The Judgment of the Court was delivered by

Sabyasachi Mukharji, J.:— The subject-matter of challenge in this application under art. 226 of the Constitution is the notice dated 9th July, 1973 issued under s. 154/155 of the I.T Act, 1961. In order to appreciate the question involved in this application it would be necessary to refer to certain facts. The petitioner is a public limited company. The petitioner is engaged in the business of manufacture and sale of aluminium utensils and articles. One of the main businesses of the petitioner, according to the petitioner, consisted of export of aluminium utensils and articles and goods outside India. The petitioner is an exporter of laluminium goods and articles to countries outside India. By export of the said aluminium articles and goods the petitioner earned what is known as import entitlement. The petitioner sold the said import entitlement. I am concerned in this application under art. 226 of the Constitution with the question relating to the assessment year 1965-66. On the 18th March, 1970, the ITO made an assessment for the said year. In the assessment the petitioner had contended that the amounts realised by the petitioner from the sale of import entitlement were not income but capital receipts. The ITO negatived this contention. In this application, it is nipt necessary to refer to this aspect any further. It was contended alternatively that the petitioner was entitled to certain deductions as provided under s. 2(5)(a)(i) of the Finance Act, 1965, as the said receipts were income or profits derived from export of goods or merchandise out of India. The petitioner also contended that the petitioner was entitled to rebate under para. F(I)(b)(ii)(a) of Part I of the First Schedule to the said Finance Act, 1965. I will refer to the relevant provisions of the said clause. The petitioner contended that the income arising from the manufacture and sale of aluminium utensils are attributable to manufacture and production of aluminium so as to come within the relief granted by the said provision. The ITO, however, disallowed both these contentions. The assessee preferred an appeal before the A AC on 21st April, 1970, contending, inter alia, that the aforesaid two reliefs were wrongly not allowed by the ITO. On the 3rd February, 1972, the AAC of Income-tax disposed of the appeal. The AAC observed, inter alia, as follows:

“1965-66.—The Income-tax Officer will checkup this point and will allow such relief and rebate as may be admissible in law to the appellant on export sales and export profits.”

2. The AAC, therefore, directed the ITO to examine the point and allow such reliefs as would be admissible in law to the petitioner. On 13th November, 1972, the ITO gave effect to the order of the AAC under s. 251 of the I.T Act, 1961, and allowed the aforesaid reliefs to the petitioner. In passing the impugned order, the ITO, after making the tax calculation, observed, inter alia, as follows:

3. On the 9th July, 1973, the impugned notice was issued. In the said notice, the ITO indicated that the nature of the mistake proposed to be rectified were as follows:

“1. Tax wrongly calculated at the rate applicable to priority income.

2. Export profit rebate wrongly allowed.”

4. On the 20th July, 1973, the petitioner made the demand for justice by withdrawal of the said notice and on 23rd July, 1973, the petitioner moved this court under art. 226 of the Constitution and obtained the rule nisi and also an order of injunction. Thereafter, on the 4th November, 1974, the CIT issued another notice under s. 263 of the I.T Act, 1961, in respect of the said order made by the ITO under s. 251. In the said notice, the Commissioner observed, inter alia, as follows

“The Income-tax Officer while giving effect to the orders of the AAC allowed rebate on export profit amounting to Rs. 1,16,173 and Rs. 65,291 for the assessment years 1965-66 and 1966-67, respectively. In doing so, it appears that the ITO had overlooked the clear provisions of the Finance Acts, 1965 and 1966, to the effect that such rebate would be admissible only for the total income included in profits and gains derived from the export of any goods or merchandise outside India. Obviously, it appears to me that the Income-tax Officer has not correctly applied the provisions of the two Finance Acts.

5. It is also seen that the Income-tax Officer applied the articles specified in Part III of the First Schedule of the Finance Act, 1965, i.e, aluminium, whereas the assessee was producing aluminium utensils from aluminium. This also appears to be an incorrect application of the Acts.”

6. The petitioner had also moved an application under art. 226 of the Constitution challenging the said notice and a rule was issued being Matter No. 362 of 1974 [Jeewanlal (1929) Ltd. v. CIT, [1977] 106 ITR 33 (Cal)] which was discharged by me recently. The question involved in this case is whether in view of the nature of rectification proposed by the impugned notice dated 9th July, 1973, it can be said that the said rectification comes within the purview of s. 154 of the I.T Act, 1961.

7. Section 154 gives authority to the ITO to rectify any mistakes apparent from the record. The scope and effect of s. 154 has been judicially considered in several decisions. By judgment delivered on the 23rd April, 1971, in the case of Harbans Lal Malhotra & Sons (P.) Ltd. v. ITO, [1972] 83 ITR 848 (Cal), I had occasion to consider this question. I had held that a question which required interpretation of the expression used in statutes and which required investigation of fact and interpretation of law could not be said to be an obvious and apparent mistake which was self-evident or that such mistake did not require a process of argument or investigation. In such a situation s. 154 of the Act could not be resorted to. In a judgment subsequently delivered by the Supreme Court on the 5th August, 1971, in the case of T.S Balaram, ITO v. Volkart Brothers, [1971] 82 ITR 50, the Supreme Court held that a mistake apparent on the record, to come within the provisions of s. 154, must bean obvious and patent mistake and not something which could be established by a long-drawn process of reasoning on the points on which there might conceivably be two opinions. A decision on a debatable point of law was not a mistake apparent from the record. Some of these decisions were reviewed by a. Bench decision of this court in the case of ITO v. Raleigh Investment Co., [1976] 102 ITR 616 (Cal), where, delivering the judgment of the Bench, I had observed that a mistake which was not obvious or which required investigation or in respect of which two different views were possible was not a mistake which could be rectified under s. 154 of the I.T Act, 1961. Bmt the fact that the ITO or, for that matter, the assessee had made the calculation on one basis did not establish by itself or indicate that two different views were possible. In a case, where two views were not possible, if a mistake was committed by misreading the section (in that case s. 80 of the Finance Act, 1965) or miscalculation of the rate provided in the section, the application of s. 154 of the I.T Act, 1961, would not be defeated. In the case of ITO v. India Foils Ltd., [1973] 91 ITR 72 (Cal), another Division Bench of this court held that a mistake to come within the purview of s. 154 of the I.T Act, 1961, must be a mistake apparent on the face of the record. It must be an obvious, clear and apparent mistake. A mistake which was ngt so apparent and which required a long and elaborate reasoning and argument on a point on which there might conceivably be two points of view would not be a mistake apparent from the record. In the case of Tata Iron Steel Co. Ltd. v. N.C Upadhyaya, [1974] 96 ITR 1, the Division Bench of Bombay High Court held the same view but came to the conclusion that the mistake was obvious and patent in that case.

8. The position, therefore, is that in order to attract the jurisdiction under s. 154 of the Act the mistake proposed to be rectified must be patent or apparent or obvious and on which there could not conceivably be two points of view. A mistake which has to be established by way of a process of reasoning or of investigation either on facts or by examination of the question of law on which there might conceivably be two views was not a mistake which came within the provisions of s. 154 of the Act. But whether the mistake sought or proposed to be rectified is a mistake which comes within the purview of the section must depend upon the facts and circumstances of each case.

9. Bearing the aforesaid principles in mind the question involved in this application will have to be examined. In the instant case, two alleged mistakes were sought to be, rectified (1) tax wrongly calculated at the rate applicable to priority income; (2) export profit rebate wrongly allowed. In order to determine the question whether there was wrong calculation at the rate applicable to priority income it is necessary to refer to the relevant provisions of the Finance Act, 1965. Section 2(5)(a)(i) proceeds as follows:

“In respect of any assessment for the assessment year commencing on the 1st day of April, 1965—

(i) an assessee being an Indian company or any other company which has made the prescribed arrangements for the declaration and payment of dividends within India or an assessee (other than a company) whose total income includes any profits and gains derived from the export of any goods or merchandise out of India, shall be entitled to a deduction, from the amount of income-tax with which he is chargeable, of an amount equal to the income-tax calculated at one-tenth of the average rate of income-tax on the amount of such profits and gains included in the total income.”

(Underlined* by me)

10. Therefore, the question on the first aspect is whether the sale proceeds received by the petitioner from the sale of import entitlement were profits or gains derived from the export of the goods or merchandise out of India. This is a question on which there would conceivably be two views. It may be contended that the goods having been exported out of India, the petitioner had earned the right to import entitlement and the profits of that right were really derived from the export of the goods. As a matter of fact, the Income-tax Appellate Tribunal in respect of Income-tax Appeals Nos. 272 and 300 (Cal) of 1974-75 for the assessment years 1967-68 and 1968-69 had taken that view. It may also be contended that there being no export and profits in respect of import entitlement the petitioner was not entitled to deduction of tax as contemplated under s. 2(5)(a)(i) of the Finance Act, 1965. I am not concerned at this stage with the question which view is correct or the appropriate view. All I am concerned to examine is whether on this point two views can reasonably be conceived or whether one view was the only possible view. Having regard to the nature of rectification proposed on this aspect, I am of the opinion that two views are conceivable. I have referred to the notice issued by the Income-tax Commissioner where he was of the opinion that the ITO while giving effect to the same had overlooked the provisions of the Finance Act. The ITO-who had made the assessment in his affidavit in answer to the rule nisi to this court has stated that he mistook the order of the A AC with regard to its direction and allowed the relief granted and did not examine the question properly. I accept the submission of the ITO. But even in a case where an order has been passed by mistake or oversight and if the rectification of that order involves examination of a question or contention on which two views are conceivable, in such a case, in my opinion, s. 154 is not an authority to review the previous order and rectify the mistake.

11. So far as the second alleged mistake proposed to be rectified is concerned, the same relates to para. “F” (I)(b)(ii)(a) of Part I of the First Schedule to the Finance Act, 1965. This provides for rebate on so much of the total income as constituted profits or gains attributable to the business of generation or distribution of electricity or of construction, manufacture or production of any one or more of the articles or things specified in the list of articles and things and item (2) of the said Part III runs as follows

“(2) Aluminium, copper, lead and zinc (metals).”

12. The question in this case is whether the petitioner being one who manufactures aluminium utensils can be said to be one who is concerned with the manufacture or production of the articles mentianed hereinbefore. The question is whether the utensils, after these are produced of aluminium, cease to remain aluminium. In aid of his submission counsel for the petitioner drew my attention to the observations of the Supreme Court in the cases of Tun gabhadra Industries Ltd. v. CTO, [1960] 11 STC 827 and in the case of State of Madhya Bharat v. Hiralal, [1966] 17 STC 313.

13. On the other hand, reliance was placed by counsel for the revenue on the use of the expression “(metal)” in the said list. Therefore, it was urged that only aluminium which was metal was entitled to special treatment mentioned in the Schedule. On this question also, it is not possible to say that two views cannot reasonably be conceived. If that is the position then rectification was not possible. Even if an order had been passed through oversight, rectification of the order would involve a decision on two contending views on which debate is possible. Such a procedure, in my opinion, is not within the scope of s. 154 of the Act. In the aforesaid view of the matter, I am of the opinion that the nature of rectifications being what these are, these mistakes cannot be described to be self-evident or apparent and as such do not come within the purview of s. 154 of the I.T Act, 1961. The notice is, therefore, without jurisdiction. In the premises, the said notice is hereby quashed and set aside and the respondents are restrained from giving effect to the same. The rule is made absolute to the extent indicated above. If any order has been passed in pursuance of the aforesaid notice, the same is also quashed and set aside arid the respondents are restrained from giving effect to the same.

14. There will be no order as to’ costs.