# 846 SHRI P. 13. MAHENDRA MILLS LTD v. DESAI, APPELLATE ASSISTANT COMMISSiOl~ER OF INCOME TAX AND ANR

- **Citation:** [1975] 3 S.C.R. 846
- **Court:** Supreme Court of India
- **Decided:** 1975-03-04
- **Case number:** Civil Appeal No. 1793 of 1970
- **Bench:** V. R. Krishna Iyer, R. s. SARKARIA, A. c. GUPTA
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/846-shri-p-13-mahendra-mills-ltd-v-desai-appellate-assistant-commissiol-er-of-6399
- **Pages:** 8

## Headnote

B
Jnconw-Tax Act, 1961-5, 35-Scope of-Record of appeal-Mcn11i11g of.
I~ the course of assessment of the income of the assessee for the year
1959-60 the Income-tax Officer found a discrepancy betwee11 the value of its
.closing stock which ·was shown in its books as Rs. 5.89 lakhs a?d the records
of the State Bank in which it was shown as Rs. 8.04. lakhs. 1 he Income-tax
Officer rejected the explanation of the assessee regarding the discrepancy an.d
C
worked out the closing stock at Rs. 8.04 lr.khs.
When the assessee's appeal
against th's order was pending before the Tribunal, the Income-tax
O_ffict~r
took up for assessment the income of the assessee for the assessment year
?960-61.
Rejecting the contention of the asscssee that the opemng stock for
the assessment year should be taken to be Rs. 8.04 lakhs but the Income-tax
Officer took it as Rs. 5.89 lakhs.
On Appeal the Appellate Assistant Com.
missioner accepted the contention of the assessee and reversed the decision
of the Income-tax Officer.
Neither party appealed against this order. Later.
however, the Tribunal accepted the explanation of the assessee in regard to
D
the discrepancy in the closing stock for the assessment year 1959-60 rn1d h~B
that the closing stock should be taken as Rs. 5.89 lakhs as shown in its booh.
Thereupon the Income-tax Officer moved the Appellate Assistant Commissioner
to rectify his order relating to the assessment year 1960-61 and bring it in
conformity with the Tribunal's order.
The Appellate Assistant Commissioner accordingly passed an order.
The assessee then inoved the High Court under Art. 226 of t .. e Constitution
E
alleging that the Appellate Assistant Commissioner had overstepped the juri:,-
diction conferred under s. 35 of the Income-tax Act. The HiRh Court dismissed
the petition.
On appeal to this Court it was contended that the words 'record of apr<cal'
in s. 35 of the .Act would mean the record f~r the assessment ycm· J 960-6:
and not ·the entl!e r•ecord of the a~sessee relatmg to the earlier years as also
~f later yea!·s; and (2). ~he Appellate. Assistant Co~missio~1er had no jurisdic·
F
t1on to rectify hr.s dec1s1on by referring to something which took place four
years after that dcc1s1on.
Dismissing the appeal.
HELD : ( 1) For the purpose of ascertaining the true s:ock position tile
rec?r'.1 of the assessment for assessment year 1959-60, including 1he "{ribunal's
dec1s10n, y.:as not extraneous r:ir irrelevant to the record of the appeal and
could leg1timately. be
loo~.ed mto .bY the Appellate Assistant Conwis,ioncr
G
for the purpose or correcting the m1slake.
[852C]
S!nce the closing stock of .one assessment year furnishes the figure of 11-, 0
opei:img stock for the succee.drng year it follows !hat the record ;howin" ti:,
clos!llg stock of assessment year 1959-60 formed a part of the evidence rel~va~~
to the a;isessment for. assessment y~~r 196-0-61.
To the extent of ascertninine
the closmg and opet1'ng stock pos1t10ns, the two assessments telescoped : 1 -
each other.
The Tribunal's finding that the value of the closing stock 'to~
?ssessment year 1959-60 h~d completely replaced the Income-tax Officer's findm!!
H
10 regard ~o that fact with effect from the date of the Jncome-t
Offi
:.~
e>rder relatmg to the assessment year 1959-60.
If the Jncome-t:: Offi~~<
I ...
•
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H
J\IAHENDRA MILLS V, P. B. DESAI (Sarkaria, !.)
847
order relating to assesoment year 1959-60 was relevant to and part of tile
'record of appeal' the TribuJ!al's decision which st,perseded that finding Wes
equally so within the contemplation of s. 35 of the Act.
[851G-H]
(2) The finding of the Tribunal as to the valuation of stock, although
recorded sabsequent to the appellate decision of the Appellate Assistant Commissioner, could be taken as forming part of the record of the appeal and
taken into accotmt for the purpose of correcting the mJstake nnder s. 35, as
to the value of the opening stock for the assessment year 1960-61, apparent
from that re~ord. [853B]

## Text

:846
SHRI P. 13.
MAHENDRA MILLS LTD.
v.
DESAI, APPELLATE ASSISTANT COMMISSiOl~ER
OF INCOME TAX AND ANR.
March 4, 1975
A
[V. R. KRISHNA IYER, R. s. SARKARIA AND A. c. GUPTA, JJ.]
B
Jnconw-Tax Act, 1961-5, 35-Scope of-Record of appeal-Mcn11i11g of.
I~ the course of assessment of the income of the assessee for the year
1959-60 the Income-tax Officer found a discrepancy betwee11 the value of its
.closing stock which ·was shown in its books as Rs. 5.89 lakhs a?d the records
of the State Bank in which it was shown as Rs. 8.04. lakhs. 1 he Income-tax
Officer rejected the explanation of the assessee regarding the discrepancy an.d
C
worked out the closing stock at Rs. 8.04 lr.khs.
When the assessee's appeal
against th's order was pending before the Tribunal, the Income-tax
O_ffict~r
took up for assessment the income of the assessee for the assessment year
?960-61.
Rejecting the contention of the asscssee that the opemng stock for
the assessment year should be taken to be Rs. 8.04 lakhs but the Income-tax
Officer took it as Rs. 5.89 lakhs.
On Appeal the Appellate Assistant Com.
missioner accepted the contention of the assessee and reversed the decision
of the Income-tax Officer.
Neither party appealed against this order. Later.
however, the Tribunal accepted the explanation of the assessee in regard to
D
the discrepancy in the closing stock for the assessment year 1959-60 rn1d h~B
that the closing stock should be taken as Rs. 5.89 lakhs as shown in its booh.
Thereupon the Income-tax Officer moved the Appellate Assistant Commissioner
to rectify his order relating to the assessment year 1960-61 and bring it in
conformity with the Tribunal's order.
The Appellate Assistant Commissioner accordingly passed an order.
The assessee then inoved the High Court under Art. 226 of t .. e Constitution
E
alleging that the Appellate Assistant Commissioner had overstepped the juri:,-
diction conferred under s. 35 of the Income-tax Act. The HiRh Court dismissed
the petition.
On appeal to this Court it was contended that the words 'record of apr<cal'
in s. 35 of the .Act would mean the record f~r the assessment ycm· J 960-6:
and not ·the entl!e r•ecord of the a~sessee relatmg to the earlier years as also
~f later yea!·s; and (2). ~he Appellate. Assistant Co~missio~1er had no jurisdic·
F
t1on to rectify hr.s dec1s1on by referring to something which took place four
years after that dcc1s1on.
Dismissing the appeal.
HELD : ( 1) For the purpose of ascertaining the true s:ock position tile
rec?r'.1 of the assessment for assessment year 1959-60, including 1he "{ribunal's
dec1s10n, y.:as not extraneous r:ir irrelevant to the record of the appeal and
could leg1timately. be
loo~.ed mto .bY the Appellate Assistant Conwis,ioncr
G
for the purpose or correcting the m1slake.
[852C]
S!nce the closing stock of .one assessment year furnishes the figure of 11-, 0
opei:img stock for the succee.drng year it follows !hat the record ;howin" ti:,
clos!llg stock of assessment year 1959-60 formed a part of the evidence rel~va~~
to the a;isessment for. assessment y~~r 196-0-61.
To the extent of ascertninine
the closmg and opet1'ng stock pos1t10ns, the two assessments telescoped : 1 -
each other.
The Tribunal's finding that the value of the closing stock 'to~
?ssessment year 1959-60 h~d completely replaced the Income-tax Officer's findm!!
H
10 regard ~o that fact with effect from the date of the Jncome-t
Offi
:.~
e>rder relatmg to the assessment year 1959-60.
If the Jncome-t:: Offi~~<
I ...
•
A
B
E
H
J\IAHENDRA MILLS V, P. B. DESAI (Sarkaria, !.)
847
order relating to assesoment year 1959-60 was relevant to and part of tile
'record of appeal' the TribuJ!al's decision which st,perseded that finding Wes
equally so within the contemplation of s. 35 of the Act.
[851G-H]
(2) The finding of the Tribunal as to the valuation of stock, although
recorded sabsequent to the appellate decision of the Appellate Assistant Commissioner, could be taken as forming part of the record of the appeal and
taken into accotmt for the purpose of correcting the mJstake nnder s. 35, as
to the value of the opening stock for the assessment year 1960-61, apparent
from that re~ord. [853B]
C£•mmissio11er of I11come-tax v. Kliem Chand Ramdas 61 I.T.R. 41~-LR.
65 I.A. 236, referred to.
Mis. Malwran Mills (Pril'ilte) Ltd. v. The l11co111e-tax O.fficer,
l'orbandar
(1959] Suppl. 2 S.C.R. 547 and M. K. Venkatacha/am
v.
Bombay Dyeing &
Mfg. Co. Ltd., (1959] S.C.R. 703, followed.
(3) There is no room for apprehension that the income-tax authoritie.s.
under the gu.ise of correcting mistakes lightly reopen assessments long past and
olosed and thus introduce an element of instability in the administration of
the Act.
A decision is a precedent on its own facts.
Each case presents its
own features
The Income-tax authorities and the Tribunals are supposed to
a>pp!y the 1-ricio of a decision to the. facts of particular cases with due care and
discernment, bearing in mind the restricted scope of their jurisdiction under
s. 35 and the object for which it is ~onferred. [853F]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1793 of 1970.
From the judgment and order dated 24th June, 1970 of the Gujarat
High Court in Special Civil Applicatioia No. 1259 of 1969.
S. T. Desai and I. N. Shroff, for the appellant.
T. A. Ra111aclw11dra11 and S. P. Nayar, for the respo'ddents.
The Judgment of the Court was delivered by
SARKAR!/'>, J.
This appeal directed against the judgment, datd
24.6.1970, of the High Court of Gujarat raises a question in regard to
the interpretation of s.35 of the Indian Income-tax Act, 1922 (for short.
called the Act).
·
The assessee is a Limited Company which manufactures textiles
in its Mill.
For the assessment year 1959-60, the assessee showed
in its books the value of its closing stock at Rs. 5,89,439 /-. The
Iincome-tax Officer in the course of the assessment, .detected that there
was some discrepancy between the value of the stock of cotton shown
in the books of the assessee and the' records of the State Bank of India
with which it had hypothecated that stock.
The assessee tried to explain away this discrepancy by saying that it had given an incorrect
figure of its stock to the Bank with a view to obtain higher amount
of over-draft.
The Income-tax Officer rejected this explanation and
added Rs. 2,14,682/- to the value of the stock so that according to
his assessment, the closing stock for the assessment year 1959-60
worked out to· Rs. 8,04,121/-. Having'failed in first appeal before
the Appellate Assistant Commissioner, the assessee preferred a second
appeal to the Tribunal.
SUPREME COURT REPORTS
[19751 3 s.c.R.
?·ending the appeal before the Tribunal, the Income-tax Offi~er
tc,:,1~ up the assessment of its income for the !1ext assessm<mt year i.e.
J 960-01.. The asscssee contended that openmg stock for the assessment year 1960-1961 should be taken as Rs. 8,04,121/-. The Incomet::.x Officer rejected this contention and took up the opening stock for
that assessment year at Rs. 5,89,439 /- without making the addition of
Rs. 2, 14,682/-·
Agai,1st this order of the Income-tax Officer,
the
asse...;sce went in appeal before the Appellate Assistant Commissioner
who, on 30.6.1965, accepted the same. clespicc opposition from the
J I'coi;:e-tax Officer who had pcrsonaily appeared there to defeml his
order and held thnt the opening stock for the asscs,ment year 1960-
. 1961 be taken at Rs. 8,04,121/-. Neither party appealed against
this Prcler before the Tribunal.
On January 22, 1969, the Tribunal allowed the assessee's appeal
referred to above relati'.1g to the assessment year, 1959-60, and accepted the assessee· s explanation about the discrepancy relafa1g to the
value of stocks between its account-books and those of the Bank. The
Tribunal directed that the addition of Rs. 2, 14,682/- made by the
lncome-tax Officer to the closing stock relating to the assessment year
! 959-60 be deleted.
Thus, according to the Tribunal's decision, the
closing stock for the assessment year 1959-60 (which would ialso be
the opening stock for the succeeding year) was Rs. 5,89,439 / as shown
in the boob of the assessee.
11rnreafter on March 26, 1959, the Income-tax Officer moved the
Appellate Assis1~ant Commissioner requesting that the latter's appellate
crder, elated 30.6.1965, relating to the assessment year 1960-61
be
r~rtified and brought in conformity with the Tribunal's order.
The Appellate Assistant Commissioner then issued a <aotice under
::: 154 of the Act to the assessec to show cause why the appellate order.
dated 30.6.1965, be not rectified under s.35 of the Act.
Despite objectioi1 frc:11 the asscsscc, on 28.6.1969, the Appellate As-;ist;mt Commissioner passed an order for rectifying his decision elated 30.6.1965
The order of rectification runs thus :
"_ ... in the instant case there is a mistake apparent from
r~cord of appeal as pointed out ia the I.I.O's letter clntcd
26.3.69 mentioned above.
The appellate order whicl1
is
now souglit to be rectified, was passed on 30.6.65. The
rectification is therefore in time.
Accordingly I direct that
the value of opening stock for the A.Y. 60-61 be taken at
Rs. 5,89,439/-, being equal to the value of the closing stock
determined by the Tribunal for the A.Y. 1959-60. Therefore, the relief of Rs. 2,14,682 /- given to the assessee in the
origi·aal appellate orper, elated 30.6.1965, stands cancelled.
The ITO is directed to give effect to this order."
The assessee then impugned this order by a writ petition under
.Article 226 of the Constitution before the Gujarat High Court, on the
giround that the, Appellate Assistant Commissioner had overstepped
tl1e jurisdiction conferred on him under s.35 of the Act.
The High
Court dismissed the petition.
Hence this appeal.
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l\!AHENDRA MILLS \', P. B. DESAI (Sarkaria, J.)
84 9
Before the High Court, the assessee raised two contentions which
have beea re-agitated before us.
They are : (i) The Appellate Assistant Commissioner had no jurisdiction to make the impugned order
because there was no misrake apparent "from the record of the appeal"
within the contemplation of s.35 of the Act. (ii) Assuming that the
words "record of the appeal" in s.35 were comprehensive enough to
include the record of other related proceedings, the Appellate Assistant Commissioner had no jurisdictioa to rectify his decision dt. 30.6.65,
by referring to some thing which actually and factually took place four ·
years after that decision.
Elaborating his contentions, Mr. Desai submits that in the context
of the present case, the words "record of the appeal" in s.35 would
mean the record for the assessment year 1960-61 which the Appellate
Assistant Commissid.1er had actually before him at the time of hearing
of the appeal and not the entire record of the assessee relating to the
carli<:r years and a fortiori of later years.
Such appellate record, it
is mentioned, had no apparent error which could be rectified under
s.35.
The argument proceeds, that the order of the Tribunal for the
assessment year 1959-60, made on 22.1.1969-whieh gave rise to the
mistake-was something subscqueJ.1t and extraneous and could not,
by any stretch of language, be called a part of the "record of the appeal"
rehting to the assessment year 1960-61. Support for this contention
has been sought from a decision of the Mysore High Court in. Ganapathi
Subbaraya Hegde v. State of Mysore,(1) which proceeds on an interpretation of s.37 of the Mysore
Agricultural Income-tax Act.
Learned Counsel has tried to disHaguish the decision of this Court in
M/s. Mahrana Mills (Private) Ltd. v.
The Income-tax Officer.
Porbandar(2) on the two-fold ground
(i) that that was a case of
depreciation in which the written-down value had to be calculated with
reference to the record of past years, and (ii) unlike the present case,
there, the error was in existence and apparent from the record of the
appeal at the time of its decision. It is argued that-Maharana Mills'
case (>upra) was not one where the mistake was-rectified with reference to something happening subsequently to the original decision of the
Appellate Assistant Commissioner.
Attempt has also been made to
distinguish the Privy Council decision in Commissioner of Incometax v. Kliem Chand Ramdas(8 ) on the ground that there the mistake
hJd become apparent as a result of the cancellation of registration of
the~ assess<:e firm in revision under s. 33 of the Act.
As against this, Mr. Ramachandran, learned Counsel for the Revenue submits that the "record of the appeal" spoken of in s.35 is the
. entire evidence which could be looked into by the Appellate Assistant
Commissioner for the purpose of the appeal.
Since the closing stock
of one year and the opening stock of the succeeding year must necessarily be the same, the record of the assessment year 1959-60, was
also relevant and therefore, a part of the record of the appeal arising
out of the assessment for 1960-61. It is further canvas~ed that the
(I) 84 I.T.R. 523.
(2) [1959] Supp. 2, S.C.R. 547.
(3) 61, I. T. R. 414- LR. 65 T. A. 236.
8-·564SCI 175
850
SUPREME COURT REPORTS
ll975l 3 s.c.R.
Tribunal had for the I.T.O's frading as to the value of the closing stock
for the assessment year 1959-60 being Rs. 8,04,121/-
completely
substituted its own finding regarding such v•alue being Rs. 5,89, 439 /-,
with effect from the date of I.T.O's order, and thus the Tribunal's
order, though passed subsequently, had, wit~ retrospec.:tive effect, become a part of the record of the appeal relatmg to the assessment year
l 960-61, which could legitimately be looked int~ ~y the Ap~llate
Assistant Commissioner for the purpose of asccrtammg and rect1fyr,1g
the mistake in his appellate decision.
Relia1~cc has been placed on
the decisions of this Court in Maharana Mills (P) Ltd. v. Income-tax
Officer, Porbandar (supra) and that of the Privy Council in Commi.i·
sioner of Income-tax v. Khemchand Ramdas (supra).
The material part of s.35 is in these terms :
"35 ( 1). 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 time., within four years from
the dat1~ of any assessme1t order or refund order passed by
him on bis own motion rectify any mistake apparent from the
record of the appeal, revision, assessment or refund as the
case may be, and shall within the like period rectify any such
mistake which has been brought to his notice by an
assessee ... "
· 111e crucial words arc those that have been underlined.
The interpretation of the words "record of appeal" is not a matter
which is res integra.
It came up for consideration before '.his Court in
Maharana Mills case (Supra). The appellant therein (hereinafter
called the Mills) was assessed to income-tax for the assessment year
1953-54 and by an order of June 30, 1955, the J.T.0. allow~d depreci<ttbn under s. 10(2) (vi) of the Act in the amount of Rs. 3,48,105/-.
On August 8, J 955, the Mills made an application before the I.T.0.
for rectification of the order under s.35 of the Act pointing out certain
mistakes in calculations of the depreciation amount. The Incomctax Officer by his order, dated February 27, 1956, corrected the "written
down value" of the differe,1t properties of the Mills and detem1ine<l
the total allowable depreciation to be Rs. l ,94,074/-. The Mills
challenged this order of rectification on several grounds two of tl!Jem.
which arc material for our purpose, were: (a) that the provision of
s.35 under which the Income-tax Officer had acted, was not mean,t for
the purpose of making corrections in written down values, the correct
provision being s.34 which specifically refers to excessive depreciatiou.
:v.id (b) that, in any case, he had exceeded· his jurisdiction under .s.3:>
in calculating the depreciation on the written down value of the buildings and machinery of the appellant acting s110 motu and that he could
corre. ' only those mistakes which had been pointed out by the milfa.
The arsument was tbr: recalculation is not rectifying a mistake which
is apparent from the record. This Court negatived these contentions
with thi~ observation :
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MAHENDRA MILLS v. p D. DESAI (Sarkaria, J.)
8 5 1
"1 he words used in the section are "apparent from the
<ecord" aud the record docs not mean only the order of
assessment but it comprises all proceedings on which the
assessment order is
based and the Income-tax Officer is
ci,1titled for the purpose of exercising his jurisdiction unde_r
s.35 to look into the whole evidence and the law applicable to
asccnain whether there was an error. If he dollbls
the
Written Down Value of the previous year it is open to him
to check up the previous calcul?''' :·,s and if he finds any
mistake it is open to him to make fresh calculations in accordance with the Jaw applicable including the Rules made thereunder."
This Court then noticed
Venkatachalam's case(1)
and Khem
Chand's case (supra) in support of the view taken by it.
Counsel
for the then appellant sought to distinguish these cases on the ground
that the record there considered was the assessment record of that
year and the Income-tax Officer did not have to go to the records
of the previous year. This argument was repelled in these terms :
"That is a distinction without
a difference.
Jf,
for
instance, the Income-tax Officer had found that in the assessment year 1952-53 there was an apparent arithmatic mistake
in the account of the Written Down Value of the prope11ies
which resuited in a correspondin.~ ;i1i,take in the asscssl)lent
of ·,he year in controversy could he not take the corrected
figure for the purposes of the assessment and could it be said
that the mistake was not apparent from the record. A fortiori
if he discovered that the very basis of the different assessments
\vas erroneous because of an initial mistake in determining the
Written Down Value could it be said that this v.-uuld not be a
mistake apparent from the record.
And if' in order to
determine the correct Written Down Value the Income-tax
Officer makes correct calculations, can it be said that that is
not rectifying a mistake apparent from the record but de110rs
it."
The observations of this Court, quoted above, fully apply to the
facts of the case in hand. It will bear repetition that the closing stock
for the assessment year 1959-60 as entered in the books of the assesscc.
was Rs. 5,89,439/-, and as found by the Income-tax Officer
wa;~
Rs. 8,04,121/-. Since the
closing stock of one
assessment year
furnishes the figure 'Of the opening stock for the succeeding year, it
follows that the record showing the closing stock of assessment yen
1959-60· formed a part of the evidence relevant to the assessment for
the assessment year 1960-61. Thus to the extent of ascertaining the
closing and opening stock p·0sitions, the two assessments telescoped
into each other. Jndeed, it was on this basis that the
Appellate
Assistant Commissioner had by his decision dated 30-6-1965 allowed
the assessee's appeal regarding A.Y. 1960-61. The Tribunal's finding,
(I) !1959] S.C.R. 703.
852
SUPREME COURT REPORTS
[1975] 3 S.C.lll.
that the value of the closing stock for A.Y. 1959-60 should be
Rs. 5,89,439/-, had completely replaced the Income-tax
Office:r's
finding in regard to th'at fact with effect from the date of the Incometax Officer's order relating to A.Y. 1959-60. If the I.T.0.'s finding
with regard to the closing stock for A.Y. 1959-60 was relevant to
and part of the "record of appeal", the Tribunal's decision
which
superseded that finding, was equally so within the contemplation of
s.35 of the Act.
It cannot be gainsaid that the mistake in regard
to the opening stock for A.Y. 1960-61 being Rs. 8,04,121/-, was
quite apparent when the Appellate Assistant Commissioner undertook
to rectify his aJ?pellate. order dated 3~-6--65, t~e correct figure of
valuation finally determmed by the Tnbunal bemg Rs. 5,89,439/-.
Thus considered, it is clear that ~or the purpose of ascertaining the
true stock position the record of the assessment for A.Y. 1959-60,
including the Tribunal's decision, was not extraneous or irrelevant
to the record of the appeal and could legitimately be !o'Oked into for
the purpose of correcting the mistake by the Appellate
Assistant
Commissioner.
Thus the first contention of the appellant stands overruled.
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The second point canvassed by Shri Desai is well-nigh covered
D
by the ratio of the privy Council decisions in Khem Chand's
case
(supra). The assessee in that case did not produce his account books
and the lncume tax Officer made an assessment on the 'best-judgmmt
basis'.
On the application of the assessee, however,
he
allowed
registration of the assessee-firm on January 17, 1927.
As it was
a registered firm, he did not in the assessment order made under
s.23(4) on the same day, assess any super-tax. The Ccmmissioner of
E
Income-tax in exercise of his powers under s.33 of the Act, called
for the record, cancelled the registration on January 28, 1927, and
directed the I.T,O.
to take necessary consequential action.
The
result was that by an order, dated May 4, 1929, the assessee was
assessed to super-tax. Three days later, a demand notice was issued.
On these facts, ddivering the opinion of the Judicial Committee, Lord
Romer made these pertinent observations in regard to the applicability
F
of s.35 :
"in their Lordship's opiniun, the case clearly would have
fallen within the provisions of section 35 had the Incometax Officer exercised his powers under the section within
one year from tne date on which the earlier demand was
served upon the respondents. For, looking at the record
c
of the assessments made upon them as it stood after the
cancellation of the respondent's registration-and the order
affecting the cancellation would have formed part of
the
record-it would be apparent that a mistake had been made
in stating that no super-tax was leviable."
From the quotes above, it is evident that the Judicial Committee
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considered the order of the Commissioner cancelling the registration
of the assessee's firm-although passed about 11 days after
the
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MAHENDRA MILLS V. P. B. DESAI (Sarkaria, J.)
853
original assessment-to have formed part of the record of the assessment, for the purpose of rectifying the mistake as a mistake apparent
from the ·record of the case.
On parity of reas(ming, in the instant
case, the finding of the Tribunal as to the valuataion of the stock,
although recorded subsequently to the appellate
decision of
the
Appellate Assistant Commissioner, could be taken as forming part
of the record of appeal and taken into account for the purpose of
correcting the mistake, under s.35, as to the value of the opening
stock for A.Y. 1960-61, apparent from that record. ,
We do not want to overburden this judgment by a discussion of
Ganapatho Subbaraya Hegde's case
(supra)
cited by Shri Desai.
Suffice it to say that this was a case under s.37 of the Mysore Agricultural IncC1llle-tax Act, 1957.
The notice for rectification issued
in that case and the orciers of the authority were found to be defective
in as much as they did not state that there was any mistake apparent
on the record of the assessment proceedings for the previous three
years· in question.
Maharana Mills'
case
and Khemchand's case
(supra) were not noticed by the High Court in that case.
Lastly, Shri Desai urged that we should not lose sight of the
startling results which might flow from a liberal interpretation of
s.35. It is apprehended that if the phrase "record of the appeal" is
widely interpreted so as to cover the records of all collateral proceedings and subsequent events, it would leave the door wide open to
endless harassment of assessees; the income-tax
authorities would
under the guise of correcting mistakes, lightly reopen assessments long
past and closed, and thus introduce an element of disconcerting instability in the administration of the Act.
In our opinion, there is no worn for any such apprehension. It
must be remembered that a decision is a precedent on its own facts.
Each case presents its own features. The income-tax authorities and
Tribunals are supposed to apply the ratio of a decision, to the facts
of particular cases with due care and discernment, bearing in mind
F · the restricted scope of their jurisdiction under s.35 and the object
for which it is conferred.
The appeal fails and is dismissed with costs.
P.B.R.
Appeal dismissed.