Khanna, J. - (1.) This appeal on certificate is against the judgment of Gujarat High Court dismissing petition under Art. 226 of the Constitution of India filed by the appellant for a writ of certiorari or other appropriate writ to quash two notices issued by the respondent to the appellant under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as the Act of 1961).
(2.) The matter relates to the assessment years 1957-58 and 1959-60. The appellant is a public limited Company which carries on the business of manufacture of pottery and sanitary wares at Morvi and other places in the State of Gujarat. In respect of the assessment year 1957-58, the corresponding accounting year for which ended on July 31, 1966, the appellant filed its return under the Indian Income Tax Act, 1922 (hereinafter referred to as the Act of 1922). The predecessor-in-interest of the respondent by assessment order dated April 16, 1959 assessed the total income of the appellant at Rs. 4,60,372. In computing the said income the Income-tax Officer allowed depreciations amounting to Rs. 5,05,487. For the assessment year 1959-60 the appellant likewise filed return. Assessment order in respect of that year was mde on March 30, 1961 and the income of the appellant was assessed at Rs. 11,04,650 after allowing depreciation of Rs. 3,57,926.
(3.) On October 5, 1965 a letter was addressed on behalf of the respondent to the appellant stating that there had been a mistake in the calculation of the depreciation allowance in respect of certain items of the capital assets of the appellant for the period covered by the assessment years 1955-56 to 1962-63. As a result of the mistake, it was stated, a sum of Rs. 2,39,723 had been allowed as depreciation allowance in excess of the permissible limit. Enclosed with the letter was a chart showing excess depreciation allegedly allowed during the above-mentioned period. The excess amounts of depreciation for the years 1957-58 and 1959-60 were mentioned in the chart to be Rs. 37,869 and Rs. 26,945 respectively. The appellant company was asked if it had any objection to the rectification of the mistake. The above letter was followed by another letter wherein the respondent wrote to the appellant that "the mistake in depreciation arose because the initial depreciation was not taken into account in finding out whether the total depreciation allowed exceeded the original cost". On February 2, 1966 the Income-tax Officer addressed another letter to the appellant stating that for the assessment years 1957-58 and 1959-60 the income of the appellant had escaped assessment for failure of the appellant to disclose all material facts within the meaning of Section 147 (a) of the Act of 1961. The appellant in reply stated that depreciation calculation sheets had been worked by the income-tax authorities and there was no failure on the part of the appellant to disclose all facts. Impugned notices were thereafter issued on March 4, 1966 by the Income-tax Officer to the appellant stating that he had reason to believe that the income of the appellant chargeable to tax for the assessment years in question had escaped assessment within the meaning of Section 147 of the Act of 1961. The Income-tax Officer acordingly stated that he proposed to recompute and reassess the income/loss/depreciation allowance for the aforesaid years. The appellant was called upon to furnish returns in the prescribed form within 30 days from the date of the service of notices. It was also mentioned that the notices were being issued after obtaining the necessary satisfaction of the Commissioner of Income-tax.;