M.G. Industries vs The Income Tax Officer

J.N. Bhat, J.—This is a writ petition preferred on behalf of Messrs. M.G. Industries against the Income tax Officer, B Ward. Jammu with

the following allegations.

The Petitioner is a business concern carrying on the business of manufacturing and sale of stainless steel articles, the present pariners of the

concern being P.K Bhadwar, O.P. Vehta and V.P. Mehta. The Petitioner tiled a return of loss in respect of the assessment bear 1961-62. The

Respondent by means of his order, dated 26-3-1966 did not accept the loss return presented by the Petitioner and assessed the income of the

Petitioner for the year in question levying a tax of Rs. 1,18,072/ 22 After this order was passed by the Respondent, a demand notice u/s 156 of

the Income tax Act of 1961 was issued against the Petitioner. For default three more notices under this very Act under Sections 273. 271(1) and

271(2) filed were also issued against the Petitioner. The Petitioner applied for stay of proceedings for imposition of the penalty as well us for the

realization of the Income Tax demand on 5-4-1966. The Respondent rejected that request of the Petitioner by his order, dated I2-4-1966.

The Petitioner applied to the Inspecting Asstt. Commr. of Income Tax. Jammu, on 12-4-1966. requesting him to grant the Petitioner the reliefs

refused by 'the Respondent, vide his order dated 12-4-1966, but even that officer did not grant the Petitioner any relief. The assessment order,

according to the Petitioner, is bad because the Respondent had no jurisdiction lo deal with a case wliere income for the first time was assessable at

more than Rs. 20.000 as the Income Tax Commr. Patiala. had determined the jurisdiction of the various income tax officers in Jammu and the case

of the present Petitioner could not be heard by the Respondent The Respondent had acted in breach of the rules of natural justice in holding

inquiries at the back of the Petitioner The Petitioner had filed an appeal on 16-4-1966 against the order of the Respondent, dated 26-3-1966

before the Appellate Asstt. Commr of Jammu The sum demanded from the Petitioner being a very huge one, and a no stay had been granted by

the Income Tax authority in favour of the Petitioner, be was compelled lo move this Court by means of a writ petition. The Respondent was further

incompetent in law to issue .a' notice for default u/s 27l(l)(c) where the minimum penalty for concealment is more than Rs. 10,000.

The grounds on which the writ is sought are:

that the Respondent had no jurisdiction to assess the Petitioner.

the Respondent had violated the principles of natural justice.

the Respondent ought lo have slaved the proceedings till the disposal of the appeal.

the Respondent could, not issue a notice for imposition of the penalty because the matter of imposition of the tax is vet undetermined,

that the discretion exercised by the Respondent was improper.

that the imposition of the tax and the basis of its calculation are wholly arbitrary and illegal.

that the Respondent was wrong in law for initialing and. completing penally proceedings till the final determination of the dispute,

that the Respondent himself determined the Income Tax on the Petitioner and therefore non-payment of advance fax is unimaginable.

that the proceedings against the Petitioner for not filing the return in time are wrong as this order is based on the original assessment order.

When the writ was presented, an application for stay of the operation of the order of the Respondent was made by the Petitioner. The Court on

admitting the writ ordered that there could be a stay for the realization of the amount of Rs. 1,18,000 on the Petitioner's furnishing substantial

security to the satisfaction of the District Judge . Jammu. According to the Respondent even this has not been done by the Petitioner On the other

hand the Petitioner filed an application in this Court on 13-8-1966 praying for the modification of the order for demanding security, and requesting

for pledge of the properly, situate at the Industrial Estate Gandhinagar. Jammu, instead of furnishing any other security.

The Respondent Mr. J.B. Malhotlra, income-lax Officer, B Ward, filed an affidavit in reply to this petition in which he admitted certain

allegations in the petition but denied the important ones. According to the Respondent the IAC had turned down the request of the Petitioner for

stay by means of his order, dated 29-4-1966. The Petitioner had submitted a return showing a loss of Rs. 1,132 u/s 22(1) the income shown by

the Petitioner was below Rs. 20,000 and therefore the Respondent had jurisdiction to dispose the case before him.

There was no violation of the principles of natural justice According to the Respondent, the Petitioner had been given an opportunity to substantiate

his pleas right from 17-1-1964 He has referred to a number of notices dated 17-1-1964. 1-2-1964, etc given lo the Petitioner which were replied

to by the Petitioner The Petitioner had been in regular correspondence with the Respondent. By means of his letter dated 30-5-1964, the

Petitioner sought an extension. The Petitioner filed two affidavits before the Respondent on 20-7-1904 giving fresh addresses of the persons riled

as witnesses. Another notice under Sections 23(3) and 143(3) on 24-4-1905 was given in the Petitioner. The Petitioner was given further

opportunity by means of a letter, dated 8-7-1965, and the last opportunity given lo the Petitioner to substantiate bis plea was by a notice, dated

10-3-1966. to which the Petitioner filed a reply on '20-8-1900 The writ petition did not lie as the Respondent had jurisdiction to decide the case.

On 11-7-1966 the Respondent put in an application supported by an affidavit raising three preliminary objections to the maintainability of the

will petition. They were to the elect that there was an alternative remedy for the Petitioner by means of an appeal which had already been resorted

to by him; (2) that no fundamental right was violated and (3) that no objection to jurisdiction was taken by the Petitioner before the Respondent

and therefore he could not be heard on the question of want of jurisdiction.

The Petitioner again replied this application of the Respondent filing a long rejoinder, dated 28-9-1966, which need not be reproduced in detail,

but will be referred to briefly at its appropriate place.

Very long and elaborate arguments were addressed before me in this case by the learned Counsel for the Petitioner. Although in my opinion this

writ petition can be disposed of very briefly by means of a very short order, yet as the case was argued at length shall have to consider the

arguments advanced It appears that the Petitioner filed a return of his income for the assessment year 1901-02 on 12-3-1902 showing a loss of

Rs. 1,132 for that year before the Respondent. The ease remained under investigation before the Respondent till 20-3-1906 when the Respondent

passed his final order demanding an Income Tax of Rs. 1.18,072.22 from the Petitioner, while at the same time issuing a notice to the Petitioner to

show cause against penalty for concealment of full particulars of income, for not filing an estimate of advance Income Tax and for tiling belated

return of income.

On 12-3-1962 the old Income Tax Act No. XI of 1922 was in force. The new Income Tax Act No. 43 of 1961 came into force on 1st April,

1962, which means that the return in this case was filed before the new Act came Into force Section 297(1) of the Income Tax Act of 1901

repeals the Income Tax Act No. 11 of 1922 However Sub-section (2) of this section says that notwithstanding the repeal of the Indian Income

Tax Act of 1922 (Act 11 of 1922) where a return of income has been filed before the commencement of this Act by any person for any

assessment year proceedings for the assessment of that person for that year may he taken and continued as if this Act had not been passed. This

Sub-section is very clear. Therefore proceedings before the Respondent relating to the present assessment would be governed by the provisions of

the Income Tax Act of 1922 and the 1901 Act would be deemed not to have been passed at all for purposes of this case.

I have mentioned this section to start with because in, my opinion a considerable portion of the arguments of the learned Counsel for the

Petitioner would become unnecessary and even uncalled for. The proceedings and the order passed would be deemed to be passed under the old

Article

The Respondent's Advocate's three objections relating to non violation of any fundamental rights, the existence of an alternative remedy and the

waiver of the objections' of jurisdiction have to be mentioned to start with. In my opinion the first two objections go to the merits of this writ

petition and would be discussed in detail later. The third objection as to the waiver of the objection of jurisdiction shall be taken up first. In my

opinion this argument of the learned Counsel for the Respondent has to be rejected. The Respondent's learned Counsel in this behalf referred me

to the following authorities:

C.A. Abraham, Uppoottil, Kottayam Vs. The Income Tax Officer, Kottayam and Another, , Shivram Poddar Vs. Income Tax Officer, Central

Circle II, Calcutta, and Another, ; R. Chinnaswami Naidu and Sons and Others Vs. First Income Tax Officer, Circle I, Coimbatore, : R.

Chinnaswami Naidu and Sons and Others Vs. First Income Tax Officer, Circle I, Coimbatore, , Thansingh Nathmal and Others Vs. A. Mazid,

Superintendent of Taxes, , N.T. Veluswami Thevar Vs. G. Raja Nainar and Others, ; LALA KAILASHPAT SINGHANIA Vs. Income Tax

OFFICER, KANPUR., ; Ramniranjan Kedia Vs. The Income Tax Officer, 'A' Ward, Udaipur and Others, : Ramniranjan Kedia Vs. The Income

Tax Officer, 'A' Ward, Udaipur and Others, , AIR 1945 9 (Federal Court) , Rai Bahadur Seth Teomal Vs. The Commissioner of Income Tax and

The Commissioner of Excess Profits Tax, ; TALCHAR SABAI GRASS TRADING COMPANY LTD. Vs. COMMISSIONER OF Income

Tax, BIHAR AND ORISSA., ; SARUPLCHAND AND HUKUMCHAND Vs. UNION OF INDIA AND ANOTHER.,

Before discussing some of these authorities, the facts of this case have to be kept in mind. The Petitioner Assessee filed a loss return on 12-3-

1962 showing a loss of Rs. 1.132. The proceedings were going on before the ITO Respondent till 26-3-1906. It was for the first time on that day

that the Respondent held that the income of the assessed for the relevant year had been Rs. 1,89,604 and thereupon levied an Income Tax of Rs.

1,18,072.22 on the Petitioner. Till this day the Assessee persisted, that he had not made any taxable income but had undergone a loss of Rs.

1,132 for that year. It was for the first time on that day namely 26-3-1966 that the income of the Petitioner was calculated at Rs. 1,89,004 After

that the Assessee had no occasion to raise the objection of jurisdiction before the ITO as after this order the ITO Respondent was fonts officio

It may however be necessary to state as to how the question of the want of juris diction of the Respondent is questioned. Under the new Act

No. 43 of 1961 in place of Section 64 of the old Act a new Section 124 has been enacted under Sub-section (1) of this section the Commr. of

Income tax exercising powers within certain limits has to define the areas or persons or class of persons or of such in comes or class of incomes of

the various Income tax Officers In pursuance of this new section the Commrs. of Income tax, Punjab, J and K and Himachal Pradesh has

determined the jurisdiction of the three Income Tax officers working in Jammu. They are Income Tax Officer, A Ward, the Income Tax Officer, B

Ward and the Income Tax Officer C Ward. According to this notification, dated 31-10-1963, the Income Tax Officer. A Ward, has to exercise

jurisdiction with respect to all the persons within the area of Jammu City. Cantonment, Industrial Estate, and Transport Yard, etc. where the last

assessed income as on 1-4-1963 exceeds Rs. 20,000 and in case there is no last assessed income on the said date, where the assessable income

on the first occasion is more than Rs. 20,000.

The Income Tax Officer. 13 Ward, has jurisdiction over all persons within the area of Jamrnu Cantonment, Industrial Estate, Transport Yard.

Lower Gumut, Canal Road, College Road, Jain Bazaar, Mubarik Mandi, Jullakah Mohalla, Pacca Danga, and the area to the south of Tawi

Bridge, etc., etc., other than tinisc assessable by the Income Tax Officer A Ward, Jammu. The argument of the learned Counsel for the Petitioner

is that as the income of the Petitioner has been assessed at more than Rs. 20,000 and it was admittedly the first occasion on which his income was

sought to be taxed, his case could be heard and disposed of by the Income Tax Office. A Ward. Jammu, and not the Income Tax Officer. B

Ward, who is the Respondent. As a considerable portion of the argument was addressed on the inherent want of jurisdiction it: the Respondent to

dispose of the case of the Petitioner, this matter will be discussed a raratelv. This argument of want of juris-siation advanced by the learned

Counsel for the Petitioner is sought to be counter-acted by the Counsel for the Respondent on the ground that as no question of jurisdiction was

raised by the Petitioner before the I.T.O., i.e., the Respondent within the period of limitation allowed. lie cannot be permitted to raise this objection

About the main objection whether there is want of jurisdiction on the part of the Respondent to dispose of the proceedings pending before him,

it will be considered separately, but as already indicated the absence of raising the plea of want of jurisdiction by the Assessee before the I.T.O.

and therefore this regal having been lost cannot arise in the circumstances of this case on the facts as men-boned above. However this argument of

the lamed Counsel for the Respondent is based on the authorities cited above. Briefly put the authorities in this behalf may be referred to.

R. Chinnaswami Naidu and Sons and Others Vs. First Income Tax Officer, Circle I, Coimbatore, says that if there are two or more I.T. Os

operating in the same jurisdiction, the Commr may distribute and allocate the work between them If. however, an I.T.O has got territorial

jurisdiction the mere fact that he deals with the file not allotted to him would be a more irregularity

In LALA KAILASHPAT SINGHANIA Vs. Income Tax OFFICER, KANPUR., , the Allahabad High Court held that in a writ petition to

the High Court the Petitioner has to make out a case, not only of an error of law having been committed by the subordinate authority or officer

however grave the error might be, or of want of jurisdiction, even though there may be total absence of jurisdiction, but he has in addition, to show

that manifest injustice has been done to him and injustice will be perpetrated if relief is not granted.

This authority however lays down that if there is an alternative remedy by way of an application in revision to the Commr. the writ will not be

entertained by the High Court.

In TALCHAR SABAI GRASS TRADING COMPANY LTD. Vs. COMMISSIONER OF Income Tax, BIHAR AND ORISSA., , it was

held that where no objection to the place of assessment or to the assessing officer was raised by an Assessee before a I.T.O., the appellate

authorities would be entitled to overrule the attempt of the Assessee to raise it after the assessment had been made. It was further held that an

objection as to the place of assessment cannot be raised for the first time in appeal against the assessment after the assessment had been made

A Full Bench of the M. B. High Court in SARUPLCHAND AND HUKUMCHAND Vs. UNION OF INDIA AND ANOTHER., , held

that an objection as to the place of assessment must be specific and Section 64(3) becomes operative only when a question as to the place of

assessment arises. . . ."" Similarly the Federal Court in AIR 1945 9 (Federal Court) , observed: that the provisions of Section 64(3) clearly indicate

that the question as to the place of assessment is more one of administrative convenience than of jurisdiction and that in any event it is not one for

adjudication by the Court. The scheme of the Act does not contemplate an objection as to the place of assessment being raised in appeal against

assessment after the assessment has been made.

In Gourhari Rice Mill Vs. Commr. of Income Tax, , it was held where an Assessee not a resident of British India submits to the jurisdiction of

an I.T.O. by filing a return through an agent in British India, the second proviso to Section 64(3) of the Act is a complete bar to his raising any

objection in regard to the jurisdiction of the I.T.O. to make the assessment.

Similarly in Firm Rasulji Buxji Kathawala Vs. Income tax Commissioner, Delhi and Another, , Wan-choo, C.J"" delivering the judgment of a

Division Bench of that Court held in that case:

Where an Assessee has received a notice u/s 34, Income Tax Act. and wants to take an objection as to the place of assessment, he must, under

the second proviso to Section 64(3) do so before the period fixed in the notice for making a return expires. Thus, where the Assessee receives a

notice u/s 34, and is allowed time up to the 1st of May, 1954, to make a return, he has the right to object to the place of assessment up to the 1st

of May, 1954 And if he fails to object to the place of assessment till then the second part of the second proviso bars any such objection

All the authorities excepting R. Chinnaswami Naidu and Sons and Others Vs. First Income Tax Officer, Circle I, Coimbatore, are under the old

Income Tax Act of 1922. u/s 64(3) where any question arises under that section as to the place of assessment such question has to be determined

by the Commr., or where the question is between places in States more than one, by the Commissioners concerned, and if they are not in

agreement, by the Central Board of Revenue.

Proviso 2 to this section enacted that the place of assessment could not be called in question by an Assessee if he had made a return in respect of a

notice u/s 22(1) and had stated therein the principal places wherein he carried on his business provision or vocation. or if he had not made such a

return, the question of jurisdiction could not be called in question after the expiry of the time allowed by the notice u/s 22(2) or u/s 34 for the

making of a return If the place of assessment was called in question, the third proviso enacted that if the Income Tax Officer was not satisfied with

the correctness of the claim, he had to refer the matter for determination to the Commr. before the assessment was made. Under the amended

Section 124 (5a) no person shall be entitled to call in question the jurisdiction of an I.T.O. after the expiry of one month from the dale on which he

had made a return u/s 139(1) or after the completion of the assessment, whichever is earlier, etc., etc

The argument of the learned Counsel for the Respondent is that the question of jurisdiction was not raised by the Assessee be fore the ITO

within limitation and according to Section 121 of the new Act the objection should be ruled out. In support of his contention he has cited the above

authorities. Hut as I said the facts of this case do not warrant any such inference because the case of the asses see right up to the, date of the

assessment had been that he had suffered a loss u/s 64(1) the Income tax Officer of the area had jurisdiction where the Assessee carried on

business, profession or vocation to determine the case. It is not denied that at the time this return was filed before the I.T.O. the Respondent was

the officer empowered under the Act to determine the case of the Assessee Petitioner I shall have occasion to ' comment upon the further legal

implications of this aspect of the case, while discussing the arguments of the learned Counsel for the Petitioner. But suffice it to say that the

authorities and the law relied upon by the learned Counsel for the Respondent to shut the mouth of the Petitioner to challenge the jurisdiction of the

Respondent is uncalled for and does not hold water

Now I shall lake up the arguments of the learned Counsel for the Petitioner. In his arguments before me the learned Counsel for the Petitioner

has argued under two broad heads: (l) the assessment order had to be shuck down because there was inherent want of jurisdiction in the

Respondent to dispose of this case, and (2) that the Respondent had been guild of the violation of the principles of natural justice. His llrst

argument was based Section 124 of the new Act read with the of the Income Tax Commissioner, dated ed on order of the Income Tax 31-10-

1963, already referred to. According' to-this order the learned Commr. of Punjab, J. and K. and Himachal Pradesh Was competent to determine

the jurisdiction of the various I.T. Os. This order in particular specifies the jurisdiction of the three I.T. Os. of A, B and C Wards, Jammu.

According to the learned Counsel for the Petitioner, the case of the Petitioner is of an Assessee whose assessable income on the first occasion in

the year under reference was more than Rs. 20,000. According to the Petitioner, the Respondent I.T.O., B Ward, had no jurisdiction to dispose

of it, but it was; only the I.T.O., A Ward, who could dispose, of the case, and therefore the order passed by the Respondent which is the subject-

matter of this writ is ultra vires.

According to the learned Counsel there was an inherent want of jurisdiction in the Respondent to dispose of this case. Therefore his client was

entitled to come to this Court by way of a writ petition. The learned Counsel in his arguments laid very great stress on the distinction between want

of inherent jurisdiction and want of territorial jurisdiction. He conceded that if there was want of territorial jurisdiction, that would at best be an

irregularity, but if it was want of inherent jurisdiction, the whole proceedings would be void. In this context he referred to Sections 21 of the Code

of CPC and 28 of the Code of Criminal Procedure According to him the I.T.O., B Ward had no jurisdiction where the case of an Assessee

disclosed an income on the first occasion of more than Rs. 20,000. As stated earlier, it is the admitted case of the parties that on this occasion the

Assessee was for the first time sought tp be assessed for Income Tax. The I.T.O. B Ward had jurisdiction over the case of the Assessee if his

income fell below Rs. 20,000 because the industrial estate where the Assessee carries on his business is within the territorial jurisdiction of both the

I.T. Os., A and B Ward. Jammu. the only difference in the exercise of their jurisdiction is that the I.T.O., B Ward has to dispose of the cases of

asses-sees whose income is below Rs. 20,000 and the jurisdiction of the T.T.O.. A Ward begins with the case of ah Assessee carrying on

business in the industrial estate Jammu if his income exceeds Rs 20.000

It cannot be denied that when there is want of inherent jurisdiction, the whole proceedings by an authority are null and void and the person

aggrieved can move this Court by means of a writ and a writ has to be issued in his favour. But if there is only lack of territorial jurisdiction, that has

been regarded at best an irregularity and unless objection thereto is taken both under the civil and criminal law at the earliest possible opportunity,

it will be deemed to have been waived. Before 1 discuss the authorities cited by him on this point, I need only say that strictly speaking this point

does not at all arise in this case. I have, therefore very clearly quoted Section 297(2) of the Act of 1961. Sub-section (2) of that Act says that even

though the Indian Income Tax Act of 1922 will be deemed to have been repealed, but if a return of income had been filed before the

commencement of the new Act by any person for any assessment year, proceedings for the assessment of that year would be taken and continued

as if the new Act had not been passed.

In this case the return has been filed on 12-3-1962 when the new Act bad not come into fond. Therefore for the purposes of all the

proceedings started on that return, the new Act will be deemed not to have been passed Therefore the whole case will have lo mined on the

provisions of the old le order of 31-10-1963 passed by the of Income Tax, Punjab, J. and K. and is u/s 124(1) of the New Act of Therefore that

order will have no application to this case The whole argument of the learned Counsel for the Petitioner is based on this very order According to

him there is a difference between the old Section 64 and the present Section 124, According to the old Act the heading was place of assessment

and under the new Act Section 124 mentions the jurisdiction of I.T. Os. According lo the learned Counsel it is the Commr who can confer

jurisdiction under Sub-section (1) of this new Act and the present case is a case of non-existence of jurisdiction under this Sub-section, the

concerned I.T. Os. have been conferred with jurisdiction and those I.T. Os from whose jurisdiction certain Assessees have been excluded, have

been denuded of their jurisdiction. Any proceedings taken by them will be ultra vires.

There is originality in this argument, but as already indicated this aspect of the case. does not at all arise for consideration, as all the proceedings in

this case would be governed by the provisions of the old Act. Otherwise also the law is well settled on the Interpretation of Statutes. The Courts

have off and on returned verdicts on this question. Retrospective effect can be given to procedural laws unless it is otherwise provided. Reference

may in this connection be made to Maxwell, page 221 (10th edn.). In Vol. 59 of Corpus juries under Article 226 at pp. 1159 to 1169 the

following observations arc made on Ibis topic:

Retrospective retroactive legislation is not favoured. Hence it is a well settled and fundamental rule of statutory construction, variously stated that all

stalled are to be construed as having only a prospective operation, and not as operating retrospectively. It is equally well settled as a fundamental

rule of statutory construction supported and established by unmeious judicial decisions that statutes are not to be construed as having a

retrospective effect. Both the above statements and rules are of course contingent upon the absence of any words expressing a contrary intention,

or, more specifically unless the purpose and intention of the legislature to give them a retrospective effect clearly, expressly, plainly. obviously,

unequivocally and unmistakably appears or is clearly or as it has sometimes been stated in instances where the subject-matter was under

consideration, distinctly, indisputably, manifestly, most positively, most explicitly, plainly unambiguously, unequivocally or unmistakably or shown

by express declaration, or command or by a very clear, fair necessary, unavoidable or unequivocal implication. In every ease of doubt, the doubt

must be solved against the retrospective effect and in favour of prospective construction only Where a statute is expressly or by clear implication

made retroactive to a certain extent or for a certain purpose, the Courts will not by construction give lo it a retroactive operation lo any greater

extent or for any other purpose.

It is not, however, disputed that when the return was filed the Income Tax Officer, B Ward, i.e., the Respondent had complete jurisdiction to

determine the case. That jurisdiction subsists in these proceedings and cannot be said to have been taken away by Section 124(1) read with the

order of the I. T. Commr. Patiala dated 31-10-1963 referred to above: u/s 297(2) of the new Act.

However as much was made of this argument, I may incidentally comment upon this also In Kanga and Palkhiwaala's commentary on late

Indian Income Tax Act (5th edn.) Vol. I on page 597 it is stated in AIR 1945 9 (Federal Court) the Federal Court held that the objection as to the

place of assessment could not be raised under the 1922 Act on an appeal against the assessment. The matter was concluded by Rai Bahadur Seth

Teomal Vs. The Commissioner of Income Tax and The Commissioner of Excess Profits Tax, , in which the Supreme Court held that objection as

to the place of assessment could not be raised under the 1922 Act in an appeal before the appellate Asstt. Commr or the Tribunal, or on a

reference to the High Court The decision in Tao-mals case holds good under this Act. Although, the observations of the Federal Court in Wallace

Bros case that ""the matter is more one of administrative convenience than of jurisdiction would not apply under this Act where the statute itself

refers to this matter as one of jurisdiction, the question as to the Income Tax Officer's jurisdiction is still left to be decided, as under the 1922 Act,

by the Commissioner or by the Board and not by the appellate authorities or by the Court on a reference.

Then again the observations made in R. Chinnaswami Naidu and Sons and Others Vs. First Income Tax Officer, Circle I, Coimbatore, , have

already been quoted in an earlier portion of this judgment, which are to the effect that if an I.T.O. has territorial jurisdiction, the mere fact that he

deals with a file not allotted to him would be a mere irregularity.

26 Here both the, I.T. Os are of the same grade The I.T.O, B Ward, also can determine cases where the income shown is more than Rs. 20,000.

but he is precluded from disposing of cases where the income of Assessees whose place of business is mentioned in Part 1 of this order misinform

than Rs. 20,000. There may be persons within the areas of the: districts of Doda and Udhampur whose income will be more than Rs. 20,000.?

Such cases can be disposed of by the I.T.O., B Ward under Part 2 of the same order This means that even the I.T.O B Ward can dispose of

cases of people whose incoine is more than Rs. 20,000. It seems to me that the distribution of work of the I.T. Os., A and B Wards has been

made on account of administrative convenience rather than investing a particular I.T.O. with a jurisdiction and taking away those powers from the

other IT. Os This distribution may have been made in order to enable the two I.T. Os to cope with the bulk of the work. Otherwise both officers

can dispose of cases pertaining to the Industrial Estate. If we, therefore, carefully examine this order, it does not at all show any inherent want of

jurisdiction in the I.T.O., B Ward to hear cases where the income is more than Rs. 20,000 The officers also are of the same grade.

The analogy of civil and criminal courts does not at all help the Petitioner If"" it-is only a Sessions Judge or a district court which can dispose of

cases exclusively triable by. the Sessions Court or the district court and any proceedings taken in such cases by an inferior court would be null and

void, the reason is clear because it is the two different categories of officers who can deal with the matters within their jurisdiction. Here the officers

are of the same rank both officers can dispose of cases without any limitation of valuation. It is only to make the functioning of the two officers

smooth and regulate their work that for the sake of administrative can-- vengeance one I.T.O is to hear cases with an income of less than Rs.

20,000 of the same locality and another I.T.O. is to hear cases with more than that income. Otherwise the powers are the same This disposes of

the main argument of the learned Counsel for the Petitioner However the authorities cited by him will be considered and it will be very clear from

those authorities that writs have been entertained only where there is inherent want of jurisdiction.

In M. Chockalingam and Another Vs. Commissioner of Income Tax, Madras and Another, the Supreme Court has held the addition of penal

interest u/s 18(a) is enhancement within the meaning of the proviso to Section 31 of the Act of 1922. If the I.T.O. proceeds u/s 35 to rectify an

assessment for which no penal interest for failure to pay advance tax is added, the orders to levy Income Tax without sending a notice to the

Assessee would be a clear breach of the principles, of natural justice and the Court would issue a writ of certiorari

Similarly a Full Bench of the Assam High Court in MESSRS. TANSUKHRAI BODULAL Vs. Income Tax OFFICER, NOWGONG, AND

OTHERS., held that under the Income Tax Act. 1922 the issue of a valid notice u/s 34 of the Act is not merely a procedural requirement. but is a

condition precedent for the exercise of the jurisdiction of the I.T.O. to re assess fan Assessee under the section If the, period given in me, notice is

shorter than 30; days the, notice does not comply with the .requirements' of the Act and the notice, and the subsequent assessment are invalid, and

without jurisdiction There can be no waiver of a notice u/s 34 because it is a condition precedent for the exercise of the jurisdiction. Want of notice

affects the jurisdiction of the I.T.O This authority further lays down that' the existence of, an alternative remedy is not an absolute bar to granting

leave under Article 226 of; the Constitution and if the defect of jurisdiction is apparent on the face oft the record, the High Court will not refuse,

leave to the Petitioner even, on the ground, of acquiescence.

In (1956) 29 ITR 459 , the finding of the Nagpur High Court was that the I.T.O. should not have refused to issue a com mission for the

examination of a party who were more than 200 miles away from, the place of, assessment and further when the party was given no time to

produce the account .books and examine; them on commission

In Calcutta Discount Company Limited Vs. Income Tax Officer, Companies District, I and Another, the Supreme Court held that the I.T.O

who ..issued a notice u/s 34, did not have any materials before him for believing that' there had been .any materia) nondisclosure by reason of

which an under estimate had taken place, The I.T.O. had no jurisdiction to issue the notice after the expiry of four veers at the end of the

assessment years and therefore the Co. was entitled' to an order directing the I.T.O. not to take any action on the basis of the notice.

In Dwarka Nath Vs. Income Tax Officer, Special Circle D-ward, Kanpur and Another, , their Lordships of the Supreme Court held that the

High Court has jurisdiction to issue a writ of certiorari against a Commissioner's orders passed in revision, as the Jurisdiction conferred u/s 33(a)

(2) of the Act is a judicial one.

The Mysore High Court in (1965)56 ITR 260-(AIR 1965 Mvs 255), held that notices which formed the basis of the proceedings u/s 147 of

the Act were wholly in valid and the Petitioners could not be assessed in pursuance of those notices It was further held that while issuing notices u/s

148 the I.T.O. is not acting judicially or quasi- judicially and consequently no writ of certiorari can be issued. So their Lordships held that it is well

settled that the High Court has the power in a fit case to pass an order prohibiting the' executive authority from acting without jurisdiction

particularly when such an act is likely to subject any citizen to harassment.

The decisions quoted above would clearly show that the case of the Petitioners is not covered by any of these authorities There has been no

want of inherent jurisdiction, The proceedings were started properly and the Respondent had the power to dispose of the raze according to his

lights.

The whole argument of the learned Counsel was that the Respondent had no inherent jurisdiction to proceed in the matter. The factual and to

some extent the legal aspect of this argument has been examined above. The learned Counsel for the Petitioner however referred rue lo a number

of authorities on this point which may be mentioned as under: The State of Uttar Pradesh Vs. Mohammad Nooh, ; S.C. Prashar Vs. Vasantsen

Dwarkadas, : S.C. Prashar and Another Vs. Vasantsen Dwarkadas and Others, . (1956) 29 ITR 459 , MESSRS. TANSUKHRAI BODULAL

Vs. Income Tax OFFICER, NOWGONG, AND OTHERS., ; Calcutta Discount Company Limited Vs. Income Tax Officer, Companies District,

I and Another, . E. M. C. (WORKS) PRIVATE LTD. Vs. Income Tax OFFICER, DISTRICT I (I), KANPUR., . M. Chockalingam and

Another Vs. Commissioner of Income Tax, Madras and Another, ; (1965) 56 ITU 250 : AIR 1965 Mvs 255 and Syed Yakoob Vs. K.S.

Radhakrishnan and Others,

Before discussing these authorities I might slate unequivocally that the matter is so well settled that a writ petition in income-lay, mailers is not

altogether ruled out. This is the rinding of a Division Bench of this Court In Kidar Nalh v. Income Tax Officer. Whether it be a case under the

Income Tax Act or any other Act. when there is inherent want of jurisdiction a writ petition can be entertained and necessary writs issued. But

where there is no inherent want of jurisdiction and there are other remedies available as for instance under the Income Tax Act. the Court will be

slow lo entertain writ petitions and interfere with the due discharge of duties by authorities exercising power under particular enactments and

statutes The learned Counsel, however, laid particular emphasis on The State of Uttar Pradesh Vs. Mohammad Nooh, , (1956) 29 ITR 459 and

MESSRS. TANSUKHRAI BODULAL Vs. Income Tax OFFICER, NOWGONG, AND OTHERS.,

In the first of these cases, namely the Supreme Court authority, it has been laid down that there is no rule with regard to certiorari as it is with

Mandamus that would lit only where there is no other effective remedy. The existence of another remedy may be take ) into consideration in the

exercise of discretion If an inferior court or Tribunal at first instance acts without jurisdiction or in excess of It or contrary to the rules of natural

justice the superior court may quite properly issue a writ of certiorari to correct the error, even if an appeal to another Inferior court or tribunal was

available, whether recourse was or was not had to it"" But the limitations of the exercise of the powers arc also .contained in this very authority; i.e.,

when the procedure adopted is contrary to the rules of natural justice and fairplay

In S.C. Prashar and Another Vs. Vasantsen Dwarkadas and Others, . the want of jurisdiction was held to he a patent one. From that authority

the learned Counsel wanted to emphasize the following observations- .

Except for the territorial limitations placed upon it by the constitution there is no limit upon the right or the power of the High Court to issue a

writ under Article 226 or 227. The Courts for their' own guidance have put limitations upon their very wide powers. but those are self imposed

limitations: they are not legal or constitutional limitations. No Tri-bunal and no officer can confer jurisdiction or authority ' or competence upon itself

or him self by misconstruing a section. An authority cannot claim to exercise jurisdiction by construing a section erroneously and thereby con

tending that the section so wrongly construed gives him the necessary power In such a case, if the section has been wrongly construed, it would be

a"" clear case of absence of jurisdiction apparent on the face of ' the record because the Court has got to look at the section and to decide whether

the officer construing the section was in the right or in the wrong

A number of authorities have been discussed in this case but the facts of that case would clearly show that the want of jurisdiction in that case

was a patent one because the remedy available to the I.T.O. had already become barred u/s 34 before its amendment in 1953 The vested right of

the asses see could riot be affected except by clear and express terms used by the legislature. The legislature did not intend to give him

retrospective operation. The remedy and the right of the officer, to assess was lost before April 1, 1952, and the notice was issued after that date.

The observations made in (1956) 29 ITR 459 , MESSRS. TANSUKHRAI BODULAL Vs. Income Tax OFFICER, NOWGONG, AND

OTHERS., and Calcutta Discount Company Limited Vs. Income Tax Officer, Companies District, I and Another, : Calcutta Discount Company

Limited Vs. Income Tax Officer, Companies District, I and Another, ,.have already been quoted earlier and need not be repeated here.

In NATHU RAM PREMCHAND Vs. COMMISSIONER OF Income Tax, U. P., , the ratio decidedness is that it is.for the I.T.O. to

enforce the attendance of the witnesses if his evidence Is material.

To the same effect are the observations in E. M. C. (WORKS) PRIVATE LTD. Vs. Income Tax OFFICER, DISTRICT I (I), KANPUR.,

In C.N. Nataraj Vs. Fifth Income Tax Officer, City Circle II, Bangalore, , it was held)that a notice prescribed u/s 148 of the Act for initiating

reassessment proceedings is not a mere procedural requirement. The service of the notice on the, Assessee is a condition precedent to the validity

of any reassessment u/s 147. If no notice is issued or if the notice issued is shown to be invalid, then the proceedings taken by the I.T.O without a

notice or in pursuance of. invalid notice, .will be illegal and void.

The above mentioned authorities have been cited by the learned Counsel for the Petitioner' on 'the question' of alternative ''remedy. On the

other hand there is a long series of authorities of the Supreme Court and 6ther High Courts which lay down that the Income Tax Act provides a

complete machinery for determination of all the disputes between an Assessee and the department, and unless there is a patent want of jurisdiction

the Court should. not interfere in the ordinary discharge of duties by the authorities under the: Act by entertaining and issuing writs.

In Shivram Poddar Vs. Income Tax Officer, Central Circle II, Calcutta, and Another, it was held that the ""income tax Act provides a complete

ma chinr for assessment of tax and for relief in respect of improper or erroneous orders made by the Revenue authorities. . . ."" Resort to the High

Court in exercise of its extraordinary jurisdiction conferred or recognized by the Constitution in matters relating' to assessment levy and collection

of Income Tax may be permitted only when questions of infringement of fundamental rights arise, or where on undisputed facts the taxing

authorities are shown to have assumed jurisdiction which they do not possess.

In Thansingh Nathmal and Others Vs. A. Mazid, Superintendent of Taxes, it was held:

the jurisdiction of the High Court under Article 226 of the Constitution is couched in wide terms and the exercise thereof is not subject to any

restriction except the territorial restrictions which are expressly provided in the Articles. But the exercise of the jurisdiction is discretionary; it is not

exercised merely be cause it is lawful to do so. Ordinarily the Court will not entertain a petition for a writ under Article 226, where the Petitioner

has an alternative remedy, which without being unduly onerous, provides an equally efficacious remedy. . . The High Court does not there fore act

as a Court of Appeal against the decision of a Court or Tribunal, to correct errors of fact, and does not by assuming jurisdiction under Article 226

trench upon an alternative remedy provided by statute for obtaining relief.

In S. Chattanatha Karayalar Vs. Income Tax Officer, Nagarcoil and Another, it was held that as the Petitioner had three other remedies open

to him under the Act which are mentioned in the authority, a writ could not be issued in his favour even if the Petitioner was otherwise entitled to it.

In R. Chinnaswami Naidu and Sons and Others Vs. First Income Tax Officer, Circle I, Coimbatore, . it was held:

While the power under Article 226 is discretionary, a certain restraint upon its exercise will be called for. The very wide amplitude of the power

itself justified such a restraint and the power could be exercised only in proper cases, where a statute creates a liability and indicates the forum

which will determine such liability and sets up a hierarchy of appellate jurisdictions, it is but proper that the schome of such a statute is not normally

or as. a matter of course, by passed and interference is made under Article 226 either at the original or at any subsequent stages envisaged in the

statutory scheme. Though the power is wide enough to clothe the High Courts with the jurisdiction to interfere even in such cases, yet in the

exercise pf their discretion under the article, the courts should take into consideration the statutory scheme of remedies and decline to interfere

unless the alternative remediless are inadequate, and to compel a party to resort to them will amount to denial of speedy justice in the

circumstances and would mean grave hardship and harassment and waste of time and money.

In Central Potteries Ltd. Vs. State of Maharashtra and Others, it was held that when proceedings for assessment against a non-registered

dealer under the U.P. Sales Tax Act were taken without notice to him it was a mere irregularity in assumption of jurisdiction and therefore no writ

petition would lie.

In this case it is admitted that again the order, of assessment of the Respondent dated 26-3-l966 an appeal has been preferred by the

Petitioner on 12-4-1966. That appeal is pending before the Inspecting Asstt. Commr. So in this case not only is an alternative remedy available to

the Petitioner, but he has already taken recourse to it. His writ petition would not be maintainable because of the observations of their Lordships of

the Supreme Court in numerous cases quoted above that there was an alternative remedy available to the Petitioner by way of an appeal. I would

say that the argument for the Respondent becomes all the stronger when that remedy has already been availed of by the Petitioner.

A direct authority on this point is contained in Ramniranjan Kedia Vs. The Income Tax Officer, 'A' Ward, Udaipur and Others, . 'In that case

against an order of re assessment, an appeal, was preferred before the appellate authority. It was held that so far as the assessment order is

concerned, the Court could not exercise its powers under Article 226 as the applicant had not exhausted his remedies under the Act, and secondly

the, Court would not also interfere with the order imposing penalty as the order would stand or, fall according, as the order of assessment would'

be held valid or not and the question, white, the, tax, had been properly levied under the assessment order? was one,., under appeal.

Similarly it, was held in AIR 1966 Mya 167 that when there was an alternative remedy; open and if a party a had not taken reprise to such'

Remedy. He was not entitled to any relief under Article 226.

In C.A. Abraham, Uppoottil, Kottayam Vs. The Income Tax Officer, Kottayam and Another, , it was laid down that the Income Tax Act

provides a complete machinery for- assessment of tax ' and imposition of penalty: and for obtaining relief' in respect of any improper orders passed

by the Income Tax authority and a person the was aggrieved by an order of the Appellate Income Tax Asstt. Commr. imposing a penalty cannot

be permitted to abandon' resort to that machinery. and to invoke the jurisdiction' of the High Court under Article 226 when he had an adequate

remedy open to him by way of an appeal to the Tribunal.

Again in Nishi Kant Jha Vs. The State of Bihar, , their Lordships held that though the jurisdiction of the High Court to issue writs against the

orders of the Election Tribunal is undoubted, but then it was well settled that where there is another remedy provided the Court may properly

exercise the discretion by declining to interfere under Article 226.

Other authorities on this point need not be multiplied because the principle' of law is very well settled and only some pertinent] authorities

,have, been .discussed above.

The learned Counsel for the Petitioner however, argued that recourse to appeal, was not an equally adequate and efficacious- remedy,"" in the

case of, the Petitioner in my opinion the argument is otherwise. In a writ petition this Court can exercise Jurisdiction only the proceedings are ultra

vires or the ITO started proceedings when he had no jurisdiction to do so or when there is a clear breach of the violation of the principles of

natural justice other questions relating to facts cannot he decided in this writ petition. For instance this Court cannot express any opinion on the

findings of fact arrived at by an I.T.O. unless of course there is absolutely no material for any such finding. But as would appear from the

assessment order itself and the arguments advanced before me. there are many important and controversial matters of fad which can be inquired

into and properly deterged by the Income Tax authorities only. This Court in its writ jurisdiction cannot at all grant the necessary relief's to the

Petitioner even if he is entitled to get them. Therefore the appeal not only being an alternative remedy is in my opinion the more adequate and

efficacious remedy open to the Petitioner which he has already availed of.

The second ground of attack by the learned Counsel for the Petitioner is that the order passed violates the principles of natural justice. The

learned Counsel for the Petitioner laid stress on three points in this connexion. One was that the I.T.O had turned down the request of the

Petitioner for examination of the books of Messrs. Bihar Agricultural Industry and Shri Inderjit Agarwal. The other item referred to by the learned

Counsel for the Petitioner related to the turning down of the request of the Petitioner by the Respondent for the issue of a commission for

examining some Bombay parties. The third instance of failure of natural justice was not permitting the Respondent to prove an entry of Rs. 5,000

relating to Gupta Engineering Works. The learned Counsel for the Petitioner however made another grievance that one witness Krishan Lal was

examined at the back of the Petitioner. The learned Counsel further pointed out to me that the I.T.O. by means of his notice dated 19-6-1965 had

communicated to the Petitioner that he was satisfied that the examination of the parties mentioned in that notice would not be of any help in the

direct Hon to ascertain the genuineness of Hundi loans Therefore he had turned down the request of the Petitioner to issue commission and had

given him a fortnight's time for the production of these parties before him. According to the learned Counsel for the Petitioner the Respondent was

already prejudiced against the Petitioner and he created different handicaps for him in not permitting him to prove his case

On the other side it was argued that the Petitioner had been given time to substantiate his case right from 17-1-1964 till 10-3-1966, the last notice

of the Respondent, dated 10-3-1966. was replied to by Mr. Grover. Counsel for the Petitioner on 20-3-1966. The Petitioner had been afforded a

sufficiently long time to Substantiate his pleas. I need not enumerate further the arguments and the objections of the Respondents, on this score. I

might however say that the Petitioner in reply to the preliminary objections of the Respondent has put in a very long affidavit which covers seven

pages. There are many more matters indicated in this affidavit which need not be enumerated in detail which would at least disclose the grounds on

which the principles of natural justice have been violated. It is true that when the principles of natural justice have been violated this Court can

interfere in writ. But again that power is subject to the same limitation, namely, that when the same matters can be agitated before an appellate

authority, a writ need not be entertained and issued on this ground. In this case as indicated earlier the appellate authorities can take into

consideration many more grounds than urged before me as also these grounds and then give a finding as to the validity or otherwise of the

contentions raised by the Petitioner.

In this behalf I may only say that the observations as contained in E. M. C. (WORKS) PRIVATE LTD. Vs. Income Tax OFFICER, DISTRICT I

(I), KANPUR., relating to issue of commissions. discovery and summoning and enforcing the attendance of witnesses will be taken due note of by

the appellate authorities. It seems that the Respondent was in haste to complete the assessment within the statutory period of four years after the

assessment year and therefore more or less rushed through the proceedings. There is no such limitation with the appellate authorities under the

Income Tax Act.

In this case the Assessee has been subjected to a huge tax of over a lakh and a quarter of rupees for a single assessment year and that too for

the first year of the assessment. The Assessee may have been ignorant of the technique and may not have been very vigilant but that does not mean

that he should not get a fair hearing at the hands of the Income Tax authorities I trust and hope that the Income Tax authorities will look into all the

allegations of fact as well as of law raised on behalf of the Assessee and see that he gets an adequate and a full hearing and all facilities as provided

and enjoined by law upon the Income Tax authorities are afforded to the Petitioner

With these observations the writ petition is dismissed without any order as to costs