HINDUSTAN MALLEABLES AND FORGINGS LIMITED Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS is a petition by the assessee-company under articles 226 and 277 of the Constitution of India. The petitioner seeks a writ of certiorari or other appropriate writ or order or direction for quashing the order of rectification of annexures 2 and 4. The order of rectification at annexure 2 was passed by the Income-tax Officer (Special Circle), Dhanbad, under section 154 of the Income-tax Act, 1961 (briefly the Act), on 18th December, 1973. By that order, he rectified the mistake in the assessment order dated December 30, 1969, for the assessment year 1965-66. His order was upheld by the Commissioner of Income-tax in revision under section 264 of the Act. The order of the Commissioner dated January 25, 1975, is annexure 4 to this writ petition. The facts in brief are these. The petitioner was previously a private limited company and was admittedly converted into a public limited company with effect from February 24, 1961. It derives its income from manufacture and also from malleable cast iron, forged fittings, etc. The petitioner in its original return filed on September 30, 1975, claimed deduction under section 84(2) of the Act amounting to Rs. 78,247. The relevant portion of section 84 is :

(2.) APPEAL preferred by the assessee against that order was subsequently withdrawn. A similar claim, however, was made by the assessee-company again in the next assessment year 1966-67, but in that year also the claim was rejected by the Income-tax Officer on the same ground. Against this order of the Income-tax Officer rejecting the claim under section 84 in the assessment year 1966-67, the assessee went up in appeal before the Appellate Assistant Commissioner who is his appellate order dated September 11, 1970, observed that section 84 of the Act refers to profits and gains derived from new industrial undertaking, which clearly implies that emphasis falls on new industrial undertaking rather than on the assessee claiming benefit under section 84. In his appellate order the Appellate Assistant Commissioner opined that a mere change in the taxable entity of the new industrial undertaking shall not deprive the assessee-company from the benefit of the provisions of section 84. Meanwhile, Mr. N. Prasad, the Income-tax Officer, discerned that some apparent mistake of fact and of law was committed by his predecessor in rejecting the claim of the assessee under section 84(2) of the Act, and that his predecessor was not correct in holding that the present company was not a new industrial undertaking. He thought that apparently the assessee was entitled to the exemption in the assessment year 1965-66, under section 84 of the Act and accordingly on December 18, 1973, he allowed the claim of the assessee under that section, rectifying the previous order dated December 30, 1969. The order of Mr. N. Prasad, the Income-tax Officer, dated December 19, 1973, is annexure 2 to this writ petition. The petitioner, thereafter, moved a petition in the High Court at Patna in C. W. J. C. No. 1273 of 1974but the writ petition was permitted to be withdrawn on August 20, 1974, with the observation that the petitioner has got adequate alternative remedy of challenging the order of rectification by filing an application in revision before the Commissioner of Income-tax under section 264(1) of the Act. The order of the High Court is annexure 3. The petitioner then filed a revision petition before the Commissioner of Income-tax, Bihar-II, Patna, under cof the Act against the order of rectification. The revision petition was rejected on January 16, 1975. It was held by the Commissioner of Income-tax that the Income-tax Officer was perfectly justified in rectifying the mistake under section 154 of the Act and the action was within his jurisdiction. He, accordingly, upheld the order of rectification passed by the Income-tax Officer. A copy of his order is annexure 4 to this writ application.

(3.) IT is thus clear that each case has to decided on its own facts. Keeping these guiding principles in view, let us consider whether in the instant case there was a mistake apparent from the record. The question is, was the Income-tax Officer justified in rectifying the mistake in the earlier order of December 30, 1969 (annexure 1), on the ground that the mistake was an obvious one. In other words, the question is, was section 84 of the Act correctly invoked ? This is the only question that we have to decide. This section to the extent material for the present purpose reads as under :