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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,

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^      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

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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

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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

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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.

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    In the  result, the  appeal fails and is dismissed with costs. P.S.S.                                     Appeal dismissed. 230