,157-6-0 by way of interest on tax paid in advance as a resul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso, the assessee would be entitled to obtain a credit for Rs. 50,603-15-0. It is also common ground that, if the subsequently inserted proviso covered the assessee's case, he would be entitled to a credit only of Rs. 21,156-9-0. It is thus obvious that the order giving the relevant credit to the assessee was valid when it was made and that it would be erroneous under the subsequent amendment. Under these circumstances, was the first appellant justified in exercising his power of rectification under section 35 of the Act ? In deciding this question it would be necessary to determine the true legal effect of the retrospective operation of the Amendment Act. Section 1, sub-section (2), of the Amendment Act expressly provides that subject to the special provisions made in the said Act it shall be deemed to have come into force on the first day of April, 1952. The result of this provision is that the amendment made in the Act by section 13 of the Amendment Act must, by legal fiction, be deemed to have been included in the principal Act as from the first of April, 1952, and this inevitably means that, at the time when the Income-tax Officer passed his original order on October 9, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment. The learned Judge then added that "their Lordships can have no doubt that the provisions which, if applied retrospectively, would deprive of their existing finality orders, which, when the statute came into force, were final, are provisions which touch existing rights." The argument for the respondent is that the assessee has obtained a right under the order passed by the Income-tax Officer to claim credit for the specified amount under section 18A(5) and the said right cannot be taken away by the retrospective operation of section 13 of the Amendment Act. The same argument is put in another form by contending that the finality of the order passed by the Income-tax Officer cannot be impaired by the retrospective operation of the relevant provision. In our opinion, this argument does not really help the respondent's case because the order passed by the Income-tax Officer under section 18A(5) cannot be said to be final in the literal sense of the word. This order was and continued to be liable to be modified under section 35 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... encement of the Amendment Act. Section 7, sub-section (1), adds two provisos to section 9 of the principal Act by clauses (a) and (b). Sub-section (2) of section 7 then lays down that the amendments made in clause (a) of sub-section (1) shall be deemed to be operative for any assessment for the year ending the 31st day of March, 1952, whether made before or after the commencement of this Act and where any such assessment has been made before such commencement, the Income-tax Officer concerned shall revise it whenever necessary to give effect to this amendment. The position under section 30, sub-section (2), of the Amendment Act is substantially similar. By sub-section (1) of this section certain additions and amendments are made in the schedule to the principal Act by clauses (a), (b), (c) and (d). Sub-section (2) then provides for the retrospective operation of the amendment made by sub-section (1) in terms similar to those used in section 7, sub-section (2). It is clear that the provisions in sections 7 and 30 are intended for the benefit of the assessees and so the Legislature may have thought it necessary to confer on the Income-tax Officer specific and express power to revise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a specific and clear provision of the statute and that must inevitably be treated as a mistake of law apparent from the record. If a mistake of fact apparent from the record of the assessment order can be rectified under section 35, we see no reason why a mistake of law which is glaring and obvious cannot be similarly rectified. Prima facie it may appear somewhat strange that an order which was good and valid when it was made should be treated as patently invalid and wrong by virtue of the retrospective operation of the Amendment Act. But such a result is necessarily involved in the legal fiction about the retrospective operation of the Amendment Act. If, as a result of the said fiction, we must read the subsequently inserted proviso as forming part of section 18A(5) of the principal Act as from April 1, 1952, the conclusion is inescapable that the order in question is inconsistent with the provisions of the said proviso and must be deemed to suffer from a mistake apparent from the record. That is why we think that the Income-tax Officer was justified in the present case in exercising his power under section 35 and rectifying the said mistakes. Incidentally we may mention that in M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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