9911796707
Advanced Search 
TMI Blog1959 (4) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... ason of the Finance Act of 1950 (Act XXV of 1950). 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 section 10(2)(vi) of the Act was Rs. 3,43,869. The appellant continued to be assessed to income-tax in the assessment years 1951-52, 1952-53 and 1953-54 and the present appeal relates to the assessment of the year 1953-54. According to the assessment order dated June 30, 1955, the amount of depreciation allowed for the assessment year 1953-54 was Rs. 3,48,105. On August 8, 1955, as already stated the appellant made an application for rectification under section 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 attach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per separate statement." On August 6, 1955, the appellant made an application under section 35 for certain corrections in the calculations and the order thereon was passed on February 27, 1956, but no written notice of the intended rectification of the written down value and the depreciation amount was given by the Income-tax Officer to the appellant under section 35(2) read with section 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 only 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise of discretion, because in our opinion, the case can be decided on other grounds of substance. The first question is that of notice under section 35(2) 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 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tingencies 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 assessable 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 section 60A of the Act and that section was inapplicable to the Order made under section 12 of the Finance Act, 1950. He relied on two cases decided by the Hyderabad High Court in Naik v. Commissioner of Income-tax and Commissioner of Income-tax v. D. B. R. Mills Ltd. 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 correctness 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 section 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 where the original cost of the machinery purchased, Rs. 340,000, 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 Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me 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 section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the record of the case. In Sidhramappa Andannappa Manvi v. Commissioner of Income-tax 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 section 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 section 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 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 rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Venkatachalam's case and Khemchand's case, 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 properties 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 he 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 that is not rectifying a mistake apparent from the record but is de hors it. In our opinion this appeal is without force and we would, therefore, dismiss i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
