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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