AJIT K.SENGUPTA J. - (1.) IN this reference under section 256(2) of the Income -tax Act, 1961, for the assessment years 1963 -64, 1964 -65 and 1965 -66, the following question of law has been referred to this court : 'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the mistake sought to be rectified by the Income -tax Officer was not a mistake apparent from record within the meaning of section 154 of the Income -tax Act, 1961 ?'
(2.) THE facts are that the assessee - company which is engaged in the manufacture of steel rolling mills, started a new industry for the manufacture of hot rolled mill steel and high carbon wire rods in the previous year corresponding to the assessment year 1962 -63. There was no profit from this new unit during that year. There were, however, profits in the assessment years under reference. The assessee, in the circumstances, made a claim under section 84 of the Act. The Income -tax Officer computed the amount of profits in the respective years on which, according to him, the relief was allowable, at Rs. 3,10,331 for the assessment year 1963 -64, Rs. 3,97,761 for the assessment year 1964 -65 and RS. 5,61,146 for the assessment year 1965 -66. In arriving at these figures, the Income -tax Officer had to compute the capital employed in the new industrial undertaking. While computing such capital, the value of uninstalled plant and machinery was included : Subsequently, the Income -tax Officer thought that the above amount was not to be included in the computation of capital. He, accordingly, wrote a letter to the assessee on February 7, 1969, stating that the said uninstalled plant and machinery were not actually used in the business in the respective years and as such there did not exist any prima facie case for allowance of rebate under sections 84 and 101 of the Act on their values. By the above letter, he called upon the assessee to show cause why the rebate wrongly allowed should not be withdrawn. The assessee objected to the proposed rectification but the Income -tax Officer passed three different orders for. the above three years on July 18, 1969, by which he recomputed the capital employed in the newly established industrial undertaking excluding the value of the uninstalled machinery and withdrew the rebate under section 84 of the Act on such excluded amounts.
(3.) THE assessee appealed to the Appellate Assistant Commissioner. The first contention before him was that the provisions of section 154 were not applicable to the facts of the assessees case. The next contention of the assessee before him was that even if it were held that the provisions of section 154 were applicable, no rectification was called for on the merits of the case and the value of the uninstalled plant and machinery had to be included in the capital employed by the new industrial undertaking. The Appellate Assistant Commissioner rejected both these contentions and confirmed the Income -tax Officers orders on the above points.;