PILANI INVESTMENT CORPORATION LTD. Vs. INCOME TAX OFFICER, "A" WARD, COMPANIES DIST. II, AND ANOTHER.

JUDGEMENT

(1.) IN the application the petitioner seeks appropriate writs and orders directing the respondents, their servants and agents to recall show -cause notice dated May 13, 1964, and to forbear from giving effect to the same.

(2.) THE main contention of the petitioner is that an order under Sec. 23A of the Act is an order of assessment or reassessment within the meaning of the said Act, including Sec. 34(3) thereof. It is next contended that, assuming that Sec. 23A of the Act is attracted, the petitioner first became assessable under this Sec. during the assessment year 1955 -56 which ended on March 31, 1956. Under the provisions of the said Sec. 34(3), the respondent No. 1, it is contended, has no jurisdiction to make any order of assessment or reassessment after the expiry of four years from April 1, 1956. It was, therefore, argued that the respondent No. 1 had no jurisdiction to assess or reassess the petitioners profits or gains on the basis of the impugned notice dated May 13, 1964. It is for this reason that the petitioner contends that the respondent No. 1 should be directed to cancel or withdraw the said show cause notice dated May 13, 1964. In other words, the petitioners contention is that because no order can be made by reason of the bar imposed by Sec. 34(3) of the Act, the issue of the said show cause notice by the respondent No. 1 is illegal, and this notice should, therefore, be cancelled or withdrawn or quashed. The further contention of the petitioner is that the issue of the said show cause notice by itself is an act in excess of the jurisdiction of the respondent No. 1 and, therefore, appropriate writs should be issued prohibiting any further action on the basis of the said impugned notice.

(3.) IN respect of the above contention, Mr. Sen, firstly, relied upon a Bench decision of the Gujarat High Court in Navanagar Transport and Industries Ltd. v/s. Income Tax Officer, Special Investigation Circle A. In that case also the Income Tax Officer issued a notice calling upon the assessee why an order under Sec. 23A should not be made against the assessee. The point regarding the bar of limitation imposed by Sec. 34(3) of the Act, however, was not taken before the Income Tax Officer, who held against the assessee, and, thereafter, the matter went to the Inspecting Assistant Commissioner for his approval, under sub -section (8) of Sec. 23A of the Act, and it was before the Inspecting Assistant Commissioner that the assessee urged the ground regarding the bar imposed by Sec. 34(3) of the Act to an order being made under Sec. 23A. But, before the Inspecting Assistant Commissioner could decide whether he should grant or refuse relief, a writ petition was filed for appropriate relief. One of the grounds urged before the court was that Sec. 34(3) imposed a bar to an order under Sec. 23A. A second ground however was also urged, namely, that the assessee had no commercial profits in respect of which it could be asked to make a further distribution, and if such distribution was ordered, it would amount to distribution of capital, which would be contrary to law. With regard to this second contention, it was held that there was an adequate alternative remedy provided by the Act and this remedy must be pursued by the assessee. It was held that if the assessee failed before the Income Tax Officer on this second ground, it could carry the matter in appeal before the Appellate Assistant Commissioner, and thereafter to the Tribunal and finally, to the High Court on a reference under Sec. 66, if a question of law arose out of the order of the Tribunal. This remedy, it was held, was a specific and adequate alternative remedy available to the assessee, and such remedy must be pursued. On this first ground mentioned above, however, it was held that Sec. 34(3) was general in its application and prescribed a period of limitation for every order of assessment or reassessment, other than an order under Sec. 23 to which clause (c) of sub -section (1) of Sec. 28 applied, or an order of assessment or reassessment in cases falling within clause (a) of sub -section (1) and sub -section (1A) of Sec. 34. The argument advanced in that case was that Sec. 23A before the amendment was merely a computation section, but after amendment it had become an assessment section. It was also argued that Sec. 23A after the amendment was a self -contained Sec. imposing liability to super -tax, and also providing for its computation and determination, and that when an order under the amended Sec. 23A was made it was an order determining the amount of super -tax payable by the company under that section. It was held that an order under Sec. 23A after its amendment by the Finance Act, 1955, was an order of assessment to which the period of limitation prescribed in Sec. 34(3) applied, and such an order could not, therefore, be made after the expiration of a period of four years from the end of the assessment year. In that view of the matter appropriate writs were issued for relief to the petitioner in that case. Relying upon this decision, Mr. Sen argued that the decision in this case was an authority for the proposition that an order under Sec. 23A of the Act could be made only if the bar imposed by Sec. 34(3) did not apply. But in this case, Mr. Sen argued, the assessment was clearly proposed to be made for a period beyond the period prescribed by Sec. 34(3) of the Act, and therefore the order could not be made, and the impugned notice to show cause also could not be issued.