1. This appeal has been filed by the department against the order dated 4-3-1982 of the AAC relating to the assessment year 1975-76.
2. The assessment for the assessment year 1975-76 was completed under Section 143(1) of the Income-tax Act, 1961 ('the Act'). In this assessment, the ITO had allowed depreciation and expenses towards gratuity as claimed by the assessee. Subsequently, the ITO came to hold the view that depreciation has been allowed at a higher rate and that expenses tawards gratuity were wrongly allowed. He issued a show-cause notice dated 10-7-1979 asking the assessee to state his reasons as to why the assessment made under Section 143(1) should not be rectified under Section 154 or 155 of the Act in order to correct the aforesaid mistakes. The date of hearing was fixed on 23-7-1979. On 19-7-1979, the assessee requested for ten days' time on the ground that the person who looked after the income-tax affairs of the assessee was out of India.
This application dated 19-7-1979 was duly received in the office of the ITO as per receipt dated 20-7-1979 stamped on the office copy of the letter in the possession of the assessee. However, the ITO passed the order under Section 154. This order is not dated but the assessee states that it received the order on 10-3-1980 which shows that the order must have been passed on or before 10-3-1980. In this order, the ITO states that nobody attended on behalf of the assessee nor any communication received from him in response to the show-cause notice issued by him. In that order, the ITO reduced the depreciation and withdrew the deduction for gratuity allowed in the original assessment under Section 143(1).
3. The assessee appealed to the AAC and contended that the order passed by the ITO was not justified. The AAC found that there could be no two opinions about the rate of depreciation admissible on an asset and whether the conditions under Section 40A(7) of the Act were satisfied or not in a particular case. However, he found that the assessment was completed under Section 143(1) and so, the said assessment could not be tampered with by resorting to the provisions of Section 154. According to him, if the order under Section 143(1) is modified by the provisions of Section 154, then the sanctity of the order under Section 143(1) would be violated. Hence, he came to the conclusion that the ITO was not justified in rectifying the assessment order passed under Section 143(1) by his subsequent order under Section 154. He gave the following findings: (ii) The mistakes pointed out by the ITO in the order under Section 154 do exist and they are liable to be rectified but not under Section 154.
(iii) As the action under Section 154 was taken and completed before the expiry of limitation under Section 153, the ITO should approach the IAC for seeking permission to resort to the provisions of Section 143(2)(b) and if his IAC permits him to issue a notice under Section 143(2)(b) he should rectify the mistake and pass a fresh order.
4. The assessee has accepted the above decision of the AAC; but, the department has come in appeal against the aforesaid order on the following grounds: 1. On the facts and in the circumstances of the case, the learned AAC erred in vacating the order passed under Section 154 of the Income-tax Act, 1961.
2. On the facts and in the circumstances of the case, the learned AAC further erred in holding that the assessment completed under Section 143(1) could not be tampered with by resorting to the provisions of Section 154.
3. The appellant prays that the order of the AAC on the above grounds be set aside and that of the ITO restored.
5. Shri C. Perianayagam, the learned representative for the department, urged before us that the AAC erred in his decision. He stated that there were mistakes in the original assessment made by the ITO as has been admitted by the AAC himself in his order. There are two ways to rectify mistakes appearing in an assessment order made under Section 143(1). One method is to invoke the provisions of Section 154. Another method is laid down in Section 143(2). According to him, Section 143(2) and Section 154 are not mutually exclusive and it is open to the ITO to proceed under any of the two sections according to his choice. As the ITO had proceeded under Section 154, Shri C. Parianayagam urged that the AAC should have upheld the order under Section 154 passed by the ITO.6. Shri D.M. Harish, the learned representative for the assessee, on the other hand, supported the order of the AAC. He stated that Section 143 is a complete code in itself. Section 143(1) authorises the ITO to make an assessment accepting the return of the assessee if he is satisfied that the return filed by the assessee was correct and complete. If it is found subsequently by the assessee or the ITO that the assessment as made under Section 143(1) requires verification or reconsideration, then Section 143(2) provides for that contingency.
Section 143(3) refers to making the assessment once again after the original assessment under Section 143(1) was reopened for reconsideration at the instance of either party. The Explanation to Section 143(3) states the circumstances under which the original assessment made under Section 143(1) shall be deemed to be incorrect, inadequate or incomplete in a material respect. One of those circumstances has been stated to be the over allowance of depreciation as has happened in this case. Another circumstance is when the total income determined under Section 143(1) is less than the amount of the total income on which the assessee is properly chargeable as has happened in this case in respect of the deduction for gratuity. Thus, Shri D.M. Harish urged that Section 143(3) envisages every type of contingency including the rectification of any mistake in an order passed under Section 143(1). Hence, Section 143(1) read with the other provisions relevant thereto which appear in Section 143 constitute a complete code in itself. These are special provisions peculiar to the rectification of mistakes appearing in an order under Section 143(1).
The rule that 'the special excludes the general' is quite well known.
Section 154 is the general provision of rectifying mistakes. There are material differences between these two provisions. The assessee has no right of appeal against an order under Section 143(1). He can ask for the reopening of the assessment within thirty days only. The ITO can reopen it only after taking the prior approval of the IAC. On the other hand, there is a right of appeal against an order under Section 154.
The ITO need not take the prior approval of the IAC. There is a time limit of four years for passing an order under Section 154. His point was that the two sections are different, one being general and the other being special and, therefore, they are indeed mutually exclusive in the sense that for an assessment under Section 143(1), the special provisions relating thereto and appearing in Section 143 alone will apply and the general provisions under Section 154 will not apply.
7. We have considered the contentions of both the parties as well as the facts on record. We find force in the contention raised for the assessee. The rule that 'the special excludes the general' is well settled. If any authority for this proposition is required, we may cite the decisions in the cases of CIT v. Saran Singh Ram Singh  14 ITR 152 (Lahore), Ram Rakha Mal & Sons Ltd. v. CIT  5 ITR 137 (Lahore) and Kikabhoy Chanda-bhoy v. CIT  17 ITR 523 (Bom.). In these cases, it has been clearly held that a general provision cannot derogate from a special provision regarding a certain class of cases.
On going through the provisions of Section 143(1) and the other provisions relevant thereto appearing in Section 143, we are inclined to hold that those provisions constitute a complete code in themselves being special provisions relating to the assessments made under Section 143(1) accepting the return of the assessee without calling him to produce any evidence in support of the return filed by him. We agree with the AAC that those special provisions cannot be ignored by resorting to the general provisions under Section 154. Under the circumstances, we uphold the order of the AAC.