Umesh Chandra Banerjee, J.
1. The writ Petition is directed against an order dated Octobers, 1976, issued by the Income-tax Officer, 'A' Ward, Companies District III, Calcutta, under Section 35 of the Indian Income-tax Act, 1922.
2. The principal contention raised in this application is that the Income-tax Officer had no jurisdiction to invoke Section 35 of the Indian Income-tax Act, 1922, in the facts and circumstances of the matter under consideration and, as such, the order of the Income-tax Officer is wholly without jurisdiction.
3. In order to appreciate the contentions raised in this writ petition, I may briefly refer to the facts.
4. The petitioner, a non-resident shipping company, carries on its business of shipping in India through 'M/s. James Finlay & Company. The petitioner submitted its return of income for the assessment year 1961-62 showing a loss of Rs. 6,43,067. The said return was filed on the basis of the provisional ratio certificate in view of the fact that the final ratio certificate was not available at the time of filing of the said return. The Income-tax Officer proceeded to make the assessment on the basis of the provisional ratio certificate and computed the total Indian income of the petitioner at Rs. 20,24,546 and, on the basis of the said computation of its income, the total tax was determined at Rs. 12,75,463.98. The Income-tax Officer also in the said order imposed penal interest to the extent of Rs. 67,583.28 The amount thus demanded amounted to Rs. 13,43,047.26. The said demand, however, was partially adjusted against the refund of Rs. 13,42,111.19 which was payable by the Revenue authority to the petitioner and a net demand of Rs. 936.07 remained outstanding.
5. The petitioner thereafter preferred an appeal against the said order of assessment made by the Income-tax Officer and the Appellate Assistant Commissioner of Income-tax upheld the claim of the petitioner regarding the investment allowance.
6. M/s. James Finlay Co. Ltd., on behalf of the petitioner, thereafter made an application on August, 6, 1963, before the Income-tax Officer, 'B' Ward, Companies District III, Calcutta, to give effect to the order of the Appellate Assistant Commissioner of Income-tax and to refund a sum of Rs. 14,06,116.59. The said amount consisted of a sum of Rs. 13,42,111.19 which had been paid by adjustment of the refund due to the petitionerand a sum of Rs. 64,005.50 which was paid by the petitioner under Section 44B of the old. Act of 1922.
7. The Income-tax Officer thereafter passed an order dated January 29, 1964, under Section 250 of the Income-tax Act, 1961, revising the assessment on the basis of the order of the Appellate Assistant Commissioner of Income-tax by reason whereof the amount refundable was determined at Rs. 13,42,111.19. Subsequently, however, the petitioner furnished the final ratio certificate from the Income-tax Authorities, United Kingdom, and on the basis thereof, the Income-tax Officer passed another order dated December 29, 1964, under Section 154 read with Section 250 of the new Act by giving effect to the order of the Appellate Assistant Commissioner of Income-tax and computed the tax refundable to the petitioner at Rs. 13,42,111.19.
8. M/s. James Finlay Co. Ltd., on behalf of the petitioner, thereafterby several letters requested the Income-tax Officer to refund the sumof Rs. 13,42,111.19 and Rs. 64,005.50 and to pay interest on theaforesaid amounts under Section 244(1) of the new Act. The Income-taxOfficer in the meantime, however, filed an appeal before the . Income-taxAppellate Tribunal against the said decision of the Appellate AssistantCommissioner of Income-tax and the said appeal was dismissed by theIncome-tax Appellate Tribunal by a consolidated order dated July 7, 1965.The matter was thereafter taken to the High Court under Section 256(1) ofthe new Act of 1961, and having failed to achieve any success in the HighCourt, the matter was further moved to the Supreme Court with also nosuccess.
9. The Income-tax Officer by his letter dated April 4, 1972, informed thepetitioner of adjustment of a sum of Rs. 10,31,123 out of the refund ofRs. 13,42,111 against the demands for the assessment years 1969-70 and1970-71. In pursuance thereof, M/s. James Finlay & Co. Ltd., on behalf ofthe petitioner, sent a letter dated May 30, 1972, to respondent No. 1,stating that a sum of Rs. 3,53,860 was refundable to the petitioner afterthe adjustment of Rs. 10,31,123 along with another sum of Rs. 64,005 dueto the petitioner with a further request for payment of interest by reasonof very great delay in granting the refund.
10. The Income-tax Officer thereafter made a refund of Rs. 3,10,998 to the petitioner on November 1, 1972.
11. Immediately thereafter, M/s. James Finlay & Co. Ltd., on behalf of the petitioner, by a letter dated December 21, 1972, requested respondent No. 1, to issue a refund voucher for Rs. 8,32,915 representing the estimated quantum of interest without any further delay and in pursuance of which the Income-tax Officer passed an order under Section 244 of thenew Act on September 15, 1973, whereby he allowed a sum of Rs. 8,02,981 being the amount of the total interest payable under Section 244 of the new Act. After adjusting the taxes for a sum of Rs. 5,90,191, he determined the net interest refundable at Rs. 2,12,790, In the said order, the Income-tax Officer referred to the direction given on May 29, 1973, to him by the Commissioner of Income-tax, West Bengal-II, to allow interest under Section 244 of the new Act on the amount of the refund which was withheld by an order made under Section 241 of the new Act. In accordance with the said direction, the calculation of interest under Section 244 of the new Act was also made by the Income-tax Officer and, on the basis of the said calculation, the total interest payable under Section 244 of the new Act amounted to Rs. 8,02,981.
12. On September 20, 1976, the petitioner received an undated notice under Section 154/155 of the new Act read with Section 35 of the old Act issued by respondent No. 1, whereby respondent No. 1 requested the petitioner to show cause on September 23, 1976, why the refund order under Section 244 of the new Act for the assessment year 1961-62 dated September 15, 1973, should not be amended as there was a mistake apparent from the record within the meaning of Section 154/155 of the new Act. The nature of the mistake proposed to be rectified as stated in the said notice was that the interest under Section 244 of the new Act was wrongly allowed. In the reply to the show-cause notice, the petitioner, however, disputed the contentions of the Revenue authority.
13. The respondent No. 1 thereafter passed an order dated October 5, 1976, under Section 35 of the old Act for the assessment year 1961-62, whereby he withdrew the interest determined to be payable to the petitioner under Section 244 of the new Act on the ground that the interest was allowed through mistake and the said mistake was apparent from the record.
14. Mr. Pronob Kumar Pal, appearing in support of the application, contended that since ;the Commissioner of Income-tax has already passed an order in favour of the writ petitioner in regard to the payment of interest under Section 244 of the 1961 Act and the Income-tax Officer, in fact, acted thereon, the subsequent notice for rectification and consequent order for withdrawal of the order for payment of interest on the ground of error apparent under Section 35 of the 1922 Act by the Income-tax Officer is wholly unauthorised and without jurisdiction. The order dated September 15, 1973, cannot be said to be an independent order but merely communicating the order passed, by the Commissioner of Income-tax. As a matter of fact, the order itself records the same. The extract of the said order is, however, set out hereinbelow for the sake of convenience :
Assessment: year 1961-62
Order under Section 244
'In this case the refund of Rs. 13,42,111 for assessment year 1961-62 was withheld by CIT, W.B.I., Calcutta, under Section 241 of the I.T. Act, 1961, vide No. A/34639/C.T/NS/253/63-64 dated 6-11-1965.
Subsequently, the CIT directed to adjust part of the refund against taxes of other years and to issue refund order for the balance amount which was done on 30-3-72.
CIT, W.B.-II, vide his No. Asst/1961/CT/NS/253/63-64 (SF) dated 29-5-73, directed to allow interest under Section 244 on the amount of refund withheld as per his direction, the calculation of interest under Section 244 is as follows ;......'
15. In this connection Mr. Pal placed strong reliance on the decision in Varghese v. ITO : 131ITR597(SC) . In that decision, the Supreme Court observed (p. 613):
'It is now well settled as a result of two decisions of this court, one in Navnit Lal C. Javeri v. Sen, AAC : 56ITR198(SC) and the other in Ellerman Lines Ltd. v. CIT : 82ITR913(SC) , that circulars issued by the CBDT under Section 119 of the Act are binding on all officers and persons employed in the execution of the Act even if they deviate from the provisions of the Act.'
16. Mr. Nanda Lal Pal, however, contended that the Income-tax Officer is within his rights to rectify his own order and by no stretch can it be said that the order dated September 15, 1973, can be identified as a mere communication of the Commissioner's order. It is further contended that the direction of the Commissioner as stated by the Income-tax Officer in the order dated September 15, 1973, is a mere administrative instruction with no effect at all.
17. On a true and proper reading of the order dated September 15, 1973, together with the order of the Commissioner of Income-tax, relevant extract of which is set out hereinbelow :
'In the circumstances, the assessee is entitled to interest under Section 244 of the I.T. Act, 1961, on the full amount of refund after the expiry of six months from the date on which the AAC's order was given effect to by the ITO up to the date on which the refund was partially adjusted towards the demand for the assessment years 1969-70 and 1970-71. The assessee is further entitled to interest on the balance amount up to the actual date of issue of the refund order. You are, therefore, requested to take immediate action in the matter.'
18. It leaves no room for doubt that the order was passed in terras of the direction of the Commissioner of Income-tax. There is no independent application of mind and it appears that the Income-tax Officer concerned has only carried out the order of his superior authority. While it is true that in the case of Varghese : 131ITR597(SC) , a Circular of the Board was involved and the findings of this court were made in that context, but in my view, those principles must and ought to be followed, though a contra contention was made by the Revenue authority. Orders of superior officers cannot be trifled with in any manner and neither the statute has conferred any such power on the Income-tax Officer. The Commissioner as also the Income-tax Officer are creatures of statute and they are to discharge their respective duties within the strict ambit of the statute.
19. Mr. Pal's next contention in support of the application is that Section 297(2)(a) of the 1961 Act does not bar the continuation of the proceedings under the new Act of 1961 and since the. 1961 Act has been taken recourse to by the Tax Authorities, question of error apparent on the face of the record in any event does not and cannot arise. In this context, Mr. Pal strongly relies on the decision of this court in the case of Imperial Chemical Industries Ltd. v. CIT : 116ITR516(Cal) .
20. In that decision, this court observed that the provision under Section 297(2)(a) is an enabling provision authorising the taxing authority to invoke either the 1922 Act or the 1961 Act in the event of happening of a contingency as envisaged under the statute.
21. The same view has also been expressed by S.P. Mitra J. (as. he thenwas), in the case of CIT v. Rajnagar Tea Company Ltd. : 87ITR669(Cal) .
22. While it is true that an, error of law can be termed as an error apparent on the face of the record as laid down by the Supreme Court in the case of Syed Yakoob v. Radhakrishnan, : 5SCR64 , but the question, remains to be seen as to whether this directive of the Commissioner as contained the order dated September 15, 1973, can be termed to be an error of such a nature capable of being rectified under Section 35 of the Act of 1922,
23. Admittedly, prior to the invocation of the power under Section 241 of the 1961 Act by the Commissioner, the concerned Income-tax Officer after production of the final ratio certificate dealt with the matter under Section 154/250 of the new Act of 1961. Subsequently, the departmental authority on December 1, 1965, also examined the matter arid withheld the question of refund under Section 241 of the 1961 Act and thereafter, again the all important order dated September 15, 1973, was passed by the Income-tax Officer under Section 244 of the Act of 1961. As a matter offact the notice being annexure 'N' to the writ petition was also issued under Section 154/155 of the Income-tax Act, 1961, read with Section 35 of the Indian Income-tax Act, 1922. This pre-eminently shows that the departmental authority, as as a matter of fact, taken recourse to the provisions of the new Act of 1961 and as per the decision of this court reported in Imperial Chemical Industries Ltd. v. CIT : 116ITR516(Cal) , the acts of the authority cannot be termed as illegal by reason of the provisions contained in Section 297(2)(a) of the Income-tax Act, 1961. Mr. N.L. Pal, however, contended that since the old Act of 1922 did not contain any provision for payment of interest and the matter being governed under the old Act, order for payment of interest under the new Act is a mistake apparent on the face of the record. Considering, however, the enabling provisions as contained in the Act of 1961 and considering the factum of taking recourse to the new Act of 1961 by the departmental authority, the contention of the revenue authority, in my view cannot be accepted. The proceeding under Section 154, it is well settled, is to be treated nothing other than an order made in the proceeding for assessment of the firms. In this context, reference may be made to the decision of the Supreme Court in the case of Sankappa v. ITO : 68ITR760(SC) .
24. In any event, an error apparent or mistake apparent on the record must be an obvious and patent mistake and not something which would have to be established by a long drawn process of reasoning on points on which there may conceivably be two opinions. A decision on a debatable point of law cannot be termed to be a mistake apparent from the record. Assuming full credence to the submissions of Mr. Pal, it is not free from doubt in regard to the applicability of Section 35 of the Act of 1922. This view finds support from the decision of the Supreme Court in the case of Balaram, ITO v. Volkart Brothers : 82ITR50(SC) .
25. In that view of the matter, the Income-tax Officer was, in my view, clearly in error in holding that power of rectification existed in his favour in regard to the order dated September 15, 1973, under Section 35 of the Act of 1922.
26. The application thus succeeds. The rule is made absolute. In the facts of this case, there will be, however, no order as to costs.
27. On an oral prayer by Mr. Rupen Mitra, operation of the order is stayed for a period of two weeks from date.