MIR SUBA HARI BHAKTA Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) BY this petition under article 226 of the Constitution, after incorporation of the amendment which was sought by the petitioner, the main relief sought is the issue of a writ, order or direction in the nature of a writ of certiorari quashing the assessment order dated February 23, 1959, passed by the opposite party, the Income-tax Officer, A" Ward, Dehra Dun. This order of assessment relates to the assessment year 1950-51. For that assessment year no notice under section 22(2) of the Income-tax Act was issued to the petitioner. A general notice under section 22(1) had been issued as usual. Some time at the end of the year 1954, the Income-tax Officer sought the permission of the Commissioner of Income-tax to take action under section 34 of the Income-tax Act against the petitioner. Before, however, any proceedings under that provision of law could be initiated, the petitioner, on January 1, 1955, filed a return of his income in respect of the assessment year 1950-51. This return was obviously filed under section 22(3) of the Income-tax Act, as up to that date no order of assessment had been made in the case of the petitioner in respect of the assessment year 1950-51. The Income-tax Officer, however, ignored the return and, having obtained the sanction of the Commissioner, he proceeded to issue notice under section 34(1) of the Income-tax Act to the assessee. He then took proceedings in pursuance of that notice and made an order of assessment. That order was taken up in appeal to the Appellate Assistant Commissioner and then to the Income-tax Appellate Tribunal. The Tribunal accepted the appeal and set aside the proceedings under section 34 on the ground that those proceedings were void, having been taken after the return had been filed under section 22(3) of the Income-tax Act. The Commissioner of Income-tax then moved the Tribunal to refer the question of law to the High Court as to whether the proceedings under section 34 of the Income-tax Act were valid or void in view of the return having been filed under section 22(3) of the Income-tax Act. It was at this stage that the opposite party started proceedings for assessment of the petitioner under section 23 of the Income-tax Act on the basis of the return that had been filed by the petitioner under section 22(3) of the Act on January 1, 1955. He issued two notices to the petitioner - one under section 22(4) and the other under section 23(2) of the Income-tax Act to appear and produce or to arrange for production of certain account books in connection with the assessment proceedings. Both these notices were issued on February 13, 1959, fixing February 20, 1959, for the production of the documents. The petitioner has stated that he was out of station, and consequently he sought adjournment, which was granted to the extent that the datu for production was shifted to February 23, 1959. On that date the petitioner did not appear. Thereupon, the Income-tax Officer proceeded under section 23(4) to make assessment. Against that assessment the petitioner filed an appeal before the Appellate Assistant Commissioner which is still pending. He also moved an application under section 27 of the Income-tax Act before the Income-tax Officer to set aside the assessment made and to make a fresh assessment under section 23(3) of the Act. It is in these circumstances that the petitioner has comn up to this court by this petition seeking an order or writ quashing the order of assessment which was made by the opposite party on February 23, 1959, under section 23(4) of the Income-tax Act.

(2.) THE principal ground on which the writ is sought from this court is that the order of assessment was made beyond the period of limitation prescribed in section 34(3) of the Act and was, therefore, void in law. This is a ground which is to be examined in detail.

(3.) IN the present case, the INcome-tax Officer, opposite party, held in the order of assessment itself that the order which he was making was one to which clause (c) of sub-section (1) of section 28 did apply. This was held by him for the reason that the petitioner had concealed the particulars of income in respect of one item of Rs. 1,00,000 and also in respect of another item of Rs. 12. It was urged by learned counsel for the petitioner before us that this finding of the INcome-tax Officer that the petitioner had concealed the particulars of his income in respect of these two items was incorrect and, in exercise of our writ jurisdiction under article 226 of the Constitution, we are competent to re-examine the question and decide whether the decision given by the INcome-tax Officer is correct or incorrectu It was urged that, on the determination of this question depended the decision of the question as to whether the INcome-tax Officer acted in exercise of jurisdiction vested in him or in excess of that jurisdiction. This contention raised before us ignores the circumstance that the limitation prescribed by section 34(3) of the INcome-tax act does not govern the jurisdiction of the INcome-tax Officer to take quasi-judicial proceedings for assessment, but merely governs his power to pass an order of assessment. As has beef held earlier, the proceedings for assessment which were being taken under sections 22 and 23 of the INcome-tax Act on the return which had been filed by the petitioner under section 22(3) of the INcome-tax Act were not barred by time or otherwise illegal. While taking those proceedings the INcome-tax Officer was already functioning as a quasi-judicial tribunal so that he was competently seized of quasi-judicial proceedings. The proviso relating to limitation contained in section 34(3) of the INcome-tax Act was only a limitation on his power to make an order of assessment and did not affect his jurisdiction to continue the proceedings under section 22 and 23 of the INcome-tax Act. This was, therefore, a case where the INcome-tax Officer was rightly and competently dealing with the quasi-judicial proceedings and the law merely laid down limitation on his power to pass a particular order in those proceedings. The limitation was that he could not make an order of assessment ordinarily beyond four years from the end of the year of assessment or, in case where clause (c) of sub-section (1) of section 28 applied, beyond a period of eight years from the end of the year of assessment. IN order to see whether this limitation did or did not affect his power, he had to record a finding whether clause (c) of sub-section (1) of section 28 did or did not apply to this case. He did record that finding and this finding record by him, whether it be right or wrong, was a finding which he was required to give and which he could give in exercist of the jurisdiction which he was already exercising in dealing with the proceedings for assessment. The finding which affected this question of limitation was, therefore, a finding which he had to record in exercise of the jurisdiction which he was already exercising validly and was not a finding of a collateral fact which might have affected the jurisdiction to take proceedings altogether. The point he had to decide was, therefore, one which was intrinsic to the exercise of jurisdiction already vested in him and was not an extrinsic or collateral point which required decision so as to permit the exercise of jurisdiction or take away his jurisdiction. The law laid upon the INcome-tax Officer himself the duty of recording a finding, and the finding having been recorded in exercise of jurisdiction vested in him, it cannot be said that the recording of the incorrect finding had the result of enabling him to exercise jurisdiction not vested in him, so that in this case no question arises in the petitiop before us of setting aside the order of the INcome-tax Officer on the ground of want of jurisdiction or on the ground that he had exercised jurisdiction in excess of that vested in him. The point that is being challenged by the petitioner is one which the INcome-tax Officer was required to decide in exercise of jurisdiction vested in him and the jurisdiction of the INcome-tax Officer on such a point could be challenged under article 226 of the Constitution only on the ground that it suffered from a manifest error apparent on the face of the record. IN this connection, reliance is placed on two recent decisions of the Supreme Court in Nagendra Nath Bora v. Commissioner of Hills Division, 1958 SCR 1240 and Appeals, Assam, and Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale, 1960 1 SCR 890. It does not appear to be necessary to refer to earlier decisions of the Supreme Court or of other courts, as in these two latest cases the Supreme Court has fully clarified all the earlier decisions. IN the case of Nagendra Nath Bora v. Commissioner of Hills Division, 1958 SCR 1240 and Appeals, Assam, it was held that :