ppeal 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 section P Mehta J B Dadachanji section N Andley and Rameshwar Nath for the appellants
M C Setalvad Attorney General for India R Ganapathy Iyer and D Gupta for the respondent
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 article 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 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 ie the assessment year 1950 51
In that year the amount of depreciation allowed under section 102vi of the Act was Rs 343869
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 348105
On August 8 1955 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 194074
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 194074 as per working sheet attached
The correct computation of income is as under Income before allowing depreciation as per original assessment orderRs100674 Less charity disallowed wrongly written Rs 21889 instead of Rs 20124 Rs1765 Income Rs98909 Less depreciation Rs194074 Rs95165 Less Dividend income as per origi nal assessment order Rs11870 Loss
Rs83295 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 231944 was reduced to Rs 83295 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 i Definition of  assessee  as per Indian Income tax Act
ii The exact meaning of WD 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 BengalMs
Karnani Industrial Bank Ltd v Views expressed by Taxation Enquiry Commissioner 1953 54 Volume II page 84 para
vi Taxation Laws Part B  State Removal of Difficulties Order 1950
The depreciation thus worked out as per separate statement
On August 81955the appllant made an application under section 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 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 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 articles 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 section 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 section 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 section 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
The learned Attorney General contended in the first instance that the remedy available under article 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 section Rashid  Son vs 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 article 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 article 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 section 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   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 194074 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 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 section 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 section 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 191224
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 38656 and they were assessed to income tax on a total income of Rs 9326
For the accounting year 1948 ie the assessment year 1949 50 when the Ordinance came into force the total depreciation amount allowed was Rs 366925 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 section 105b 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 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 section 105b of the Act merely because the Ordinance was replaced by the Act
In this connection reference was made to section 12 of the Finance Act 1950 section 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 section 3 or section 11 of that Act i e Finance Act 1950
Under that section section 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 section 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 section 60 A 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 section V Naik vs Commissioner of Income tax 1 and Commissioner of Income tax vs 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 section 35 are not final and can be redetermined in the following assessment years and in support he referred to Karnani Industrial Bank vs Commissioner of Income tax 3 where the original cost of the machinery purchased Rs 340000 was accepted in the successive assessment years till it was doubted in the assessment order 1946 47 and was determined at Rs 280000 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 section 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 2  3 558 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 section 105b is not that the Income tax 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 section 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 section 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 section 34 which specifically refers to excessive depreciation
There are two sections under which an Income tax Officer can act i e sections 34 and 35 and the question for decision that arises is whether section 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 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 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 vs Khem Chand Ramdas1 held section 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 section 234
As it was a registered firm no super tax was assessed
The Commissioner called for the record under section 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 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 IA 236 560 the provisions of sections 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 vs 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 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 I 2 SCR 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 section 35 of the Act were discussed by this Court in M K Venkatachalam vs Bombay Dyeing and Manufacturing Co Ltd 1 where the facts were these A sum of Rs 50063 being interest on tax paid in advance was given credit for under section 18A5 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 section 35 of the Act rectified the mistake and reduced the amount of interest credited to Rs 21157 and issued a demand for the difference
The assessee obtained a writ of 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  7I 562 respondent for Rs 50603 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 section 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 vs Khem Chand Ram Chand 1 was referredto
Counsel for the appellant sought to distinguish both these cases Venkatachalam s case 2 and Khem Chand s case1 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 LR 651A 236


Summary:
The appellant who was the holder of a permit to run a stage carriage which was about to expire made an application to the State Transport Authority for its renewal for a further period
The respondent made a representation against the renewal of the appellant s permit and also applied for the grant of the permit to himself
The State Transport Authority made an order in the terms  Renewed for three years  in respect of the appellant s permit but no express order was made on the respondent s application for the grant of the permit to him
On appeal by the respondent the Appellate Tribunal cancelled the appellant s permit and granted the permit to the respondent
The appellant then moved the judicial Commissioner Vindhya Pradesh for a 693 writ of certiorari quashing the order of the Appellate Tribunal on the ground that it disclosed an error on the face of it because under the Act no appeal lay from the order that was passed by the subordinate authority
The learned judicial Commissioner held that the appeal was competent and dismissed the application for the writ
It was contended for the appellant that the respondent s appeal to the Appellate Tribunal was not maintainable on the grounds 1 that no express order was made against the respondent by the State Transport Authority and so section 64a of the Act did not give him a right of appeal and 2 that in view Of sections 47 57 and 58 Of the Act the State Transport Authority had no jurisdiction to consider the respondents application or to make an order in respect of it after the appellant s permit was renewed and therefore could not make an order rejecting it
It was also contended that section 64 of the Act did not provide for an appeal by a person aggrieved by the renewal of a permit unless he was one of those mentioned in cl
f of that section which the respondent was not and therefore even if an appeal by the respondent was competent under section 64a in such an appeal the Appellate Authority could not set aside the order of renewal
Held 1 that the order made by the State Transport Authority in the present case did amount infact to a refusal to grant the permit to the respondent
The respondent s appeal to the Appellate Authority was therefore maintainable under section 64a of the Act
section Gopala Reddi vs Regional Transport Authoyity North Arcot1955  approved
V C K Bus Service Ltd vs Regional Transport AuthoyityCoimbatore  distinguished
2 that section 582 Of the Act shows that an application for the renewal of a permit and a fresh application for the same permit have to be heard together and that there was nothing in sections 47 and 57 indicating a contrary course
3 that cl
f of section 64 Of the Act does not in any way restrict the power of the Appellate Tribunal to grant all reliefs in an appeal under cl
a of the section
Consequently the order of the Appellate Tribunal setting aside the order of renewal was valid
Dholpur Co operative Transport Etc
Union Ltd vs The Appellate Authority Rajasthan AIR  in so far as it decided to the contrary disapproved