DOSHI P C Vs. 7TH ITO

JUDGEMENT

(1.) THIS is petition challenging the orders made by the respondent, the 7th Income-tax Officer, C-I Ward, Bombay, under section 35(8) and 35(7) of the Indian Income-tax Act, on the 23rd February, 1961, and on the 15th March, 1961, respectively, in relation to the assessment of one Chaturbhuj Sunderji Doshi for the assessment years 1950-51 and 1951-52 for which the relevant previous years were S. Y. 2005 and 2006 respectively. Chaturbhuj Sunderji Doshi died on the 21st of March, 1963, and the petitioners are the executors of his estate. Until his death the said Chaturbhuj Sunderji Doshi was assessed as an individual. In the relevant years with which we are concerned, he held certain shares in Bharat Silk Mills (Pvt.) Ltd., a company to which the provisions of section 23A of the Indian Income-tax Act were applicable. On the 5th March, 1955, the Income-tax Officer, Companies Circle, passed an order under section 23A(1) upon the said company for the assessment year 1949-50, as the said company had declared dividend, which was below 60% of its assessable income According to the said order, the share of Chaturbhuj Sunderji Doshi in the dividend which was deemed to have been distributed was determined at Rs. 37,148. The said order made on the 5th March, 1955, was subsequently rectified by the Income-tax Officer, Companies Circle, had given intimation of the original as well as the rectified order under section 23A made on the company to the respondent, who was dealing with the individual assessment of Chaturbhuj Doshi. The intimation of the original order was given on the 13th April, 1955, and of the rectified order on the 28th December, 1955. The respondent completed the assessment of Chaturbhuj Doshi for the assessment year 1951-52, on the 31st December, 1955, but he failed to include therein the share of the dividend deemed to have been distributed. However, subsequently, on the 24th February, 1956, he intimate to Chaturbhuj Doshi that he proposed to rectify the assessment order made by him under section 35 of the Act so as to include therein a sum of Rs. 31,568 which represented his share in the dividend of the Bharat Silk Mills (Pvt.) Ltd., which was deemed to have been distributed under the order under section 23A on that company. On the 5th of March, 1956, the respondent rectified the original assessment as had been proposed by him. The assessee, Doshi, had filed an appeal against the order of assessment made against him, and in the said appeal he also raised a contention with regard to the rectification made in the original assessment by the respondent. The Appellate Assistant Commissioner dismissed the appeal as against the original assessment and as to the assessee's contention with regard to the rectification, he did not entertain the same on the ground that it did not form part of the assessment order the same on the ground that it did not form part of the assessment order appealed against. In the further appeal taken by the assessee, Doshi, to the Income-tax appellate Tribunal, it was pleased to take the view that the order of rectification was in effect an order of assessment, and, consequently, formed a part of the assessment order which was appealed against, and hence it was incumbent on the Appellate Assistant Commissioner to have gone into the contention raised by the appellant assessee on merits. In that view of the matter, it set aside the order passed by the Appellate Assistant Commissioner relating to the remanded the case back to him for decision on merits. On remand the Appellate Assistant Commissioner passed an order on the 22nd October, 1962, holding that the Income-tax Officer was not justified in including the said dividend in assessment under section 35 of the Act and directing that the amount should be deleted from the assessment. Now, in the mean while, proceedings under section 34 of the Act were initiated against Bharat Silk Mills (Pvt.) Ltd. as a result of which a revised order under section 23A read with section 35(7) of the Act came to be made upon the company on the 30th January, 1958, under which the total income of the company was enhanced, resulting in the share of Chaturbhuj Sunderji Doshi in the dividend deemed to have been distributed correspondingly increasing to Rs. 41,665. After receipt of the intimation of this revised order against the company, the respondent intimated to the assessee, Doshi, on the 6th May, 1959, that he proposed to rectify his assessment for the year 1951-52 under section 35(7) to give effect to the Tribunal's order dated 30th March, 1959, and thereafter on the 15th March, 1961, he passed the order under section 35(7) including the sum of Rs. 41,665 as deemed dividend in the assessment of Doshi. THIS is one of the two orders which is challenged in the present petition. After the said order was passed the assessee, Doshi, made an application under section 35 of the Act for rectification of the mistake apparent on the face of the record. THIS application was allowed to the extent of deleting the addition of Rs. 42,090 which appears to have been wrongly added to the income of the assessee. THIS rectification order which was made on the 1st September, 1963, was served on the petitioners on the 24th January, 1964, as the executors of the estate of the deceased, Chaturbhuj Sunderji Doshi, who had died pending the proceedings on 21st March, 1963, and it was follows by a notice of demand on the 20th February, 1964. The petitioners have asked for the setting aside of this notice of demand also and have prayed for a prohibitory order restraining the respondent from taking any further proceedings in pursuance thereof.

(2.) AS against the assessment made on Chaturbhuj Sunderji Doshi for the assessment year 1950-51, he had appealed to the Appellate ASsistant Commissioner. In the said appeal, which was decided on the 13th January, 1961, the Appellate ASsistant Commissioner gave certain directions to the respondent. While carrying out the said directions, the respondent by his order dated 23rd February, 1961, included a sum of Rs. 41,262 net as the assessee's share of the dividend deemed to have been distributed by the company for the S. Y. 2005. On the 18th January, 1963, the assessee, Doshi, requested the Income-tax Officer to delete the said addition and rectify his order but the said request was refused by the order made by the respondent on the 24th April, 1964. The petitioners have challenged the orders passed by the respondent on the 23rd February, 1961, and 24th April, 1964, and have prayed for an appropriate writ for quashing the same.

(3.) IN the petition itself no explanation has been sought to be given by the petitioners as to the delay nor any grounds urged why the petition should to be rejected on that ground. Mr. Trivedi, the learned counsel, who appears for the petitioners, has urged before us three reasons for condoning the delay. He has urged, in the first place, that the orders complained of being patently without jurisdiction, the delay on the part of the petitioners in coming to the court should not come in their way of obtaining a writ of certiorari for quashing the orders, which are illegal and without jurisdiction, or for obtaining a writ of prohibition preventing further action being taken in pursuance of the said orders. Secondly, he says that since action under the said orders by issuing the notice of demand was not taken until recently, it could not be said that there has been any under delay on his part in coming to the court. It is argued by him that, since the orders passed by the respondent were without jurisdiction, he could wait until an effective threat had arisen as a result of any action, which would harm him was taken by the respondent in pursuance of the said orders and, since such effective step could be said to have been taken only when the said notices of demand were issued to him, the petition filed by him does not suffer from any delay. Thirdly, he argues that, since after the passing of the orders in 1961, he had applied for the rectification of the orders, the time taken in prosecuting the said remedy should be allowed in considering the delay which had occurred in coming to this court against the said orders and if that time is excluded his present petition does not suffer from a gross delay at any rate.