Appeal No 311 of 1959
Appeal from the judgment and order dated October 31 1955 of the Travancore Cochin High Court Ernakulam in Original Petition No 75 of 1955
A N Kripal and D Gupta for the appellant
Sardar Bahadur for the respondent
December 13
The Judgment of the Court was delivered by 238 KAPUR J
This is an appeal pursuant to a certificate of the High Court of Kerala against the judgment and order of that court and the question for decision is the applicability of section 35 of the Indian Income tax Act hereinafter termed the Act 
The facts which have given rise to the appeal are these The respondent is a limited company which owns a spinning mills at Alwaye
It commenced business in January 1951 and its first accounting year ended on December 31 1951 and the relevant assessment year is 1952 53
It filed its return showing an income Rs 321284 without taking into account the amount allowable under section 15C of the Act
On February 2 1953 the net assessable income of the respondent was determined at Rs 147083 after deducting Rs 179081 under section 15C
The respondent however declared a dividend of Rs 472415 which attracted the application of section 2 of the Finance Act 1952 read with Part B proviso ii of First Schedule and thus it became liable to the payment of additional income tax and this fact was overlooked by the Income tax Officer
After giving notice under section 35 of the Act the Income tax Officer by an order dated January 25 1954 rectified this error and imposed an additional tax at the rate of one anna in the rupee
He later discovered that this was also erroneous and the rate should have been 5 annas in a rupee
By an order dated August 12 1954 he rectified the error
Under section 18A advance income tax had to be paid and the respondent company had deposited only Rs 5000 and therefore became liable to penal interest under section 18A8 of the Act
By the same order this omission to impose penal interest was  corrected and this error was thus rectified
Against this order the respondent company went in revision under section 33A2 to the Commissioner of Income tax but the revision was dismissed
Thereupon the respondent company filed a petition in the High Court of Kerala under article 226 of the Constitution on the ground that section 35 of the Act did not apply and that on the merits additional tax could not be imposed
The High Court by its judgment dated October 31 239 1955 held that the orders made were without jurisdiction and therefore granted a writ of certiorari quashing the orders and the Income tax Officer has brought this appeal pursuant to a certificate of that High Court
According to the High Court section 35 of the Act was a provision for rectification of mistakes apparent on the record and in the opinion of the High Court it was a mistake analogous to O 47 r 1 of the Code of Civil Procedure for grant of review on the ground of mistake or error apparent on the face of the record and it construed it in the following words ie an evident error which does not require any extraneous matter to show its incorrectness
The error may be one of fact but is not limited to matters of fact and include also errors of law
But the law must be definite and capable of ascertainment
An erroneous view of law on a debatable point or a wrong exposition of the law or a wrong application of the law or a failure to apply the appropriate law cannot be considered a mistake or error apparent on the face of the record
See Chitaley s CPC Col
III pp
3549 50 5th edition
 On the ground that the applicability of proviso ii of Part B of the First Schedule of the Finance Act was a complex question which could not be said to be apparent on the face of the record the High Court held that the necessary foundation for the exercise of the powers under section 35 had not been laid and therefore the Income tax Officer had no jurisdiction to make the order that he did
The High Court also held that the levy of penal interest under section 18A8 of the Act for failure to make advance deposit under section 18A3 was also without jurisdiction
The learned Judges of the High Court seem to have fallen into an error in equating the language and scope of section 35 of the Act with that of O 47 r 1 Civil Procedure Code
The language of the two is different because according to section 35 of the Act which provides for rectification of mistakes the power is given to the various income tax authorities within four years from the date of any assessment passed by them to rectify 240 any mistake apparent from the record and in the Civil Procedure Code the words are an error apparent on the face of the record and the two provisions do not mean the same thing
This court in Maharana Mills Private Ltd vs Income tax Officer Porbandar 1 has laid down the scope of section 35 at p 358 in the following words 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 reasonable opportunity of being heard
 In that case the error arose because of an initial mistake in determining the written down value which was subsequently rectified
In an earlier case M K Venkatachalam vs Bombay Dyeing  Manufacturing Co Ltd 2 where as a consequence of a subsequent amendment of the law having retrospective effect the Income tax Officer reduced the amount of interest under section 18A5 of the Act and the assessee obtained from the High Court a writ of prohibition against the Income tax Officer on the ground that the mistake contemplated had to be apparent on the face of the order and not a mistake resulting from an amendment of the law even though it was retrospective in its effect it was held that it was a case of error apparent from the record
Gajendragadkar J in his judgment 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
 Thus this court has held that discovery of an error on 1 2  241 the basis of assessment due to an initial mistake in determining the written down value is a mistake from the record and so is a misapplication of the law even though the law came into operation retrospectively
The Income tax Officer can under section 35 of the Act examine the record and if he discovers that he has made a mistake he can rectify the error and the error which can be corrected may be an error of fact or of law
The restrictive operation of the power of review under 0
47 R 1 Civil Procedure Code is not applicable in the case of section 35 of the Act and in our opinion it cannot be said that the order of the Income tax Officer in regard to assessment in dispute was without jurisdiction
In regard to section 18A 8 also the learned Judges have misdirected themselves because that section is mandatory
It provides section 18A8 Where on making the regular assessment the Income tax Officer finds that no payment of tax has been made in accordance with the foregoing provisions of this section interest calculated in the manner laid down in sub section 6 shall be added to the tax as determined on the basis of the regular assessment
 Therefore the Income tax Officer was required to calculate the interest in the manner provided under the provisions of that sub section and had to add it to the assessment
Counsel for the respondent sought to raise the question as to the applicability of proviso ii of Part B of First Schedule of the Finance Act 1952 and relied upon the judgments of this Court in Commissioner of Income tax vs Elphinstone Spinning  Weaving Mills Co Ltd 1 and similar cases reported as Commissioner of Income tax Bombay City vs Jalgaon Electric Supply Co Ltd1 and Commissioner of Income tax Bombay City vs Khatau Makanji Spinning and Weaving Co Ltd 3 but the facts of those cases were different
In the first case there was no total income and the 1 2 3 1960 40 ITA 189
31 242 Finance Act was not applicable in that case
In the second there was no profit in any preceding year and therefore the fiction failed because it postulates that there should be undistributed profits of one or more years immediately preceding the previous year
In the third case also the Finance Act was inapplicable because the additional tax was not properly laid upon the total income and what was actually taxed was never a part of the total income of the previous year
In our opinion the order of the High Court was erroneous
We therefore allow this appeal and set aside the judgment and order of the High Court with costs in this court and in the High Court
Appeal allowed


Summary:
After the respondents net assessable income for the years 952 53 was determined it declared dividends which attracted provisions of the Finance Act 1952 and became liable to the 237 payment of additional income tax which fact was overlooked by the Income tax Officer who after giving notice under section 35 of the Income tax Act rectified the error and imposed an additional tax at the rate of one anna in the rupee
He later discovered that this was also erroneous and the rate should have been five anmas in a rupee and rectified the error by the same order the omission to impose penal interest under section 18A8 was rectified and penal interest was imposed
The respondent s case before the High Court was that section 35of the Act did not apply and that on the merits the additional tax could not be imposed
The High Court held that the necessary foundation for the exercise of the powers under section 35 bad not been laid and therefore the Income tax Officer had no jurisdiction to make the order and also that the penal interest under section 18A8 of the Act for failure to make advance deposit was also without jurisdiction
Held that the language and scope of section 35 of the Indian Income tax Act 1922 could not be equated with that of O 47 r 1 of the Code of Civil Procedure
The Income tax Officer could under section 35 of the Act examine the record and if he discovered that a mistake had been made could rectify the error both of law and fact
The restrictive operation of the powers of review under 0
47 r of the Code of Civil Procedure was not applicable in the case of section 35 of the Income tax Act
Held further that the section 18A8 was a mandatory one and the Income tax Officer was required to calculate the interest in the manner provided under the provisions of that sub section and had to add it to the assessment
Maharana Mills P Ltd vs Income tax Officer and M K Venkatachalam vs Bombay Dyeing  Manu facturing Co Ltd   discussed
Commissioner of Income tax vs Elphinstone Spinning  Weaving Mills Co Ltd  Commissioner of Income tax Bombay City vs Jalgaon Electric Supply Co Ltd and Commissioner of Income tax Bombay City vs Khatau Makanji Spng
 Weavg to
Ltd not applicable