1. The petitioner was an assessee under the provisions of the Indian Income-tax Act, 1922. The Income-tax Officer completed the assessment for the year 1961-62 under the 1922 Act on February 27, 1962. While doing so, he allowed a sum of Rs. 3,535 as depreciation allowance. An appeal was filed by the assessee against the said order of assessment on other points, but on the question of depreciation allowance there was no appeal. After the appeal was disposed of by the Appellate Assistant Commissioner of Income-tax, the Income-tax Officer realised that the depreciation allowance allowed by him at the time of assessment was excessive. He, therefore, issued a notice under section 154 of the Income-tax Act, 1961, calling upon the petitioner to show cause as to why the mistake alleged to have been committed by him in Writ Petition No. 2183 of 1968 on the file of this court. In the course of the said proceedings, it was submitted on behalf of the revenue that the notice should be treated as one issued under section 35 of the 1922 Act as it was permissible to do so because there was a mistake apparent on the record. At this stage the petitioner raised the contention that no action could be taken under section 35 of the 1922 Act as it would violate article 14 of the Constitution in view of section 147 of the 1961 Ac and section 34 of the 1922 Act. This court, without deciding the question whether the action under section 35 of 1922 Act was discriminatory or not, disposed of the case reserving liberty to the petitioner to approach this court in the event of the final order to be passed by the Income-tax Officer being against him. Thereafter, the Income-tax Officer passed the impugned order under section 35 of the 1922 Act disallowing the excessive depreciation allowance which had been allowed by him at the time of the original assessment and calling upon the petitioner to pay extra tax which became payable after rectification. Aggrieved by the said order, the petitioner has filed this writ petition.
2. The contention of Sri K. Srinivasan, learned counsel for the petitioner, is that, in the circumstance of this case, it was open to the Income-tax Officer to take action under section 147(b) of the 1961 Act also in view of section 297(2)(d) of that Act and if action had been taken under section 147(b) of that Act, it was open to the petitioner to contend that such action was barred by time in view of section 153(2)(b) of the 1961 Act which provided that no order of assessment, reassessment or recomputation should be made under section 147 after the expiry of four years from the end of the assessment year in which the income was first assessable or the expiry of one year from the date of service of the notice under section 148, whichever was later. It is not disputed that any action taken under section 147(b) of the 1961 Act would have been barred by time when the assessment. On these facts, it is argued that any action taken under section 35 of the 1922 Act for rectifying the mistake referred to above would be violative of article 14 of the Constitution.
3. It is the common case of the parties before me that the error in question was capable of being corrected either under section 35 of the 1922 Act because it was a mistake apparent on the record or under section 147 of the 1961 Act because it was a case where excessive depreciation allowance had been computed. If action had been taken under section 147(b) to the 1961 Act, the petitioner would have been entitled to file an appeal Income-tax Appellate Tribunal with a right to seek a reference to the High Court under the provisions of the 1961 Act. From an order passed under section 35 of the 1922 Act, no appeal lies to a higher tribunal. It is also seen that whereas in the case of any action taken under section 147(b) of the 1961 Act there is a shorter period of limitation, there is an extended period of limitation under section 35(1) of the 1922 Act which authorises the Income-tax Officer to rectify any mistake apparent from the record within four years from the date of the assessment order. As already mentioned, the period of four years from the end of the assessment year had elapsed by the time the notice was issued to the assessee, but the period of four years from the date of the assessment order had not elapsed.
4. Relaying upon the decision of the Supreme Court in Suraj Mall Mohta and Co. v. Visvanatha Sastri, it was contended by Sri K. Srinivasan that the proceedings taken under section 35 of the 1922 Act had to be struck down since they suffered from the same infirmities which were pointed out in that case by the Supreme Court while dealing with an action taken under section 5 of the Taxation on Income (Investigation Commission) Act, 1947. In that case the assessee against whom action was taken under section 5 of the said Act contended before the Supreme Court that in view of section 34 of the 1922 Act (which was similar to section 147 of the 1961 Act) which was also applicable to his case, the impugned action was liable to be struck down under article 14 of the Constitution. The Supreme Court upheld the said contention by pointing out that section 34 of the 1922 Act was also applicable to the case of the assessee before it and that by having recourse to section 5 of the Taxation of Income (Investigation Commission) Act, 1947, the assessee was deprived of his right of appeal, which he would have had if action had been taken under section 34 of the 1922 Act, and also the defence that the action taken thereunder was barred by time, which was available under section 34(3) of the 1922 Act. The principle enunciated by the Supreme Court in that case was that when two provisions of law were applicable to a given case and of them one was more onerous than the other, in the absence of any guidance as to which of the two provisions should be resorted to in a given case, any action taken under the provision which was more onerous was liable to be struck down as being violative of article 14 of the Constitution. The same principle is reiterated by the Supreme Court in Anandji Haridas and Co. (P.) Ltd. V. S. P. Kushare, Sale Tax Office. In that case the Supreme Court was concerned with section 11(4)(a) and 11A of C. P. and Berar Sales Tax Act, both of which permitted action to be taken against an assessee under that Act when it was discovered that certain turnover had escaped assessment. In that case the Supreme Court was of the opinion that both section 11 and 11A were applicable to the case of the assessee. But it held that no action could be taken against the assessee under section 11 which did not prescribe any period of limitation in view of the fact that under section 11A action could only be taken with three calendar years from the expiry of the assessment year. In that connection the Supreme Court observed as follows :
'From the above conclusions it follows that the appellants' case falls both under section 11(4) (a) and section 11A(1). Therefore, it was open to the assessing authority to proceed against them under any one of those two sections. But as they were proceeded against under section 11(4) (a) they cannot have the benefit of the period of limitation prescribed under section 11A(1). Hence, it must be held that the present case falls within the rule laid down by this court in Suraj Mall Mohta & Co. v. Visvanatha Sastri. On the facts found it follows that section 11(4) (a) has become a discriminatory provision in view of section 11A(3). Hence, the same is liable to be struck down under article 14. But for the inclusion of sub-section (3) in section 11A, there would have been no discrimination between those dealt with under section 11(4) (a) and those under section 11A(1). The period of limitation prescribed in section 11A(1) would have attracted itself to proceedings under section 11(4) (a) as held by this court in Ghanshyamdas's case.
5. In view of the pronouncement of the Supreme Court in the two cases referred to above, it has to be held in this case that action taken against the petitioner under section 35 of the 1922 Act is discriminatory. The impugned order, is, therefore, set aside.
6. The petition is accordingly allowed. No costs.