TMI Blog1969 (8) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Officer, being the respondent No. 1 herein, held that the alleged sale of shares was the result of a concerted action between the sellers and the purchasers, both belonging to concerns controlled by the Bangur group and that the loss claimed did not arise in the normal course of the assessse's business and disallowed the claim for loss. It does not appear from the said order that the Income-tax Officer considered the claim for loss in respect of each particular transaction in shares. On appeal by the petitioner against the assessment order, the Appellate Assistant Commissioner, by his order dated the 11th December, 1964, allowed the entire claim for loss of Rs. 2,41,472 on the ground that the petitioner was a dealer in shares and that the Income-tax Officer had failed to establish that the loss did not arise in the normal course of its business. By his letter No. CCI/1967-68/105 dated the 19th April, 1967, the respondent No. 1, inter alia, purported to give notice to the petitioner under section 154 of the Income-tax Act, 1961, for rectifying the assessment for 1959-60 as the profit on the sale of the said bonus shares to the extent of the face value thereof, viz. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 33A and the Income-tax Officer may, at any tilme within four years from the date of any assessment order or refund order passed by him, on his own motion rectify any mistake apparent from the record of the appeal, revision, assessment or refund, as the case may be, and shall within the like period rectify any such mistake which has been brought to his notice by an assessee : Provided that no such rectification shall be made, having the effect of enhancing an assessment or reducing a refund unless the Commissioner, the Appellate Assistant Commissioner, or the Income-tax Officer, as the case may be, has given notice to the assessee of his intention so to do and has allowed him a reasonable opportunity of being heard," Similar provisions were originally enacted in section 154 of the 1961 Act. But by the Direct Taxes (Amendment) Act, 1964, sub-clause (bb) was introduced in subsection (1) and a new sub-section (1A) was enacted. Subsection (1)(bb) gave a similar power of rectification to the Inspecting Assistant Commissioner while sub-section (1A) provided as follows : " Where any matter has been considered and decided in any proceeding by way of appeal or revision rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability on the taxpayer, the Court observed : " It is clear that, when proceedings are taken for rectification of assessment to tax either under section 35(1) or section 35(5) of the Act of 1922, those proceedings must be held to be proceedings for assessment. In proceedings under those sections what the Income-tax Officer does is to correct errors in, or rectify orders of assessment made by him, and orders making such corrections, or rectifications are, therefore, clearly part of the proceedings for assessment. " The learned counsel also drew my attention to the relevant passage in Kalawati Devi Harlalka's case and submitted that, as rectification proceedings are part of the assessment proceedings, respondent No.1 could proceed, if at all, under section 35 of the 1922 Act, and the present notice must be held to be illegal being in excess of his jurisdiction. The next contention of Dr. Pal against the validity of the proceedings initiated by the impugned notice is that the issue and service of a valid notice under section 35 of the 1922 Act is the foundation of the jurisdiction of the Income-tax Officer to proceed thereunder and, as in this case the notice purported to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question of the cost of the bonus shares to the assessee was ever considered by either of these authorities. The Income-tax Officer rejected the claim as not being a genuine business loss while the Appellate Assistant Commissioner allowed the loss as a trading loss. I am inclined to agree with this part of Mr. Sen's argument. If Section 154(1A) of the 1961 Act is applicable to the impugned notice in this case, the Income-tax Officer must to be held to be entitled to act in accordance with that notice. The other submission of Mr. Sen that, in any event, the assessee has an alternative remedy by way of appeal to the Appellate Assistant Commissioner against the order of rectification when passed as provided for under the 1961 Act must be rejected forthwith. There is no provision in the 1922 Act for such an appeal and if that Act is held applicable to this case, the petitioner would have no remedy whatsoever against the order of rectification. Further, it is now well established that the mere existence of an alternative remedy is not a bar to an application under article 226. Mr. Sen referred me to a very recent decision of our appeal court (A. N. Ray and S. K. Mukherjea JJ. in G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t speaks of notice under that section as a part of the revenue jurisdiction. As long as an opportunity is given to the assessee to meet the case contemplated in section 35 of the 1922 Act the provisions are complied with. Counsel for the appellant relied upon the decision of the Supreme Court in M. Chockalingam and M. Meyyappan v. Commissioner of Income-tax in support of the proposition that only a notice under section 35 of the 1922 Act would invest the revenue with jurisdiction and a notice under section 154 of the Act of 1961 would not have a similar effect. The Supreme Court in Chockalingam's case said that a notice had to be sent to the assessee and he was to be given a reasonable opportunity of being heard as the statute itself enacted. The Supreme Court said that, if that opportunity was not given and if a fair hearing was not given, the proceedings would be, bad. The Supreme Court decision in Chockalingam's case does not lay down that a notice must be expressly under section 35 of the Act of 1922 to clothe the revenue with jurisdiction ...... In that view of the matter it has now to be considered as to whether the issue of a notice under section 154 of the Act of 1961 w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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