TMI Blog1966 (7) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... on 23A of the Income-tax Act, 1922 (hereinafter referred to as the Act). The petitioner contended that it was a company in which the public was substantially interested, and for that reason section 23A was not attracted. On April 21, 1959, the Central Board of Revenue made an order transferring the petitioner's case to the respondent No. 1. By an order dated February 25, 1960, under section 23(3) read with section 34(1)(b) of the Act, the Income-tax Officer included certain items of income not previously included in the original assessment. An appeal was preferred against the said order before the Appellate Assistant Commissioner, but this appeal was dismissed on September 20, 1960. Thereafter, by another order dated September 22, 1960, made under section 23(3) read with section 34(1)(b) of the Act, certain further items of income were included in the assessment of the petitioner. By letters dated June 27, 1962, and December 14, 1962, the respondent No. 1 requested the petitioner to submit certain particulars regarding proceedings under section 23A of the Act. These particulars were furnished by the petitioner. By a letter dated February 15, 1963, the petitioner, through its advo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner is that the issue of the said show cause notice by itself is an act in excess of the jurisdiction of the respondent No. 1 and, therefore, appropriate writs should be issued prohibition any further action on the basis of the said impugned notice. Mr. A. K. Sen, learned counsel for the petitioner, argued that the petitioner was entitled to relief as by the said notice dated May 13, 1964, the respondent No. 1 proceeded to do something which he could not do. It was argued that an order under section 23A of the Act was an order of assessment and, therefore, such an order was subject to the bar imposed by section 34(3) of the Act. It was also argued that it was plain from the terms of the said notice, that the respondent No. 1 was of the opinion that section 23A of the Act applied, and for that reason the petitioner was liable to pay additional super-tax. But, it was argued, an order of assessment or reassessment could not be made by reason of the bar imposed by section 34(3) of the Act ; and therefore the notice calling upon the petitioner to show cause why an order under section 23A should not be made, could not be issued by the respondent No. 1. Mr. Sen next argued tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention, it was held that there was an adequate alternative remedy provided by the Act and this remedy must be pursued by the assessee. It was held that if the assessee failed before Income-tax Officer on this second ground, it could carry the matter in appeal before the Appellate Assistant Commissioner, and thereafter to the Tribunal. and finally, to the High Court on a reference under section 66, if a question of law arose out of the order of the Tribunal. This remedy, it was held, was a specific and adequate alternative remedy available to the assessee, and such remedy must be pursued. On this first ground mentioned above, however, it was held that section 34(3) was general in its application and prescribed a period of limitation for every order of assessment or reassessment, other than an order under section 23 to which clause (c) of sub-section (1) of section 28 applied, or an order of assessment or reassessment in cases falling within clause (a) of sub-section (1) and sub-section (1A) of section 34. The argument advanced in that case was that section 23A before the amendment was merely a computation section, but after amendment it had become an assessment section. It was als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act with different connotations. I shall, however, refer to this decision in another connection, later in this judgment. The next case relied upon by Mr. Sen was also another decision of the Supreme Court in S. S. Gadgil v. Lal Co., in which it was held that the period prescribed by section 34 of the Act was not a period of limitation and that the section in terms imposed a fetter upon the power of the Income-tax Officer to bring to tax escaped income. This section, it was held, prescribed different periods in different classes of cases for enforcement of the right of the State to recover tax. It was further held that a proceeding for assessment was not a suit for adjudication of a civil dispute and the income-tax authorities, who had the power to assess, and recover tax were not acting as judges deciding a litigation between the citizens and the State, but that they were administrative authorities whose proceedings were regulated by statute, and whose function was to estimate the income of the taxpayer and to assess him to tax on the basis of that estimate. The next case relied upon by Mr. Sen was a decision of the Allahabad High Court in Ram Bilas Kedar Nath v. Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment within a period of eight years, and where he had reason to believe that an under-assessment had resulted from other causes, he should have jurisdiction to start proceedings for reassessment within four years ; and both these conditions must co-exist before the Income-tax Officer had jurisdiction to start proceedings after the expiry of four years. Relying upon this decision, Mr. Sen contended that the question of the bar imposed by section 34(3) was a question of jurisdiction of the Income-tax Officer to make an order under section 23A of the Act. The next contention of Mr. Sen was regarding scope of the writ of prohibition. He argued that a writ in the nature of prohibition should be issued as soon as the inferior tribunal proceeded to apply a wrong principle of law when deciding a fact on which the jurisdiction depended. In other words, he submitted that the petitioner was not bound to wait until an order was made by the Income-tax Officer, but was entitled to come to court for a writ in the nature of prohibition as soon as it became apparent that the Income-tax Officer was proceeding to make an order, when on the facts such an order could not be made. In support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come or the machinery for the assessment. After the amendment, an order under section 23A of the Act would be an order of assessment which would be subject to the bar provided in section 34(3) of the Act. The order proposed to be made would clearly be barred by the provisions in section 34(3) and, therefore, it was argued, the Income-tax Officer had no jurisdiction to issue the impugned show-cause notice. Mr. Gouri Mitter, learned counsel for the respondent No. 1, contended that the application is entirely misconceived. He argued that the application was not maintainable and in any event it was premature as no order had been made by the Income-tax Officer yet. All that the respondent No. 1 had done by the impugned notice, was to call upon the petitioner to show cause why an order under section 23A should not be made. The petitioner appeared before the respondent No. 1 through his representative, and agreed to show cause why the order should not be made, but instead of showing cause, he had, come to this court and obtained the present rule. The right to a writ under article 226 or the claim for such a writ, it was argued by Mr. Mitter, would arise only if the Income-tax Officer he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal to the Appellate Assistant Commissioner. It was contended before the appellate authority that some of the witnesses were not examined and that the evidence of other witnesses was not properly recorded. The appellate authority remanded the proceedings to the Income-tax Officer, and directed him to submit a report after examining the witnesses. After this Order of remand was made, the assessee was called upon to appear before the Income-tax Officer and produce his evidence. But instead of complying with this requisition, the appellant moved the Gujarat High Court on the writ petition mentioned above, but he also preferred an appeal from the assessment order of the Appellate Assistant Commissioner to the Income-tax Appellate Tribunal. Dealing with the contention raised on behalf of the appellant, the Supreme Court at page 418 of the report held as follows : " Mr. Pathak for the appellant attempted to argue that the notice issued against the appellant is, on the face of it, invalid, because it is barred by time. We did not allow Mr. Pathak to develop this point, because we took the view that a plea of this kind must ordinarily be taken before respondent No. 1 himself. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. The petitioner's only contention before this court was that as an assessment order under section 23A was barred by limitation under section 34(3) of the Act, the Income-tax Officer had no jurisdiction to issue the notice itself calling upon the petitioner to show cause why an order should not be made under section 23A of the Act. Mr. Mitter argued that the Supreme Court had expressly negatived this contention which was raised by the appellant in the above case and it was, therefore, not open to the petitioner to contend that the Income-tax Officer had no jurisdiction in the matter. Indeed, Mr. Mitter argued, the Income-tax Officer alone could come to a decision on the contention raised by the petitioner including the contention regarding the bar of limitation created by section 34(3) of the Act. Relying upon the two decisions of the Supreme Court, Mr. Mitter contended that the law is now well-settled, and there is no room for doubt that this court in exercise of its writ jurisdiction should not deal with the contentions raised by the petitioner regarding the bar of limitation created by section 34(3) of the Act. It was argued that it was not open to the petitioner to contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any such relief, and this court should not permit the petitioner to come to this court on a writ petition for relief when he could seek the same relief by pursuing the remedies provided by the Act itself. In support of this contention, reliance was placed by Mr. Mitter on the observations of the Supreme Court in C. A. Abraham v. Income-tax Officer to which reference has already been made earlier in this judgment. In that case the assessee was aggrieved by an order of the Income-tax Officer assessing certain suppressed incomes. A show cause notice was issued why penalty should not be imposed and, after considering the explanation of the assessee, various penalties were imposed. Appeals against the orders imposing penalty were dismissed, and thereafter the appellant applied to the Kerala High Court for a writ of certiorari. This application was rejected and thereupon an appeal was preferred to the Supreme Court. It was held at page 428 of the report as follows : " In our view, the petition filed by the appellant should not have been entertained. The Income-tax Act provides a complete machinery for assessment of tax and imposition of penalty and for obtaining relief in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which remain to be investigated by the revenue authorities. " Relying upon the two decisions of the Supreme Court discussed above, Mr. Mitter argued that no writ should be issued in this application and no relief should be granted to the petitioner, who had invoked the extraordinary jurisdiction of the court in a matter, in which the statute had provided the machinery for relief, if the order made by the revenue authorities was an improper order or the petitioner was otherwise aggrieved by such an order. It was argued that the law on the question whether, on a case such as this, writs and orders should be issued under article 226, has been settled by the Supreme Court by the two decisions mentioned above. It was further argued that there were no grounds in this petition why the court should give relief to the petitioner in exercise of its extraordinary jurisdiction under article 226 of the Constitution, when the Act provides for complete relief, if the petitioner was aggrieved by any order made against him. Mr. Mitter submitted that the instant case stood on a much stronger footing, because no order had yet been made by the income-tax authorities against the petitioner. The peti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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