1960 (8) TMI 87 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the notice issued under Section 34 of the Indian Income-tax Act, 1922.
2. Jurisdiction of the Income-tax Officer to reassess based on the notice.
3. Waiver of the right to challenge the validity of the notice.
4. Availability of alternative remedies and the appropriateness of invoking Article 226 of the Constitution.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 34:
The petitioner, a Hindu undivided family firm, was initially assessed on March 25, 1947, for the assessment year 1946-47. On March 24, 1951, the petitioner received a notice dated March 19, 1951, under Section 34 of the Indian Income-tax Act, 1922, requiring submission of a return by March 31, 1951. The petitioner contended that this notice was invalid as it did not provide the mandatory thirty days required under Section 22(2) of the Act. The court held that the notice was indeed invalid because it failed to comply with the statutory requirement of giving at least thirty days for the submission of the return. The court cited several precedents, including *Commissioner of Income-tax v. Ramsukh Motilal* and *Narayan Chetty v. Income-tax Officer, Nellore*, to affirm that a valid notice is a condition precedent for the exercise of jurisdiction by the Income-tax Officer.

2. Jurisdiction of the Income-tax Officer to Reassess Based on the Notice:
The court emphasized that the jurisdiction to reassess under Section 34 is contingent upon the issuance of a valid notice. Since the notice dated March 19, 1951, was invalid, the proceedings initiated based on this notice were without jurisdiction. The court reiterated that the requirement of a valid notice is not merely procedural but a foundational prerequisite for the Income-tax Officer to assume jurisdiction for reassessment.

3. Waiver of the Right to Challenge the Validity of the Notice:
The respondents argued that the petitioner had waived the right to challenge the validity of the notice by filing a return under protest and participating in the assessment proceedings. The court rejected this argument, stating that the existence of a valid notice is a condition precedent for jurisdiction and cannot be waived. The court referred to the principles of waiver, emphasizing that there must be an intentional relinquishment of a known right, which was not the case here. The petitioner had consistently protested the validity of the notice and had not willingly participated in the proceedings.

4. Availability of Alternative Remedies and the Appropriateness of Invoking Article 226:
The respondents contended that the petitioner should have exhausted alternative remedies available under the Income-tax Act before invoking Article 226. The court acknowledged that while alternative remedies are generally preferred, they do not preclude the issuance of a writ of prohibition when the defect of jurisdiction is apparent on the face of the record. The court held that since the proceedings were patently without jurisdiction due to the invalid notice, the petitioner was entitled to relief under Article 226. The court also noted that the petitioner had pursued the matter through the appellate authorities and had raised the issue of invalidity at every stage.

Conclusion:
The court concluded that the proceedings before the Income-tax Officer were without jurisdiction due to the invalid notice issued under Section 34. Consequently, the petitioner was entitled to a writ of prohibition, directing the Income-tax Officer not to proceed with the reassessment based on the invalid notice. The court issued the writ without any orders as to costs.