J. L. KAPUR - (1.) THE following Judgment of the court was delivered by
(2.) THIS is an appeal by special leave against the judgment and order of the High court of Judicature at Bombay dismissing the appellant's petition under Art. 226. The appellant before us is a private limited company carrying on the business of manufacturing and selling textiles and the respondent is the Income-tax Officer of Porbander. Previous to the year 1949, in Porbander which became a part of the State of Saurashtra, there was no income-tax. In 1949 the Saurashtra Income-tax Ordinance (hereinafter termed the Ordinance) was promulgated which was applicable to the State of Saurashtra. By that Ordinance income-tax became leviable and from 1950 onwards when Saurashtra became part of the Union of India the Indian Income-tax Act (hereinafter referred to as the Act) became applicable by reason of the Finance Act of 1950 (Act XXV of 1950). The appellant 'Was taxed for the accounting year 1949, i.e., the assessment year 1950-51. In that year the amount of depreciation allowed under s. 10(2)(vi) of the Act was Rs. 3,43,869.00. The appellant continued to be assessed to incometax in the assessment years 1952-53 and 1953-54 and the present appeal relates to the assessment of year 1953-54. According to the assessment order dated 30/06/1965, the amount of depreciation allowed for the assessment year 1953- 54 was Rs. 3,48,105.00. On 8/08/1955, the appellant made an application for rectification under s. 35 of the Act. In this application he pointed out several mistakes in calculations in regard to the depreciation amount. By his order of 27/02/1956, the Income-tax Officer corrected the Written Down Value of the different properties of the appellant and determined the total allowable depreciation to be Rs. 1,94,074.00. The order of the Income-tax Officer was as follows: ' To arrive at the Written Down Value of the assets it was necessary to maintain depreciation record. This being not done so far, is done now and working attached. Depreciation allowance as per rules is worked out at Rs. 1,94,074.00 as per working sheet attached. The correct computation of income is as under: JUDGEMENT_881_AIR(SC)_1959Html1.htm And thus the unabsorbed depreciation amount which under the assessment order of 30/06/1955, was Rs. 2,31,944.00 was reduced to Rs. 83,295.00 and this was set off against the appellant's income of the assessment year 1954-55. On 29/02/1956, the Income-tax Officer passed two provisional assessment( orders for the years 1954-55 and 1955-56. In both these orders he calculated the depreciation amounts on the basis of the same Written Down Value as he had determined for the year 1953-54. The reasons for calculating them on the new basis were set out by the Income-tax Officer in his order dated 18/05/1956, and they were:' Less Depreciation. The depreciation of the Company has not been properly calculated by arriving at, Written Down Value as per the Saurashtra Income Tax Ordinance and also as per Indian Income-tax Act. The assessee Company was being assessed regularly even as per Indian Income-tax Act. So Written Down Value of all assets are arrived at by working out the depreciation as per above Ordinance as well as Income Tax Act. The depreciation is worked out as per separate statement keeping in view the following: i) Definition of ' assessee ' as per Indian Income-tax Act. (ii) The exact meaning of W.D. V. as per Income-tax Act. (iii) The meaning of W. D. V. as per the Saurashtra Income-tax Ordinance, 1949 and Rules (Page 20, para. 13-5- A). (iv) 1. T. R. Volume 25, 558. Decision of Calcutta High court as regards C. I. T., West Bengal,M/s. Karnani Industrial Bank Ltd. (v) Views expressed by Taxation Enquiry Commissioner, 1953- 54, Volume II, page 84, para. 34. (vi) Taxation Laws (Part 'B' State) (Removal of Difficulties Order, 1950. The depreciation thus worked out as per separate statement'. On 8/08/1955,the appllant made an application under s. 35 for certain corrections in the calculations and the order thereon was passed on 27/02/1956, but no written notice of the intended rectification of the Written Down Value and the depreciation amount was given by the Income-tax Officer to the appellant under s, 35 read with s. 63 of the Act. On 9/03/1956, the appellant wrote to the Income-tax Officer protesting against the order:' You have exercised powers not vested in you under the said Section, and you have gone beyond the purview of the Act by preparing statements and records which are prejudicial to the rights of the Company '. The appellant requested the Income-tax Officer to cancel his previous order and to pass a fresh order correcting onlv those mistakes which had been pointed out by it' On the same day the appellant sent another letter asking for the cancellation of the provisional assessment order for 1954-55 and requested for a revised assessment order on the basis of the return filed by it. The reply of the Income-tax Officer of the same date was that the order was correct and a similar order was made on the second application in regard to the assessment of 1954-55. On 16/04/1956, the appellant filed a petition in the High court of Bombay under Arts. 226 and 227 in which it alleged that the Income-tax Officer had: ' exceeded the limits of jurisdiction vested in him and exercised illegally jurisdiction not vested in him by law under Section 35 and passed orders, inter alia, and suo motu and without giving any prior notice and altered the entire procedure and basis of calculating depreciation on the written down value of buildings and machinery of the petitioners. The appellant prayed that the order made under s. 35 of the Act be quashed and an injunction issued restraining the Income-tax Officer from recovering the assessed tax. The High court dismissed this petition on the ground that it contained misstatements of fact ; that ' The advantage of this jurisdiction is not available to the subject when adequate and efficacious remedy is available to him under the ordinary law ' ; that the appellant could, under s. 33A of the Act, have gone in revision to the Commissioner. The High court also held against the appellant on merits. The appellant has come to this court by special leave and three questions were raised (1) that no notice as required under s. 35 was given to the appellant; (2) that there was no record on the basis of which the rectifica. tion in the Written Down Value of the property could be made and (3) that there was no mistake apparent from the record.
(3.) THE learned Attorney-General contended in the first instance that the remedy available under Art. 226 is a discretionary one and if the High court had exercised its discretion no appeal was competent and in support of his contention he relied upon the judgment of this court in K. S. Rashid and Son v. Income-tax Investigation Commission, etc. (1), where Mukherjee, J., (as he then was) said:For purpose of this case it is enough to state that the remedy provided for in Art. 226 of the Constitution is a discretionary remedy and the High court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere '. It is not necessary to decide in this case whether the order passed under Art. 226 is of a discretionary nature and therefore in appeal this court would not interfere with the exercise of discretion, because in our opinion, the case can be decided on other grounds of substance. The first question is that of notice under s. 35 of the Act. The affidavit of the Income-tax Officer shows that the correctness of the figures for determining the depreciation was discussed with the appellant's secretary. The Incometax Officer stated that: ' The depreciation which was calculated in the assessment order of 1953-54 was as per the statement given by the petitioner. On submission of the said application the petitioner (Shri Ganatra, the secretary of the Mills) was told that the depreciation will be given after rectifying mistakes. The petitioner had agreed to the same. There being no record of the working out from the first available record in the Assessment order for the Assessment year 1943-44, the petitioner was also supplied with the copy of the working of the depreciation along with the necessary rules and regulation for calculating the same '. He also stated that the order of rectification was passed 'almost at the end of the financial year, after explaining and discussing all the above calculation along with the relevant rules and regulation of the calculated depreciation ' ; that the order was not passed without giving a reasonable opportunity to the appellant; that the matter was discussed with its representative more than once; thattheassessment for the year 1954-55 was made final after calculatitig the depreciation; that the point of depreciation was notraised by the applicantat any hearingand that even though no written notice was given, the representative of the appellant was given notice of the intended determination of the Written Down Values. He also stated : ' Thus though no written notice is given, applicant is given notice of the intention of calculating depreciation on record basis and is also allowed a reasonable opportunity of being heard inasmuch as he was given the calculation of depreciation on 21/2/1956 '. The orders placed on the record show that the Income-tax Officer made calculation for the purpose of determining the depreciation amount and after giving deductions allowed by the Act and the Rules made thereunder arrived at the corrected figure of Rs. 1,94,074.00 for the assessment year 1953-54. Apart from the fact that the petition of the appellant does not set out clearly all the facts which should have been set out, there is the affidavit of the respondent that the matter was discussed with the representative of the appellant although no written notice was given. In this connection the learned Attorney-General has further submitted (1) that the order determining the depreciation amount allowable was not final; (2) that the effect of the order making the rectification was not of enhancing the assessment or reducing the refund; and (3) that the question of depreciation could be raised at the time of assessment in any subsequent year. ;