1972 (3) TMI 26 - HC - Income Tax

Summary

Issues Involved:
1. Interpretation of Section 297(2)(a) of the Income-tax Act, 1961.
2. Validity of the assessment made under the Income-tax Act, 1961, instead of the Indian Income-tax Act, 1922.
3. Competency of the notice for rectification of the assessment order.
4. Appellant's procedural choices and their implications on the legal remedy.
5. Impact of the new Act on penalty and prosecution provisions.

Detailed Analysis:

1. Interpretation of Section 297(2)(a) of the Income-tax Act, 1961:
The appellant raised a question regarding the interpretation of Section 297(2)(a) of the Income-tax Act, 1961. The court noted that the assessment for the year 1961-62 should have been made under the provisions of the old Act (Indian Income-tax Act, 1922) as the return was filed under the old Act. The learned judge acknowledged that the assessment should have been made under the old Act but concluded that the order of assessment and consequential orders and notices cannot be considered void ab initio and without jurisdiction. The judge emphasized that the proper course would have been to rectify the order to align with the provisions of the repealed Act of 1922.

2. Validity of the assessment made under the Income-tax Act, 1961, instead of the Indian Income-tax Act, 1922:
The court addressed whether the assessment made under the 1961 Act was valid. The judge stated that a wrong reference to the power under which the order is made does not per se vitiate the order if there is another power under which the order could lawfully be made. The validity of the impugned order must be tested by whether the Income-tax Officer had the power to make such an order. The provisions of Section 23(3) of the 1922 Act and Section 143(3) of the 1961 Act are in pari materia, dealing with the same subject-matter of assessment. Therefore, an order under Section 143(3) of the 1961 Act could be considered as made under Section 23(3) of the 1922 Act.

3. Competency of the notice for rectification of the assessment order:
The appellant objected to the competency of the notice for rectification of the assessment order. The court observed that the appellant did not argue this point before the Appellate Assistant Commissioner, nor did he include it as a specific ground in his appeal. The court held that the appellant should have raised this issue during the appeal process and that it was incumbent upon him to put forward this ground.

4. Appellant's procedural choices and their implications on the legal remedy:
The appellant initially chose to appeal the assessment order but did not argue the point regarding the applicability of the old Act. The court noted that the appellant, having chosen one particular remedy, cannot in mid-stream start a writ petition under Article 226 of the Constitution. The appellant should have pursued the appeal to the Tribunal if he believed his point was sound. The court emphasized that the appellant's fear of penalty and prosecution under the new Act was premature and that the appellant's remedy would be open under Article 226 if and when such penalty and prosecution occur.

5. Impact of the new Act on penalty and prosecution provisions:
The appellant contended that the penalty and prosecution provisions under the new Act were harsher than those under the old Act. The court found this argument misplaced as the present application did not concern penalty or prosecution. The court noted that if and when penalty and prosecution occur, the appellant would have ample remedies available. The court dismissed the appeal, stating that the appellant had not provided sufficient grounds to invoke the special jurisdiction of the High Court under Article 226, especially when an alternative and equally efficacious legal remedy existed.

Conclusion:
The appeal was dismissed, with the court emphasizing that the appellant should have pursued the available legal remedies through the Tribunal. The court held that the assessment made under the 1961 Act was not invalid, and the appellant's procedural choices did not warrant interference under the writ jurisdiction. The court also noted that the appellant's concerns about penalty and prosecution under the new Act were premature and could be addressed if and when they arise.