Law:

Section:

Section 35 of the Indian Income-tax Act, 1922 [Corresponding to section 154 of the Income-tax Act, 1961] - Rectification of mistake - ITO by rectification order under section 35 of the 1922 act withdrew excess depreciation allowed to assessee - Assessee did not dispute that there was error apparent from record but claimed that it was open to ITO to take action under section 147(b) of the 1961 act and [ since section 147(b) provided for right of appeal and shorter period of limitation in contrast to section 35, ITO's action under section 35 was discriminatory; and that section 35 being more onerous than section 147(b) was violative of article 14 of the constitution - Whether assessee's claim justified - Held, on facts, no Facts For the assessment year 1961 62, the original assessment order had been made on 27-2-1962, but it was set aside on appeal and a fresh order of assessment was made on 16-1-1965. On appeal, the AAC modified the assessment to some extent, as a result of which a consequential order was made by the ITO on 20-11-1965. Later on, the ITO noticing that excess depreciation had been allowed in the assessment made on 16-1-1965, issued notice, purported to be under section 154 of the 1961 Act, on 23-1-1968 proposing to rectify the same. On the assessee's challenging the notice in a writ petition in the High Court, the revenue contended that action to rectify could be taken only under section 35 of the 1922 Act and the proceedings should be taken as having been initiated thereunder. Thereupon, the assessee raised a fresh ground that section 35 of the 1922 Act was unconstitutional being violative of article 14 of the Constitution insofar as it dealt with matters covered by section 147(b) of the 1961 Act. The High Court held that action could be taken only under section 35 of the 1922 Act but since no order had yet been passed, it 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 rectified the assessment by withdrawing depreciation allowance to the extent of Rs. 3,535. The assessee challenged the legality of the said order in a writ petition on the ground…

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