ANCHOR PRESSINGS (P) LTD.versusCOMMISSIONER OF INCOME TAX, U.P. & ORS.

 91'                                                                                    A


                       ANCHOR PRESSINGS (P) LTD.
                                   v.
                 COMMISSIQNER OF INCOME TAX, U.P. & ORS.                                B


,_                                     JULY 16, 1986

                 [ R.S.PATHAKAND SABYASACHIMUKHARJI,JJ.]
 \_
                Income-tax Act, 1961, s. 154 read with s. 84--Rectification of
           assessment-Precise factual material to support the claim for relief-         c
           Necessity for.
     ,__
                 Super Profits Tax Act, 1963-Assessment record-Whether could
           be regarded as integral part of the record of income-tax assessment.
                                                                                        D
                 Section 84 (now redesignated as s. SOJ) of the Income-tax Act,
           1961 as it stood at the relevant time, provided that income-tax would
           not be payable by an assessee on so much of the profits and gains
           derived from an industrial undertaking to which the section applied as
           did not exceed six per cent per annum on the capital employed in such
 f         undertaking computed in the prescribed manner. Several conditions
                                                                                        E
           laid down therein had to be satisfied before the grant of relief could be
           considered. Section 154 empowers the Income-tax Officer to rectify any
           mistake apparent from the record and for that purpose to amend an
           assessment order.
 )
                  The appellant who did not make a claim for rebate under s. 84         F
           either during the assessment proceedings or at the appeal stage subse-
"""'·      quently made an application to the Income-tax Officer under s. 154
           praying for rectification of the assessment order by grant of relief under
           s. 84, which was rejected. The revision sought before the Commissioner
           also failed.
                                                                                        G
                 The writ petition filed before the High Court having been dismis- .
           sed, the appeal by special leave was preferred. It was contended: (I)
 ~         that an obligation was imposed on the Income-tax Officer by the statute
           to grant relief which could not be refused merely because the appellant
           had omitted to claim the same, and (2) that the record of the super
           profits tax assessment containing the material, which lay before the         H
    224                    SUPREME COURT REPORTS             [1986] 3 S.C.R.

A   Income-tax Officer, must be regarded as an integral part of the record        J"!'
    of the income-tax assessment for granting relief under s. 84.

          Dismissing the appeal, the Court,

          HELD: Rectification i:ould only be justified 1on the ground of a
B
    mistake apparent from the record. If the record did not contain any
    material, it could not be said that the Income-tax Officer had commit-
    ted a mistake in omitting to grant relief under s. 84. [227C-D]

          Although the jurisdiction under s. 154 to rectify any mistake ap-
                                                                                    /
    parent from the record is wider than that provided under r. I of Order
C   XLVII of the Code of Civil Procedure to rectify an error apparent on
    the face of the record, nonetheless there must be material to support the
    claim to relief under s. 84, and unless such material can be referred to,
    no grievance can be made if the Income-tax Officer refuses to rectify the
    assessment and refuses relief under s. 84. [227D-FJ
D
          There is a close relationship between the Super Profits Tax Act
    and the Income Tax Act, and any change in the assessment made under
    the latter has its consequential impact on the assessment made under
    the former. The converse is equally true, especially in view of s. 20(2) of
    the Super Profits Tax Act which provides that all the information con-
E
    tained in any statement or return made or furnished under the provi-
    sions of that Act or obtained or collected for the purpose of that Act
    may be used for the purpose of the Income Tax Act. Therefore, if the
    record of the super profits tai< assessment contains material pertaining
    to the claim under s. 84 of the Income-tax Act, such material can be
    considered by the Income-tax Officer for the purpose of granting relief        \
F   under s. 84 in the income-tax assessment. [228D-G]

          In the instant case, the appellant has failed to show that all the
    material required for satisfying the conditions requisite for the grant of
    relief under s. 84 existed on the super profits tax record at the time
    when the income-tax assessment was completed. Therefore, it cannot be
G   said that in omitting to grant relief under s. 84 when making the assess-
    ment order, the Income-tax Officer committed a mistake apparent from
    the record. [229C-D]

          Subhash Chandra Sarvesh Kumar v. Commissioner of Income--
    tax and Another, [1981] 132 I. T.R. 619 and Income-tax Officer, Alwaye
H   v. Asok Textiles Ltd., [1961141 I.T.R. 732, referred to.
                   ANCHOR PRESSINGS v. C.I.T. [PATHAK, J.J              225

         CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1700                   A
    (NT) of 1974.

         From the Judgment and Order dated 23.9.1972 of the Allahabad
    High Court in Writ No. 2956 of 1972.
                                                                               B
          S.K. Dhingra for the Appellant.



l         M.K. Banerjee, Additional Solicitor General, Miss A. Subha-
    shini and B.B. Ahuja for the Respondent.

          The Judgment of the Court was delivered by
                                                                               c
          PATHAK, J: This appeal by special leave is directed against the
    judgment and order of the High Court of Allahabad dismissing a writ
    petition filed by the appellant.

           The appellant is a private limited company carrying on the busi-    0
    ness of the manufacture and sale of locks used in suit cases. It filed a
    return of its income for the assessment year 1963-64 and was assessed
    to income-tax by an assessment order dated March 12, 1968. No claim
    was made by the assessee for rebate under s. 84 of the Income Tax
    Act, 1961. There was an appeal by the assessee to the Appellate As-
    sistant Commissioner of Income Tax but no claim was made for rebate        E
    at that stage either. Subsequently on August 20, 1969 the appellant
    made an application under s. 154 of the Income Tax Act praying for
    rectification of the assessment order by the grant of relief under s. 84
    of the Act. The application was rejected by the Income Tax Officer. A
)   revision application moved by the appellant before the Commissioner
    of Income-tax was also rejected on March 6, 1972. Against the order of     F
    the Commissioner the appellant now filed a writ petition in the High
    Court of Allahabad. The High Court dismissed the writ petition on
    September 23, 1972. And now this appeal by special leave.

          Section 84 of the Income Tax Act, as it stood at the relevent
    time, provided that income-tax would not be payable by an assessee on      G
    so much of the profits and gains derived from any industrial undertak-
    ing to which the section applied as did not exceed 6 per cent per annum
    on the capital employed in such undertaking computed in the pre-
    scribed manner. The section applied to an industrial undertaking
    which satisfied certain conditions detailed in the section. It may be
    observed thats. 84 was deleted with effect from April I, 1968 and now      H
    finds place ass. 80J in the Act.
    226                   SUPREME COURT REPORTS            [1986] 3 S.C.R.

A         The appellant contends that the Income-tax authorities were ob-
    liged to exercise the jurisdiction conferred by s. 154 of the Act and
    grant relief to the appellant under s. 84. Section 154 empowers the
    Income Tax Officer to rectify any mistake apparent from the record
    and for that purpose to amend an assessment order passed by him. It is
B   urged that the income-tax authorities and the High Court erred in
    holding that no mistake was apparent from the record merely because
    no claim to relief under s. 84 had been made by the appellant before
    the Income Tax Officer during the assessment proceedings. It is con-
    tended that an obligation was imposed on the Income Tax Officer by
    the statute to grant such relief and it could not be refused merely
                                                                               }
                                                                               !
    because the appellant had omitted to claim the relief. While we believe
c   the appellant is right in his contention, we do not think that the mere
    existence of such an obligation on the Income Tax Officer is sufficient.
    Before the Income Tax Officer can grant relief there must be clear
    data on the assessment record sufficient to enable him to consider
    whether the relief should be granted. In the absence of such material,
    no fault can be found with the Income Tax Officer for not making an
D
    order under s. 84 favouring the assessee. It will be noticed from the
    provisions of s. 84 that several conditions must be satisfied before the
    grant of relief can be considered. The industrial undertaking should
    not have been formed by the splitting of, or the reconstruction of, a
    business already in existence. It should not have been formed by the
E   transfer to a new business of a building, machinery or plant previously
    used for any purpose. It should manufacture or produce articles in any
    part of India, which manufacture or production should have begun at
    any time within 23 years next following April I, 1948 or such other
    further period as the Central Government may specify. An industrial
    undertaking manufacturing or producing articles should be found to         \.
F
    employ IO or more workers in a manufacturing process carried on with
    the aid of power or to employ 20 or more persons in a manufacturing
    process carried on without the aid of power. These are some of the
    conditions which need to be fulfilled before relief under s. 84 can be
                                                                               .-
    granted. It is apparent that precise factual material must be contained
    in the record in order to enable the Income Tax Officer to discharge
    his obligation to grant relief under s. 84. It has not been shown to us
G
    that the record before the Income Tax Officer contained all that
    information.

         Our attention was drawn to Sub hash Chandra Sarvesh Kumar v.
    Commissioner of Income-tax and Another, [1981] 132 l.T.R. 619 where
H   the Allahabad High Court quashed an order of the Commissioner of
                         ANCHOR PRESSINGS v. C.1.T. [PATHAK, J.]               227

~        Income-tax rejecting revision applications for the grant of relief under     A
         s. 801 and s. 80HH of the Income Tax Act, on the ground that the
         Commissioner should have considered whether there was material on
         the record to sustain the claim of the assessee to relief, and the fact
         that claim was not made formally in the return or during the pendency
         of the assessment proceedings before the Income Tax Officer should
                                                                                      B
         not have prevented the Commissioner from considering whether the
         assessee was entitled to relief. That was a case where the assessee


l \.
         complained in the writ petition that it lay within the jurisdiction of the
         Commissioner to entertain the claim of the assessee even though the
         claim had not been made before the Income Tax Officer. The present
         is a case, however, where the appellant sought to invoke the jurisdic-
         lion of the Income Tax Officer to rectify the assessment order. That         c
         can only be justified on the ground of a mistake apparent from the
         record. If the record does not contain any material, it cannot be said
    {
         that the Income Tax Officer has committed a mistake in omitting to
         grant relief under s. 84. We are conscious that the jurisdiction under s.
         154 of the Income Tax Act is, as pointed out by this court in Income-
                                                                                      D
         tax Officer, Alwaye v. Asok Textiles Ltd., 11961] 411.T.R. 732, wider
         than that provided under rule 1 of Order XLVII of the Code of Ci vii
         Procedure. Rule 1 of Order XLVII of the Code confines the jurisdic-
         lion of the Court to the rectification of "an error apparent on the face
         of the record" while s. 154 of the Income Tax Act, 1961 (which car-
         responds to s. 35 of the Indian Income Tax Act 1922) uses wider
                                                                                      E
         language and empowers the Income-tax authorities to rectify any mis-
         take "apparent from the record". Nonetheless there must be material
         to support the claim to relief under s. 84, and unless such material can
         be referred to no grievance can be made if the Income Tax Officer
  )      refuses to rectify the assessment and refuses relief under s. 84.
                                                                                      F
               Learned counsel for the appellant says that the material is con-
""""'<   tained in the record of the assessment made on the appellant under the
         Super Profits Tax Act, 1963. He contends that the record of the Super
         Profits Tax assessment must be regarded as an integral part of the
         record of the income-tax assessment and, therefore, it must be infer-
         red that the material necessary for granting relief under s. 84 in the
                                                                                      G
         income-tax assessment lay before the Income Tax Officer.

~             The Super Profits Tax Act, 1963 was enacted to impose a special
         tax on certain companies. The tax is charged on the excess of the
         chargeable profits of a company over the standard deduction and the
         "chargeable profits", according to the definition in sub-s. (5) of s. 2 of   H
     228                   SUP.REME COURT REPORTS            [19861 3 S.C.R.

A    that Act, means the total income of an assessee computed under the
     Income Tax Act, 1961 adjusted in accordance with the provisions of
     the First Schedule. In many respects, the Super Profits Tax Act bor-
     rows its provisions from the Income Tax Act, and the scheme for
     assessment, appeals, revision and rectification in the Super Profits Tax
B    Act follows closely the pattern set forth in the Income Tax Act. As has
     been noted the computation of chargeable profits turns on the compu-
     tation of the total income determined under the Income Tax Act.
     Where any order of rectification is made under s. 154 or under s. 155 of
     the Income Tax Act recomputing the total income of an assessee, a
     consequential recomputation of the chargeable profits is provided for
     bys. 15 of the Super Profits Tax Act. Moreover, the Super Profits Tax
c    payable by a company for the assessment year is deductible from the
     total income of the company for that assessment year in computing the
     distributable income of a company for the purposes of s. 104 ands. 105
     of the Income Tax Act. Them is undeniably a close relationship between
     the Super Profits Tax Act and the Income-tax Act and any change in the        •
D    assessment made under the Income Tax Act has its consequential impact
     on the assessment made under the Super Profits Tax Act. It is apparent
     therefore, that the record of an income tax assessment can be regarded as
     part of the record of a Super Profits Tax assessment. The converse can
     also be true that is made abundantly clear by sub-s. (2) of s. 20 of the
     Super Profits Tax Act which provides that all the information contained in
E    any statement or return made or furnished under the provisions of the
     Super Profits Tax Act or obt,rined or collected for the purposes of that
     Act may be used for the purposes of the Income Tax Act. To the extent
     that information contained in the Super Profits Tax rerord is employed
     for the purpose of the Income Tax proceeding, it cannot be doubted that
     the Super Profits Tax record becomes part of the Income Tax record. It is
     apparent that if the record of the Super Profits Tax assessment contains
                                                                                  \.
F
      material pertaining to the claim under s. 84 of the Income Tax Act, such
      material can be considered by the Income Tax Officer for the purpose of
     granting relief under s. 84 in the Income Tax assessment. In that sense
      and to that degree learned counsel for the assessee is perfectly right in
     contending that the record of the Super Profits Tax assessment beromes
G     part of the record of the Income Tax assessment.

          That does not suffice, however, to entitle the assessee to relief.
     As has been mentioned earlier, there are a number of conditions which
     must be satisfied before relief can be granted under s. 84. All that data
     was evidently not contained in the Super Profits Tax assessment record
'H   at the time when the Income Tax assessment was completed. The
                   ANCHOR PRESSINGS v. C.I.T. (PATHAK, J.]               229

    Additional Commissioner of Income Tax, while dismissing the revi-
    sion petition of the assessee against the order of the Income Tax Of-
    ficer refusing to rectify the Income Tax assessment under s. 154, went
    through the Income Tax record and the Super Profits. Tax record of the
    assessee and found that no attempt had been made at any stage by the
    assessee to place facts on the record indicating that the undertaking
    belonging to the assessee was a new one and was entitled to relief          B
    under s. 84. He noted that in the return relating to the Super Profits
    Tax Act the assessee had made a claim for relief under s. 84, but he
    pointed out that the claim had not yet been examined. It has also not
    been shown to us that all the material required for satisfying the condi-
    tions requisite for the grant of relief under s. 84 existed on the Super
    Ptofits Tax record at the time when the income-tax assessment was           c
    completed. When that is the position, it can hardly be said that in
    omitting to grant relief under s. 84 when making the assessment order
    the Income Tax Officer committed a mistake apparent from the re-
    cord. We must remember that we are dealing with a challenge to an
    order refusing rectification and not to an order directly a~~Iing the
    assessment.                                                                 Q

         In the result, the appeal fails and is dismissed with costs.


    P.S.S.                                                 Appeal dismissed.




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