TMI Blog1980 (6) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ed January 23, 1968, proposing to rectify the same. The notice, however, purported to be under s. 154 of the I.T. Act, 1961. This was challenged in W.P. No. 2183 of 1968 before this court and a writ of prohibition sought. Further proceedings pursuant to that notice had been stayed by this court. In that writ petition it was represented for the department that action to rectify could be taken only under s. 35 of the Indian I.T. Act, 1922, and the proceedings taken should be taken as having been initiated thereunder. Consequent on such submission an application was filed to raise a ground that s. 35 of the Indian I.T. Act, 1922, was unconstitutional being violative of art. 14 of the Constitution in so far as it dealt with matters covered by s. 147(b) of the I.T. Act, 1961. This court did not go into this question but in the view that action could be taken only under s. 35 of the earlier Act and no order had yet been made, dismissed the writ petition reserving liberty to the assessee to challenge the order, if any, made against it on the said ground. Thereafter, the ITO, after affording an opportunity to the assessee, rectified the assessment by withdrawing depreciation allowance to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken against the petitioner under section 35 of the 1922 Act is discriminatory. The impugned order is, therefore, set aside." It is urged by Sri Rajasekhara Murthy, learned counsel for the appellant, that the conclusion reached by the learned judge is not correct and it is not at all clear how the decisions referred to applied to the facts in the instant case. He argued that the two sections, s. 35 of the Indian I.T. Act, 1922, and s. 147(b) of the I.T. Act, 1961, operated in different fields and there was no discrimination involved and in the instant case only s. 35 of the Indian I.T.. Act, 1922, could be applied. He pointed out that an additional affidavit had been filed on behalf of the department in Writ Petition No. 2193 of 1969, dated 23-7-1970, a copy of which was produced as Ex. I along with the counter-affidavit in the present case, from which it was clear that there was no information which could lead the ITO to reasonably believe that certain income had escaped assessment within the prescribed time to take action under s. 147(b) of the I.T. Act, 1961. That affidavit was to the effect that the scrutiny by the internal audit party had disclosed that excess depreciation h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose, scope or ambit of the provision is only to secure a correction of the error apparent on the record. It is thus clear that the two sections operate in different or distinct fields. In Sivagaminatha Moopanar Sons v. ITO [1955] 28 ITR 601, the High Court of Madras dealt with a contention that s. 28(1)(c) of the Indian I.T. Act for levy of penalty was an alternative for launching prosecution under s. 51 or s. 52 and art. 14 of the Constitution was violated as the IAC was vested with an unguided discretion to direct either proceedings for levy of penalty or a prosecution and held that there was no such vice involved. It was held (headnote): " Though in some concrete instances there might be overlapping between the provisions of s. 28 and the provisions of ss. 51 and 52, the two sets of provisions are directed to secure very different objects. Sections 51 and 52 have been enacted for vindicating public justice and for the punishment of the offender for deliberate infraction of the law. Section 28 is enacted for the purpose of rendering evasion unprofitable and of securing to the State compensation for damages caused by attempted evasion. In their nature the two remedies are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 947, dealt with all persons who had similar characteristics and the procedure prescribed under the 1947 Act was substantially more drastic and, therefore, prejudicial to the assessee and violated art. 14 and was void. This decision and several other decisions were considered by the Supreme Court in the case of Maganlal Chhagganlal (P.) Ltd. v. Municipal Corporation of Greater Bombay AIR 1974 SC 2009, and the position was summed up in para. 15 as follows: " Where a statute providing for a more drastic procedure different from the ordinary procedure covers the whole field covered by the ordinary procedure, as in Anwar Ali Sarkar's case [1952] SCR 284; AIR 1952 SC 75 and Suraj Mall Mohta's case [1954] 26 ITR 1 (SC) without any guidelines as to the class of cases in which either procedure is to be resorted to, the statute will be hit by article 14. Even there, as mentioned in Suraj Mall Mohta's case, a provision for appeal may cure the defect. Further, in such cases, if from the preamble and surrounding circumstances, as well as the provisions of the statute themselves explained and amplified by affidavits, necessary guidelines could be inferred as in Saurashtra case [1952] SCR 435; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there is no specific appeal against the dismissal of the application causes no prejudice to the assessee. The third case raises a controversy. But this appears to be only on the surface. On making an order under s. 35 what the ITO does is to amend the assessment or other order. If the assessment is amended that would amount to a fresh order and it appears that the assessee could appeal against the amended assessment if he considered himself prejudiced. Support for this is available in the observations of the Supreme Court in S.Sankappa v.ITO [1968] 68 ITR 760. In that case, the application of s. 35 in regard to assessments made under the 1925 Act was upheld. It was observed (p. 764) : It is clear that when proceedings are taken for rectification of assessment to tax either under s. 35(1) or s. 35(5) of the Act of 1922, those proceedings must be held to be proceedings for assessment. In proceedings under those provisions, 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." From the above observations, it is cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscriminated against. The facts and circumstances in Anandji Haridas and Co. (P.) Ltd. v. S. P. Kushare, STO [1968] 21 STC 326 (SC) relied on for the assessee were peculiar. The case arose under the C.P. and Berar Sales Tax Act. It was held that while action could be taken against a registered dealer both under s. 11(4)(a) and s. 11A of the Act in respect of escaped assessment, as far as unregistered dealers were concerned, action was possible only under s. II for the initiation of which there was a time-limit of 3 years and as that period of limitation was made inapplicable to proceedings under s. 11(4)(a) of that Act, by virtue of an amendment introduced as s. 11 A(3), the registered dealers alone were subjected to discrimination. It was in those circumstances that s. 11(4)(a) was struck down as violating art. 14. It had been contended that the classification between registered dealers and unregistered dealers was a rational one in the circumstances but that was not accepted. This decision has been referred to subsequently and distinguished in State of Gujarat v. Patel Ramjibhai Danabhai [1979] 44 STC 137 (SC), where the treatment of registered dealers and unregistered dealers ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
