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TMI Blog1972 (3) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... uires to be amended as there is a mistake apparent from the record within the meaning of section 154/155 of the Income-tax Act, 1961. The rectification of the mistake, as per details given below, have the effect of enhancing the assessment or reducing the refund or increasing your liability and if you wish to be heard, you are requested to appear in person or by an authorised representative in my office on 14th March 1969, at 11-30 a.m. If, however, you intend sending a written reply to this notice and do not wish to be heard in person, you are requested to ensure that your reply reaches me on or before the date mentioned above. Sd/-Illegible Income Tax Officer, Seal. 'C' Ward, Comp. Dist. I. Nature of mistake proposed to be rectified. Mistakes in the calculation of allowance of depreciation." The sole ground alleged in the notice was that the mistake was apparent from the record within the meaning of section 154/155 of the Income-tax Act, 1961. The main question in this appeal is whether, in the facts and circumstances of this case, it may be called a mistake apparent on the face of the record within the meaning of these sections. The facts are not in dispute. Venesta Foils ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viz., the value of these assets as shown in the books of Venesta on the date of the sale. For the assessment year 1962-63, the Income-tax Officer making the assessment, accepted the respondent's contention after considering the terms of the aforesaid agreement dated 30th November, 1961, and determined the depreciation as per the assessee's computation at Rs. 10,96,630. For the subsequent assessment years 1963-64, 1964-65 and 1965-66, the different Income-tax Officers also accepted the assessee's contention as to the actual cost of these fixed assets in determining the depreciation allowance in each of these three years. Then followed the notice dated 11th March, 1969, which I have already set out above, by which the Income-tax Officer wanted to amend the income-tax for the assessment year 1962-63 on the ground of mistake apparent from the records within the meaning of section 154/155 of the Income-tax Act, 1961. Immediately, on the 13th March, 1969, there was a protest on behalf of the respondent's auditors, M/s. Price Waterhouse Peat & Co. In that reply, M/s. Price Waterhouse Peat & Co. made the following points : The notice does not throw any light as to why it was considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be apparent on the face of the record. When the valuation was accepted not only by one Income-tax Officer but by three Income-tax Officers, it cannot be said that it was a mistake apparent from the face of the records. A mistake must be apparent on the face of the records. It must be an obvious, clear and patent mistake. One which is not so apparent and which requires a long and elaborate reasoning and arguments on points on which there may be conceivably two or more opinions (sic). Clearly, a decision on a debatable point of law is not a mistake apparent on the face of the records. I think the point is concluded now by the Supreme Court decision in the case of T. S. Balaram, Income-tax Officer v. Volkart Brothers. That decision of the Supreme Court cited the decisions in Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Thirumale, and Sidhramappa Andannapba Manvi v. Commissioner of Income-tax. The words used in section 154 are a mistake apparent from the record and it is clear that unless it is apparent from the record the notice can be validly challenged. The decision of the Madras High Court in T. S. Rajam v. Controller of Estate Duty, therefore, has to be understo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is appeal is the validity of a notice under section 154/155 of the Income-tax Act, 1961 (hereafter referred to as "the Act") A British company, Venesta Foils Ltd., manufactures and markets aluminium foils and similar products extensively in the United Kingdom and in other countries. On March 17, 1939, a company under the name of Foil Centre Ltd. was incorporated under the English Companies Act, with an authorised capital of pound 100 divided into 100 shares of pound 1each. Of these 100 shares, two only were issued and fully paid up by Venesta Foils Ltd. On April 20, 1961, at an extraordinary general meeting of Foil Centre Ltd. resolutions were passed changing the name of that company to India Foils Ltd., and also increasing the authorised capital by a further sum of pound 900 divided into 900 shares of pound 1 each. By an agreement dated November 30, 1961, Venesta Foils Ltd. agreed to transfer all its properties, factories, plants, machinery and other movable and immovable assets in India to India Foils Ltd., at the value shown in the books of Venesta Foils Ltd. The transferee-company undertook to meet all the liabilities of the transferor-company, incurred on account of its Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule nisi under article 226 of the Constitution which was made absolute by a judgment and order dated May 15, 1970, against which this appeal has been preferred. The question in this appeal is whether the first appellate had the jurisdiction to issue the impugned notice, and assuming he had such jurisdiction, whether the impugned notice is valid. Mr. Sen, appearing for the appellant, submitted that there was a mistake apparent on the face of the records in allowing depreciation claimed by the respondent , inasmuch as the value of the assets transferred was much in excess of the consideration paid for the transfer. He further argued that the question of ascertaining the actual cost was always a question of fact and that the Income-tax Officer was entitled to determine such actual cost according to his own valuation. The next contention of the counsel for the appellant was that under section 154(3) of the Act, the Income-tax Officer was only required to give a notice to the assessee of his intention to rectify or amend an order which would have the effect of enhancing an assessment or reducing a refund. This notice, it was argued, was not a statutory notice, and the whole object of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed before the Income-tax Officer who was competent to deal with the same, and, accordingly, the rule was discharged. Reliance was also placed by Mr. Sen on a decision of the Madras High Court in T. S. Rajam v. Controller of Estate Duty. In that case the question was of rectification of records in an estate duty assessment case. The deceased had sold within two years before his death certain shares in a private company to his sons and grandsons for rupees one lakh. The Assistant Controller of Estate Duty being of the view that the sale was a disposition in favour of relatives within the meaning of section 27 of the Estate Duty Act, 1953, rectified the order which did not originally take this aspect into consideration and fixed a higher value for the shares sold. It was held that the rectification was validly made. I do not think either of the three decisions mentioned above is of any assistance to the appellant in this case, because the question in this appeal is whether there was an error apparent on the record to enable the appellant to issue the impugned notice. It cannot be overlooked that the view the Income-tax Officer took on the question of depreciation in the assessment fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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