MAHENDRA MILLS LTD. versus SHRI P.B. DESAI, APPELLATE ASSISTANT COMMISSIONER OF INCOME TAX AND ANR.

Citation: [1975] 3 S.C.R. 846 · Decided: 04-03-1975 · Supreme Court of India · Bench: V.R. KRISHNA IYER · Disposal: Dismissed

Judgment (excerpt)

:846 
SHRI P. 13. 
MAHENDRA MILLS LTD. 
v. 
DESAI, APPELLATE ASSISTANT COMMISSiOl~ER 
OF INCOME TAX AND ANR. 
March 4, 1975 
A 
[V. R. KRISHNA IYER, R. s. SARKARIA AND A. c. GUPTA, JJ.] 
B 
Jnconw-Tax Act, 1961-5, 35-Scope of-Record of appeal-Mcn11i11g of. 
I~ the course of assessment of the income of the assessee for the year 
1959-60 the Income-tax Officer found a discrepancy betwee11 the value of its 
.closing stock which ·was shown in its books as Rs. 5.89 lakhs a?d the records 
of the State Bank in which it was shown as Rs. 8.04. lakhs. 1 he Income-tax 
Officer rejected the explanation of the assessee regarding the discrepancy an.d 
C 
worked out the closing stock at Rs. 8.04 lr.khs. 
When the assessee's appeal 
against th's order was pending before the Tribunal, the Income-tax 
O_ffict~r 
took up for assessment the income of the assessee for the assessment year 
?960-61. 
Rejecting the contention of the asscssee that the opemng stock for 
the assessment year should be taken to be Rs. 8.04 lakhs but the Income-tax 
Officer took it as Rs. 5.89 lakhs. 
On Appeal the Appellate Assistant Com. 
missioner accepted the contention of the assessee and reversed the decision 
of the Income-tax Officer. 
Neither party appealed against this order. Later. 
however, the Tribunal accepted the explanation of the assessee in regard to 
D 
the discrepancy in the closing stock for the assessment year 1959-60 rn1d h~B 
that the closing stock should be taken as Rs. 5.89 lakhs as shown in its booh. 
Thereupon the Income-tax Officer moved the Appellate Assistant Commissioner 
to rectify his order relating to the assessment year 1960-61 and bring it in 
conformity with the Tribunal's order. 
The Appellate Assistant Commissioner accordingly passed an order. 
The assessee then inoved the High Court under Art. 226 of t .. e Constitution 
E 
alleging that the Appellate Assistant Commissioner had overstepped the juri:,-
diction conferred under s. 35 of the Income-tax Act. The HiRh Court dismissed 
the petition. 
On appeal to this Court it was contended that the words 'record of apr<cal' 
in s. 35 of the .Act would mean the record f~r the assessment ycm· J 960-6: 
and not ·the entl!e r•ecord of the a~sessee relatmg to the earlier years as also 
~f later yea!·s; and (2). ~he Appellate. Assistant Co~missio~1er had no jurisdic· 
F 
t1on to rectify hr.s dec1s1on by referring to something which took place four 
years after that dcc1s1on. 
Dismissing the appeal. 
HELD : ( 1) For the purpose of ascertaining the true s:ock position tile 
rec?r'.1 of the assessment for assessment year 1959-60, including 1he "{ribunal's 
dec1s10n, y.:as not extraneous r:ir irrelevant to the record of the appeal and 
could leg1timately. be 
loo~.ed mto .bY the Appellate Assistant Conwis,ioncr 
G 
for the purpose or correcting the m1slake. 
[852C] 
S!nce the closing stock of .one assessment year furnishes the figure of 11-, 0 
opei:img stock for the succee.drng year it follows !hat the record ;howin" ti:, 
clos!llg stock of assessment year 1959-60 formed a part of the evidence rel~va~~ 
to the a;isessment for. assessment y~~r 196-0-61. 
To the extent of ascertninine 
the closmg and opet1'ng stock pos1t10ns, the two assessments telescoped : 1 -
each other. 
The Tribunal's finding that the value of the closing stock 'to~ 
?ssessment year 1959-60 h~d completely replaced the Income-tax Officer's findm!! 
H 
10 regard ~o that fact with effect from the date of the Jncome-t 
Offi 
:.~ 
e>rder relatmg to the assessment year 1959-60. 
If the Jncome-t:: Offi~~< 
I ... 
•
A 
B 
E 
H 
J\IAHENDRA MILLS V, P. B. DESAI (Sarkaria, !.) 
847 
order relating to assesoment year 1959-60 was relevant to and part of tile 
'record of appeal' the TribuJ!al's decision which st,perseded that finding Wes 
equally so within the contemplation of s. 35 of the Act. 
[851G-H] 
(2) The finding of the Tribunal as to the valuation of stock, although 
recorded sabsequent to the appellate decision of the Appellate Assistant Com-
missioner, could be taken as forming part of the record of the appeal and 
taken into accotmt for the purpose of correcting the mJstake nnder s. 35, as 
to the value of the opening stock for the assessment year 1960-61, apparent 
from that re~ord. [853B] 
C£•mmissio11er of I11come-tax v. Kliem Chand Ramdas 61 I.T.R. 41~-LR. 
65 I.A. 236, referred to. 
Mis. Malwran Mills (Pril'ilte) Ltd. v. The l11co111e-tax O.fficer, 
l'orbandar 
(1959] Suppl. 2 S.C.R. 547 and M. K. Venkatacha/am 
v.

Excerpt shown. Read the full judgment & AI analysis in Lexace.