1974 (6) TMI 29 - HC - Income Tax

Summary

Issues:
1. Whether the Income-tax Officer's action under section 35 of the 1922 Act, rectifying excessive depreciation allowance, violates article 14 of the Constitution.
2. Whether the Income-tax Officer could have taken action under section 147(b) of the 1961 Act.
3. Whether the action under section 35 of the 1922 Act is discriminatory compared to section 147 of the 1961 Act.

Analysis:
The petitioner, an assessee under the Indian Income-tax Act, 1922, had depreciation allowance rectified by the Income-tax Officer under section 35 of the 1922 Act. The petitioner contended that such action was discriminatory and violated article 14 of the Constitution. The court noted that the error could have been corrected under section 35 of the 1922 Act or section 147 of the 1961 Act. While section 147(b) of the 1961 Act could not be invoked due to time limitations, the Income-tax Officer proceeded under section 35 of the 1922 Act, allowing rectification without appeal rights to higher tribunals. The court highlighted the extended limitation period under the 1922 Act compared to the shorter period under the 1961 Act for rectification. The petitioner argued that the action under section 35 was more onerous and discriminatory, citing Supreme Court precedents. The court agreed, citing the principle that when two provisions apply, the more onerous one should not be invoked, and held the action under section 35 of the 1922 Act as discriminatory and violative of article 14.

The court referenced the Supreme Court's decisions in Suraj Mall Mohta and Co. v. Visvanatha Sastri and Ananiji Haridas and Co. (P.) Ltd. v. S. P. Kushare to support its conclusion. In the former case, the Supreme Court struck down an action under a more onerous provision, similar to the situation at hand, where the action under section 35 of the 1922 Act was deemed discriminatory. The court emphasized that the petitioner would have had appeal rights under section 147 of the 1961 Act, which were denied due to the Income-tax Officer's action under section 35. Relying on the principle of avoiding discriminatory provisions, the court set aside the impugned order under section 35 of the 1922 Act, thereby allowing the petitioner's writ petition.

In conclusion, the court held that the action taken under section 35 of the 1922 Act against the petitioner was discriminatory and violated article 14 of the Constitution. As per the precedents and legal principles cited, the court set aside the impugned order, allowing the petitioner's writ petition without costs.