1959 (12) TMI 50 - HC - Income Tax

Summary

Issues Involved:
1. Service of Notice under Section 22(2) of the Indian Income-tax Act.
2. Jurisdiction of the Income-tax Officer under Section 23(4) of the Act.
3. Availability and adequacy of alternative remedies.
4. Exercise of discretion under Section 45 of the Act.
5. Constitutionality of Section 46(5A) of the Act.

Detailed Analysis:

1. Service of Notice under Section 22(2):
The petitioner contended that there was no service of the notice under Section 22(2) of the Act, making the subsequent assessment under Section 23(4) without jurisdiction. The court examined whether the notice was served in accordance with Section 63 of the Act, which requires service either by post or as if it were a summons issued by a court under the Code of Civil Procedure. The court found that the service of notice was not properly proved by admissible evidence, as no affidavit from the serving officer was provided. Consequently, the assessment under Section 23(4) was deemed without jurisdiction.

2. Jurisdiction of the Income-tax Officer under Section 23(4):
The court held that the condition precedent for the exercise of power under Section 23(4) is the failure to file a return required by a notice given under Section 22(2). Since the service of the notice under Section 22(2) was not established, the assessment under Section 23(4) was without jurisdiction. The court emphasized that the Income-tax Officer's jurisdiction to make a best judgment assessment under Section 23(4) depends on the proper service of the notice under Section 22(2).

3. Availability and Adequacy of Alternative Remedies:
The Advocate-General argued that the petitioner had an adequate alternative remedy through an appeal against the assessment order under Section 27 of the Act. The court, however, noted that the existence of an alternative remedy is not an absolute bar to the issuance of a writ of certiorari. The court cited the Supreme Court's observations that the rule requiring the exhaustion of statutory remedies is a rule of policy, convenience, and discretion rather than a rule of law. Given the circumstances, the court decided to exercise its discretion to issue a writ of certiorari.

4. Exercise of Discretion under Section 45:
The petitioner argued that the Income-tax Officer should have exercised his discretion under Section 45 to treat the petitioner as not being in default. The court found that the Income-tax Officer's order rejecting the petitioner's application under Section 45 lacked reasons and did not give the petitioner an opportunity to explain his position. The court held that the discretion under Section 45 must be exercised judicially, considering all relevant circumstances. The court issued a mandamus directing the Income-tax Officer to exercise his discretion under Section 45.

5. Constitutionality of Section 46(5A):
The petitioner challenged the constitutionality of Section 46(5A) on the grounds that it infringes Articles 19 and 14 of the Constitution. The court found no substance in these points, referring to a previous decision in Murlidhar Jalan v. Income-tax Officer, Dibrugarh, where the matter was elaborately dealt with.

Conclusion:
The court allowed the petition, quashing the order of assessment and issuing a writ of mandamus directing the Income-tax Officer not to give effect to the assessment order. The petitioner was awarded costs of Rs. 250.