Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6
PETITIONER:
ANCHOR PRESSINGS (P) LTD.
Vs.
RESPONDENT:
COMMISSIONER OF INCOME TAX, U.P. & ORS.
DATE OF JUDGMENT16/07/1986
BENCH:
PATHAK, R.S.
BENCH:
PATHAK, R.S.
MUKHARJI, SABYASACHI (J)
CITATION:
1987 AIR 575 1986 SCR (3) 223
1986 SCC (3) 439 JT 1986 235
1986 SCALE (2)86
ACT:
Income-tax Act, 1961, s. 154 read with s. 84-
Rectification of assessment-Precise factual material to
support the claim for relief-Necessity for.
Super profits Tax Act, 1963-Assessment record-Whether
could be regarded as integral part of the record of income-
tax assessment.
HEADNOTE:
Section 84 (now redesignated as s. 80J) of the Income-
tax Act, 1961 as it stood at the relevant time, provided
that income-tax would not be payable by an assessee on so
much of the profits and gains derived from an industrial
undertaking to which the section applied as did not exceed
six per cent per annum on the capital employed in such
undertaking computed in the prescribed manner. Several
conditions laid down therein had to be satisfied before the
grant of relief could be considered. Section 154 empowers
the Income-tax Officer to rectify any mistake apparent from
the record and for that purpose to amend an assessment
order.
The appellant who did not make a claim for rebate under
s. 84 either during the assessment proceedings or at the
appeal stage subsequently made an application to the Income-
tax Officer under s. 154 praying for rectification of the
assessment order by grant of relief under s. 84, which was
rejected. The revision sought before the Commissioner also
failed.
The writ petition filed before the High Court having
been dismissed, the appeal by special leave was preferred.
It was contended: (1) that an obligation was imposed on the
Income-tax officer by the statute to grant relief which
could not be refused merely because the appellant had
omitted to claim the same, and (2) that the record of the
super profits tax assessment containing the material, which
lay before the
224
Income-tax Officer, must be regarded as an integral part of
the record of the income-tax assessment for granting relief
under s. 84.
Dismissing the appeal, the Court,
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 6
^
HELD: Rectification could only be justified on the
ground of a mistake apparent from the record. If the record
did not contain any material, it could not be said that the
Income-tax Officer had committed a mistake in omitting to
grant relief under s. 84. [227C-D]
Although the jurisdiction under s. 154 to rectify any
mistake apparent from the record is wider than that provided
under r. 1 of Order XLVII of the Code of Civil Procedure to
rectify an error apparent on the face of the record,
nonetheless there must be material to support the claim to
relief under s. 84, and unless such material can be referred
to, no grievance can be made if the Income-tax Officer
refuses to rectify the assessment and refuses relief under
s. 84.[227D-F]
There is a close relationship between the Super Profits
Tax Act and the Income Tax Act, and any change in the
assessment made under the latter has its consequential
impact on the assessment made under the former. The converse
is equally true, especially in view of s. 20(2) of the Super
Profits Tax Act which provides that all the information
contained in any statement or return made or furnished under
the provisions of that Act or obtained or collected for the
purpose of that Act may be used for the purpose of the
Income Tax Act. Therefore, if the record of the super
profits tax assessment contains material pertaining to the
claim under s. 84 of the Income-tax Act, such material can
be considered by the Income-tax Officer for the purpose of
granting relief under s. 84 in the income-tax
assessment.[228D-G]
In the instant case, the appellant has failed to show
that all the material required for satisfying the conditions
requisite for the grant of relief under s. 84 existed on the
super profits tax record at the time when the income-tax
assessment was completed. Therefore, it cannot be said that
in omitting to grant relief under s. 84 when making the
assessment order, the Income-tax Officer committed a mistake
apparent from the record.[229C-D]
Subhash Chandra Sarvesh Kumar v. Commissioner of
Income-tax and Another, [1981] 132 I.T.R. 619 and Income-tax
Officer, Alwaye v. Asok Textiles Ltd., [1961] 41 I.T.R. 732,
referred to.
225
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1700
(NT) of 1974.
From the Judgment and Order dated 23.9.1972 of the
Allahabad High Court in Writ No. 2956 of 1972.
S.K. Dhingra for the Appellant.
M.K. Banerjee, Additional Solicitor General, Miss A.
Subhashini and B.B. Ahuja for the Respondent.
The Judgment of the Court was delivered by
PATHAK, J: This appeal by special leave is directed
against the judgment and order of the High Court of
Allahabad dismissing a writ petition filed by the appellant.
The appellant is a private limited company carrying on
the business of the manufacture and sale of locks used in
suit cases. It filed a return of its income for the
assessment year 1963-64 and was assessed to income-tax by an
assessment order dated March 12, 1968. No claim was made by
the assessee for rebate under s. 84 of the Income Tax Act,
1961. There was an appeal by the assessee to the Appellate
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 6
Assistant Commissioner of Income Tax but no claim was made
for rebate at that stage either. Subsequently on August 20,
1969 the appellant made an application under s. 154 of the
Income Tax Act praying for rectification of the assessment
order by the grant of relief under s. 84 of the Act. The
application was rejected by the Income Tax Officer. A
revision application moved by the appellant before the
Commissioner of Income-tax was also rejected on March 6,
1972. Against the order of the Commissioner the appellant
now filed a writ petition in the High Court of Allahabad.
The High Court dismissed the writ petition on September 23,
1972. And now this appeal by special leave.
Section 84 of the Income Tax Act, as it stood at the
relevent time, provided that income-tax would not be payable
by an assessee on so much of the profits and gains derived
from any industrial undertaking to which the section applied
as did not exceed 6 per cent per annum on the capital
employed in such undertaking computed in the prescribed
manner. The section applied to an industrial undertaking
which satisfied certain conditions detailed in the section.
It may be observed that s. 84 was deleted with effect from
April 1, 1968 and now finds place as s. 80J in the Act.
226
The appellant contends that the Income-tax authorities
were obliged to exercise the jurisdiction conferred by s.
154 of the Act and grant relief to the appellant under s.
84. Section 154 empowers the Income Tax Officer to rectify
any mistake apparent from the record and for that purpose to
amend an assessment order passed by him. It is urged that
the income-tax authorities and the High Court erred in
holding that no mistake was apparent from the record merely
because no claim to relief under s. 84 had been made by the
appellant before the Income Tax officer during the
assessment proceedings. It is contended that an obligation
was imposed on the Income Tax Officer by the statute to
grant such relief and it could not be refused merely because
the appellant had omitted to claim the relief. While we
believe the appellant is right in his contention, we do not
think that the mere existence of such an obligation on the
Income Tax Officer is sufficient. Before the Income Tax
Officer can grant relief there must be clear data on the
assessment record sufficient to enable him to consider
whether the relief should be granted. In the absence of such
material, no fault can be found with the Income Tax Officer
for not making an order under s. 84 favouring the assessee.
It will be noticed from the provisions of s. 84 that several
conditions must be satisfied before the grant of relief can
be considered. The industrial undertaking should not have
been formed by the splitting of, or the reconstruction of, a
business already in existence. It should not have been
formed by the transfer to a new business of a building,
machinery or plant previously used for any purpose. It
should manufacture or produce articles in any part of India,
which manufacture or production should have begun at any
time within 23 years next following April 1, 1948 or such
other further period as the Central Government may specify.
An industrial undertaking manufacturing or producing
articles should be found to employ 10 or more workers in a
manufacturing process carried on with the aid of power or to
employ 20 or more persons in a manufacturing process carried
on without the aid of power. These are some of the
conditions which need to be fulfilled before relief under s.
84 can be granted. It is apparent that precise factual
material must be contained in the record in order to enable
the Income Tax Officer to discharge his obligation to grant
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 6
relief under s. 84. It has not been shown to us that the
record before the Income Tax Officer contained all that
information.
Our attention was drawn to Subhash Chandra Sarvesh
Kumar v. Commissioner of Income-tax and Another, [1981] 132
I.T.R. 619 where the Allahabad High Court quashed an order
of the Commissioner of
227
Income-tax rejecting revision applications for the grant of
relief under s. 80J and s. 80HH of the Income Tax Act, on
the ground that the Commissioner should have considered
whether there was material on the record to sustain the
claim of the assessee to relief, and the fact that claim was
not made formally in the return or during the pendency of
the assessment proceedings before the Income Tax Officer
should not have prevented the Commissioner from considering
whether the assessee was entitled to relief. That was a case
where the assessee complained in the writ petition that it
lay within the jurisdiction of the Commissioner to entertain
the claim of the assessee even though the claim had not been
made before the Income Tax officer. The present is a case,
however, where the appellant sought to invoke the
jurisdiction of the Income Tax Officer to rectify the
assessment order. That can only be justified on the ground
of a mistake apparent from the record. If the record does
not contain any material, it cannot be said that the Income
Tax Officer has committed a mistake in omitting to grant
relief under s. 84. We are conscious that the jurisdiction
under s. 154 of the Income Tax Act is, as pointed out by
this court in Income- tax Officer, Alwaye v. Asok Textiles
Ltd., [1961] 41 I.T.R. 732, wider than that provided under
rule 1 of Order XLVII of the Code of Civil Procedure. Rule 1
of Order XLVII of the Code confines the jurisdiction of the
Court to the rectification of "an error apparent on the face
of the record" while s. 154 of the Income Tax Act, 1961
(which corresponds to s. 35 of the Income Tax Act 1922) uses
wider language and empowers the Income-tax authorities to
rectify any mistake "apparent from the record". Nonetheless
there must be material to support the claim to relief under
s. 84, and unless such material can be referred to no
grievance can be made if the Income Tax Officer refuses to
rectify the assessment and refuses relief under s. 84.
Learned counsel for the appellant says that the
material is contained in the record of the assessment made
on the appellant under the Super Profits Tax Act, 1963. He
contends that the record of the Super Profits Tax assessment
must be regarded as an integral part of the record of the
income-tax assessment and, therefore, it must be inferred
that the material necessary for granting relief under s. 84
in the income-tax assessment lay before the Income Tax
Officer.
The Super Profits Tax Act, 1963 was enacted to impose a
special tax on certain companies. The tax is charged on the
excess of the chargeable profits of a company over the
standard deduction and the "chargeable profits", according
to the definition in sub-s. (5) of s. 2 of
228
that Act, means the total income of an assessee computed
under the Income Tax Act, 1961 adjusted in accordance with
the provisions of the First Schedule. In many respects, the
Super Profits Tax Act borrows its provisions from the Income
Tax Act, and the scheme for assessment, appeals, revision
and rectification in the Super Profits Tax Act follows
closely the pattern set forth in the Income Tax Act. As has
been noted the computation of chargeable profits turns on
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 6
the computation of the total income determined under the
Income Tax Act. Where any order of rectification is made
under s. 154 or under s. 155 of the Income Tax Act
recomputing the total income of an assessee, a consequential
recomputation of the chargeable profits is provided for by
s. 15 of the Super Profits Tax Act. Moreover, the Super
Profits Tax payable by a company for the assessment year is
deductible from the total income of the company for that
assessment year in computing the distributable income of a
company for the purposes of s. 104 and s. 105 of the Income
Tax Act. There is undeniably a close relationship between
the Super Profits Tax Act and the Income-tax Act and any
change in the assessment made under the Income Tax Act has
its consequential impact on the assessment made under the
Super Profits Tax Act. It is apparent therefore, that the
record of an income tax assessment can be regarded as part
of the record of a Super Profits Tax assessment. The
converse can also be true that is made abundantly clear by
sub-s. (2) of s. 20 of the Super Profits Tax Act which
provides that all the information contained in any statement
or return made or furnished under the provisions of the
Super Profits Tax Act or obtained or collected for the
purposes of that Act may be used for the purposes of the
Income Tax Act. To the extent that information contained in
the Super Profits Tax record is employed for the purpose of
the Income Tax proceeding, it cannot be doubted that the
Super Profits Tax record becomes part of the Income Tax
record. It is apparent that if the record of the Super
Profits Tax assessment contains material pertaining to the
claim under s. 84 of the Income Tax Act, such material can
be considered by the Income Tax Officer for the purpose of
granting relief under s. 84 in the Income Tax assessment. In
that sense and to that degree learned counsel for the
assessee is perfectly right in contending that the record of
the Super Profits Tax assessment becomes part of the record
of the Income Tax assessment.
That does not suffice, however, to entitle the assessee
to relief. As has been mentioned earlier, there are a number
of conditions which must be satisfied before relief can be
granted under s. 84. All that data was evidently not
contained in the Super Profits Tax assessment record at the
time when the Income Tax assessment was completed. The
229
Additional Commissioner of Income Tax, while dismissing the
revision petition of the assessee against the order of the
Income Tax Officer refusing to rectify the Income Tax
assessment under s. 154, went through the Income Tax record
and the Super Profits Tax record of the assessee and found
that no attempt had been made at any stage by the assessee
to place facts on the record indicating that the undertaking
belonging to the assessee was a new one and was entitled to
relief under s. 84. He noted that in the return relating to
the Super Profits Tax Act the assessee had made a claim for
relief under s. 84, but he pointed out that the claim had
not yet been examined. It has also not been shown to us that
all the material required for satisfying the conditions
requisite for the grant of relief under s. 84 existed on the
Super Profits Tax record at the time when the income-tax
assessment was completed. When that is the position, it can
hardly be said that in omitting to grant relief under s. 84
when making the assessment order the Income Tax Officer
committed a mistake apparent from the record. We must
remember that we are dealing with a challenge to an order
refusing rectification and not to an order directly
assailing the assessment.
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 6
In the result, the appeal fails and is dismissed with
costs.
P.S.S. Appeal dismissed.
230