1. N. V. BALASUBAMANIAN, J.---The assessee is a company. The original assessment for the assessm ent year 1974-75 was completed on March 9, 1977. The Income-tax Officer, in the original assessm ent made, accepted the claim of the assessee for depreciation and extra shift allowance on certain items of machinery including tools. The assessee subsequently filed an application on October 29, 1980, under section 154 of the Income--tax Act, 1961, (hereinafter referred to as "the Act"), before the Income-tax Officer claimed depreciation at a higher rate than what was originally claiming by the assessee and allowed by the Income-tax Officer in the original assessment. The Income-tax Officer, however, refused to entertain the application on the ground that there was no apparent mistake in the order of the original assessment made on March 9, 1977, and there was no scope for rectification in terms of section 154 of the Act. The assessee's appeal before the Commissioner of Income-tax (Appeals) also failed on the ground that there was no mistake apparent on the records. The Appellate Tribunal, on the assessee's appeal, also came to the conclusion that there was no patent or apparent mistake in the original order of the assessment of the Income-tax Officer which required rectification under section 154 of the Act.
2. The facts leading to the assessm ent for the years 1975-76 and 1976-77 are as under:--The original assessm ent for the assessm ent years 1975-76 and 1976-77 were completed under section 143(3) of the Act on February 28, 1978 and September 13, 1978, respectively. The Income-tax Officer issued notices to reopen the assessm ent under section 148 of the Act on the score that be had information which led to him to believe that the income had escaped assessment. The assessee did not file any return for the assessment years 1975-76 in response to the notice issued under section 148 of the -Act. The assessee, however, wrote a letter, dated October 20, 1980, stating that the assessee would be entitled to further relief and, therefore, the proceedings initiated under section 147(b) of the Act may be dropped. For the assessment year 1976-77, the assessee filed a return claiming higher depreciation in respect of factory buildings, roads and a machine called, Maxi Press. The Income-tax Officer, in the reassessment under section 147(b) of the Act, withdrew extra shift allowance and depreciation to the extent of Rs.45,211. Similarly, for the assessment year 1976-77, the Income-tax Officer made reassessment under section 143(3) read with section 147(b) of the Act by withdrawing excess depreciation, and extra shift allowance allowed in the original assessm ent to the extent of Rs.36,131. The assessee preferred appeals before the Commissioner of Income-tax (Appeals). The Commissioner (Appeals) went into the merits of the case and found that the assessee was entitled to higher depreciation and extra shift allowance in respect of certain items of machinery. The Commissioner (Appeals), on the view that in the reassessment proceedings initiated under section 147(b) of the Act, the Income-tax Officer had no power to make an assessm ent at a lower figure than what was originally computed in the original assessment made under section 143(3) of the Act; deleted the entire addition made by the Income-tax Officer in the reassessm ent completed under section 147(b) of the Act.,: i.e., Rs.45,211 for the assessment year 1975-76 and Rs.36,131 for the assessment year 1976-77.
3. "(1) Whether, on the facts and in the circumstances of the case, the higher rate of depreciation to which the assessee was entitled and not allowed in the original assessment proceedings could yet be granted in the reassessm ent proceedings even if it would lead to determination of the total income at a figure less than that determined in the original assessment?
(2) Whether the assessee is entitled to the same relief under section 154 in respect of the assessm ent years 1974-75 to 1976-77?"
4. Though in the second question referred by the Appellate Tribunal, it is stated that the second question is for the assessm ent years 1974-75 to 1976-77, the order of the Appellate Tribunal shows that the Tribunal considered the appeals of the assessee for the two assessment years, viz., 1974-75 and 1976-77. Hence, the reference to the assessment year 1975-76 in the second question is apparently a mistake and the question is confined to two assess e t years, viz., 1974-75 and 1976-77.
5. The Income-tax Officer, as already seen, in so far as the assessment years 1974-75 and 1976-77 are concerned, rejected the petition filed by the assessee under section 154 of the Act claiming enhanced depreciation in respect of factory buildings, roads and certain machinery on the ground that there was no mistake apparent on the records. The Commissioner of Income-tax (Appeals) as well as the Appellate Tribunal has also taken the same view on the ground that there was no mistake apparent from the records and the relief under section 154 of the Act cannot be granted as one has to look afresh, as to the nature of each machine and plant used by the assessee. It is, however, relevant to notice, that when the Commissioner (Appeals) considered the appeal preferred against the order of reassessment under section 147(b) of the Act, he held that for the assessm ent year 1974-75, the assessee's claim for higher rate, of depreciation end extra shift allowance is not a mistake apparent from the records. But, the Commissioner (Appeals) also found that the assessee claimed depreciation on the roads at 15 percent. And the depreciation on the roads was not originally granted and in so far as other machinery, viz., Maxi Press, is concerned, there was no discussion on the merits of the case. For the assessment year 1975-76, in the appeal preferred against the reassessm ent, the Commissioner of Income-tax (Appeals) went into the matter in detail and he found that the view of the Income-tax Officer that the assessee was entitled to 10 percent. Depreciation was erroneous. Similarly, for the assessment year 1976-77, he found that the view of the Income-tax Officer on the merits of the case was not correct and the assessee was entitled to higher depreciation at the enhanced rate. However, as already seen, he restricted the relief in the appeal preferred against the order under section 147(b) of the Act to the addition made in the reassessm ent. The finding of the Commissioner of Income-tax (Appeals) is that the assessee was entitled to higher depreciation. After the order of the Commissioner (Appeals), on the merits of the case, which has become final, there is certainly a mistake in the order of the Income-tax Officer which is apparent from the records. The finding of the Commissioner (Appeals) has become final. Therefore, when the Appellate Tribunal took up the matter on appeal, it was apparent that there were mistakes in the original order of assessment which called for rectification under section 154 of the Act. The assessee has challenged the finding of the Commissioner (Appeals) to the effect that there was no mistake apparent from the records.
6. But, when the records disclosed the same, the Appellate Tribunal should have directed the Assessing Officer to rectify the mistakes.
7. The Supreme Court in Maharana Mills (Pvt.) Ltd. v. ITO (1959) 36 ITR 350, held that the record contemplated by section 154 of the Act does not mean only the order of assessment but it comprises all proceedings on which the assessment order is based and the Income-tax Officer is, entitled for the purpose of exercising his jurisdiction under section 154 of the Act to look into the whole evidence and the law applicable to ascertain whether there was an error. The Supreme Court also held that if the Income-tax Officer discovers that the very basis of the different earlier assessm ent years is erroneous because of the initial mistake in determining the written down value, it cannot be said that it should not constitute a mistake apparent on the record, and if in order to determine the correct written down value, the Income-tax Officer makes correct calculations, it cannot be said that he is to rectifying the mistake apparent from the records but is de hors it.
8. The Supreme Court in L. Hirday Narain v. ITO (1970) 78 ITR 26 held that the Income-tax Officer is concerned with the assessm ent and collection of revenue and he has been conferred with a power to rectify the mistake in the order of assessment to ensure that injustice to the assessee or to the Revenue is avoided and the power conferred on him should be exercised when a mistake apparent from the record is brought to the notice of the Income-tax Officer by a person concerned with or interested in the proceedings. Applying the principles of law laid down by the Supreme Court, it is clear, the Commissioner of Income-tax (Appeals) is the person concerned in the proceeding of assessm ent and when he found that on the merits of the case, the assessee was entitled to claim higher rate of depreciation on the machinery employed by the assessee as well as on the roads, the view of the Commissioner (Appeals) would show that there were certain mistakes apparent on the face of the records which called for rectification of such mistakes. Though, at the time when the Income-tax Officer passed the order of rectification, he did not have the benefit of the order of the Commissioner (Appeals), when the Appellate Tribunal heard the matter, it had before it the order of the Commissioner (Appeals) which established clearly that the assessee was entitled to higher rate of depreciation on some machinery as well as on roads which was not granted at the time of original, assessm ent. Therefore, the Appellate Tribunal when it heard the appeal, should have considered the order of the Commissioner (Appeals) on the merits of the case, in considering the question whether there was a mistake apparent from the records or not. Hence, we hold that the order passed by the Appellate Tribunal without considering the order of the Commissioner (Appeals) on the merits of the case is not legally sustainable in law.
9. The Supreme Court in Anchor Pressings (P.) Ltd. v. CIT (1986) 161 ITR 159 held that the jurisdiction of the Income-tax Officer under section 154 of the Act for rectifying a mistake is wider than what was provided under Order 47, rule 1, of the Code of Civil Procedure and where there are materials to support the claim of the assessee which are found in the records, the Income-tax Officer is duty bound to rectify the mistake. The Supreme Court in the above case, held that the obligation imposed on-the Income-tax Officer to grant relief is wider and the relief to the assessee cannot be refused merely because the assessee had omitted to claim the relief. But, where there are materials to show that the relief was available to the assessee, but the Income-tax Officer has failed to grant the relief, then the Court can compel the Officer to grant the relief. This decision also in a way supports the case of the assessee that when there are materials on the facts of the case to establish that there are mistakes apparent from the records, the assessee is entitled to the relief and once it is established that the assessee is entitled to the relief, the Appellate Tribunal should have directed the Income-tax Officer to rectify the mistakes.
10. This Court in Addl. CIT v. P. V. S. K. Palaniappa Nadar & Sons (1980) 125 ITR 357 was dealing with a case of grant of depreciation which the assessee was entitled to. In that case, this Court held that in each case, it has to be examined whether the assessee would be entitled to depreciation at the general rate or at the special rate and the nature of the machinery would determine the category into which the assessee's goods fall. This Court also held that where it is, a matter which is not likely to involve any debate and relevant details of the machinery were on record, the Tribunal should have looked into the records and found what is the correct rate of depreciation that is applicable to the assessee. This Court, therefore, held that by not determining the question, the Appellate Tribunal has acted erroneously and failed to exercise it jurisdiction. Similarly, on the facts of the case, it is seen that on the merits of the case, it is clearly found from the order of the Commissioner (Appeals) that the assessee is entitled to higher rate of depreciation and the Tribunal should have gone into the records and found whether the assessee is entitled to higher depreciation. Since the order of the Commissioner (Appeals) on the merits has become final, which showed that the assessee is entitled to higher depreciation, the Tribunal should have looked into the records and found whether the order requires any order of rectification. Since the Tribunal has not decided the, question, we are of the view that the Tribunal has acted erroneously and failed to exercise its jurisdiction conferred upon it. The case in hand is peculiar on the facts. After the order of the Commissioner (Appeals) on the merits of the case for the two assessment years, it has become established that here are certain mistakes apparent from the record in the original order of assessm ent. The Assessing Officer earlier held that there were no mistakes apparent from the record. When the Appellate Tribunal heard the matter against the orders of reassessment as well as against the order rejecting the request for rectification, it had before it both the orders, one holding that there are mistakes found in the original order of assessment, and the other holding that there are no mistakes apparent from the records, The Appellate Tribunal, as the ultimate appellate authority on facts, should have seen that the study of both the orders, juxtaposed to each other, would reveal that here are mistakes apparent in the original order of assessment. The assessee has kept the matter alive by bringing the matter before the Appellate Tribunal. We, therefore, hold that when the Appellant Tribunal, sitting in appeal over the order of the Assessing Officer and having the privilege of looking into both the orders before it, should have directed the Assessing Officer to rectify the, mistake, After the order of the Commissioner (Appeals), the assessee could not have gone before the Assessing Officer with a request to rectify the original order of assessm ent in the light of the findings of the appellate authority because of the finding of the Commissioner (Appeals). Hence, the only course left open to it was to approach the Appellate Tribunal by way of appeal to direct the Officer to rectify the mistakes. The assessee has precisely done the same, and a duty was cast upon the Tribunal to find out whether the views of the Assessing Officer and the Commissioner (Appeals) were correct. Though the appeals before the Tribunal are independent appeals, the decision on one appeal is interdependent upon the finding in the other appeal. Therefore, we are of the view that the view of the Tribunal that there was no mistake apparent on the face of the records is not sustainable in law. The Tribunal should also go into the question what is the correct and proper rate applicable to the plant and machinery in question and direct the Officer to rectify the mistake under section 154 of the Act. Accordingly, we answer the second question referred to us for the assessment years 1974-75 and 1976-7Z in the affirmative and in favour of the assessee.