Sabyasachi Mukharji, J.:— This appeal arises out of an order and judgment passed by Sankar Prasad Mitra J. (as the Chief Justice then was) dated the 18th of February, 1969. It appears that the petitioner was assessed for the assessment year 1958–59 on a total income of Rs. 2,04,223. The said assessment was made on the 20th of March, 1969. Upon this the tax computed was Rs. 1,04,019.54. It appears that the petitioner was given rebate at 30%. The assessee-petitioner preferred an appeal against the aforesaid order of assessment. The Appellate Assistant Commissioner disposed of the appeal by his order dated the 21st of October, 1960. Before the Appellate Assistant Commissioner the only contention that was urged and upon which the appeal was allowed was the non-allowance of a sum of Rs. 14,354. The assessee had written off certain stores from its books in its accounting year for 1952-53. This amount was disallowed and added back in the assessment year 1952-53. In the subsequent years the stores were consumed. The claims for such consumption were not claimed in the profit and loss account as expenses but it went to augment the production and sales. These were claimed and allowed in all prior assessments. It was also allowed in the subsequent assessment for 1959–60, but in the instant assessment the same had not been allowed. The Appellate Assistant Commissioner in his appellate order allowed the claim of Rs. 14,354. Thereafter, on the 28th of November, 1963, the Income-tax Officer passed an order under section 31 of the Indian Income-tax Act, 1922, to give effect to the aforesaid order of the Appellate Assistant Commissioner. The total income, as mentioned hereinbefore, as found in the original assessment, was Rs. 2,04,223. After the relief was allowed by the Appellate Assistant Commissioner the total income had naturally to be reduced and the revised total income was Rs. 1,89,869. The Income-tax Officer, however, found that in accordance with the provisions of the Finance Act, 1958, the assessee was not entitled to rebate at 30% on its entire income. The assessee was entitled to certain reduced rebate which is indicated in the order passed under section 31 of the Indian Income-tax Act, 1922. It is this order which was the subject-matter of challenge in an application under article 226 of the Constitution. The application, as mentioned hereinbefore, came up before Sankar Prasad Mitra J., and by judgment delivered and order passed on the 18th of February, 1969, the learned judge has made the rule absolute and the order of the Income-tax Officer dated the 28th of November, 1963, was set aside.
2. The only question with which we are concerned in this appeal is whether in passing an order under sub-section (4) of section 31 of the Indian Income-tax Act, 1922, the Income-tax Officer was competent to reduce the amount of rebate that the assessee was given in the original computation of tax.
3. As mentioned hereinbefore, in the appeal before the Appellate Assistant Commissioner the only question that was involved was about the allowance or disallowance of a sum of Rs. 14,354. The question whether the assessee was entitled to rebate at any particular rate and if so, what was the correct rate of rebate to be granted to the assessee, was not at all an issue before the Appellate Assistant Commissioner. In the affidavit-in-opposition to the rule nisi it has been stated, inter alia, as follows:
“At the time of original assessment the super-tax rebate was not withdrawn, although the company had distributed dividends during the relevant previous year in excess of 6% of the paid up capital. In other words, the original computation of the tax was not in conformity with the provisions of the Finance Act. This omission was discovered later and while giving effect to the appellate order, the tax had to be computed in terms of the Finance Act. It was not possible to repeat the original mistake……”
4. From the aforesaid it appears what the Income-tax Officer sought to do was that he tried to rectify or correct a mistake that had been committed in the original order of assessment. Counsel for the appellants contended before us that after the order of the Appellate Assistant Commissioner it was necessary for the Income-tax Officer to compute or recompute, as the case may be, the tax liability of an assessee to give effect to the order of the Appellate Assistant Commissioner and that computation or recomputation should and can only be done in accordance with law. It was, therefore, urged that in accordance with the provisions of law and the relevant section of the Finance Act, 1958, the correct rate of tax was calculated and the assessee was not entitled to the rebate on his entire income at 30%. It was not expected, it was urged, that the Income-tax Officer would calculate the tax not in accordance with law but in violation of the same. Under section 35 of the Indian Income-tax Act, 1922, if an order of the Income-tax Officer had been the subject-matter of an appeal before the Appellate Assistant Commissioner it could not have been corrected or rectified on the ground of mistake. Such a position has been altered in the new provisions of section 154 of the Income-tax Act, 1961. There was no specific provision of appeal against the service of notice of any consequential order passed under section 31 by the Income-tax Officer. There was, however, a power of revision by the Commissioner under section 33B. In this case, it appears to us, however, that the question whether an assessee is entitled to rebate and if so at what rate is not a matter of mere recomputation of tax. It is a question of determination of application of a particular provision and that matter not being the subject-matter of appeal before the Appellate Assistant Commissioner and not being the subject-matter of rectification under section 35 of the Indian Income-tax Act, 1922, the Income-tax Officer could not, after the order of the Income-tax Officer had merged in the Appellate Assistant Commissioner's order, decide afresh what rebate should be given on the plea of implementing the order of the Appellate Assistant Commissioner by virtue of power under sub-section (4) of section 31 of the Indian Income-tax Act, 1922.
5. In the aforesaid view of the matter we are of the opinion that the learned judge came to the right conclusion. The appeal Jails and is accordingly dismissed.
6. There will be no order as to costs.
R.N Pyne, J.:— I agree.
Appeal dismissed.