1. K. HOSSAIN, J.--The petitioner, Pakistan River Steamers Ltd. have challenged in this writ petition the order dated 15-7-61 passed by the Income-tax Officer, Companies Circle II under section 35 of the Income-tax Act and the order dated 15-6-67 passed by the Commissioner, Income-tax, Dacca Zone rejecting the review petition under section 33-A (2) of the Act.
2. The facts involved in this writ petition are that the petitioner Company is a successor-in-interest of Rivers Steam Navigation Co. Ltd.
3. During the calendar year 1946, being the previous year for the assessment year 1947-48, the predecessor of the Company Rivers Steam Navigation Co. Limited, having its registered Office in the United Kingdom, had business in areas in the then British India. The said company's assessm ent for the year 1947-48, was, however, pending on the date of Independence of India and Pakistan. The same assessm ent was completed in India on 24-3-52 on the status of the company as non-resident. In accordance with article II of the Agreement for the Avoidance of Double Taxation of Income between Pakistan and India, the Company's assessment for the year 1947-48 was, therefore, to be made in Pakistan as well and it was actually so made on 29-3-52 by the then Income-tax Officer, Section II, Companies Circle II, Chittagong. In this assessment the Income-tax Officer determined the net loss of the non-resident company in the then British India at Rs, 32,00,283 including depreciation allowance but did not allocate this loss between areas now in India and Pakistan which should have been done in accordance with Article IV of the said Agreement. The next assessm ent for the year 1948-49 in respect of previous year 1947 was also made by the same Officer on 17-3-53 treating the company as non-resident. He determined the loss at Rs, 12,66,592 and depreciation allowance to be carried forward as Rs, 13,13,318. The original assessm ent for the year 1949-50 was, however, made on 31-3-54 treating the company as resident and ordinarily resident in Pakistan. The total income during the previous years for the assessment year 1949-50 was determined at Rs, 47,78,556. But the Income-tax Officer allowing set-off of losses and unabsorbed depreciation allowance for the assessment years 1947-48 and 1948-49. But the company appealed against the assessment for the year 1949-50 before the Appellate Assistant Commissioner as well as Income-tax Appellate Tribunal. The Appellate Assistant Commissioner in his order dated 14-10-58 held the company to be non-resident for the purpose of assessment for the year 1949-50. He also allowed other reliefs. As a result of the order of the Appellate Assistant Commissioner the assessm ent for the year 1949-50 was revised under section 31 on 30-4-59. In the revised order for the year 1949-50 the non-resident company's total income in Pakistan during the previous year for that year was determined at Rs, 51,25,883. Against that income the Income-tax Officer allowed set-off of the entire losses for the year 1947-48 amounting to Rs, 20,60,065 and loss to the extent of Rs, 65,818 out of loss for the assessment year 1948-49 and then carried forward the balance loss amounting to Rs, 12,00,774 of the assessment year 1948-49 and unabsorbed depreciation allowances amounting to Rs, 24,53,536 in respect of assessment years 1947-48 and 1948-49. Thereafter the Income-tax Appellate Tribunal by their order dated 15-5-59 allowed further reduction in the assessm ent for the year 1949-50. At the time of revision of the assessment for the year 1949-50 under section 33 the Income-tax Officer detected that the losses and unabsorbed depreciation allowances determined in the assessment years 1947-48 and 1948-49 had not been allocated between non-resident company's business in areas now in India and Pakistan in accordance with the provisions of the Agreement for the avoidance of Double Taxation of income between Pakistan and India. He, therefore, took up the question of rectifying the revised assessm ent order dated 30-4-59 for the year 1949-50 under section 35 of the Income-tax Act and for that purpose issued a notice to the Company on 13-9-60 asking the company to show cause on 23-9-60 why the mistakes in the assessment for the year 1949-50 in the matter of set-off of the losses of the earlier years should not be rectified. The company showed cause on 10-10-60 and the Income-tax Officer rectified under section 35 of the Act the revised assessment order dated 30-4- 59 in respect of the assessm ent year 1949-50 by his order dated 15-7-61.
4. It is against this rectification under section 35 of the assessment for the year 1949-50 the company filed the review petition before the Income-tax Commissioner, who rejected the said application after dealing it on merits. Against the order passed by the Income-tax Commissioner and that of the Income-tax Officer the present writ petition has been filed. Mr. Afzalul Haque has appeared for the Department but has not filed any affidavit as facts are not in challenge. Both parties have cited a number of decisions which will be considered hereinafter.
5. Mr. Jaffar, the learned Advocate for the petitioner has first contended that the order of rectification under section 35 of the Act passed by the Income-tax Officer was barred by limitation inasmuch as according to the learned Advocate the original order of assessment for the year 1949-50 was made on 31-3-54 and the said Officer had power of rectification under section 35 till four years from the date of assessm ent and so the rectification made on 15-7-61 was barred. He has cited the decision reported in (1959) 36 I T R 492, a decision of a single Judge of the Punjab High Court of India where it has been held that the period of four years under section 35 is to be calculated from the original assessm ent order. It may be stated that no reason has been given in support of this finding. On the other hand there is decision reported in (1964) 54 I T R 54 of a Division Bench of the Calcutta High Court where it has been held that "where in pursuance to the directions of the Appellate Tribunal in an order under section 33 (4) of the Indian Income-tax Act, 1922 the Income- tax Officer revises the assessm ent, the order passed by the Income-tax Officer partakes the character of a fresh assessm ent order and is referable only to section 23 of the Act and as such an appeal would lie under section 30 of the Act to the Appellate Assistant Commissioner.
6. In our view the decision of the Calcutta High Court is based on reason and is in consonance with the provisions of the Income-tax Act as well as with justice and equity. In addition to the reasons given in the said decision of the Calcutta High Court in 54 I T R 54, it may be stated that the order of assessm ent on the admission of appeal loses its finality and becomes sub judice and subject to the decision of the next higher Appellate Authority provided in the Act and when the case is remanded back to the Income-tax Officer by the Appellate authority, the order of assessment passed by the said Income-tax Officer to the extent the order of remand is covered becomes non est it loses its existence altogether and the fresh order that is passed after remand will be the only order of assessm ent. To hold otherwise will lead to absurdity inasmuch as we would be thinking of two orders passed by the Income-tax Officer, one that was passed before the order of remand and the other passed after the order of remand; and in that event there will be in existence two assessm ent orders for the same year of assessment; there will not only be two orders but two inconsistent orders. It cannot be supposed that the Legislature contemplated such absurdity, nor can such interpretation be given, when a more reasonable and harmonious construction could be put on the words of that section. It is therefore, held that the words "any assessment order" under section 35 means an operative and final order. This assessment order must be read in the context of other provisions of the Act to mean that the order of assessment is subject to appeal and will reach its finality thereafter. It may also be noted that the words, employed by the Legislature are "any assessm ent order" and not "original assessment order" to mean and include the order passed after remand as well. The word "any" has a wide connotation and there is nothing either in the section or any where in the Act to lead us to put the narrow construction of "original" in place of "any"; nor do the ordinary cannon of interpretation of statute permit us to do so.
7. It is therefore to be seen the original order of assessment for the year 1949-50 was passed by the Income-tax Officer on 31-3-54 and after the order of remand, the said Officer passed the order of assessm ent on 30-4-59 and the order of rectification after notice and hearing was passed on 15- 7-61 and so calculated from the order of revised assessment, the order of rectification is within four years and as such within time. It may be also noted that the question of rectification arose on the making of the revised order of assessment on 30-4-59 as the Company was ultimately found to be non-resident on appeal.
8. This contention of the learned Advocate for the petitioner therefore fails.
9. It has next been contended by the learned Advocate for the petitioner that the alleged rectification is in substance of revision of assessment and a re-assessment over again of a past and closed one, which is beyond the scope of section 35 of the Act. This question needs be considered in its proper perspective. The rectification made by the Income-tax Officer may be cited in the words of the Officer himself :- "But it appears from the records that the original assess-ment was made taking the assessee- company as R. & 0. R. while in the Appellate order under section 31 it was held by the learned A. A. C. that the assessee-company was non-resident during the accounting year. As such loss accrued in India in earlier years cannot be set off against the Pakistan income for the assessment year 1949-
50. But through mistake loss accrued in India in earlier years was also set off against Pakistan income for the assessm ent year 1949-50 while giving effect to the Appellate Order. This rectification not entail the re-opening of the earlier assessment for the years 1947-48 and 1948-49."
10. It may be stated that the Income-tax Officer has re-allocated the loss and unabsorbed depreciation in terms of the provision in the Act as contained in Article II of the agreement for the Avoidance of Double Taxation of income between Pakistan and India and that the allocation was done according to the proportion or ratio of income received by the Company in each country as given in the return of the Company and the Income-tax Officer merely made the arithmetical calculations only basing his decision on those returns which are part of the record. Mr. Afzalul Haque, the learned Advocate for the Department has produced before the Court the original returns filed by the Company and Mr. Jaffar the learned Advocate for the petitioner has seen those returns.
11. Before concluding it is profitable to refer to the various decisions on this point cited by the learned Advocates on both sides.
12. First there is the decision reported in I. T. Commissioner, Bombay v. Khem Chand Ram Das it has been held regarding section 35 as follows :- "But it is not true that after a final assessment under those section has been made, the Income-tax Officer can go on making fresh compilations and issuing fresh notices of demand to the end of all time. It is possible that the final assessment may not be made until some years after the close of the fiscal year. Question of difficulty may arise and may cause considerable delay. Proceedings may be taken by way of appeal and cause further delay. Until all such questions are determined and all such proceedings have come to an end there can be no final assessment. But when once a final assessm ent is arrived at, it cannot, in their Lordships' opinion be re-opened except in the circumstances detailed in 34 and 35 of the Act. It was found that the order could have been made under section 35 of the Act."
13. The next case is reported in (1952) 21 I T R 333 where it has been held by Chagla, C. J. with regard to the scope of section 35 that the mistake that could be rectified must not be a mistake which can be discovered by a process of elucidation or argument or debate. It has also been held that after the mistake is corrected, all consequential orders could be passed. The next case is reported in (1957) 32 I T R 275 where it has been held that omission to charge penal interest under section 18-A
(3) of the Act was in the facts of the case a clear mistake apparent from record of assessment and was therefore liable to be rectified under section 35 of the Act. There is another decision in the same volume at page 350 where the Division Bench of the Bombay High Court has held that the jurisdiction of the Income-tax Officer under section 35 of the Act is not restricted to mistakes which are clearly clerical or arithmetical. The expression "apparent from record" should not be equated with the expression "apparent on the face of the record".
14. The next decision cited is reported in (1961) 41 I T R 732 where the Supreme Court of India has held inter alia that the Income-tax Officer had under section 35 of the Act powers to examine the record and if he discovered that be had made a mistake he could rectify the error and the error which could be corrected might be an error of fact or law. The restrictive operation of the power of review under Order XLVII, rule. 1 of the Civil Procedure Code was not applicable to the case under section 35 of the Income-tax Act.
15. The other decision cited is reported in PLD 1966 SC 524 where our Supreme Court has held in a case where super tax was leviable but was not so levied due to over sight, such over sight is a mistake to be corrected under section 35 of the Income-tax Act.
16. The last decision cited on this point is reported in (1967) 65 I T R 179 of a Division Bench of the Bombay High Court and it has been held that an error apparent from the record is not only confined to an error of fact but may also include error of law. It is necessary that the error must be apparent on the examination of the record itself without entering into any fresh or additional investigation. It must be obvious and patent from the record and an error which is not obvious or patent and can only be discovered as a result of an argument cannot be error apparent from record. It was also held that non-application of section 17(1) of the Act in the original assessment cannot be treated as a mistake apparent from the record.
17. From a reading of the decisions aforesaid and the provisions of section 35 it is found that the power of the Income-tax Officer for the rectification of mistakes extend to matters of fact as well as law. These mistakes again must be apparent from record and not merely apparent on record and1 there is a difference C between the two. The power of rectification extends to make all consequential orders in pursuance to the rectification made. Mere arithmetical calculations or obvious omissions are some of the mistakes held to be error apparent from the records.
18. In the present case the company was first assessed as resident for the year 1949-50 and the assessm ent was done on 31-3-54. Proceedings were taken by the Company by way of appeals the appellate Assistant Commissioner allowed the claim of the Company and found it to be a non- resident by an order dated 14-10-58. As a result the Income-tax Officer had to revise the assessm ent on 30-4-59 under section 31 of the Act. The Appellate Tribunal also granted some reliefs and thereafter at the time of revision of the assessment for the year 1949-50 the Income-tax Officer detected that the loss and unabsorbed depreciation allowances determined in the assessm ent years 1947-48 and 1949-50 had not been allocated between non-resident Company's business in areas now in India and Pakistan. He therefore started the proceeding for rectifying the assessm ent order dated 30-4-59 for the year 1949-50 under section 35 of the Act. He issued notice, heard the party and passed the impugned order correcting the mistake on 15-7-61. All that the Income-tax Officer did not arose out of the order passed on appeal by the Appellate Assistant Commissioner and the consequences arising therefrom. The allocation of incomes and as such the loss and unabsorbed depreciations had to be done and for this purpose the proportion or ratios of income and loss was given by the Company in their returns. The Income-tax Officer therefore had to make arithmetical calculations only. It was therefore a mistake apparent from the records and could be rectified without any further investigation or elucidation, and the Income-tax Officer had ample power to exercise such jurisdiction, which he in fact did. No grievance on this account can be entertained.
19. This contention of the learned Advocate for the petitioner also fails.
20. Mr. Afzalul Haque the learned Advocate for the Department has raised the question of the maintainability of the writ petition as according to him the order of rectification passed under section 35 of the Act is appealable, and the petitioner has not exhausted the alternative remedy.
21. There is much force in this contention. The learned Advocate had drawn our attention to an unreported decision dated 6-4.67 of a Division Bench (Salahuddin Ahmed and A. H. Khan, JJ.) of this Court in Petition No, 392 of 1964 Inland Navigation Co. Ltd. v. The Income-tax Officer, Companies Circle, Chittagong, where it has been held that an order passed by the Income-tax Officer under section 35 of the Act is appealable. The relevant passage may be cited as opined by Salahuddin, J. -- "On a consideration of different provisions of law quoted above, we have come to the conclusion that the order of assessm ent made under section 23 does not cease to be an order under that section merely because it has undergone a change by way of rectified order due to some mistake apparent from the record of assessment. The original order of assessment which is substituted by rectified order made under section 35 of the Act continues to be an order under section 23 so as to attract to it the provisions of section 30 or 33 which provides for an appeal."
22. On the same conclusion A. H. Khan, J. has added the following reasons :- "It is true that in section 30, an order under section 35 is not specifically mentioned. But then, nor is section 34 mentioned therein. In the case of section 34 the words "assess or re-assess" and also the expression "and provisions of this Act shall so far as may be, apply accordingly as if the notice were a notice under that subsection" (i.e. subsection (2) of section 22), clearly indicate that the amount of income assessed or re-assessed under section 34 also falls within the meaning of the expression, "the amount of income assessed under section 23", in section 30 of the Act. Obviously such words or expressions in section 34 as noted above were not required to be used in section 35 in view of the different circumstances envisaged under that section. That sections 34 and 35 stand on the same footing so far as the question of appeal under section 30 is concerned is clear from the decision of the Judicial Committee of the Privy Council in the case of Commissioner of Income- tax, Bombay v. Khem Chand Ram Das already mentioned reported in 65 I A 236=1938 I T R 414."
23. There is no cogent reason to differ from this decision of this Court and we are in respectful agreement with the said decision. The petitioner have not preferred any appeal against the order passed under section 35 of the Act and have failed to avail of this alternative remedy provided in the Act. This is also an additional reason why this writ petition should Jail.
24. We, therefore, do not find any reason to interfere with the orders complained against. The result therefore is that this application is dismissed and the Rule discharged without any order as to costs.
25. SIDDIKY, C. J.--I agree. AIR 1938 P C 175