R.C.MANKAD, J. -
(1.) THE petitioner in this petition challenges the validity of the order dated January 18, 1979, passed by the Commissioner of Income -tax, Baroda, holding to the effect that the mistake in respect of the purchases to the tune of Rs. 20,000 could not be the subject -matter of revision petition under s. 264 of the Income -tax Act, 1961 (hereinafter referred to as 'the Act'), and prays for a writ of certiorari or a writ in the nature of certiorari, or any other appropriate writ, direction and/or order under art. 226 of the Constitution of India quashing and setting aside the said order to the extent it is prejudicial to the petitioner, and directing the Commissioner to revise the order of the ITO by reducing the assessed income by Rs. 20,000 or, in the alternative, asking him to quash the order of the ITO and remanding the matter to the ITO to pass a fresh order after considering all the relevant facts in the case.
(2.) THE petitioner is a firm and it is assessed to income -tax for the last many years. For the assessment year 1966 -67, the petitioner submitted a return of income showing a total income of Rs. 58,353. The petitioner has shown total sales of Rs. 17,29,051 and had disclosed gross profit of Rs. 1,79,761, which worked out to 10 per cent. as against 7 per cent. shown in the immediately preceding year. The ITO passed an assessment order under s. 143(3) of the Act holding, inter alia, that though comparatively the gross profit had increased, in the absence of complete quantity details and check on closing stocks etc., a lump sum addition of Rs. 1,000 to the book results disclosed by the petitioner was justified. In this view of the matter, the ITO assessed the total income of the petitioner at Rs. 60,508. If may be pointed out that along with the return, the petitioner had filed copies of the balance -sheet and profit and loss account. In the balance -sheet there was a difference of Rs. 19,989 on the assets side. But since by this discrepancy, the petitioner was to lose and it did not affect the revenue, the ITO did not take it into account while passing the assessment order.
After the assessment order was passed, the petitioner examined its books of account closely to find out the reasons for the difference in the balance -sheet. On examining the books of account it detected a mistake in totalling of purchases at two places. As a result of the mistake, the petitioner had under -totalled the purchases to the extent of Rs. 20,000. This had resulted in the disclosure of higher profit than the profit actually earned by the petitioner. The petitioner, therefore, made an application under s. 264 of the Act to the Commissioner, Baroda, who is the respondent in this petition. It was pointed out by the petitioner to the Commissioner that there was a mistake in totalling the purchases and as a result of this mistake it had under -totalling the purchase to the tune of Rs. 20,000. It was further pointed out that on account of this under -totalling the gross profit went up to 10% as against the gross profit of 7% in the preceding year. The petitioner further pointed out that if this mistake of under -totalling of purchases to the tune of Rs. 20,000 was taken into account, the gross profit would work out to 9.2% which was higher than the gross profit of 7% disclosed in the preceding year. The petitioner, therefore, requested the Commissioner to give him relief to the extent of Rs. 20,000 since the income was over -assessed to that extent.
(3.) THE Commissioner by his order dated January 18, 1979, held that having regard to the facts and circumstances of the case, there was no justification of making the lump sum addition of Rs. 1,000 to the trading results disclosed by the petitioner. In other words, he accepted the book results did closed by the petitioner and deleted the addition of Rs. 1,000 made by the ITO. However, so far as the plea of the petitioner that it was over -assessed on account of under -totalling of purchases to the extent of Rs. 20,000 was concerned, the Commissioner was of the view that the question of over -assessment did not arise from the assessment order passed by the ITO and, therefore, it could not be the subject -matter of revision application under s. 264 of the Act. The Commissioner was of the view that his revisionary powers did not extend to giving relief to an assessee on account of the assessee's own mistake which he detects after the assessment is completed. In this view of the matter, he refused to give any relief of the petitioner in respect of the under -totalling of the purchase to the true of Rs. 20,000. The petitioner has challenged the Commissioner's order to the extent he has refused go give it relief in respect of the under -totalling of purchase to the extent of Rs. 20,000.;