- (1.) THE Tribunal Jaipur Bench Jaipur has referred the following questions of law for the opinion of this Court under S. 256(1) of the INCOME TAX ACT, 1961 (hereinafter referred to as 'tax Act'): "1. Whether, on the facts and in the circumstance of the case, the withdrawal of the income -tax rebate based and computed on the quantum of dividends declared by the company is opposed to the provisions of Ss. 4 and 5 of the INCOME TAX ACT, 1961? 2. Whether, on the facts and in the circumstances of the case, the various requirements of the Para F of Part I of the First Schedule to the Finance Act, 1965, could be determined in the proceedings under S. 154 ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that there was a mistake apparent from record in the matter of withdrawal of rebate of income -tax in cl. (i)(c)(iii)(B) of the second proviso to Para F of Part I of the First Schedule to the Finance Act, 1965 ? 4. Whether the Tribunal is justified in holding that the company is one in which the public are substantially interested ? 5. Whether the Tribunal is justified in relying on the regular assessment order for 1964 -65 and tax calculations thereof to come to the conclusion that in 1965 -66 assessment that the company is one in which the public are substantially interested ?"
(2.) THE relevant facts for the determination of the above -mentioned questions are that for the accounting year relevant to the asst. year 1965 -66, the ITO determined the total income of the assessee at Rs. 43,45,236. Total tax demand amounting to Rs. 18,86,271 was worked out as under : The assessment was completed on 23rd Feb., 1970 under S. 143(3) of the Act. The ITO rectified the above order under S. 154 of the Act. The ITO found that the rebate as provided vide cl. (i)(b) (ii) of the first proviso to Para F of Part I of the First Schedule to the Finance Act has not been reduced under the provision of cl. (i)(c)(iii)(B) of the second proviso to Para F of Part I of the First Schedule. According to this provision, the rebate of Rs. 15,07,054 allowable under the first proviso was not reduced by an amount of Rs. 1,87,500 worked out at 7.5 per cent of the total amount of the dividends on equity shares, viz., Rs. 25,00,000 as worked out under the second proviso. The . . Rs. . Income tax on Rs. 43,45,236 at the rate of 80 per cent 34,76,189 Less : Rebate as provided in the Finance Act, 1965 vide cl. (i)(b)(ii) of the 1st proviso to Part I of the 1st Schedule 15,07,054 Less " Rebate and reliefs in respect of donations and incorporative dividends 1,02,864 . . 18,66,271 ITO, thus, held that the assessee should have been given relief of Rs. 13,19,554 only instead of Rs. 15,07,054. The ITO held that the above mistake was apparent from the record and being a mistake of calculation only, the same was rectified. It may be mentioned at this stage that the assessee did not file any reply to the notice issued to him as to why rectification may not be made in the original assessment order. The assessee aggrieved against the order of the, ITO filed an appeal before the Asstt. CIT. The appeal was dismissed by the Asstt. CIT. Thereafter, the assessee filed a second appeal before the Tribunal and the Tribunal also dismissed the appeal. On an application moved by the assessee for making a reference to this Court, the above -mentioned questions have been referred by the Tribunal under S. 256(1) of the Act. It was contended by the learned counsel for the assessee that there was no material on record during the proceedings for rectification to hold that the assessee -company had substantial interest of public in it. It was further submitted that the Tribunal committed a mistake in applying the provisions of cl. (i)(c)(iii)(B) of the second proviso to Para F of Part I of the First Schedule to the Finance Act, 1965 in the present case without having any material on record. It was further submitted by the learned counsel for the assessee that it was not a case of rectification of mistake and the proper remedy for the CIT was to challenge the original assessment order under Ss. 263 and 264 of the Act.
(3.) ON the other hand, Mr. Surolia, the learned counsel for the Department submitted that the ITO was entitled to see the record of the original assessment proceedings in order to decide the application for rectification. It was further submitted that it was nowhere the case of the assessee - company that the public are not substantially interested in the assessee -company. It was also argued that S. 108 of the Act clearly provides that nothing contained under S. 104 of the Act shall apply to any company in which the public are substantially interested. It was, thus, submitted by Mr. Surolai that the Tribunal was right in applying sub -cl. (iii) of cl. (c) of the second proviso to Para F of Part I of the Finance Act. It was further submitted in this regard that sub -cl. (i) of cl. (c) of the second proviso to Para F of Part I of First Schedule to the Finance Act also applied to the case of a company as is referred to under S. 108 of the Act.;