Full Judgment Text
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PETITIONER:
M/S. MAHARANA MILLS (PRIVATE) LTD.
Vs.
RESPONDENT:
THE INCOME-TAX OFFICER, PORBANDAR
DATE OF JUDGMENT:
14/04/1959
BENCH:
KAPUR, J.L.
BENCH:
KAPUR, J.L.
SINHA, BHUVNESHWAR P.
HIDAYATULLAH, M.
CITATION:
1959 AIR 881 1959 SCR Supl. (2) 547
CITATOR INFO :
R 1961 SC 699 (5)
R 1974 SC1369 (8)
F 1975 SC 910 (10,13,19)
ACT:
Income Tax-Depreciation-Written Down Value-Computation for
Prior yeays-Whethey binding for succeeding years-Fresh
calculation for written down value by income-tax
Officer--Notice to assessee-When essential-Indian Income-tax
Act, 1922 (XI Of 1922), SS. 10(2)(vi), 35(1), 63.
HEADNOTE:
Sub-section (1) Of s. 35 of the Indian Income-tax Act, 1922,
provided: the Income-tax officer may on his own motion
rectify any mistake apparent from the record and shall
rectify any such mistake which has been brought to his
notice by an assesses : Provided that no such rectification
shall be made, having the effect of enhancing or reducing a
548
refund unless...... the Income-tax Officer...... has given
notice to the assessee of his. intention so to do and has
allowed him a reasonable opportunity of being heard."
The appellant, a private limited company, was assessed to
income-tax for the assessment year 1953-54 under the
provisions of the Indian Income-tax Act, 1922, and as per
the assessment order dated June 30, 1955, the amount of
depreciation allowed under s. 10(2)(vi) of the Act was Rs.
3,48,1O5. On August 8, 1955, the appellant made an
application before the Income-tax Officer for rectification
of the order under S. 35 of the Act, pointing out certain
mistakes in calculation in regard to the depreciation
amount. By his order of February 27, 1956, the Income-tax
Officer corrected the written down value of the different
properties of the appellant and determined the total
allowable depreciation to be Rs. 1,94,074. The appellant
challenged the order dated February 27, 1956, on the
grounds, inter alia, (1) that he was not given a written
notice of the intended rectification of the written down
value, (2) that the provisions under which the Income-tax
Officer acted, i.e., S. 35 of the Act, was not meant for the
purpose of making corrections in written down values, the
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correct provision being s. 34 which specifically refers to
excessive depreciation, and (3) that, in any case, he had
exceeded his jurisdiction under s. 35 of the Act in
calculating the depreciation on the written down value of
the buildings and machinery of the appellant acting suo
motu, and that he could correct only those mistakes which
had been pointed out by it. It was found that notice was
given to the appellant of the intended determination of the
written down value, though it was not a written notice, and
that the matter was discussed with its representative.
Held : (i) that the object of the provision as to notice
under s. 35 Of the Indian Income-tax Act, 1922, is that no
order should be passed to the detriment of an assessee
without affording him an opportunity for being heard and
that if, as a matter of fact,the assessee knew of the
proceedings and the matter had been discussed with him, an
adverse order would not be invalid merely because no written
notice was given.
(2) that the word " record " used in the phrase " mistake
apparent from the record" in S. 35(I) of the Act refers not
only to the order of assessment but comprises all
proceedings on which the assessment order is based and the
Income-tax Officer is entitled for the purpose of exercising
his jurisdiction under S. 35 to look into the whole evidence
and the law applicable to ascertain whether there was an
error. If he doubts the written down value of the previous
year it is open to him to check up the previous calculations
and, if he finds any mistake, to make fresh calculations in
accordance with the law applicable including the rules made
thereunder.
A mistake contemplated by this section is not one which is
549
to be discovered as a result of an argument but it is open
to the Income-tax Officer to examine the record including
the evidence and if he discovers any mistake he is entitled
to rectify the error provided that if the result is
enhancement of assessment or reducing the refund, then
notice has to be given to the assessee and he should be
allowed a reasonable opportunity of being heard.
Venkatachalam v. Bombay Dyeing & Mfg. Co., Ltd., [1959]
S.C.R. 703, Commissioner of Income-tax v. Khemchand Ramdas,
[1938] L.R. 65 I.A. 236 and Sidhramappa Andannappa Manviv.
Commissioner of Income-tax, [1951] 2I I.T.R. 333, relied on.
JUDGMENT:
CIVIL APPELATE JURISDICTION: Civil Appeal No. 39 of 1959.
Appeal by special leave from the judgment and order dated
November 26, 1957, of the Bombay High Court at Rajkot in
Special Civil Application No. 119 of 1956.
A. V. Viswanatha Sastri, S. P. Mehta, J. B. Dadachanji, S.
N. Andley and Rameshwar Nath, for the appellants.
M. C. Setalvad, Attorney-General for India, R. Ganapathy
Iyer and D. Gupta, for the respondent.
1959. April 14. The Judgment of the Court was delivered by
KAPUR, J.-This is an appeal by special leave against the
judgment and order of the High Court of Judicature at Bombay
dismissing the appellant’s petition under Art. 226. The
appellant before us is a private limited company carrying on
the business of manufacturing and selling textiles and the
respondent is the Income-tax Officer of Porbander.
Previous to the year 1949, in Porbander which became a part
of the State of Saurashtra, there was no income-tax. In
1949 the Saurashtra Income-tax Ordinance (hereinafter termed
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the Ordinance) was promulgated which was applicable to the
State of Saurashtra. By that Ordinance income-tax became
leviable and from 1950 onwards when Saurashtra became part
of the Union of India the Indian Income-tax Act (hereinafter
referred to as the Act) became applicable by reason of the
Finance Act of 1950 (Act XXV of 1950).
550
The appellant ’Was taxed for the accounting year 1949, i.e.,
the assessment year 1950-51. In that year the amount of
depreciation allowed under s. 10(2)(vi) of the Act was Rs.
3,43,869. The appellant continued to be assessed to income-
tax in the assessment years 1952-53 and 1953-54 and the
present appeal relates to the assessment of year 1953-54.
According to the assessment order dated June 30, 1965, the
amount of depreciation allowed for the assessment year 1953-
54 was Rs. 3,48,105. On August 8, 1955, the appellant made
an application for rectification under s. 35 of the Act. In
this application he pointed out several mistakes in
calculations in regard to the depreciation amount. By his
order of February 27, 1956, the Income-tax Officer corrected
the Written Down Value of the different properties of the
appellant and determined the total allowable depreciation to
be Rs. 1,94,074. The order of the Income-tax Officer
was as follows:
" To arrive at the Written Down Value of the assets it was
necessary to maintain depreciation record. This being not
done so far, is done now and working attached.
Depreciation allowance as per rules is worked out at Rs.
1,94,074 as per working sheet attached.
The correct computation of income is as under:-
Income before allowing depreciation
as per original assessment order:Rs.1,00,674
Less charity disallowed wrongly
written Rs. 21,889 instead of
Rs. 20,124: Rs.1,765
Income Rs.98,909
Less depreciation Rs.1,94,074
Rs.95,165
Less Dividend income as per origi-
nal assessment order: Rs.11,870
Loss. Rs.83,295
Loss on account of depreciation to be
carried forward. Declared N. A. "
551
And thus the unabsorbed depreciation amount which under the
assessment order of June 30, 1955, was Rs. 2,31,944 was
reduced to Rs. 83.,295 and this was set off against the
appellant’s income of the assessment year 1954-55. On
February 29, 1956, the Income-tax Officer passed two
provisional assessment( orders for the years 1954-55 and
1955-56. In both these orders he calculated the
depreciation amounts on the basis of the same Written Down
Value as he had determined for the year 1953-54. The
reasons for calculating them on the new basis were set out
by the Income-tax Officer in his order dated May 18, 1956,
and they were:-
" Less Depreciation. The depreciation of the Company has
not been properly calculated by arriving at, Written Down
Value as per the Saurashtra Income Tax Ordinance and also as
per Indian Income-tax Act. The assessee Company was being
assessed regularly even as per Indian Income-tax Act. So
Written Down Value of all assets are arrived at by working
out the depreciation as per above Ordinance as well as
Income Tax Act. The depreciation is worked out as per
separate statement keeping in view the following:
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(i) Definition of " assessee " as per Indian Income-tax Act.
(ii) The exact meaning of W.D. V. as per Income-tax Act.
(iii) The meaning of W. D. V. as per the Saurashtra
Income-tax Ordinance, 1949 and Rules (Page 20, para. 13-5-
A).
(iv) 1. T. R. Volume 25, 558. Decision of Calcutta High
Court as regards C. I. T., West Bengal,M/s. Karnani
Industrial Bank Ltd.
(v) Views expressed by Taxation Enquiry Commissioner, 1953-
54, Volume II, page 84, para. 34.
(vi) Taxation Laws (Part ’B’ State) (Removal of Difficulties
Order, 1950.
The depreciation thus worked out as per separate statement".
On August 8,1955,the appllant made an application under s.
35 for certain corrections in the calculations and the order
thereon was passed on February
552
27, 1956, but no written notice of the intended rectifi-
cation of the Written Down Value and the depreciation amount
was given by the Income-tax Officer to the appellant under
s, 35 read with s. 63 of the Act. On March 9, 1956, the
appellant wrote to the Income-tax Officer protesting against
the order:-
" You have exercised powers not vested in you under the said
Section, and you have gone beyond the purview of the Act by
preparing statements and records which are prejudicial to
the rights of the Company ".
The appellant requested the Income-tax Officer to cancel his
previous order and to pass a fresh order correcting onlv
those mistakes which had been pointed out by it’ On the same
day the appellant sent another letter asking for the
cancellation of the provisional assessment order for 1954-55
and requested for a revised assessment order on the basis of
the return filed by it. The reply of the Income-tax Officer
of the same date was that the order was correct and a
similar order was made on the second application in regard
to the assessment of 1954-55.
On April 16, 1956, the appellant filed a petition in the
High Court of Bombay under Arts. 226 and 227 in which it
alleged that the Income-tax Officer had:
" exceeded the limits of jurisdiction vested in him and
exercised illegally jurisdiction not vested in him by law
under Section 35 and passed orders, inter alia, and suo motu
and without giving any prior notice and altered the entire
procedure and basis of calculating depreciation on the
written down value of buildings and machinery of the
petitioners
The appellant prayed that the order made under s. 35 of the
Act be quashed and an injunction issued restraining the
Income-tax Officer from recovering the assessed tax. The
High Court dismissed this petition on the ground that it
contained misstatements of fact ; that
" The advantage of this jurisdiction is not available to the
subject when adequate and efficacious remedy is available to
him under the ordinary law " ; that the appellant could,
under s. 33A of the Act,
553
have gone in revision to the Commissioner. The High Court
also held against the appellant on merits. The appellant
has come to this Court by special leave and three questions
were raised (1) that no notice as required under s. 35 was
given to the appellant; (2) that there was no record on the
basis of which the rectifica. tion in the Written Down Value
of the property could be made and (3) that there was no
mistake apparent from the record.
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The learned Attorney-General contended in the first instance
that the remedy available under Art. 226 is a discretionary
one and if the High Court had exercised its discretion no
appeal was competent and in support of his contention he
relied upon the judgment of this Court in K. S. Rashid & Son
v. Income-tax Investigation Commission, etc. (1), where
Mukherjee, J., (as he then was) said:-
For purpose of this case it is enough to state that the
remedy provided for in Art. 226 of the Constitution is a
discretionary remedy and the High Court has always the
discretion to refuse to grant any writ if it is satisfied
that the aggrieved party can have an adequate or suitable
relief elsewhere ".
It is not necessary to decide in this case whether the order
passed under Art. 226 is of a discretionary nature and
therefore in appeal this Court would not interfere with the
exercise of discretion, because in our opinion, the case can
be decided on other grounds of substance.
The first question is that of notice under s. 35 of the Act.
The affidavit of the Income-tax Officer shows that the
correctness of the figures for determining the depreciation
was discussed with the appellant’s Secretary. The Income-
tax Officer stated that:
" The depreciation which was calculated in the assessment
order of 1953-54 was as per the statement given by the
petitioner. On submission of the said application the
petitioner (Shri Ganatra, the Secretary of the Mills) was
told that the depreciation will be given after rectifying
mistakes. The petitioner had
(1) (1954) S.C.R. 738, 747.
70
554
agreed to the same. There being no record of the working
out from the first available record in the Assessment order
for the Assessment year 1943-44, the petitioner was also
supplied with the copy of the working of the depreciation
along with the necessary rules and regulation for
calculating the same ".
He also stated that the order of rectification was passed
"almost at the end of the financial year, after explaining
and discussing all the above calculation along with the
relevant rules and regulation of the calculated depreciation
" ; that the order was not passed without giving a
reasonable opportunity to the appellant; that the matter was
discussed with its representative more than once;
thattheassessment for the year 1954-55 was made final after
calculatitig the depreciation; that the point of
depreciation was notraised by the applicantat any hearingand
that even though no written notice was given, the represen-
tative of the appellant was given notice of the intended
determination of the Written Down Values. He also stated :
" Thus though no written notice is given, applicant is given
notice of the intention of calculating depreciation on
record basis and is also allowed a reasonable opportunity of
being heard inasmuch as he was given the calculation of
depreciation on 21-2-1956 ".
The orders placed on the record show that the Income-tax
Officer made calculation for the purpose of determining the
depreciation amount and after giving deductions allowed by
the Act and the Rules made thereunder arrived at the
corrected figure of Rs. 1,94,074 for the assessment year
1953-54.
Apart from the fact that the petition of the appellant does
not set out clearly all the facts which should have been set
out, there is the affidavit of the respondent that the
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matter was discussed with the representative of the
appellant although no written notice was given. In this
connection the learned Attorney-General has further
submitted (1) that the order determining the depreciation
amount allowable was not final;
(2) that the effect of the order making the rectification
555
was not of enhancing the assessment or reducing the refund;
and (3) that the question of depreciation could be raised at
the time of assessment in any subsequent year.
The object of the provision as to notice in s. 35 is that no
order should be passed to the detriment of an assessee
without affording him an opportunity but it cannot be said
that the Rule is so rigid that if, as a matter of fact, the
assessee knows of the proceedings and the matter has been
discussed with him then an adverse order would be invalid
merely because no notice under s. 63 was given. Of course
this postulates that a reasonable opportunity has been given
to show cause. Secondly this provision is applicable only
where the assessment is enhanced or-refund is reduced.
Neither of those contingencies has arisen in the present
case.
The depreciation allowed to the appellant in the year of
assessment 1943-44 when the appellant was assessed as a non-
resident, was Rs. 1,91,224. In the year 1944-45 there was
no asssessable income in British India and so also in 1945-
46. In the year 1946-47 there was a loss. In the year
1947-48 as in the preceding years the sales were effected at
Porbander and there was no collection made in British India.
The total tax due was calculated at Rs. 43-11As. In 1948-49
the sales were Rs. 38,656 and they were assessed to income-
tax on a total income of Rs. 9,326. For the accounting year
1948, i.e., the assessment year 1949-50 when the Ordinance
came into force the total depreciation amount allowed was
Rs. 3,66,925 which was much more than what was allowable on
the Written Down Values determined in accordance with the
provisions of the Ordinance which defined Written Down
Value:
Written Down Value means-
(a) In the case of assets acquired in the previous year,
the actual cost to the assessee;
(b) In the case of assets acquired before the previous year
the actual cost to the assessee less all depreciation
actually allowed to him under this Ordinance or allowed
under any Act repealed hereby or
556
which would have been allowed to him if the Indian Income-
tax Act, 1922, was in force in past ".
On the basis of this Ordinance and the other Statutes and
Rules mentioned in his affidavit, which have been set out
above, the Income-tax Officer-made the various calculations
and determined the depreciation amounts which have given
rise to the controversy before us. These calculations were
based on the Written Down Values for the successive
assessment years up to the year of assessment 1953-54.
But it was argued by counsel for the appellant that
according to s. 10(5)(b) of the Act the Written Down Value
in the case of assets acquired before the previous year mean
the actual cost to the assessee less all depreciation
actually allowed to him under the Act or under any Act
repealed thereby and therefore the provisions of the
Saurashtra Ordinance which came to an end when the Act
became applicable cannot form the basis of determining the
Written Down Value for the purposes of assessment of the
years 1950-51 onwards. In reply it was submitted that the
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Written Down Values were calculated and depreciation deter-
mined for the year 1943-44 and should in subsequent years
have been calculated in accordance with the provisions of
the Ordinance and they could not become higher for purposes
of s. 10(5)(b) of the Act merely because the Ordinance was
replaced by the Act. In this connection reference was made
to s. 12 of the Finance Act, 1950, s. 12 of which empowered
the Central Government to make provision for the removal of
difficulties in giving effect to the provisions of any of
the Acts, Rules or Orders extended by s. 3 or s. 11 of that
Act, i. e., Finance Act, 1950. Under that section (s. 12)
the Taxation Laws (Part B States) Removal of Difficulties
Order, 1950, was promulgated on December 2, 1950, and by cl.
2 of this Order provision was made for computation of
aggregate depreciation allowance and Written Down Values.
To this Order the following explanation was added on March
9, 1953: (Notification No. S. R. 0. 477):-
" For the purposes of this paragraph, the expression " all
depreciation actually allowed under any
557
laws or rules of a Part B State " means and shall be deemed
to have always meant the aggregate allowance for
depreciation taken into account in computing the Written
Down Value under any laws or rules of a Part B State or
carried forward under the said laws or rules.
But the appellant’s counsel contended that this explanation
is ultra vires because it was promulgated under s. 60-A of
the Act and that section was inapplicable to the Order made
under s. 12 of the Finance Act, 1950. He relied on two
cases decided by the Hyderabad High Court in S. V. Naik v.
Commissioner of Income-tax (1) and Commissioner of Income-
tax v. D. B. R. Mills Ltd. (2) but we are informed that one
of those judgments is under appeal to this Court and we
therefore do not wish to express any opinion upon the cor-
rectness or otherwise of this contention raised by the
appellant.
It was next argued by the learned Attorney-General that the
Written Down Values determined under S. 35 are not final and
can be redetermined in the following assessment years and in
support he referred to Karnani Industrial Bank v.
Commissioner of Income-tax (3) where the original cost of
the machinery purchased ]Rs. 3,40,000-was accepted in the
successive assessment years till it was doubted in the
assessment order 1946-47 and was determined at Rs. 2,80,000
and it was contended that the Income-tax Officer had to take
the Written Down Value of the previous year as correct.
Thus the question there raised was whether the Income-tax
Officer was entitled in law to go behind the original cost
accepted by his predecessor ever since the assessment year
1939-40. It was held that neither the principle of res
judicata nor estoppel nor the terms of s. 10 (2) (vi) of the
Act prevented the Income-tax Officer from determining. for
himself’ what the actual cost of the machinery had been and
that depreciation had to be calculated for every year and it
was open to the Income-tax Officer not merely to perform " a
mathematical operation on
(1) [1955] 29 I.T.R. 2o6. (2) [1954] 29 I.T.R. 21O,
(3) [1951] 25 I.T.R. 558.
558
the basis of the Written Down Value of the previous year,
but one of determining the Written Down Value himself ".
The limit to which the Income-tax Officer can go back does
not stop at the Written Down Value of the previous year but
extends up to the figure of the original cost, and the
method enjoined by s. 10(5)(b) is not that the Income-tax
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Officer should merely scale down the Written Down Value of
the previous year, but that he should take into
consideration the actual cost, determining it for himself,
if necessary, take also into consideration the allowances
granted in the past and then make his own-computation as to
the Written Down Value for the assessment year with which be
is concerned. Thus it cannot be said that merely because
under s. 35 some Written Down Value and the depreciation
amount have been determined they are a final determination
binding for all times to come nor does the determination
operate as estoppel or resjudicata for the following years.
Therefore it cannot be said that there is no other
efficacious and adequate remedy open to the appellant to
challenge the depreciation amount determined under s. 35.
Counsel for the appellant contended that the provision under
which the Income-tax Officer acted, i. e., 35 was not meant
for the purpose of making corrections in Written Down
Values; and that for the purpose the appropriate and correct
provision was s. 34 which specifically refers to excessive
depreciation. There are two sections under which an Income-
tax Officer can act, i. e., ss. 34 and 35 and the question
for decision that arises is whether s. 35 was open to him.
Section 35 provides:
" The Commissioner or Appellate Assistant Commissioner may,
at any time within four years from the date of any order
passed by him in appeal or, in the case of the Commissioner,
in revision under section 33A and the Income-tax Officer
may, at any time within four years from the date of any
assessment order or refund order passed by him on his own
motion rectify any mistake apparent from the record of the
appeal, revision, assessment or refund as the case may be,
and
shall within the like period rectify any such mistake which
has been brought to his notice by an assessee ".
The question therefore is was it a mistake apparent from the
record which the Income-tax Officer has rectified. It was
submitted that recalculation is not rectifying a mistake
which is apparent from the record. The words used in the
section are " apparent from the record " and the record does
not mean only the order of assessment but it comprises all
proceedings on which the assessment order is based and the
Income-tax Officer is entitled for the purpose of exercising
his jurisdiction under s. 35 to look into the whole evidence
and the law applicable to ascertain whether there was an
error. If he doubts the Written Down Value of the previous
year it is open to him to check up the previous calculations
and if he finds any mistake it is open to him to make fresh
calculations in accordance with the law applicable including
the rules made thereunder.
The Privy Council in Commissioner of Income-tax v. Khem
Chand Ramdas(1) held s. 35 to be applicable where the facts
were that the assessee did not produce books of account and
an assessment was made by the Income-tax Officer to the best
of his judgment. An application for the registration of the
firm was however allowed and it was registered on January
17, 1927. On the same day assessment was made under s.
23(4). As it was a registered firm no super-tax was
assessed. The Commissioner called for the record under s.
33 and cancelled the registration on January 28, and ordered
the Income-tax Officer to take necessary con\sequential
action. The result of that was that the assessee became
liable to super-tax. Consequently an order for super-tax
was made on May 4, 1929, and three days later notice of
demand was issued. The Privy Council held that as the fresh
action taken by the Income-tax Officer was hopelessly out of
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time the demand for super-tax was illegal because after the
final assessment the Income-tax Officer could not go on
making fresh computations and issuing fresh notices of
demand to the end of all time but it was held that
(1) (1938) L. R. 65 I.A. 236.
560
the provisions of ss. 34 and 35 prescribed the only
circumstances in which fresh assessment could be made and
fresh notice of demand could be issued. At p. 426 Lord
Romer observed:
" In the present case it is a debatable question r whether
the circumstances were such as to bring it within the
provisions of Section 34. It is not necessary to determine
that question inasmuch, as, in. their lordship’s opinion,
the case clearly would have fallen within the provisions of
section 35 had the Income-tax Officer exercised his powers
under the section within one year from the date on which the
earlier demand was served upon the respondents. For,
looking at the record of the assessments made upon them as
it stood after the cancellation of the respondent’s
registration and the order affecting the cancellation would
have formed part of that record-it would be apparent that a
mistake had been made in stating that no super-tax was
leviable ".
Thus the order effecting the cancellation of the regis-
tration of the assessee’s firm was considered to have formed
part of the record of the case.
In Sidhramappa Andannappa Manvi v. Commis. sioner of Income-
tax (1) the facts were that a debt belonging to a joint
family fell on partition to the share of the assessee. This
debt was held not to be recoverable by a judgment of the
Bombay High Court dated September 29, 1941. Holding it to
be within the accounting year the Appellate Tribunal allowed
this sum to be taken into consideration for the purpose of
the accounting year. It subsequently corrected the error.
It was held that under s. 35 the Tribunal was entitled to
rectify the mistake and was competent to pass a
consequential order dismissing the appeal instead of
allowing it.
The power under s. 35 is no doubt limited to rectification
of mistakes which are apparent from the record. A mistake
contemplated by this section is not one which is to be
discovered as a result of an argument but it is open to the
Income-tax Officer to examine the record including the
evidence and if he discovers any
(I) [1951] 2I I.T.R. 333.
(2) S.C.R. SUPREME COURT REPORTS 561
mistake he is entitled to rectify the error provided that if
the result is enhancement of assessment or reducing the
refund then notice has to be given to the assessee and he
should be allowed a reasonable opportunity of being heard.
The scope and effect of the expression "mistake apparent
from the record " and the extent of the powers of the
Income-tax Officer under s. 35 of the Act were discussed by
this Court in M. K. Venkatachalam v. Bombay Dyeing and
Manufacturing Co. Ltd. (1) where the facts were these: A sum
of Rs. 50,063 being interest on tax paid in advance was
given credit for under s. 18A(5) of the Act. Subsequently
there was an amendment of the Act by which the interest
became allowable only on the difference between the amount
of tax paid and what was actually determined. As a
consequence of this the Income-tax Officer purporting to act
under s. 35 of the Act rectified the mistake and reduced the
amount of interest credited to Rs. 21,157 and issued a
demand for the difference. The assessee obtained a writ of
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prohibition against the Income-tax Officer on the ground
that the mistake contemplated under that provision had to be
apparent on the face of the Order and it was not
contemplated to cover a mistake resulting from an amendment
of the law even though it was retrospective in its effect.
The Revenue appealed to this Court. Thus the question for
decision in that case was whether ail order proper and valid
when made could be said to disclose a mistake apparent from
the record merely because it became erroneous as a result of
a subsequent amendment of the law which was retrospective in
its operation. In delivering the judgment of the Court
Gajendragadkar, J., said:-
" At the time when the Income-tax Officer applied his mind
to the question of rectifying the alleged mistake, there can
be no doubt that he had to read the principal Act as
containing the inserted proviso as from April 1, 1952. If
that be the true position then the order which he made,
giving credit to the
(1) [1959] S.C.R. 703.
7I
562
respondent for Rs. 50,603-15-0 is plainly and obviously
inconsistent with a specific and clear provision of the
statute and that must inevitably be treated as a mistake of
law apparent from the record. If a mistake of fact apparent
from the record of the assessment order can be rectified
under s. 35 we see no reason why a mistake of law which is
glaring and obvious cannot be similarly rectified ".
The decision of the Privy Council in Commissioner of Income-
tax v. Khem Chand Ram Chand (1) was referred,to.
Counsel for the appellant sought to distinguish both these
cases; Venkatachalam’s case (2) and Khem Chand’s case(1) on
the ground that the record there considered was the
assessment record of that year and the Income-tax Officer
did not have to go to the records of the previous year.
That is a distinction without a difference. If, for
instance, the Income. tax Officer had found that in the
assessment year 1952-53 there was an apparent arithmetical
mistake in the account of the Written Down Value of the pro.
parties which resulted in a corresponding mistake in the
assessment of the year in controversy could he not take the
corrected figure for the purposes of the assessment and
could it be said that the mistake was not apparent from the
record. A fortiori if lie discovered that the very basis of
the different assessments was erroneous because of an
initial mistake in determining the Written Down Value could
it be said that this would not be a mistake apparent from
the record. And if in order to determine the correct
Written Down Value the Income-tax Officer makes correct
calculations, can it be said that is not rectifying a
mistake apparent from the record but is dehors it.
In our opinion this appeal is without force and we would
therefore dismiss it with costs.
Appeal dismissed.
(1) (1938) L.R. 65.1.A. 236. (2) [1959] S.C.R. 703.
563