1963 (7) TMI 88 - HC - Income Tax

Summary

Issues Involved:
1. Applicability of the old Income-tax Act of 1922 or the new Income-tax Act of 1961.
2. Jurisdiction and power of the Income-tax Officer under the relevant Act to take the impugned proceedings.
3. Maintenance of writ petitions despite the availability of alternative remedies.
4. Scope of Section 35(5) of the Income-tax Act of 1922 and its application to rectification of mistakes in individual assessments.

Detailed Analysis:

1. Applicability of the Old Income-tax Act of 1922 or the New Income-tax Act of 1961:
The primary issue was whether the old Income-tax Act of 1922 or the new Income-tax Act of 1961 applied to the proceedings in question. The court held that the provisions of the old Act of 1922 should govern the impugned proceedings. The reasoning was based on Section 297 of the new Act, which repealed the old Act but did not expressly or by necessary implication destroy the rights and liabilities acquired under the old Act. The court also referred to Section 6 of the General Clauses Act, which preserves rights and privileges acquired under a repealed Act unless a different intention is expressed in the new Act. The court concluded that the new Act did not have retrospective effect concerning the proceedings in question.

2. Jurisdiction and Power of the Income-tax Officer:
The court examined whether the Income-tax Officer had the power and jurisdiction under the relevant Act to take the proceedings under challenge. The court concluded that the Income-tax Officer acted without jurisdiction in invoking Section 155 of the new Act to amend the assessment for the year 1952-53 and to initiate proceedings for the other years. The court emphasized that Section 35(5) of the old Act, which allows rectification of mistakes, could not be used to correct errors that were not consequent upon the final order of assessment or reassessment of the firm. The court also noted that Section 35(5) was not intended to give the Income-tax Officer an extended period to rectify mistakes that could have been corrected under Section 35(1) within the prescribed period of four years.

3. Maintenance of Writ Petitions Despite Availability of Alternative Remedies:
The court addressed the argument that the writ petitions would be non-maintainable if the new Act applied, which provided for an appeal. The court rejected this contention, stating that the availability of an alternative remedy does not bar the issuance of writs of certiorari or prohibition. The court cited precedents, including the Supreme Court's decision in State of U.P. v. Mohammad Nooh, to support the view that writs can be issued even when alternative remedies are available, especially when the inferior court or tribunal acts wholly without jurisdiction or patently in excess of jurisdiction.

4. Scope of Section 35(5) of the Income-tax Act of 1922:
The court analyzed the scope of Section 35(5) of the old Act, which allows rectification of mistakes in the individual assessment of a partner based on the assessment or reassessment of the firm. The court held that Section 35(5) could not be used to rectify other errors in the completed individual assessment of a partner that were not consequent upon the final order of assessment or reassessment of the firm. The court emphasized that the purpose of Section 35(5) was limited to including or correcting the share income of the partner in the individual assessment and could not be used to rectify other mistakes that should have been corrected under Section 35(1) within the prescribed period.

Conclusion:
The court concluded that the relevant provisions of the old Income-tax Act of 1922 should govern the impugned proceedings. The court also held that the Income-tax Officer acted without jurisdiction in invoking Section 155 of the new Act and in initiating proceedings for the other years. The court issued a writ of certiorari to quash the order dated February 8, 1963, for the year 1952-53 and writs of prohibition to restrain the Income-tax Officer from proceeding further for the other years. The petitioner succeeded in all five writ petitions, and costs were awarded in two of the petitions.