1972 (1) TMI 31 - HC - Income Tax

Whether on the facts and in the circumstances of the case the Tribunal was correct in holding that the order under section 154 of the Income-tax Act 1961 was null and void for the assessment year 1957-58 ? - since the provisions of section 35 of Indian Income-tax Act 1922 and section 154 of Income-tax Act 1961 are substantially the same the Income-tax Officer had the jurisdiction under Indian Income-tax Act 1922 to pass the rectification order. The order cannot become null and void simply because it was made under section 154 of Income-tax Act 1961

Summary

Issues:
1. Validity of an order under section 154 of the Income-tax Act, 1961 for the assessment year 1957-58.

Detailed Analysis:
The High Court was tasked with determining the validity of an order under section 154 of the Income-tax Act, 1961, for the assessment year 1957-58. The assessment against the assessee was initially made under the provisions of the Indian Income-tax Act, 1922, and was completed on March 23, 1962. Subsequently, the Income-tax Officer issued a notice under section 154 of the Income-tax Act, 1961, and passed an order on February 17, 1966. The Tribunal allowed the assessee's second appeal, holding that proceedings under section 154 of the 1961 Act could not be initiated for the assessment in question. The Tribunal deemed the order passed by the Income-tax Officer null and void, leading to the reference before the High Court by the Commissioner of Income-tax.

The Court delved into the relevant legal provisions to address the issue at hand. Section 297(2)(a) of the Income-tax Act, 1961, allows for proceedings to be conducted for assessments made before the enforcement of the Act as if the new Act had not been passed. It was highlighted that section 297 does not explicitly mention proceedings under section 154 for assessments filed before the 1961 Act. Drawing from the Supreme Court's decision in Sankappa v. Income-tax Officer, it was established that orders modifying assessments made under the 1922 Act could not be issued under section 154 of the 1961 Act if the assessment proceedings fell within the exception of section 297(2)(a).

The Court also discussed the case of Indra Singh & Sons Private Ltd. v. Union of India, emphasizing the distinction between cases where proceedings were initiated under the 1922 Act and those initiated post the enforcement of the 1961 Act. Despite the potential procedural error in applying section 154 instead of section 35 of the 1922 Act, the Court clarified that the order would not be null and void if the Income-tax Officer had the authority to pass it. The Court underscored that the mere mention of a wrong legal provision does not invalidate an order if the officer had jurisdiction to issue it.

In conclusion, the High Court answered the question referred to it in the negative, indicating that the order under section 154 of the 1961 Act was not null and void. The Court highlighted that the Income-tax Officer had the jurisdiction to pass the order, even if the specific provision of law cited was incorrect. The parties were directed to bear their own costs, with the counsel's fee assessed at Rs. 200.