1. [The judgment of the court was delivered by Srinivasa Iyengar J.].- This appeal is against the judgment of a single judge (Margarine & Refined Oil Co. (P.) Ltd. V. ITO (1975) 98 ITR 636) allowing a writ petition filed by the respondent and quashing an order under Section 35 of the Indian I.T. Act, 1922, revising the assessm ent for 1961-62. An assessment order had been made on February 27, 1962, under the Indian I.T. Act, 1922, but it was set aside on appeal and a fresh order of assessment was made on January 16, 1965. This was appealed against and the AAC modified the assessment to some extent. A consequential order was made by the ITO on November 20, 1965' The appeal to the AAC was not concerned with any question of depreciation allowance allowable to the assessee. The ITO noticing that there was excess depreciation allowed in the assessment made on January 16, 1965, and as this was an error apparent on the record, issued a notice dated January 23, 1968, proposing to rectify the same. The notice however, purported to be under Section 154 of the I.T. Act, 1961. This was challenged in W.P. No. 2183 of 1968 before this court and a writ of prohibition sought. Further proceedings pursuant to that notice had been stayed by this court. In that writ petition it was represented for the department that action to rectify could be taken only under Section 35 of the Indian I.T. Act, 1922, and the proceedings taken should be taken as having been initiated thereunder. Consequent on such submission an application was filed to raise a ground that Section 35 of the Indian I.T. Act, 1922, was unconstitutional being violative of art. 14 of the Constitution in so far as it dealt with matters covered by Section 147(b) of the I.T. Act, 1961. This court did not go into this question but in the view that action could be taken only under Section 35 of the earlier Act and no order had yet been made, dismissed the writ petition reserving liberty to the assessee to challenge the order, if any, made against it on the said ground. Thereafter, the ITO, after affording an opportunity to the assessee, rectified the assessment by withdrawing depreciation allowance to the extent of Rs. 3,535 on the ground that the allowance to that extent was a mistake apparent on the record by the order dated December 3, 1971, and a notice of demand was issued for payment of the deficit in the tax payable.
2. The challenge to this order, which was upheld by the learned judge, was on the ground that it was open to the ITO to take action under Section 147(b) of the I.T. Act, 1961, and if action had been taken thereunder it was open to the assessee to contend that the action was barred by the time the notice was issued for purposes of rectification of the assessment. If action had been taken under Section 147(b) of the I.T. Act, the assesee had a right of appeal to the AAC and further appeal to the Tribunal and also to seek a reference to the High Court but there was no right of appeal against an order under Section 35 of the Indian I.T. Act, 1922, and in the case of action taken under Section 147(b) of the I.T. Act, 1961, there was a shorter period of limitation while in the case of action taken under Section 35 of the Indian I.T. Act, 1922, there was an extended period of limitation and, therofore, Section 35 of the Indian I.T. Act, 1922, was liable to be struck down as offending art. 14 of the Constitution and, consequently, the order should be quashed.
3. The learned judge referred to two decisions of the Supreme Court in Suraj Mall Mohta and Co. V.
4. Visvanatha Sastri (1954) 26 ITR 1 and Anandji Haridas and Co. (P.) Ltd. V. S.P. Kushare, STO (1968) 21 STC 326 relied on for the assessee. He observed (p. 639): "The principle enunciated by the Supreme Court in that case (Suraj Mall Mohta's case (1954) % ITR 1 (SC)] was that when two provisions of law were applicable to a given case and of them one was more onerous than the other, in the absence of any guidance as to which of the two provisions should be resorted to in a given case, any action taken under the provision which was more onerous was liable to be struck down as being violative of art. 14 of the Constitution, The same principle is reiterated by the Supreme Court in Anandji Haridas and Co. (P.) Ltd. V. S.P. Kurshare, STO (1968) 21 STC 326, 337."
5. After extracting a portion from the judgment in Anandji Haridas' case (1968) 21 STC 326 (SC), the learned judge concluded (p. 640): "In view of the pronouncement of the Supreme Court in the two cases referred to above, it has to be held in this case that action taken against the petitioner under Section 35 of the 1922 Act is discriminatory. The impugned order is, therofore, set aside."
6. It is urged by Sri Rajasekhara Murthy, learned counsel for the appellant, that the conclusion reached by the learned judge is not correct and it is not at all clear how the decisions referred to applied to the facts in the instant case. He argued that the two Sections, Section 35 of the Indian I.T.
7. Act, 1922, and Section 147(b) of the I.T. Act, 1961, operated in different fields and there was no discrimination involved and in the instant case only Section 35 of the Indian I.T. Act, 1922, could be applied. He pointed out that an additional affidavit had been filed on behalf of the department in Writ Petition No. 2193 of 1969, dated 23-7-1970, a copy of which was produced as Ex. I along with the counter-affidavit in the present case, from which it was clear that there was no information which could lead the ITO to reasonably believe that certain income had escaped assessment within the prescribed time to take action under Section 147(b) of the I.T. Act, 1961. That affidavit was to the effect that the scrutiny by the internal audit party had disclosed that excess depreciation had been allowed in the case of the assessee for the assessment years 1961-62 to 1964-65 and their objection dated December 2, 1967, was forwarded to the ITO by the IAC on December 30, 1967, and thereupon the notice for rectification came to be issued and in these circumstances initiation of action under Section 147(b) of the I.T. Act, 1961, was not possible. It is pointed out that Section 35 of the Indian I.T. Act, 1922, has not been struck down as offending art. 14 and it is contended that without striking down the section, the order could not have been set aside as discriminatory. Sri Srinivasan, learned counsel appearing for the assessee, supported the order under appeal and stressed that under Section 147(b) excess depreciation allowance allowed was explained to be income escaping assessm ent and there was no guideline as to which of the provisions, viz., Section 35 of the Indian I.T. Act, 1922, or Section 147(b) of the I.T. Act, 1961, should be applied in a given case.
8. In our opinion, the contentions urged for the appellant are sound and must be upheld. It was not the case for the assessee that the order was wrong or that there was no error apparent on the record for taking action under Section 35 of the Indian I.T. Act, 1922. Section 147 of the I.T. Act, 1961, provides for action by the ITO when there has been an escapement of income. Action can be taken thereunder only if the ITO has reason to believe that by reason of the omission or failure on the part of the assessee to file the return or to disclose fully all material facts necessary for the assessment, the income chargeable to tax has escaped assessment or notwithstanding that there has been no such omission or failure on the part of the assessee the ITO has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment.
9. Existence of the conditions specified is a pre-requisite for the exercise of jurisdiction under this section. The assessee has no right of action under the section. Normally, an enhancement of income chargeable to tax ensues, though in a given case there may be no change. In contrast proceedings under Section 35 of the Indian I.T. Act can be taken by the asses-! see also. Action is permissible under this section only if there is an error apparent on the record. Proceedings thereunder may result in reduction or enhancement of the income chargeable to tax but the purpose, scope or ambit of the provision is only to secure a correction of the error apparent on the record. It is thus clear that the two sections operate in different or distinct fields. In Sivagaminatha Moopanar & Sons v. ITO (1955) 28 ITR 601, the High Court of Madras dealt with a contention that Section 28(l)(c) of the Indian I.T. Act for levy of penalty was an alternative for launching prosecution under Section 51 or Section 52 and art. 14 of the Constitution was violated as the IAC was vested with an unguided discretion to direct either proceedings for levy of penalty or a prosecution and held that there was no such vice involved. It was held (headnote): "Though in some concrete instances there might be overlapping between the provisions of Section 28 and the provisions of Sections 51 and 52, the two sets of provisions are directed to secure very different objects. Sections 51 and 52 have been enacted for vindicating public justice and for the punishment of the offender for deliberate infraction of the law. Section 28 is enacted for the purpose of rendering evasion unprofitable and of securing to the State compensation for damages caused by attempted evasion. Iii their nature the two remedies are not mutually exclusive but are concurrent.
10. Section 28(4) only makes provision for a statutory concession to the assessee in the overlapping cases. The grant of a concession to the assessee in the form of a provision in Section 28(4) does not alter the situation and does not make the two provisions mutually exclusive for the purpose of attracting the vice of unequal protection of the laws forbidden by article 14."
11. This principle is equally attracted to the instant case.
12. Orders made under Section 35 of the Indian I.T. Act have been upheld even though action could have been taken under Section 34 of the Indian I.T. Act (corresponding to Section 147(b) of the I.T.
13. Act). In Maharana Mills (P.) Ltd. V. ITO [1959) 36 ITR 350, the Supreme Court rejected the contention urged for the assessee that Section 34 was the correct provision to take action as it specifically referred to excessive depreciation. This was reiterated by the Supreme Court in IAC of Agri. IT v. V. M.
14. Ravi Nam- boodiripad [1974] 96 ITR 73.
15. Provision for rectification of error apparent on the record and for tak-i ing proceedings regarding escapement are a common feature in the tax laws and they are to be invoked in different circumstances. Recourse would be had to the appropriate provision having regard to the facts and circumstances in each case. In the instant case, it was the plea of the assessee that action was taken under Section 35 because action under Section 147(b) was barred by time. This by itself does not violate art. 14 in any way because in all cases where action under Section 147(b) is barred by time, recourse could not be had to Section 35. But action can be taken under Section 35 only if there is an error apparent on record and not otherwise. In the affidavit filed by the department, it bad been specifically pointed out that there was no information which would lead to the ITO to reasonably believe that income had escaped assessment within the time allowed under Section 147(b). It appears to us that the plea of violation of art. 14 is farfetched.
16. In our opinion, the decisions relied on the judgment under appeal do not justify the conclusion reached. It is not at all clear how there are two procedures, one more onerous than the other. In the case of Suraj Mall Mohta and Co. V. Visvanatha Sastri [1954] 26 ITR 1 (SC), it was held that Section 34 of the Indian I.T. Act and Section 5(4) of the Taxation of Income (Investigation Commission) Act, 1947, dealt with all persons who had similar characteristics and the procedure prescribed under the 1947 Act was substantially more drastic and, therofore, prejudicial to the assessee and violated art. 14 and was void This decision and several other decisions were considered by the Supreme Court in the case of Maganlal Chhagganlal (P.) Ltd. V. Municipal Corporation of Greater Bombay, AIR 1974 SC 2009, and the position was summed up in para. 15 as follows: "Where a statute providing for a more drastic procedure different from the ordinary procedure covers the whole field covered by the ordinary procedure, as in Anwar Ali Sarkar's case [1952] SCR 284; AIR 1952 SC 75 and Suraj Mall Mohta's case [19541 26 ITR 1 (SC) without any guidelines as to the class of cases in which either procedure is to be resorted to, the statute will be hit by article 14. Even there, as mentioned in Suraj Mall Mohta's case, a provision for appeal may cure the defect. Further, in such cases, if from the preamble and surrounding circumstances, as well as the provisions of the statute themselves explained and amplified by affidavits, necessary guidelines could be inferred as in Saurashtra case [1952] SCR 435; AIR 1952 SC 123 and Jyoti Pershad's case [1962] 2 SCR 125; AIR 1961 SC 1602, the statute will not be hit by article 14. Then again where the statute itself covers only a class of cases as in Haidar's case [1960] 2 SCR 646; AIR 1960 SC 457 and Bajoria's case [1954] SCR 30; AIR 1953 SC 404, the statute will not be bad. The fact that in such cases the executive will choose which cases are to be tried under the special procedure will not affect the validity of the statute.
17. Therefore, the contention that the mere availability of two procedures-will vitiate one of them, that is the special procedure, is not supported by reason of authority."
18. The ratio of the decision in Suraj Mall Mohta's case [1954] 26 ITR 1 (SC) is inapplicable to the facts of the instant case.
19. It was, however, urged for the assessee-respondent that if action had been taken under Section 147(b) there would be a right of appeal and an order under Section 35 of the Indian I.T. Act was not appealable. When it is borne in mind that Section 35 is for the rectification of an error apparent on the record, the plea of absence of appeal is bereft of any substance. A mistake corrected cannot result in a prejudice. CTT v. Vellin- giri Gounder and Brothers [1953] 24 ITR 166 (Mad) was relied on for the proposition that there is no appeal against an order under Section 35 of the Indian I.T. Act.
20. There is also an observation to this effect in Hirday Narain v. ITO [1970] 78 ITR 26 (SC), but it was also pointed out that the Commissioner can be approached by way of a revision petition. These observations were made while rejecting a contention that an interference under art. 226 was not justified. Now, coming to the types of orders which could be made under Section 35 of the earlier Act, four situations can be contemplated: the ITO rectifying an error resulting in a reduction of tax payable, assessee applying for rectification and his application being allowed, the ITO rectifying an error resulting in an enhancement of the tax payable and the assessee applying but his application being rejected. In the first two cases, the assessee would have no ground for complaint.
21. In the last case, the effect would be that the ITO holds that there is no error apparent to be corrected and the original order is correct. If still the assessee feels that the original order is wrong there is undoubtedly a right to appeal against it. The circumstance that there is no specific appeal against the dismissal of the application causes no prejudice to the assessee. The third case raises a controversy. But this appears to be only on the surface. On making an order under Section 35 what the ITO does is to amend the assessment or other order. If the assessment is amended that would amount to a fresh order and it appears that the assessee could appeal against the amended assessm ent if he considered himself prejudiced. Support for this is available in the observations of the Supreme Court in S. Sankappa v. ITO [1968] 68 ITR 760. In that case, the application of Section 35 in regard to assessments made under the 1922 Act was upheld. It was observed (p. 764): "It is clear that when proceedings are taken for rectification of assessment to tax either under Section 35(1) or Section 35(5) of the Act of 1922, those proceedings must be held to be proceedings for assessm ent. In proceedings under those provisions, what the Income Tax Officer does is to correct errors, in, or rectify orders of, assessment made by him, and orders making such corrections or rectifications are, therofore, clearly part of the proceedings for assessment."
22. From the above observations, it is clear that once an order of assessment is amended by an order made under Section 35, it becomes a fresh assessment order. If so, it follows that an appeal lies against that order. On this ground, as also for the reason that Section 35 is also in the nature of a remedy given to an assessee like Section 147, which confers power only on the department to take action, the plea of violation of art. 14 on the ground want of right of appeal must fail.
23. The next line of the contention urged for the assessee was that by virtue of Section 149, notice under Section 147(b) cannot be issued after the expiry of four years from the end of the relevant assessm ent year whereas action for rectification of an order under Section 35 of the 1922 Act could be taken within four years from the date of the order. The plea of the assessee was that the period within which action could be taken under Section 147(b) is shorter than the one provided under Section 35 of the 1922 Act and, therofore, there was discrimination. It will be seen that the commencement of the period of four years in the two cases is different because the scope of the actions under the two sections are different. The assessment of escaped income is in respect of a particular assessm ent year and, therofore, the time-limit is fixed in relation to the end of the relevant assessm ent year. The rectification intended is in respect of an order and, therofore, the coming into existence of that order is taken as the starting point. Provisions for different time-limits in these circumstances cannot be said to be discriminatory. In a given case, it can conceivably happen that the time-limit for the rectification can expire before the expiry of four years from the end of the assessm ent year and there could then be no grievance that the time-limit for rectification is longer than the time for action under Section 147(b). The purpose and scope of the two sections being different, a comparison of the different time-limits prescribed thereunder for purposes of conjuring up a discrimination is, in our opinion, impermissible. As noticed earlier, it cannot be said that the period fixed under Section 35 is longer than the one prescribed under Section 147(b). So far as the assessee is concerned, in a case where he wants rectification of an error resulting in a benefit to him, he cannot contend that by the prescription of the longer period (according to his contention) he is prejudiced or discriminated against.
24. The facts and circumstances in Anandji Haridas and Co. (P.) Ltd. V. S.P. Kushare, STO (1968) 21 STC 326 (SC) relied on for the assessee were peculiar. The case arose under the C.P. and Berar Sales Tax Act. It was held that while action could bd taken against a registered dealer both under Section II(4)(a) and Section 11A of the Act in respect of escaped assessment, as far as unregistered dealers were concerned, action was possible only under Section 11A for the initiation of which there was a time-limit of 3 years and as that period of limitation was made inapplicable to proceedings under Section II(4)(a) of that Act, by virtue of an amendment introduced as Section 11 A(3), the registered dealers alone were subjected to discrimination. It was in those circumstances that Section II(4)(a) was struck down as violating art. 14. It had been contended that the classification between registered dealers and unregistered dealers was a rational one in the circumstances but that was not accepted. This decision has been referred to subsequently and distinguished in State of Gujarat v. Patel Ramjibhai Danabhai (1979) 44 STC 137 (SC), where the treatment of registered dealers and unregistered dealers differently was upheld on the ground that the classification was a reasonable on having regard to the object sought to be achieved. In the present case, however, unlike in Anandji's case (1968) 21 STC 326 (SC), there are no two classes of assessees who have been treated differently. Regarding every assessee against whom no action was taken within the period prescribed under Section 147(b) of the Act and whose case falls under Section 35, action is possible under that section within the period prescribed therein. Further, unlike the provisions considered in Anandji's case (1968) 21 STC 326 (SC), there is a period of limitation prescribed both under Section 35 of the 1922 Act and Section 147(b) of the 1961 Act and which is applicable to all persons equally. Therefore, in our opinion, the specification of different time-limits in Section 35 of the Indian I.T. Act, 1922, and Section 147(b) of the I.T. Act, 1961, brings about no discrimination justifying any conclusion that Section 35 offends art. 14.
25. For the reasons stated above, the appeal is entitled to succeed. Accordingly, the appeal is allowed and in reversal of the judgment of the learned single judge, the writ petition is dismissed. Parties to bear their own costs..