Sethuraman, J. - (1.) THIS is a reference under Section 256(1) of the Income-tax Act of 1961. The assessee is a co-operative society engaged in the marketing of the agricultural produce of its members. It is exempt from income-tax and super-tax in respect of profits and gains of the business carried on by it by virtue of Sections 81 and 99 of the Income-tax Act, 1961, as it was in force in the relevant year. We arc considering in this reference the assessment for the assessment year 1963-64. The Income-tax Officer made an assessment on the asses see on 20th of August, 1963, computing the total income as follows : JUDGEMENT_375_ITR111_1978Html1.htm
(2.) AS mentioned earlier, since the assessec was not liable to income-tax and super-tax with reference to its business promts, the Income-tax Officer levied the tax on the aggregate of interest from securities, Rs. 1,723, and other sources, Rs. 236, in all Rs. 1,959. The tax was worked out as follows: JUDGEMENT_375_ITR111_1978Html2.htm After adjusting the tax deducted at the source and the advance tax paid, he made a demand for the balance of tax due from the assessee. There was a change in the incumbent and the succeeding Income-tax Officer took proceedings under Section 154 of the Income-tax Act of 1961. Under that provision, with a view to rectifying any mistake apparent from the record, the Income-tax Officer may amend any order of assessment or of refund or any other order passed by him. Such an amendment cannot be made after the expiry of four years from the date of the order sought to be amended. Within about two years from the assessment, the Income-tax Officer set in motion the proceedings under Section 154. In his order of 12th August, 1965, he wrote as follows: "In the original assessment made on August 20, 1963, (i) super-tax was omitted to be calculated; and (ii) additional surcharge on the residual income was levied proportionate to non-exempt income which was not correct. As these mistakes are apparent from the records, revise the assessment as under after calling for assessee's objection." He took the total income at the same figure, viz., Rs. 2,42,654, as computed by his predecessor and proceeded to work out the tax as follows : JUDGEMENT_375_ITR111_1978Html3.htm The assessee objected to the application of Section 154 and also to the levy of the additional surcharge of Rs. 12,792.90. In the order under Section 154, the Appellate Assistant Commissioner pointed out that "the Income-tax Officer failed to levy super-tax and additional surcharges correctly by mistake" and that these mistakes were apparent from the records. Regarding the objection of the assessee against the levy of additional surcharge of Rs. 12,792.90 by taking into account the exempted business income, he proceeded to make some discussion, which appears to be beside the point. ' In the result, he dismissed the appeal.
(3.) THE assessee appealed to the Appellate Tribunal and contended that there was no mistake apparent from the record so as to attract Section 154 and that the additional surcharge could not be levied in respect of the income from the business having regard to the provisions of the Income-tax Act, 1961, and the Finance Act, 1963, applicable to the present case. THE Tribunal noticed : "It is unfortunate, however, that in the orders of the Income-tax Officer and the Appellate Assistant Commissioner no attempt has been made to set out how the calculation of tax made in the original assessment under Section 143(3) was wrong and how the.calculation made under Section 154 is correct." It, however, considered elaborately the various provisions of the Income-tax Act and the Finance Act, 1963, and came to the conclusion that there was a mistake in the calculation of tax in general and the calculation of additional surcharge in particular and that the mind of the Income-tax Officer could and did notice that there was a mistake which he proceeded to rectify according to what he considered to be correct. The Tribunal endeavoured to demonstrate in its order as to how the Income-tax Officer's working was justified. The result is that we get an insight into what the Income-tax Officer has done only from the order of the Tribunal. At the instance of the assessee, the following two questions have been referred : "(1) Whether, on the facts and in the circumstances of the case, the levy of tax of Rs. 12,792.90 as additional surcharge on the assessee is in accordance with law ? (2) Whether, on the facts and in the circumstances of the case, there was any error apparent from the record regarding levy of additional surcharge which could be rectified under Section 154 of the Income-tax Act, 1961?" ;