Hegde, J. - (1.) This appeal by certificate arises from the decision of the High Court of Bombay in Misc. Petition No. 104 of 1968 on its file. That was a petition under Art. 226 of the Constitution. Therein the respondents challenged the validity of the orders of rectification made by the Income-tax Officer, Company Circle, Bombay in the assessments of the respondents for the assessment years 1958-59, 1960-61, 1961-62 and 1962-63 under S, 154 of the Income-tax Act, 1961. Respondents Nos. 2 and 3 are the partners in the first respondent firm. The first respondent firm was duly registered under the Income Tax Act, 1922 as well as under the Income-tax Act, 1961. In the original assessments of the firm for the concerned assessment years, assessments were made on the slab rates prescribed under the respective Finance Acts applicable to registered firms. In the individual assessments of the partners for their respective share in the income of the firm was included and assessed at the maximum rates of income since their assessments were made in the status of non-resident. On February 1, 1965, the first respondent firm was served with notices dated January 29, 1965 by the Income-tax Officer intimating to it that in its assessments for the assessment years 1958-59, 1960-61, 1961-62 and 1962-63, there are mistakes apparent from the record inasmuch as the firm had not been charged at the maximum rates of income-tax under S. 17 (1) of the Income Tax Act, 1922 and therefore he proposes to rectify those assessments under S. 154 of the Income-tax Act, 1961. The respondents in their reply to those notices denied that there was any mistake apparent or otherwise in those orders of assessment. They disputed the Income-tax Officers authority to make any correction. The Income-tax Officer did not accept the contention of the respondents and assessed them by applying the provisions of S. 17 (1) of the 1922 Act. The respondents challenged the validity of the orders rectifying the assessments, before the High Court of Bombay as mentioned earlier. The High Court took the view that the original assessments made on the respondents were prima facie in accordance with law and at any rate as there was no obvious or patent mistake in those orders of assessment, the Income-tax Officer was incompetent to pass the impugned orders.
(2.) The first question that we have to decide is whether on the facts and in the circumstances of the case, the Income-tax Officer was within his powers in making the impugned rectifications. He purported to make those rectifications under S. 154 of the Income-tax Act, 1961. That section to the extent material for our present purpose reads: "154 (1) . With a view to rectifying any mistake apparent from the record- (a) the Income-tax Officer may amend any order of assessment or of refund or any other order passed by him. ********** " The corresponding section in the Income Tax Act, 1922 is S. 35.
(3.) We have now to see whether the Income-tax Officer was justified in opining that in the original orders of assessment, there was any apparent mistake. As seen earlier in the original assessments of the firm for the relevant assessment years. the Income-tax Officer adopted the slab rates applicable to registered firms. The question for decision is whether the first respondent's firm came within the mischief of S. 17 (1) of the Income Tax Act, 1922. Section 17 (1) reads: "Where a person is not resident in the taxable territories and is not a company, the tax, including super-tax, payable by him or on his behalf on his total income shall be an amount equal to- (a) the income-tax which would be payable on his total income at the maximum rate, plus (b) either the super-tax which would be payable on his total income at the rate of nineteen per cent, or the super-tax which would be payable on his total income if it were the total income of a person resident in the taxable territories whichever is greater .......";