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TMI Blog1972 (3) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing officer and, it was contended that only a sum of Rs. 25,631 incurred by the petitioner in connection with the marriage of his daughter should be taken into account for purpose of assessment under the Expenditure-tax Act. The Expenditure-tax Officer, however, was of the view that the expenses incurred by the sons from the assets allotted to them in the partition during the accounting year ending March 3, 1961, were also includible in the taxable expenditure of the assessee. In these circumstances the total taxable expenditure was determined at Rs. 70,851 and the expenditure-tax payable thereon at Rs. 41,851. On appeal, the petitioner was successful. The department preferred a further appeal to the Income-tax Appellate Tribunal, Madras. The Tribunal confirmed the Appellate Assistant Commissioner's order and gave relief to the assessee. The Tribunal's view was that the expenditure incurred by the assessee's sons was under their own obligation and not in respect of any obligation towards the assessee. The Tribunal's order dated March 3, 1965, remained unchallenged. On July 15, 1965, the Expenditure-tax Officer, proposed to reopen the assessment for the assessment year 1961-62, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded once that the proper section applicable to the subject-matter, is section 4(i) of the Expenditure-tax Act, it cannot turn round and contend that section 4(ii) is applicable and plead its own default in not applying the correct section as a ground to start reassessment proceedings. In this view the interdict against further processing of the notice is justified. As a writ of prohibition is asked for, I am not inclined to go into the merits, since the assessee, if he fails in these proceedings, will still have an adequate opportunity to place such material before the department and get an adjudication thereon. The only question which has to be decided is whether a writ of prohibition should issue and the respondent be injuncted at the threshold from proceeding with the enquiry as initiated by him under the challenged notice. Writ of prohibition is not a writ of right, nor is it issued as a matter of course. The circumstances which normally warrant the issue of such an extraordinary rule is the discovery of want of jurisdiction or an attempt to usurp jurisdiction when the quasi judicial tribunal has none and when it is against all principles of natural justice. The question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eable to tax has escaped assessment in any assessment year. Section 16(a) provides for a particular circumstance whereunder such a reopening can be undertaken. Section 16(b) provides for such invocation of jurisdiction notwithstanding section 16(a). Therefore, if there is information and in consequence thereof the assessing officer entertains a reasonable belief that there has been an escapement of assessment, he has the jurisdiction under section 16(b) to issue the notice and proceed with the enquiry. The case of the petitioner is that, as the earlier proceedings which concluded in a final order of assessment proceeded on the footing that it was section 4(i) that was applicable and as the department also based its contentions on the said basis, the consequential order of the Income-tax Appellate Tribunal passed in 1965 has become final and, therefore, the same subject-matter cannot be seen once again for purposes of re-adjudication as it is prohibited on the principle of res judicata. Reliance is placed upon the decision in Commissioner of Income-tax v. Rao Thakur Narayan Singh. That was a case where the Supreme Court said that the taxing officers cannot reopen final decisions ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of it. It cannot be said that as a result of such information in his possession, he cannot reasonably believe that the expenditure chargeable to tax has escaped assessment. This is not a case where he changed his mood or opinion, but this is a case in which he is bona fide channelising his action within the compass of statutory provisions and if he does act in the way he purports to do in this case, it would not be proper to injunct him at this stage by the issue of a rule of prohibition. But, the argument is that on the earlier occasion the revenue took up a definite stand that the expenditure was includible and chargeable under section 4(i) and it was in the conspectus of such events that the proceedings culminated finally with the decision of the Income-tax Appellate Tribunal. It is urged that the earlier stand that the expenditure was chargeable under section 4(i) cannot lightly be given the go-by and section 4(ii) invoked for purposes of reassessment. Sub- sections (i) and (ii) of section 4 of the Expenditure-tax Act projects two different situations. If by a wrong application of a statutory provision a conclusion or decision is arrived at and if it is discovered later th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act of 1961. On this subject eminent judges have entered the labyrinth by the same path but came out through different avenues. The abundance of judicial authority on this subject which sometimes appear to be varying in scope has certainly set guidelines which can be usually applied. Precedents on this subject are so many that I am inclined only to consider a few so as to appreciate the contentions of parties. At one time it was thought that the power to reassess was available to the revenue only in a case where the record projects a lacuna attributable to a cause or circumstance other than that referable to the conduct of the revenue. The above observation, of Jagannadhadas J. in Chatturam Horliram Ltd. v. Commissioner of Income-tax has been fully explained in a later decision in Maharaj Kumar Kamal Singh v. Commissioner of Income-tax. The Supreme Court, in the latter case, said: " ..... 'escape' in section 34(1)(b) was not confined to cases where no return had been submitted by the assessee or where income had not been assessed owing to inadvertence or oversight or other lacuna attributable to the assessing authorities ; even in a case where a return had been submitted, if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompetent. In Anandji Haridas and Co. (P.) Ltd. v. S. P. Kushare, Sales Tax, Officer, Nagpur , the Supreme Court confirming its earlier view in Commissioner of Income-tax v. Narsee Nagsee and Co. said : " All these cases show that the words 'escaping assessment' apply equally to cases where a notice was received by the assessee but resulted in no assessment at all and to cases where due to any reason no notice was issued to the assessee, and, therefore, there was no-assessment of his income. " In the very same decision the Supreme Court reiterated the principle that " information " includes information as to the true and correct state of the law and so would cover information as to the relevant judicial decisions as well. In fact, in Salem Provdent Fund Society Ltd. v. Commissioner of Income-tax our High Court was of the view that if a mistake in the original order of assessment is brought to the notice of the Income-tax Officer by a superior officer, even that would appear to be information disclosed to the Income-tax Officer. The only interdict evolved, again by precedents, against the invocation of such a power to revise, appears to be that in the first instance all cogent mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws the fact, and it cannot be limited to any particular person, body or authority since such fact may be within the knowledge or possession of any one and it may be received by the Income-tax Officer from any source. But, in the case of information as to the correct state of the law, the external source from which it may be received must necessarily be of a limited character. Though it may not be possible to define precisely the cases where intimation received by the Officer as to the correct state of the law may be regarded as information, opinion as to the state of the law by any and every, person cannot constitute ' information ' for the purpose of the section. It must be a statement or the expression of the correct state of the law by a person or body or authority competent and authorised to pronounce upon the law so that it is invested with some definiteness and authority. " In the conspectus of such well laid theories as to reopening of assess- ments, the question for consideration in the instant case is whether the supervening judicial precedents, which are bound to be noticed by the assessing authority and which are admittedly pronounced by appropriate and competent tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court had once again the opportunity to consider the content of the word " information ". They said : " The opinion of the Central Board of Revenue regarding the correct valuation of the securities for purposes of estate duty expressed in an appeal prepared by the accountable person, is 'information' within the meaning of section 59 of the Estate Duty Act, 1953, as amended by the Estate Duty (Amendment) Act of 1958, on the basis of which the Controller can entertain a reasonable belief that property assessed to estate duty has been under-valued. " The force of the march of law as compiled above does not prompt me to make the rule nisi absolute. But Mr. Swaminathan forcibly contends that the Income-tax Officer is expected to know the taxing law and he ought to have applied the correct provision of law. Ignorance of law undoubtedly is no excuse. But misapplication of law is not inexcusable. The result of misapplication of law is that an error by inadvertence has been committed. In such circumstances, the error can be corrected in a manner known to law. It is impossible to compel one who is unwilling to disobey law to contravene it. If, therefore, section 4(i) was mistakenly i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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