VARADARAJA IYENGAR, J. - These two petitions are filed by the same petitioner under article 226 of the Constitutions and call in question two separate but similar orders of the common respondent the Income-tax Officer, Quilon. The question is whether the Income-tax authority acted in excess of jurisdiction when he purported by those orders to rectify, on ground of alleged mistake, two original orders already passed, assessing the petitioner to income-tax for the consecutive years 1124 M. E. and 1951-52. We will take up these petitions in their order.
2. O. P. No. 119 of 1955. The petitioner is a merchant in Quilon. He carries on two lines of business activity, one being in tobacco wholesale and retail, and the other in cashew kernels, manufacture and export.
3. His assessment to income-tax for the year 1124 was made by order dated 30th May, 1953, under the Travancore Income-tax Act, 1121. This order is filed as Ex. A and it shows that his total income was made up three heads as follows : This total income was adjusted and set off against the larger loss of Rs. 131,878 of the previous year 1123 M. E., which had been allowed to be carried over to the next year along with an unabsorbed depreciation of Rs. 13,728-11-0. The net loss for the year 1124 M. E. was on this basis ascertained to be Rs. 21,547 and there was accordingly no levy and collection of tax for the year.
4. Two rectification proceedings were, one after the order, taken by the respondent with reference to Ex. A order under section 48 of the Travancore Income-tax Act corresponding to section 35 of the Indian Act. By the first order filed in the case as Ex. B he cancelled the adjustment and set-off as regards two of the heads of income, viz., "property" and "other sources", as shown above and made their total of Rs. 17,086 available for assessment to income-tax. The explanation was given that the previous years loss was under business which could not legitimately be adjusted against net income from property and other sources. Anyhow the petitioner did not object and we are not concerned further with this order.
5. BY the second rectification proceedings which are filed in the case as Ex. C the respondent split up the business income of Rs. 93,245 as shown above into its two component parts of tobacco income and cashew income and then took out the tobacco income of Rs. 40,067-9-0 as unavailable for adjustment and set-off against the previous years loss which had arisen from the cashew business only. Adding this tobacco income to the income from property and other sources, the total income was estimated as Rs. 57,153 and made available for assessment to income-tax and super tax. This is the order which forms the subject of controversy in this original petition.
6. The explanation for the action so taken was "that tobacco and cashew were quite different commodities and had not been considered the same business in the assessment order. The income had been separately computed, but in noting down the figures under business the fact that the previous years loss under cashew exceeded the profits from cashew during the year of account had simply escaped notice." 7. The petitioner to whom notice had been issued in competition with the proposed rectification under Ex. C took objection mainly on the ground that his dealings in tobacco and cashew were part of the same business and it had also been treated as such in the past years by the department. Further, the question whether his trading activities in several commodities constituted the same business or distinct business was a question of fact on which a decision should be deemed to have been already taken when the assessment was made, and assuming there was a mistake about the matter it was not apparent from the records of the assessment and there was accordingly no jurisdiction to proceed under section 48 of the Travancore Income-tax Act. These objections are again pressed before me.
8. Mr. Rama Iyer, learned counsel for the respondent Income-tax authority, referred to the assessment order of the previous year 1123 to show that the loss carried over arose for the first time during that year and from cashew business only and that therefore there was no question of any previous practice in the department by which the total business income for purpose of assessment was ascertained without distinction as to how the loss was sustained whether in the one or in the other business carried on by the assessee. According to him separate computation had been made of the income of the respective businesses, tobacco and cashew, and they should be taken to be separate, so that the loss arising in respect of the one could not be carried for ward or set off in respect of the other.
9. I do not think that I am called upon in these proceedings to decide as to whether the respondent Income-tax Officer, was right or wrong in coming to a conclusion that the business activities of the petitioner herein in tobacco and cashew in fact constituted distinct businesses and not the "same business" within the meaning of section 24 clause (2) of the Indian Income-tax Act. The question, in my opinion, is only whether it was open to him after set-off, of loss carried over, had been once allowed, to reconsider the question and give effect to the fresh conclusion as if the proceedings were one of rectification of mistake. I am inclined to hold that the matter involved is not a case of correction of mistake evident or apparent on the face of the record of assessment within the meaning of section 35 but amounts to a revision and reassessment not contemplated by that section.
10. The question of same or independent business is even normally one of some complexity. It is a question of fact depending for its answer on a consideration of several facts and circumstances. As observed by Viswanatha Sastri, J., in K. S. S. Soundrapandia Nadar v. Commissioner of Income-tax : "An individual or a firm or a company may carry on more than one business at the same time : (A. L. A. R. Brothers case, South Indian Industrials Ltd. case, and Arunachalam Chettys case). Consequently, the fact of common ownership or proprietorship of the business concerns is not a criterion for determining whether the business activities of individuals, firms or companies constitute a single business : (In re Hiralal Kalyanmal). On the other hand, the fact that different lines of business are pursued or different commodities are bought and sold by a single person, firm or company does not necessarily mean that there are different businesses. There are multiple stores like Woolworths and Selfridges in England or Spencers in Madras which deal in different and dissimilar lines of goods, but yet the business is one and the same. If two lines of business belong to the same person and are connected with the same trade, the one being ancillary or subsidiary to the other, if they are owned, controlled and financed in common, if the staff employed and the place of business are the same and if common accounts are kept, it may readily be inferred that the two lines of business are really part of the same business. Observations to this effect are found in the decided cases. But it is not to be assumed that all these features must be present in every case or that the absence of one or more of them is fatal to the claim that the different line of business are really parts of the same business." 11 Again, the jurisdiction to correct by way of rectification under section 35 of the Indian Act is limited. It deals only with errors apparent on the face of the record which can be corrected at any stage.
As observed by Gentle, C.J., that section does not enable an order to be reversed by revision or by review, but permits only some error which is apparent on the record to be corrected. See Commissioner of Income-tax, Madras v. O. RM. M. SM. SV. Sevugan. See also Chowdhary Mithoo Missar v. Commissioner of Income-tax, where it was held that the section cannot cover a case where a reassessment has been made by discovery of new facts. Mr. Rama Iyer, learned counsel, referred to K.Govindan v. Commissioner of Income-tax. But that case dealt only with the question whether and when a reference to the High Court would lie on a finding by the Tribunal that two businesses were separate or otherwise for purpose of section 24(2). Reference in this connection may also be made to Sidhramappa v. Commissioner of Income-tax, where the question arose as to whether after rectification under section 35 it was competent to the Income-tax authority to pass consequential orders. Learned Judges say : "Now the power is undoubtedly a limited power; it is not a power of revision or review, but it is limited to correcting only those mistakes which are apparent on the record. A mistake must be patent on the record; it must not be a mistake which can be discovered by a process of elucidation, or argument or debate. The mistake being patent on the record, rectification must be limited to correcting that mistake only without any further argument or debate. The rectification must follow as a necessary logical consequence of the mistakes being found on the record." 12. It is clear therefore that the respondent, Income-tax authority, was obviously having a revision and reassessment in the guise of a rectification proceeding and such an order cannot stand.
13. I, therefore, issue a writ of certiorari quashing the order of rectification dated 29th April, 1955, filed in the case as Ex. C and passed under section 48 of the Travancore Income-tax Act by the respondent, Income-tax Officer, Quilon. The respondent will pay the costs of the petitioner. Advocates fee Rs. 100.
14. O. P. No. 120 of 1955. This application relates to the income-tax assessment for 1951-52. The assessment was on 30th January, 1954, under the Indian Income-tax Act. It computed the income as follows : 15. The respondent, Additional Income-tax Officer, Quilon, purported by Ex. B order dated 30th April, 1955, to rectify an alleged mistake in the computation of the income under business in the assessment as above. This was done by setting off the loss of the previous year which had been allowed to be carried forward against the cashew income alone for the year, the income from tobacco being added on to the income from property and other sources for purpose assessment.
16. The question arising in this case is similar to that which I have already decided in the connected case. Applying the same principle it has to held that the respondent, Income-tax Officer, exceeded his jurisdiction in taking proceedings under section 35 of the Income-tax Act. The order of rectification dated 29th April, 1955, and filed in the case as Ex. B and passed under section 35 of the Income-tax Act cannot be sustained and is therefore quashed. The respondent will pay the costs of the petitioner. Advocates fee Rs. 100.