TMI Blog1966 (10) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 1956, was, Consequently, a valid order and was not barred by time. In the circumstances, the answer returned by the High Court to the two questions referred to it has to be held to be incorrect. Both the questions have to be answered against the assessee and in favour of the Commissioner of Income-tax, so that the answer returned by the High Court to the two questions is set aside, the first question is answered in the affirmative, and the second in the negative. Appeal allowed. - - - - - Dated:- 3-10-1966 - Judge(s) : V. RAMASWAMY., J. C. SHAH., V. BHARGAVA JUDGMENT The judgment of the court was delivered by BHARGAVA J.----The assessee in the proceedings out of which this appeal has arisen was Bidhu Bhushan Sarkar, who died and is now represented in these proceedings through his legal representative. The assessee used to be assessed by the Income-tax Officer of District 24-Parganas in Bengal. For the assessment year 1947-48, the assessee filed a voluntary return before the Income-tax Officer on December 22, 1947, showing a net loss of Rs. 330. This return was filed without any notice under section 22(2) of the Income-tax Act having been served on him. Before any p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 34 culminated in an order of assessment by the P.I.T.O. under section 34(4) passed on 31st January, 1953. The assessee filed an appeal against that order of assessment and when the appeal came up, the P.I.T.O. himself drew the attention of the Appellate Assistant Commissioner to the fact that he had no jurisdiction over the assessee as there was already a file of the assessee with the A.I.T.O. He, therefore, requested that the assessment should be set aside as it was void ab initio. The Appellate Assistant Commissioner accepted this request of the P.I.T.O., set aside the assessment on 7th December, 1955, and made a direction that the assessment could be completed according to law by the officer having proper jurisdiction over the case. Thereafter, on the 30th December, 1955, the Commissioner of Income-tax made an order transferring the case of the assessee from the A.I.T.O. to the P.I.T.O. These was an appeal by the assessee against the direction of the Appellate Assistant Commissioner that the assessment should be completed by the officer having proper jurisdiction over the case. That appeal was allowed by the Income-tax Appellate Tribunal on the 23rd April, 1957, and the direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The assessment was, therefore, held to be barred by limitation on the ground that it should have been completed by 31st March, 1956. This appeal has now been brought up to this court by the Commissioner of Income-tax, Calcutta, on a certificate granted under section 66A(2) by the High Court. It appears in this case that at one stage there was a contest between the parties as to whether the notice dated 23rd February, 1950, was validly issued under section 34 or not. Even before the High Court it seems that some attempt was made on behalf of the assessee to raise the question that the notice dated 23rd February, 1950, under section 34 was invalid on the ground that it was issued without completing the assessment on the voluntary returns submitted on December 22, 1947, and March 31, 1949. On behalf of the Commissioner, the contention before the High Court was that, on the question referred to the court, it was not open to the assessee to raise this contention. The objection raised by the Commissioner was rightly accepted by the High Court. It is plain from the two questions referred to the High Court that the High Court was not called upon to express any opinion about the valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 22nd December, 1947, related) should be taken in the assessment of the military contract income for which there was another file. This remark recorded by him in his order gives clear indication that he felt at that stage that it would not be right for him to continue the proceedings which were pending before him, obviously because another proceeding for assessment of the same assessee was pending before his senior officer, viz., the P.I.T.O. He, therefore, ordered the case to be filed. In making this order, the only intention the A.I.T.O. could have was that the proceedings before him should no longer remain in existence as being unnecessary proceedings. The very income which he was called upon to assess to tax was to be taken into account by his senior officer and, therefore, he felt that he should not continue simultaneous proceedings for the same purpose as the proceedings before his senior officer. In ordering that the case be filed, therefore, he clearly intended that the proceedings before him should be terminated or dropped. There is no indication in the order that what the A.I.T.O. intended was that the proceedings before him should continue to remain pending and sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Officer accepted the return and assessed the income as " nil ". In that case, thus, the order " no proceeding " was interpreted in the light of the circumstances in which that order was passed. In the case before us, the order directing that the case be filed has to be similarly interpreted in the circumstances in which it was passed; and, as we have indicated above, the only proper interpretation is that the A.I.T.O. intended to conclude the proceedings before himself in view of the fact that proceedings were going on before his senior officer. Our attention was also drawn to a decision of the Calcutta High Court in Income-tax Reference No. 128 of 1961, Haji Mohamed Mian v. Commissioner of Income-tax, in which judgment was delivered on February 23, 1965. In that case also, proceedings had begun on the basis of a notice under section 22(2) of the Income-tax Act, and, at a later stage, the Income-tax Officer ordered that the proceedings be filed on the ground that no return had been filed by the assessee in response to the notice. The order of the Income-tax Officer was interpreted as amounting to dropping of the proceedings, and it was further held that the dropping of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by him. Even an invalid order terminating proceedings has the effect of terminating them; and in such a case, the appropriate method for correcting the illegality committed is to have that order vacated by appellate or other higher authorities having jurisdiction to intervene. As long as the order is not set aside, it remains in force and takes full effect. The order was not totally without jurisdiction; at best it was an order not contemplated by law and it could not be treated as a non-existent order. In the present case also, the order of the A.I.T.O. directing that the case be filed could have been set right on appeal, or by a reference to the High Court, in case the Tribunal refused to correct it. While it was not set aside, the only conclusion possible is that the proceedings before the A.I.T.O. terminated and did not any longer continue to remain pending. The High Court, in dealing with this question, proceeded on the further basis that when the order of transfer was made by the Commissioner of Income-tax on 30th December, 1955, this proceeding must have been treated as pending, because, otherwise, the order of transfer would not relate to any pending case at all. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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