TMI Blog1970 (5) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... on the 14th March, 1962, upon the assessment of the petitioner's firm on the 31st March, 1966. Needless to say that, by this rectification, the petitioner's tax liability was sought to be increased. On the 12th May, 1966, the respondent No. 1 passed an order against the petitioner under section 154 of the new Act for the assessment year 1961-62. On January 9, 1966, the petitioner was served with a notice of demand under section 156 of the new Act for the assessment year 1961-62 pursuant to the aforesaid notice under section 154. On the 4th July, 1966, the respondent No. 1 gave notice to the petitioner under section 222(1) of the new Act requiring the petitioner to show cause why a penalty should not be imposed for non-payment of tax. Eventually, on December 30, 1967, the petitioner was served with a notice of demand from the Tax Recovery Officer, Calcutta, with respect to the certificate for Rs. 74,348.85 forwarded by the Income-tax Officer. The Tax Recovery Officer on the same day, namely, the 30th December, 1967, made an order prohibiting and restraining the petitioner from making any transfer of his shares in the Transport Corporation, of India (P.) Ltd. In the present applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a part of "assessment", the point aforesaid raised in the affidavit-in-opposition is not sustainable by reason of the provisions of section 297(2)(a) of the new Act. It is apparent, submits Mr. Bajoria, learned counsel for the petitioner, from section 3 and section 23(5) of the old Act that the firm and its individual partners are distinct and separate entities for purposes of assessment. And simply because the firm has been assessed under the new Act the individual partner's assessment cannot be rectified under the new Act. On behalf of the respondents it has been urged before me that sections 154 and 155 of the new Act contain two distinct types of provisions. Section 154 deals with rectification of mistake made in an order of assessment and section 155 with "other amendments" in an order of assessment. According to counsel for the respondents section 155 does not deal with rectification as such and is independent of section 297(2)(a) of the new Act. In other words, the provisions in section 297(2)(a) do not in any way control the provisions of section 155. It is true that in Sankappa's case , the Supreme Court has said that assessment includes rectification but section 155 doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 962, for the assessment years 1956-57 and 1957-58. Subsequently, on January 27, 1964, the assessee received two notices under sections 154 and 155 of the new Act for rectifying the assessment on the ground of a mistake apparent from the record. The error was said to be a difference between the amounts of certain commission paid by another company to the assessee as disclosed by that company and the amounts shown in the returns filed by the assessee. On 6th April, 1964, orders were passed under section 35 of the old Act rectifying the assessment. The assessee applied Under article 226 to quash the orders by the issue of a writ of certiorari. A Division Bench of this court has held that the orders of rectification made under section 35 of the old Act are valid in law : the word "assessment" is used in the Income-tax Act, in a number of provisions, in a comprehensive sense and included all proceedings starting with the filing of the return or issue of notice and ending with determination of the tax payable by the assessee : the proceeding for rectification of assessment of tax under section 35 of the old Act are proceedings of assessment : and it, therefore, follows that the jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 154 of the new Act, it cannot be said that he had no power to make it as he had power to make an order of rectification under section 35 of the old Act, and the order of rectification would not, therefore, be regarded as having been made without jurisdiction. According to the Gujarat High Court, a wrong reference to the power under which an order is made does not per se vitiate the order, if there is some other power under which the order could lawfully be made. At pages 520-521 (of 74 I.T.R.) Bhagawati C.J. of the Gujarat High Court observes : "The validity of the order has to be tested by reference to the question whether the Income-tax Officer had any power at all to make the order. If the power is otherwise established, the fact that the source of the power has been incorrectly described would not make the order invalid : the order cannot fail merely because it purports to be made under a wrong provision if it can be shown to be within the power of the Income-tax Officer under some other provision of law. Now, though the order of rectification could not be made by the respondent under section 154 of the new Act, it cannot be said that the respondent had no power at all to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to section 5(7A) of the Income-tax Act as a result of the decision of this court in Bidi Supply Company v. Union of India did not find place in the Patiala Act. The Commissioner, when he transferred this case, referred not to the Patiala Income-tax Act but to the Indian Income-tax Act, and it is contended that if the Patiala Income-tax Act was in force for purposes of reassessment, action should have been taken under that Act and not under the Indian Income-tax Act. This argument, however, loses point, because the exercise of a power will be referable to a jurisdiction which confers validity upon it and not to a jurisdiction under which it will be nugatory. This principle is well settled. See Pitamber Vajirshet v. Dhondu Navlapa." I am inclined to apply the principles laid down in these decisions to the facts of this case. Here, the notice for rectification was issued under the new Act. The order rectifying the assessment has also been made under the new Act. But, the order of rectification must be held to be referable to the jurisdiction of the Income-tax Officer under section 35 of the old Act which confers validity upon it and not to his jurisdiction under the new Act under wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repealed Act by any person for the assessment year ending on the 31st day of March, 1962, or any earlier year, the assessment of that person for that year shall be made in accordance with the procedure specified in this Act." In the present case the original assessment of the petitioner was made under the old Act ; a proceeding for rectification is a part of assessment ; it is, therefore, obvious by reason of section 297(2)(a) that the rectification proceedings must be taken and continued as if the new Act had not been passed at all. With respect to the firm the position is that the assessment related to an assessment year to which the old Act applied. The firm filed its return after the commencement of the new Act. That is why the firm has been assessed under section 297(2)(b) in accordance with the procedure specified in the new Act. But in fact and in substance it is an assessment under the old Act. On this view of the matter I do not see any difficulty in institution of proceedings for rectification against the petitioner under section 35(5) of the old Act. In any event, section 35(5) does not expressly specify that the assessment or reassessment of the firm must be under th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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