TMI Blog1955 (10) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... sued after obtaining the necessary satisfaction of the Commissioner of Income-tax, Bombay City, Bombay. 2. The competence of the Income-tax Officer to issue this notice is challenged in this petition which raises an interesting question of processual law and the very interesting question whether the grant of a writ of prohibition is always discretionary or whether in some cases it is demandable of right. 3. I shall being by stating the undisputed facts as succinctly as I can. Petitioner No. 1 is the only heir and legal representative of Dwarkadas Vussonji, who died on April 1, 1946. Dwarkadas Vussonji and Parmanand Odhavji (respondent No. 3) carried on business in partnership in the name of Purshottum Laxmidas, which was a firm registered under the Indian Income-tax Act. Another firm in the name of Vasantsen Dwarkadas was started by Dwarkadas. The partners in that firm were Vasantsen Dwarkadas (petitioner No. 1), Narandas Shivji and Nandlal Odhavji, who is the brother of Parmanand Odhavji. The firm of Vasantsen Dwarkadas filed a return under the Act for the assessment year 1942-43 and claimed registration of the partnership. Registration was, however, refused to that firm on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serving that a clear finding had been recorded by the Income-tax Tribunal that the business of Vasantsen Dwarkadas was the business of the firm of Purshottum Laxmidas. That reference was decided on October 8, 1952. 8. On April 30, 1954, the Income-tax Officer who is respondent No. 1 served the firm of Purshottum Laxmidas with a notice under section 34 of the Income-tax Act, which notice has already been set out above. There was correspondence thereafter in the course of which respondent No. 1 was asked to state the reasons submitted by the Income-tax Officer to the Commissioner of Income-tax for reopening of the assessment of the firm of Purshottum Laxmidas for the year 1942-43 under section 34 of the Act. The reason for starting proceeding under section 34 supplied to the firm of Purshottum Laxmidas was as follows : The income of the concern of Vasantsen Dwarkadas was originally included in the hands of Dwarkadas Vussonji. Dwarkadas Vussonji was also a partner in the registered firm of Purshottum Laxmidas. The Appellate Tribunal by its consolidated order dated August 14, 1951 has come to the finding that the concern of Vasantsen Dwarkadas is the branch of Messrs. Purshottum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... competent. As to the constitutionality of the second proviso challenged by the petitioners it is submitted in that affidavit that the proviso deals with a definite class of cases and that the classification is permissible. 11. It will be convenient at this stage to set out the relevant part of section 34 of the Income-tax Act as it stood before the second proviso to sub-section (3) was amended by Act XXV of 1953 : 34. (1) If - (a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax have escaped assessment for that year, or have been under-assessed, or assessed at too law a rate, or have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been computed, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second proviso to sub-section (3) as amended by Act XXV of 1953 is as follows : Provided further that nothing contained in this section limiting the time within which any action may be taken or any order, assessment or reassessment may be made, shall apply to a reassessment made under section 27 or to an assessment or assessment made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 31, section 33, section 33A, section 33B, section 66 or section 66A. Section 1(2) of the amending Act of 1953 lays down that subject to any special provision made in this behalf in this Act, it shall be deemed to have come into force on the April 1, 1952. 13. The first argument pressed strongly and clearly by Mr. Jhaveri, learned counsel for the petitioners, was in this form : The order of the Tribunal, in which the finding relied on by respondents Nos. 1 and 2 was recorded, was made on August 14, 1951. The notice under section 34 in respect of the assessment year 1942-43 was issued on the firm of Purshottum Laxmidas on April 30, 1954. 14. Both these were after the statutory period of eight years prescribed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limitation is no more than a condition annexed to the enforcement of a substantive right and does not affect the right itself. But it is an equally well-established principle that unless the terms of a statute expressly so provide or necessarily require it, retrospective operation will not be given to a statute so as to affect, alter or destroy any right already acquired or so as to revive any remedy already lost by efflux of time. It is always presumed in such cases that Legislature does not intend to deprive a person from pleading that the right or remedy sought to be enforced against him has become barred before the new provisions of law come into operation. In this respect there is no difference between statutes dealing with procedure and those dealing with substantive rights. That the rule regarding vested rights is not confined to substantive rights but extends equally to remedial rights or rights of action including rights of appeal is also well established. See Colonial Sugar Refining Co. v. Irving. This principle was reiterated by their Lordships of the Privy Council in Delhi Cloth and General Mills Co. v. Income-tax Commissioner, Delhi, and it was held that : While pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the President on May 24, 1953, that its provisions were to come into force, not on the date of the enactment, but on April 1, 1952. Therefore the Legislature has in terms already given some retrospective operation to the proviso under consideration, and when this has been done in words of sufficient clarity, it is impossible to give still further retrospective effect to the proviso, even assuming that such effect can, on general principles, be given to it. In such a case the date to which it came into operation cannot be pushed back further. The terms of the amending statute in section 1(2) of it gives to my mind a complete answer to the present question. 18. But it was argued by Mr. Seervai, relying on a recent decision of Calcutta High Court, Income-tax Officer v. Calcutta Discount Co. Ltd., that section 1(2) of the amending Act of 1953 is really concerned with the retrospective operation of the provisions of the amended Act and not of the amendments themselves, which must be judged by their own language and the places assigned to them in the Act. In that case section 34 of the Income-tax Act and certain amendments made in it by the amending Act of 1948 came up for considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 34 with effect from the March 30, 1948, is that from that date the Income-tax Act is to be read as including the new section as a part thereof and if it is to be so read, the further effect of the express language of the section is that so far as cases coming within clause (a) of sub-section (1) are concerned, all assessment years ending within eight years from the March 30, 1948, and from subsequent dates, are within its purview and it will apply to them provided the notice contemplated is given within such eight years. What is not within the purview of the section is an assessment year which ended before eight years from the March 30, 1948. All the three assessment years in question in the present case ended within eight years from the March 30, 1948, and also within eight years from the dates of the notices and accordingly the proceedings taken are authorised by the section and are valid. 19. It is essential to note that the learned Chief Justice in this case took particular care to emphasise that what was not within the purview of the amended section was a notice in respect of any assessment year which ended before eight years from the date on which the amended section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall only mention one case cited by Mr. Jhaveri. See Rex v. Hammersmith Profiteering Committee. It is also necessary to refer to the decisions of this Court which explain what is meant by the expression error of law apparent on the face of the record . A simple perusal of the notice challenged in this petition along with section 34 as it stood prior to the amendment in 1953 of the second proviso to sub-section (3) and the amendment made in that sub-section by the amending Act is enough to point to the conclusion that in issuing that notice the Income-tax Officer committed a substantial error which went to the root of the matter. It was not a case of usurpation of the jurisdiction he did not have. The writ being ex debito justitiae this Court will not withhold the writ where a judicial or quasi-judicial authority has acted without or in excess of jurisdiction even on the ground that the applicant has no merits. 22. One other point can be shortly disposed of. It was contended by Mr. Seervai at the outset of the hearing of this petition, although not as a preliminary objection, that when a provision of a revenue statute like the Income-tax Act, which was a complete code in itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider the arguments presented by learned counsel and sought to be supported by a number of citations. It is well settled that the very purpose of issuing a writ of prohibition is to prevent a person or body of persons having legal authority to determine questions affecting the right of a subject judicially, from acting in excess of their legal authority, and in such a case the writ being ex debito justitiae would issue. It has been said that the Court should not be chary of exercising it. The writ is granted not only when a question relating to usurpation or abdication of jurisdiction is involved but also against judicial and quasi-judicial authorities and administrative tribunals to keep them from straying from the sphere of their powers and acting in contravention of any statute or principle of law. It commands inactivity instead of kinetic excesses. In any such case : where a material question is involved, it is competent to the superior Court to issue a writ, and the Court is not to be fettered or obsessed by the fact of the existence of an alternative remedy. In Burder v. Vely, Lord Denman, C.J., said : The cases seem to establish, and consistency of reasoning requires, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g becoming manifest in the course of the proceedings, and what I will call a patent want of jurisdiction, i.e., a want of jurisdiction apparent on the face of the proceedings. Whilst in cases of latent want of jurisdiction there has always been a great conflict of judicial opinion, as to whether the grant of the writ was discretionary or not, the authorities seem unanimous in deciding that, where the want of jurisdiction is patent, the grant of the writ of prohibition is of course. 27. At page 559 of the report the learned Lord Justice said : The result of the authorities appears to me to be this : that the granting of a prohibition is not an absolute right in every case where an inferior tribunal exceeds its jurisdiction, and that, where the absence or excess of jurisdiction is not apparent on the face of the proceedings, it is discretionary with the Court to decide whether the party applying has not by laches or misconduct lost his right to the writ to which, under other circumstances, he would be entitled. The reason why, notwithstanding such acquiescence, a prohibition is granted where the want of jurisdiction is apparent on the face of the proceedings, is explained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determining whether the assessment is 'made under this Act.' The phrase describes the provenance of the assessment : it does not relate to its accuracy in point of law. The use of the machinery provided by the Act, not the result of that use, is the test. 32. Relying on this decision of the Privy Council the learned counsel argued with considerable emphasis that where effective and proper machinery was provided for by the Act itself the Court would refuse to interfere by a writ of prohibition unless some fundamental right of the subject was involved. The decision of the Privy Council was recently considered by the Supreme Court in The State of Tripura v. The Province of East Bengal. It was pointed out that in Raleigh's case the main and relevant claim was repayment of the tax alleged to have been wrongfully levied under colour of an ultra vires provision under the Income-tax Act and that the position was quite section 24(2) of the Bengal Agricultural Income-tax Act, 1944, was entitled to file a suit for a declaration that the Act was ultra vires if the gist of the wrongful Act complained of was that it subjected the plaintiff to harassment and trouble by commencing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ab High Court on behalf of the respondents was that the Income-tax (Investigation Commission) Act, XXX of 1947, being an enactment of a special nature which created new rights and liabilities, the remedies provided in the Act itself for the breach or violation thereof where the only remedies which could be pursued by the aggrieved parties and articles 226 or 227 of the Constitution was not available to the petitioners. It would seem from the judgment of the Supreme Court that this contention had not found favour with their Lordships, but they did not deem it necessary to express any final opinion on the point in that case. After considering these two points their Lordships went on to dismiss the appeal on the ground that the remedy provided for in article 226 is a discretionary remedy and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. It does appear, however, from the judgment that it was not a case where want of jurisdiction on the part of the respondents was patent on the face of the proceedings. Therefore, it is not possible to read the observations relied on by M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Crown. It is with this background that in England it has been held that in such a case the writ of prohibition is demandable of right. But no such considerations need weigh with this Court in appreciating the broad principle that granting of all writs under article 226 of the Constitution including the writ of prohibition is always discretionary though of course different considerations may prevail in case of different writs. But I need not pursue this difficulty because in respect of a decision of the Supreme Court to raise any such difficulty would be impertinent and I shall give the decision all the effect I am bound to give it. An elaborate review of the authorities cited before me is not necessary. Such a review would be unduly long. I think that the cases I have selected for reference can be regarded as sufficiently expounding and illustrating the principles that can be gleaned from an exhaustive review of citations. The following propositions though not exhaustive of the subject are sufficient for the purposes of this case and I venture to think that the true measure and scope of the exercise of this jurisdiction and the discretion of this Court to issue a writ of prohibiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner No. 2 who also carried on business under another name. In my opinion this is not a fact which can weight with the Court in a case of apparent lack of jurisdiction. The uberrima fides essential on the part of petitioner are in the matter of the petition itself. Such for instance would be the case where there is a suppression of a material fact in the petitioner's affidavit in support of his case for the writ, here the question is whether there was an excess or absence of jurisdiction on the face of the proceedings. When I am satisfied that there was such total absence, I would not be justified in rejecting this petition on the ground pressed before me. 38. The greatest stress was laid by Mr. Seervai as I have already indicated on the ground that there was an adequate and appropriate machinery in the Income-tax Act itself even for the determination of this question of jurisdiction. It was said that even if it be assumed that the Income-tax Officer, the Appellate Assistant Commissioner and the Appellate Tribunal might have taken an erroneous view of this question of jurisdiction, there was the remedy provided by sections 66 and 66A to go to the High Court and the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion but as simply one of an error of law apparent on the face of the proceedings. It is not possible on the facts of this case to take the view that the conduct of the petitioners is such as should deprive them from asking for prohibition. Nor do I regard this as a case where the completeness of the income-tax code should outweigh the considerations which prevail where there is a clear error of law apparent on the face of the proceedings and the error is in respect of a material question. Therefore, even if I had reached the conclusion that respondent No. 1, the Income-tax Officer, had jurisdiction to issue the notice challenged before me, I should have held that it was issued clearly beyond the period prescribed for it by section 34 as it stood before the amendment by Act XXV of 1953 and, therefore, bad. 40. It was but faintly urged on behalf of the respondents that respondent No. 1 in issuing the notice under section 34 was acting in a purely administrative capacity and that the issuance of that notice was not even a quasi-judicial act. It was said that the initiation of the matter by the requisite notice was a purely subjective administrative act although subsequent proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation which he could otherwise have done under the first part of sub-section (3) of the section. The contention so grounded was that the proviso had the effect of creating two classes of assessees, viz., those entitled to plead limitation and these now disentitled to do so. This it was urged was unequal treatment and creation of classification for which there was no rational basis. 42. Mr. Seervai, learned counsel for respondents Nos. I and 2, submitted that there was a clear and valid justification for the class of cases sought to be affected by the second proviso to sub-section (3) of the section. It was said that this very case afforded an instance where a finding of superior authority could only be given effect to by the presence of the impugned proviso. The argument was that the classification, if any, was inherent in the scheme of taxation, and that it was reasonable having regard to the subject-matter. 43. There does not seem to be much difficulty in understanding the section or the impugned proviso. The section provides for additional or supplemental assessment in a case where income has escaped full assessment. It also provides for income which has altogether escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 44. It is to be observed, therefore, that the section read with the second proviso to sub-section (3) provides for three categories of persons in relation to the question of time-limit : Firstly, those who have escaped assessment, or have not been fully assessed, but are entitled to the benefit of the period of limitation prescribed by the section; Secondly, those assessees against whom any finding is recorded or direction given in any order or proceedings to which they were parties and the order was made in any proceedings under any of the sections mentioned in the second proviso to sub-section (3); and Thirdly, strangers to those proceedings, that is, any persons against whom any finding is recorded or direction given in orders made in proceedings to which they were not parties. Under this category would fall all persons who cannot be regarded as assessees within the meaning of that expression as used in the second proviso. 45. In effect both the second and third categories have been challenged on behalf of the petitioners as laying down classes without any rational basis and as amounting to discrimination. 46. There was no time-limit before 1939 for completion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the question : Can it be said in any such case by any assessee against whom a finding is recorded or direction given and in whose case assessment or reassessment is sought to be made after the time-limit prescribed by a general rule that the non-application to such cases of the time-limit creates a classification devoid of reasonable basis ? Or can it be said that there is created a class on reasonable basis having regard to the difference pertinent to the subject 47. Now equality before the law guaranteed by article 14 of the Constitution is an affirmation of the well-known fundamental principle that among equals the law should be equal and should be equally administered; that like should be treated alike. This principle is applicable to all matters whether great or small and is evidently one which requires only to be stated to be at once assented to as being just. No case upon this subject in relation to income-tax legislation can be referred to with greater advantage than Suraj Mall Mohta and Co. v. Visvanatha Sastri very recently decided by the Supreme Court, where the learned Chief Justice observed as follows : It is well settled that in its application to legal proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction of laws, but is does not garnet to all persons the benefit of the same laws and same remedy or the identical procedure. I shall only add this coming from the faintly academic to the purely practical that the differentiation between assessees entitled to claim protection of the time limit and those entitled to do so by virtue of the fact that a finding was recorded or direction given in any of the proceedings enumerated in the section is not in any way divorced from the purpose and circumstances under which it was sought to be established. The assessee himself being a party to the various proceedings envisaged in the impugned proviso and often himself being responsible for adopting some or all of those proceedings can hardly be heard to complain of the absence of the time limit in any such case. Obviously the proviso, so far as it relates to an assessee who has been a party to these long drawn out proceedings, is directed to prevent him from escaping assessment or supplemental assessment. The rule derives justification from the difficulties arising in such cases and is clearly addressed to attain a specific purpose and the end sought to be attained by the section itself, namel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the observations of the learned Chief Justice which lends any support to this argument. The observations were made in a totally different context to emphasize the principle that classification which is permissible means segregation in classes based on some real and substantial distinction bearing a just and reasonable relation to the objects sought to be attained and not segregation made arbitrarily and without any substantial basis. To my mind the arguments urged by learned counsel are not sufficient to prop up a classification which on the face of it seems unreasonable. A finding, if it is to be binding on a party, should, as a general rule, be in proceedings inter partes. It cannot bind strangers. As to strangers the maxim must apply res inter alios acta alteri nocere non debet. There are some limitations to the application of the fundamental principle which underlies this maxim, but they have no bearino on the present point. It would not only be highly inconvenient but also grossly unjust to deprive a person of the benefit of an express provision of law prescribing limitation simply because in some income-tax proceedings to which he was not a party-and of which he may possibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies to all matters great or small. Very readily I feel bound to extend to such persons the benefit of the time-limit expressly prescribed by the section and to hold that legislation segregating such persons in a class which has no systematic relation to a class or persons benefiting by the time-limit is a classification arbitrary and unjustifiable. The proviso, so far as it affects persons other than assessee not parties to the proceedings enumerated in it must, therefore, be held to be ultra vires the Legislature. 50. Now the argument pressed before me was that the whole second proviso to section 34(3) was bad as contravening article 14 of the Constitution. The argument proceeded that even if a part of this newly enacted proviso to section 34(3) was held to be bad, the whole of it must fail. There is no warrant for this contention. Then it was urged that in any event petitioner No. 2, the firm of Purshottam Laxmidas, were not assessees within the meaning of the newly enacted second proviso and must be regarded as strangers to the proceedings in which the finding in question was regarded by the Appellate Tribunal. The argument ran that no question of construction or applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the newly enacted proviso does not reach the assessment year 1942-43 and that it was not competent to the Income-tax Officer to issue the notice challenged in this section. 53. There will, therefore, issue a writ prohibiting respondent No. 1 and his successors in office from taking any further steps or proceeding in pursuance of the show cause notice dated April 30, 1954, or from assessing or reassessing the firm of Purshottam Laxmidas in respect of the assessment year 1942-43. 54. Respondents Nos. 1 and 2 will pay the petitioners' costs of this petition. The costs will be taxed costs. 55. The respondents appealed. 56. M. P. Amin (Advocate-General) with G. N. Joshi, for the appellants. N. A. Palkhivala with R. J. Kolah, for the respondents. Chagla, C.J. 57. This appeal arises out of a petition filed challenging a notice issued by the Income-tax Officer under section 34 of the Income-tax Act and praying for a writ restraining the Income-tax Officer from proceeding further pursuant to that notice. 58. It appears that the firm of Purshottam Laxmidas, who are petitioners No. 2, was stated on October 28, 1935, and in this firm there were two partners Dwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Dwarkadas. It further expressed the opinion that if the Income-tax Officer could include this sum in the income of Purshottam Laxmidas he was of course at liberty to do so. Therefore in substance what the Appellate Tribunal decided with regard to the income of Vasantsen Dwarkadas for the assessment year 1942-43 was that it was erroneous to include that income in the assessment of Dwarkadas, that in its opinion the income of Vasantsen Dwarkadas was the income of Purshottam Laxmidas, and that if effect could be given to that expression of opinion by the Income-tax authorities the Income-tax authorities should do so by including this income in the assessment of Purshottam Laxmidas. Armed with this opinion of the Income-tax Tribunal, the Income-tax Officer issued a notice under section 34 of the Income-tax Act on April 30, 1954, and by this notice the firm of Purshottam Laxmidas was called upon to submit a return of its total income for the year ending March 31, 1953. It is this notice which is challenged by the petitioners. 59. Under section 34, sub-clause(1)(a), if the Income-tax Officer has reason to believe that income has escaped tax owing to an omission or failure on the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 31, section 33, section 33A, section 33B, section 66 or section 66A. 61. The important alterations made in the second proviso will be immediately noticeable. In the first place, the second proviso was no longer a proviso to sub-section (3) but it is a proviso to the whole section. In the second place, no limitation was to apply in cases falling under the second proviso not only with regard to an assessment made on the assessee but also against any third person or against a person who was a stranger to the assessment, and whereas the original proviso limited its operation to all order made under the various sections enumerated, the amended provisos extended its ambit by providing that the assessment or reassessment may be made in consequence of or to give effect to any finding or direction contained in an order under the various sections. 62. It is under this amended second proviso that the Income-tax Officer has purported to issue this notice. It may be pointed out that as the assessment year 1942-43 ended on March 31, 1943, and inasmuch as the notice wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich came into force on April 1, 1952, by depriving the assessee of the right which had accrued to him of no further action being taken against him under section 34. As the law stood, the assessee could say to himself on April 1, 1952, that any fear of proceedings being taken under section 34 was effectively at an end, and therefore unless there is anything in the second proviso which would leab us to the conclusion that the Legislature not only brought into force the Act, which received assent on May 24, 1953, on April 1, 1952, but it revived a remedy already lost, we could not possibly accede to the contention that the amended proviso has a retrospective effect in the manner suggested by the Advocate-General. 64. An argument was advanced by the Advocate-General that if the right is not barred and only the remedy is barred, the remedy could be revived by the Legislature, and a rather curious suggestion was made that the Income-tax Department had the right to collect income-tax from all persons who were liable to pay tax, that that right never got barred, and also the liability of every person to pay tax which was due from him also continued indefinitely, and therefore it was ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... op would not have had retrospective effect if it had attempted to revive a remedy which had already been barred. At page 490 the learned Chief Justice says : and since the time-limits for so proceeding were the same, the new section affects no rights previously unaffected. 66. And at the bottom of that page : It is true that if time is enlarged by a new enactment, but at the date when the enactment comes into force, no proceeding can any longer be commenced in a particular case under the previous law, the new enactment will not apply to such a case. 67. And lower down on page 491 : As to time, none has a vested right in a period of limitation and a change of the period which does not altogether take away a right of action subsisting at the date of change or revive a right, then already barred under the old law, can always be made and the period applicable thereafter will be the new period, whether enlarged or abridged. 68. Therefore, in our opinion, it is clear that the notice issued by the Income-tax Officer under section 34 which is challenged by the petition under appeal was a notice that was issued out of time, and is, therefore, invalid. 69. The sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to say, the writs issued by the Court cannot run beyond the territories subject to its jurisdiction. The other is that the person or authority to whom the High Court is empowered to issue writs 'must be within those territories' and this implies that they must be amenable to its jurisdiction either by residence or location within those territories. 70. Therefore, apart from these two limitations, it is for the High Court to decide whether in a particular case it will or it will not issue a writ. 71. Strong reliance was placed by the Advocate-General on a judgment of the Punjab High Court in Lala Lachhman Dass Nayar v. RE. In that case Mr. Justice Kapur and Mr. Justice Soni held that a challenge could not be made to the validity of a notice under section 34 by a writ of prohibition or mandamus under article 226 of the Constitution. When one looks at the facts of that case it is clear that in all the matters which were considered by the Punjab High Court in that decision not only notice had been issued under section 34 but assessment had been completed, and what was really challenged in substance was not so much the notice as the invalid assessment made pursuant to a b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he plaintiff is seeking to prevent illegal and unauthorised proceedings being commenced against him and his being subjected to harassment, and a case where he has already been assessed and he is challenging the validity of the assessment. But the importance of Tripura's case goes further. It lays down this important proposition that an illegal threat to assess can be challenged otherwise than by the machinery provided by the Income-tax Act. Therefore, to the extent that the Advocate-General argued that when the Income-tax Act provides a particular machinery the aggrieved party can challenge a threat to assessment only by means of that machinery. That contention has been held to be untenable by the Supreme Court. But it is pointed out that even so the only remedy which the aggrieved party has is by filing a suit and not by asking for a prerogative writ under the Constitution. It must be borne in mind that when Tripura's case was decided the Constitution had not been enacted and the right to issue prerogative writs was confined to the High Courts within the limits of the Presidency-towns, and therefore the Ruler of Tripura State could only challenge the illegal notice issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell established is that if the authority against whom a complaint is made has violated rules of natural justice, the Court will interfere and protect the petitioner and not insist upon this going to a higher tribunal for relief. But the interesting question which was debated at the Bar was whether there was a third exception to this rule, and the third exception that was suggested was when there is complete absence of jurisdiction and that absence of jurisdiction is apparent on the face of the record. It is necessary to clarify this expression complete absence of jurisdiction. If we are dealing with a judicial or quasi-judicial tribunal, the expression absence of jurisdiction does not create any difficulty. But we have also to consider cases where the order challenged is the order of an administrative officer or an administrative tribunal and the allegation against him may be that he is acting without authority or beyond his competence. In such a case the expression absence of jurisdiction would also apply, but with a different significance as just pointed out. In this particular case what is urged by the petitioner is that the Income-tax Officer in issuing the notice had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the necessary power. In such a case, if the section has been wrongly construed, it would be a clear case of absence of jurisdiction apparent on the face of the record because the Court has got to look at the section and to decide whether the Officer construing the section was in the right or in the wrong. 78. Turning to the authorities on this point, the most important is the decision of the English Court in Farquharson v. Morgan. In that case a Country Court Judge made an order to enforce an award by execution as on an ordinary County Court judgment under section 24 of the Agricultural Holdings Act and on the face of the award it was apparent that the compensation had been awarded to the tenant for matters not within the Act, and the Court of Appeal interfered by a writ of prohibition notwithstanding the fact that there was an agreement contained in the lease between the lessor and the tenant to refer all disputes to arbitration and also the fact that the lessor had by his conduct acquiesced in the exercise of jurisdiction by the County Court. Before we go further with this case it may be pointed out that there is a line of case where it has been held that if a party does not o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recedent if allowed to stand without impeachment,' and, I will add for myself, because it is a want of jurisdiction of which the Court is informed by the proceedings before it, and which the judge should have observed, and of which he himself should have taken notice. 82. And again at page 563 Lord Justice Davey draws a distinction between the case of a patent and latent want of jurisdiction and the distinction according to this learned Lord Justice is : but the distinction does not, I think, depend on the existence of a formal record, but is one of substance, whether the defect is apparent or depends on evidence. 83. And a little lower down on the same page he observes : In the present case the limits of the jurisdiction appeared, I repeat, on the face of the statute, and the fact of the excess appeared on the face of the amended award which the Court asked to enforce. 84. Then there is a recent judgment of the Queen's Bench Division reported in R. v. Comptroller-General of patents, and observation of the learned Chief Justice at page 865 are very pertinent : Objection to jurisdiction can always be taken by plea, and, if an appeal lies from the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee, it is bad to the extent that it affects a stranger. Before we consider this constitutional aspect of the matter, let us once more look at the language of this amended proviso. We suppose it is always difficult to draft a taxing statute, but whether it is always necessary to make it more difficult than it reasonably should be, we always find it hard to understand. The right to assess a stranger to assessment under section 34 arises in consequence of or to give effect to any finding or direction contained in an order under the various sections enumerated in the proviso, and here we are concerned with section 33. In the first place, it is difficult to understand how a Tribunal can give a finding or a direction affecting a third party who is not before the Tribunal. In this very case the assessee before the Tribunal was Vasantsen Dwarkadas, petitioner No. 1, as representing his father; in that appeal the firm of Purshottam Laxmidas was not before the Tribunal; and yet this proviso contemplates that a finding or a direction could be given by the Tribunal affecting Purshottam Laxmidas on which action can be taken by the Income-tax authorities, and it is precisely because the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e category of people who are liable to pay tax and who fail to pay tax is so large that it is not possible for the Legislature to embrace the whole of that class. That would be a perfectly valid argument if we could be satiesfied that it was not possible for the Legislature to reach all persons belonging to a particular category or that persons dealt with by the law and not dealt with by the law belong to different categories. Neither of these two factors are present in this case. As we have already said, the persons with regard to whom a finding or direction is given and persons with regard to whom no finding or direction is given belong to the same category, and as well shall presently point out, there is no reason why the Legislature should have excepted persons with regard to whom no finding or direction is given. The Advocate-General says that it is because of the finding or direction given that the attention of the Income-tax authorities is directed to the fact that a particular person has not paid tax which he was liable to pay. But the attention of the Income-tax authorities may be drawn by hundred different ways to the fact that other persons have also not paid tax which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person who was employed as a paid legal practitioner on behalf of the Municipality or as legal practitioner against the Municipality was disqualified from standing from standing for election to a seat in the Municipality, was challenged as offending against article 14 of the Constitution. The challenge was repelled by the Supreme Court and what is relied upon is the observations of Mr. Justice Bhagwati at page 1010. The learned Judge says : The simple answer to this contention is that legislation enacted for the achievement of a particular object or purpose need not be all embracing. It is for the Legislature to determine what categories it would embrace within the scope of legislation and merely because certain categories which would stand on the same footing as those which are covered by the legislation are left out would not render legislation which has been enacted in any manner discriminatory and violative of the fundamental right guaranteed by article 14 of the Constitution. 92. Social legislation would be impossible, social reform would be impossible, if the Legislature was to be expected to pass legislation embracing the whole people, and therefore if social reform ..... X X X X Extracts X X X X X X X X Extracts X X X X
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