TMI Blog1967 (1) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, 1955, the Income-tax Officer, Companies Circle, passed an order under section 23A(1) upon the said company for the assessment year 1949-50, as the said company had declared dividend, which was below 60% of its assessable income. According to the said order, the share of Chaturbhuj Sunderji Doshi in the dividend which was deemed to have been distributed was determined at Rs. 37,148. The said order made on the 5th March, 1955, was subsequently rectified by the Income-tax Officer on the 28th December, 1955, and as a result of the said rectification, the share of Chaturbhuj S. Doshi in the dividend deemed to have been distributed was brought down to Rs. 31,568. The Income-tax Officer, Companies Circle, had given intimation of the original as well as the rectified order under section 23A made on the company to the respondent, who was dealing with the individual assessment of Cbaturbhuj Doshi. The intimation of the original order was given on the 13th April, 1955, and of the rectified order on the 28th December, 1955. The respondent completed the assessment of Chaturbhuj Doshi for the assessment year 1951-52, on the 31st December, 1955, but he failed to include therein the share of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asing to Rs. 41,665. After receipt of the intimation of this revised order against the company, the respondent intimated to the assessee, Doshi, on the 6th May, 1959, that he proposed to rectify his assessment for the year 1951-52 under section 35(7) to give effect to the Tribunal's order dated 30th March, 1959, and thereafter on the 15th March, 1961, he passed the order under section 35(7) including the sum of Rs. 41,665 as deemed dividend in the assessment of Doshi. This is one of the two orders which is challenged in the present petition. After the said order was passed the assessee, Doshi, made an application under section 35 of the Act for rectification of the mistake apparent on the face of the record. This application was allowed to the extent of deleting the addition of Rs. 42,090 which appears to have been wrongly added to the income of the assessee. This rectification order which was made on the 1st September, 1963, was served on the petitioners on the 24th January, 1964, as the executors of the estate of the deceased, Chaturbhuj Sunderji Doshi, who had died pending the proceedings on 21st March, 1963, and it was followed by a notice of demand on the 20th February, 1964. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fs prayed for by them. In the petition itself no explanation has been sought to be given by the petitioners as to the delay nor any grounds urged why the petition should not be rejected on that ground. Mr. Trivedi, the learned counsel, who appears for the petitioners, has urged before us three reasons for condoning the delay. He has urged, in the first place, that the orders complained of being patently without jurisdiction, the delay on the part of the petitioners in coming to the court should not come in their way of obtaining a writ of certiorari for quashing the orders, which are illegal and without jurisdiction, or for obtaining a writ of prohibition preventing further action being taken in pursuance of the said orders. Secondly, he says that since action under the said orders by issuing the notice of demand was not taken until recently, it could not be said that there has been any undue delay on his part in coming to the court. It is argued by him that, since the orders passed by the respondent were without jurisdiction, he could wait until an effective threat had arisen as a result of any action, which would harm him was taken by the respondent in pursuance of the said ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt this writ which though it is primarily intended for enforcement of fundamental rights must also issue where necessity demands immediate and decisive interposition. (ii) The considerations that arise when this writ is asked for on the ground that any inferior court or person or body of persons having legal authority is committing or has committed an error of law apparent on the face of its proceedings and those that arise in a case of excess or usurpation of jurisdiction by any such court or authority must necessarily be differentiated, for in the former case there is an erroneous exercise of jurisdiction which exists while in the latter case there is no jurisdiction at all. (iii) Absence of jurisdiction may be patent, that is, apparent on the face of the proceedings, or latent in the sense that it is not so apparent. Where the defect is not apparent, the court in its discretion may refuse the writ if the facts or circumstances attending the case show undue delay, insufficient materials, misconduct, laches or acquiescence on the part of the party applying for it or are such as would render it unjust on the part of the court to interpose. (iv) Where, however, there is patent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stay its hands merely on the ground of delay on the part of the petitioner to come to the court. The question, however, to be considered is whether the present case is one which falls in the category of cases where there is a patent lack of jurisdiction and the court could be immediately satisfied that the order complained of or the action proposed to be taken in pursuance thereof is illegal and without jurisdiction. Now the circumstances in which the orders came to be passed have been already stated by us. The order dated 23rd February, 1961, relating to the assessment for the assessment year 1950-51, was made in consequence of the directions given by the Appellate Assistant Commissioner in his decision in the appeal preferred by the assessee, Doshi, against his assessment for the assessment year 1950-51. It appears from the order, which is produced at Exhibit K, that the assessee's share of the dividend deemed to have been declared under section 23A by the Income-tax Officer, Companies Circle, was added under section 35(8) of the Act after due notice was given to the assessee. Section 35(8) provides : " Where, as a result of proceedings initiated under clause (a) of sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication of section 35(8) for the purpose of adjusting the assessment of the assessee-shareholder on the basis of a mistake apparent from the record. It is difficult, in the first place, to agree with the submission, at any rate to the whole extent. Secondly, it is difficult to see whether the submission that is advanced can apply to the case. The original assessment which was made on the assessee is not produced before us. Whether in the said original assessment any share of the deemed dividend of the company was included or not is not known. It is also not known whether at the time when the assessee's assessment was made, an order under section 23A was or was not made against the company. In the absence of proper facts being placed before the court, it is difficult to see whether the submission made by the learned counsel, even if it is substantial, can have application to the present case. Moreover, the argument of the learned counsel that the only way to include the deemed dividend under section 23A in the assessment of the assessee is by having recourse to section 34--proceedings is not correct. Thus, for instance, where even before the assessee's assessment is completed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original assessment, there would be no inclusion of any deemed dividend in the individual assessment of the partner and the computation of the total income of the partner will obviously not contain any such inclusion. As a result of the order made under section 23A passed on the firm on its reassessment under section 34(1), recomputation of the total income of the partner will be necessary in order to include therein his share of the deemed dividend. Such a recomputation the Income-tax Officer may be able to make by reopening the assessment of the partner under section 34(1)(b), but it may as well happen that when the order under section 23A comes to be passed against the firm in its reassessment proceedings, the time to reopen the partners' assessment under section 34(1)(b) may have already elapsed. Mr. Trivedi argues that if section 34(1)(b) proceedings cannot be availed of, the Income-tax Officer has no other power to bring the said income to tax. We do not agree with him. It appears to us that the Income-tax Officer can also avail of the provisions of section 35(8) in such a case and recompute the total income of the partner, treating the computation as a mistake apparent from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult of proceedings initiated under section 34. Mr. Trivedi argues that since in the present case the company was reassessed as a result of proceedings initiated under section 34, the provision applicable was section 35(8) and not section 35(7) and consequently the order, which purports to have been passed under section 35(7), is illegal and without jurisdiction. Here again, we must state, in the first place, that the proper material necessary for the purpose of appreciation of the point has not been put before us by the petitioners. What has been produced as exhibit H purports to be an order made under section 23A read with section 35(7) and not an order under section 23A read with section 34, nor an order under section 23A read with section 35(8). In the body of the order it is stated that in view of the reopening of the assessment under section 34 for the assessment year 1949-50, the total income of the company is enhanced and the net deemed dividend under section 23A is also revised as specified therein. It would thus be seen that the reopening of the assessment of the company under section 34 resulted not in the passing of an order under section 23A as a consequence of the reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end was not included in the assessee's original assessment, the purported addition thereof to the assessment having been found to be erroneous and deleted in accordance with the Appellate Assistant Commissioner's order. Here again, we may state that the submission, which the learned counsel has made, is not such as would immediately convince the court that there has been an apparent lack of jurisdiction on the part of the respondent. We may point out in this connection that it is not as if the original share of the deemed dividend was never included in the assessee's income. Although in the original assessment the Income-tax Officer had overlooked to include it, he had tried to do it by a subsequent rectification order, which he had made. Unfortunately, however, the said order came to be set aside by the Appellate Assistant Commissioner on the ground, it appears to us, erroneously, that it was not justified under the provisions of section 35. If the inclusion made in the original assessment had not been wrongly deleted, there was no difficulty of the nature pointed out by Mr. Trivedi in applying the provisions of section 35(8) to the case. Even otherwise it does not appear to us qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order and ultimately on the 7th May, 1959, he was informed that the assessment order was not traceable. The department thereafter started the recovery proceedings by issuing a certificate under section 46(1) of the Indian Income-tax Act and on the 16th of August, 1960, prohibitory orders came to be issued in the said recovery proceedings. The petitioner requested the authorities to withdraw the said proceedings on the ground that they were patently illegal and without jurisdiction and, since his request was not heeded to, he made the writ petition on the 12th November, 1960, praying for a writ to quash the notice of demand and the recovery proceedings and for directions restraining the respondents from taking any further action in pursuance of the said notice of demand. Now the notice of demand, which could only follow on a proper and legal assessment order having been made in accordance with law, was patently illegal and without jurisdiction inasmuch as no order of assessment had been made or served on the petitioner either prior to or at the time of the issue of the notice of demand. The petitioner had requested the authorities to supply to him the order of assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed he had sought to get them set aside by way of making applications for rectification and the time taken by him in the said rectification proceedings should be excluded in considering the question of delay. Now, in respect of the order relating to the assessment for the assessment year 1951-52, which was made on the 15th March, 1961, the petitioners appear to have made an application for rectification of the same nearly two years thereafter on the 16th of January, 1963. This application was entertained by the respondent in so far as it really and truly related to a mistake apparent on the face of the order and the rectification was allowed. What had happened was that in the order made on the 15th March, 1961, the respondent had inadvertently made a double addition of the deemed dividend. He deleted the excess part which had been inadvertently added and rectified the order on the 1st September, 1963. On that date at any rate it was clear to the petitioners that their remedy to persuade the Income-tax Officer to delete the entire inclusion of the deemed dividend had failed. Even thereafter the present application, which is made on the 11th July, 1964, is filed after a period of n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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