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TMI Blog1965 (10) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ather some time in 1927. In March, 1942, Rattan Chand, created a trust called " Rattan trust ". In 1946, a sum of Rs. 5 lakhs was ostensibly donated to the Trust by Shri Gokal Chand, the father of Shri Rattan Chand. In May, 1951, Shri Gokal Chand died. In June, 1947, this trust was assessed for the year 1947-48. Rattan Chand was also assessed as a Hindu undivided family for the year 1946-47. This assessment was made in September, 1946. On 25th March, 1963, a notice was issued to Shri Rattan Chand Kapur under section 148 of the Income-tax Act (43 of 1961) by the Income-tax Officer, Special Investigation Circle "A", Amritsar, stating that the said officer had reason to believe that Shri Rattan Chand's income in respect of the assessment year 1946-47 had escaped assessment within the meaning of section 147 of the Income-tax Act and that the said Income-tax Officer proposed to assess the income for the said assessment year. Shri Rattan Chand Kapur was required to deliver to the Income-tax Officer, within thirty days from the date of the service of the notice, a return in the prescribed form of the income chargeable in respect of which he was assessable for the financial year in questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Lastly, it has been urged that the petitioner had actually acquiesced in response to the notice and was estopped from challenging the same in the present proceedings. The petitioner's learned counsel has attempted to meet this objection with the submission that the petitioner was unaware of the assessment proceedings. It is, however, common case of the parties that the petitioner has since preferred appeals against the orders of assessment in accordance with the provisions of the Income-tax Act. It may here be pointed out that the petitioner has also presented to this court supplementary writ petitions with the object of challenging the assessment orders as well ; of course, the challenge is mainly confined to the validity of the original notice. The petitioner's counsel has very fairly conceded that he is not entitled to take us into the merits of the assessment order, which may require appreciation or evaluation of the evidence on which it proceeds; on the writ side it is conceded by the learned counsel that this court is confined only to discover a jurisdictional defect or some other serious legal infirmity going to the root of the matter and he can canvass the merits only b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. Shri Awasthy has also referred us to Shivram Poddar v. Income-tax Officer in which the Supreme Court once again emphasised what it had often observed earlier, that the Income-tax Act provides a complete machinery for assessment of tax and for relief in respect of improper or erroneous orders made by the revenue authorities and it is for those authorities to ascertain the facts applicable to a particular situation and to grant a proper relief in the matter of assessment of tax. Resort to the High Court in exercise of its extraordinary jurisdiction conferred or recognised by the Constitution in matters relating to assessment, levy and collection of income-tax may be permitted only when questions of infringement of fundamental rights arise, or where on undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess. In attempting to bypass the provisions of the Income-tax Act by inviting the High Court to decide questions which are primarily within the jurisdiction of the taxing authorities, the party approaching the court has often to ask the court to make assumptions of facts which remain to be investigated by such authorities. Similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is true that this court may persuade itself to interfere if there is something going to the root of the jurisdiction of the Income-tax Officer, but, then again, this is a matter of discretion to be exercised on the facts and circumstances of each case, whether it would be more appropriate that this court decides to intervene itself ignoring the machinery which the legislature has in its wisdom provided for redress of grievances. In view of the legal position which I have just stated, I may deal with the petitioner's submission, because, according to Shri Sastri, there are special circumstances in this case which justify interference by this court. According to Shri Sastri the last date for reopening the assessment was March 31, 1955, and thereafter, there was no jurisdiction on the Income-tax Officer to issue a notice under section 34(1)(a) of the Indian Income-tax Act, 1922. This right having become barred by time, sections 147, 148 and 149 of the Income-tax Act, 1961 (43 of 1961), hereinafter described as the current Act, would not revive that right and revest it in the revenue. It is desirable at this stage to notice the various amendments made in section 34(1)(a) of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year after the year ending on the 31st day of March, 1940, any income chargeable to tax has escaped assessment within the meaning of that expression in section 147 and no proceedings under section 34 of the repealed Act in respect of any such income are pending at the commencement of this Act, a notice under section 148 may, subject to the provisions of section 149 or section 150, be issued with respect to that assessment year and all the provisions of the current Act are to apply accordingly. The counsel has laid emphasis on some relevant dates in the present case. Rattan Chand, son of Gokal Chand, is stated to have separated from the family somewhere in 1927. In March, 1942, Rattan Chand is stated to have created a trust called the " Rattan Trust ". In January, 1946, according to the petitioner's case, a sum of Rs. 5 lakhs was donated to this trust by Gokal Chand, the father of the author of the trust. Rattan Chand was assessed as Hindu undivided family for the year 1946-47 on 6th September, 1946. On 14th June, 1947, the trust was assessed for the year 1947-48 and in the course of assessment, reference was made to the donation made by Gokal Chand. In May, 195l, Gokal C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act were initiated against her on July 25, 1949, after the expiry of four years but within eight years. The High Court held on a reference that the assessment proceedings were not valid as the period of limitation prescribed under section 34 for failure to submit a return was 4 years and the period had expired before the amendment of section 34 in 1948, prescribing an eight-year period of limitation for such a case, came into force. On appeal to the Supreme Court, it was held by Sarkar, Hidayatullah and Raghubar Dayal JJ. (Das and Kapur JJ. dissenting), ' that the assessment proceedings were valid as section 34, as amended in 1948, was applicable to this case'. Per Das and Kapur JJ. (dissenting): 'Section 31 of the Indian Income-tax (Amendment) Act, 1953, and section 34 as amended in 1948, did not revive the right of the Income-tax Officer to initiate proceedings which had been barred under section 34 before it was amended in 1948'. Per Sarkar J.: 'The Legislature had undoubtedly the power to make section 34, as amended in 1948, apply to an assessment for an assessment year by giving it a retrospective operation in spite of the time to issue a notice and to make the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remains, it cannot be enforced by the officers administering the tax laws. If the disability is removed, or, according to a new law, a new time-limit is created retrospectively, there is no reason why the liability should not be treated as still enforceable. The law does not deal with concluded claims or their revival but with the enforcement of a liability to the State which though existing remained to be enforced '." Shri Awasthy submits that the majority view in this case supports his contention, whereas Shri Sastri argues that the opinion on the point at issue, which concerns us, was equally divided, and Sarkar J. had proceeded on somewhat different lines, though in the ultimate result, he agreed with Hidayatullah and Raghubar Dayal JJ. Shri Awasthy has relied on the head-notes at pages 2 and, 4 of the report in Prashar's case. At page 2, it is stated to have been held by Sarkar, Hidayatullah and Raghubar Dayal JJ. (Das and Kapur JJ. dissenting), that : " (i) Section 4 operated on and validated notices issued under section 34(1)(a), as amended in 1948, even earlier than April 1, 1956, in other words, in respect of assessment years prior to March 31, 1956, and, therefore, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and has, in the alternative, doubted its correctness in the light of the later Supreme Court decision. Shri Sastri has also relied on the following observations of the Supreme Court in S. S. Gadgil v. Lal & Company at page 236: "It is true that by the amendment made by section 18 of the Finance Act, 1956, a notice could be issued within two years from the end of the year of assessment. But the application of the amended Act is subject to the principle that, unless otherwise provided, if the right to act under the earlier statute has come to an end, it could not be revived by the subsequent amendment which extended the period of limitation. The right to issue a notice under the earlier Act came to an end before the new Act came into force. There was undoubtedly no determinable point of time between the expiry of the earlier Act and the commencement of the new Act ; but that would not, in our judgment, affect the application of this rule." In my opinion, on the facts and circumstances of this case, particularly when the assessee has: (i) allowed more than one and a half years to elapse from the date of the impugned notice before approaching this court; (ii) allowed assessment to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer to deal with the merits of the contentions raised before them. The High Court must in each case consider whether the act or omission complained of has resulted or is likely to result in grave injustice and whether the party approaching it has another adequate remedy which is equally efficacious; whether he has approached the court without acquiescence and without undue delay; whether the problem posed raises complicated questions of disputed facts which it would be inappropriate for the High Court to determine; whether the aggrieved party has been guilty of misrepresentation or suppression of material facts and whether, notwithstanding the apparent breach, it would be inequitable to grant relief. At the close of the judgment, the court took pains to state that it was constrained to set aside the order because there was no indication as to the grounds on which the High Court had rejected the petition which, prima facie, made out a case which might require investigation and trial. Indeed, the anxiety of the Supreme Court to confine this decision to its own circumstances is also clear from the following observations : " We may hasten to observe that we are not seeking to lay down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not possible to hold that the invalidity of the notice is manifest on the face of the present record or that the law is clearly against the revenue. An error-if at all there is one-is, according to the counsel, far from apparent on the face of the record and, in order to establish it, the assessee had to resort to a long-drawn process of reasoning on points on which clearly there may be more than one opinion. In such circumstances, the error can scarcely be described to be self-evident and it would require lengthy and complicated arguments to establish it. A writ is hardly an appropriate remedy for curing the defect under the rules governing the power of this court under article 226 of the Constitution. This submission too cannot be said to be without merit or unjustified. On behalf of the petitioner, an express request has been made that in case this court is inclined not to go into the merits of the controversy and prefers to direct the petitioner to seek redress of grievances from the appellate authorities under the statute, then we may not express any opinion on the merits of the arguments addressed at the Bar in support of the challenge to the notice or to the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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