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TMI Blog1979 (5) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. On 24th February, 1959, the assessing authority issued a notice to the company under section 12 of the Rajasthan Sales Tax Act, 1954, on the ground that the turnover of the company to the extent of Rs. 1,38,76,958-6-0 has escaped assessment to tax under the Act. The Sales Tax Officer, after hearing the representative of the company, proceeded to assess tax in respect of the aforesaid amount, which represented the sale price of the cement exported by the company outside the State of Rajasthan. But, in his view, only that part of the aforesaid sales, which fell due between 1st April, 1955, and 10th November, 1955, was taxable in the hands of the company. He, therefore, imposed tax on the company in respect of the sum of Rs. 76,41,546-1-3 considering the same to be the escaped turnover of the company. The company preferred an appeal against the aforesaid order passed by the Sales Tax Officer before the Deputy Commissioner (Appeals), which was allowed by the order dated 22nd March, 1965, on the ground that no proper notice under section 12 of the Act was served on the company. The Deputy Commissioner was of the view that the notice, which was served upon the company, was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company under section 12 of the Act, the Commercial Taxes Officer issued a fresh notice to the company on 6th May, 1965, under section 12 of the Act. In the present writ petition, the company has challenged the validity of the fresh notice (annexure C) issued by the assessing authority on 6th May, 1965. The only submission advanced by the learned counsel for the petitionercompany in this case before us is that, after the limitation prescribed for giving a notice under section 12 of the Act had expired, the Commercial Taxes Officer was incompetent to issue such a notice to the company and the notice dated 6th May, 1965, was invalid on that ground alone. The submission of the learned counsel for the petitioner is that initially notice under section 12 could be issued within three years of the expiry of the period to which the tax relates. But, after an amendment was made in section 12, such a notice could be issued within a period of four years and thereafter within an extended period of eight years. According to the learned counsel, thus, the maximum period within which the notice under section 12 of the Act could be issued at the relevant time was eight years from the expiry o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be contested and, in fact, it has not been contested before us that the notice dated 6th May, 1965, was issued beyond the period of eight years of the expiry of the relevant assessment year. But, the argument of the learned Additional Government Advocate, appearing for the State of Rajasthan, is that the notice dated 6th May, 1965, was valid as the same was issued in pursuance of the order of the Deputy Commissioner (Appeals) dated 22nd March, 1965, and in continuation of the earlier notice for reassessment issued to the company on 24th February, 1959. We shall presently examine this aspect of the matter. The Board of Revenue, while deciding the revision petition of the company, held that, as no valid notice was issued to the company, "the very foundation" of the proceedings was "washed out" and that the notice issued to the company on 24th February, 1959, was invalid. The aforesaid finding of the Board had become final and conclusive between the parties, as the application for rectification filed by the State of Rajasthan in respect thereof was dismissed by the Board of Revenue on 15th October, 1969, and the State of Rajasthan has not challenged the aforesaid order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shown to be invalid, then the validity of the proceedings taken by the Income-tax Officer without a notice or in pursuance of an invalid notice would be illegal and void." In Commissioner of Income-tax, Kerala v. Thayaballi Mulla Jeevaji Kapasi[1967] 66 I.T.R. 147 (S.C.)., it was held by their Lordships of the Supreme Court that the service of a notice prescribed by section 34 of the Indian Income-tax Act, 1922, for the purpose of commencing proceedings for reassessment is not merely a procedural formality. Their Lordships observed as under: "Service of notice prescribed by section 34 of the Income-tax Act, for the purpose of commencing proceedings for reassessment is not a mere procedural requirement: it is a condition precedent to the initiation of proceedings for assessment under section 34. If no notice is issued or if the notice issued is shown to be invalid, then the proceedings taken by the Income-tax Officer, without a notice or in pursuance of an invalid notice, would be illegal and void." It was also held in the aforesaid case that the service of notice within the period of limitation is a condition precedent to the exercise of jurisdiction, and if it is not proved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd duly served upon the assessee. A defective notice would confer no jurisdiction upon the reassessing authority to initiate proceedings in pursuance of such a notice and to pass an order of reassessment in pursuance thereof. In S. Narayanappa v. Commissioner of Income-tax, Bangalore[1967] 63 I.T.R. 219 (S.C.). , their Lordships of the Supreme Court observed as follows: "The proceedings for assessment or reassessment under section 34(1)(a) of the Income-tax Act start with the issue of a notice and it is only after the service of the notice that the assessee, whose income is sought to be assessed or reassessed, becomes a party to those proceedings." Applying the aforesaid principles to the facts of the present case, we may observe that the earlier notice issued on 24th February, 1959, having been held to be invalid by the Board of Revenue, the entire proceedings taken in pursuance of such an invalid notice were vitiated and the latter notice issued by the Commercial Taxes Officer on 6th May, 1965, could not be said to have been issued in continuation of the earlier notice. The company cannot be held to have become a party to the proceedings which were initiated on the basis of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Appellate Assistant Commissioner in the appeal, the Income-tax Officer issued a fresh notice and passed an order of reassessment. The question which was raised in that case is identical to the one which arises before us, as to whether the commencement of the proceedings for reassessment after the expiry of the period of limitation for reassessment prescribed under the Act could be justified on the ground that the notice was issued in pursuance of the order of the Appellate Commissioner. It was held by a Division Bench of the Madras High Court in the aforesaid case[1963] 49 I.T.R. 13. that if the earlier notice was improper and had no validity, the effect was as if no notice at all was issued by the department under section 34 and the entire proceedings taken on the basis of such an invalid notice stood vitiated, as the issue and service of a valid notice is the very foundation of the proceedings for assessment or reassessment and service of such a valid notice confers jurisdiction on the Income-tax Officer for initiating proceedings for reassessment. The direction given by the Appellate Commissioner, while passing an order of remand for making a fresh order of assessment, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), the aforesaid two decisions of the Madras High Court were followed and it was held that when the Appellate Assistant Commissioner set aside the reassessment order passed by the Incometax Officer on the ground that the proceedings for reassessment were bad in law and invalid and the Income-tax Officer was directed to make a fresh reassessment according to law after giving the assessee a reasonable opportunity of hearing, the subsequent proceedings for reassessment were wholly void and illegal if they were taken after the period of limitation had expired. It was observed by their Lordships of the Gujarat High Court in the aforesaid case[1975] 100 I.T.R. 734. as under: "The jurisdiction of the Income-tax Officer to initiate reassessment proceedings under section 34 is a jurisdiction which he derives under section 34 and not by virtue of any directions given to him by the Appellate Assistant Commissioner. Moreover, the Appellate Assistant Commissioner himself had no jurisdiction under section 31 of the Act of 1922 to issue directions which went to the extent of conferring jurisdiction upon the Income-tax Officer when he was not lawfully seized of jurisdiction." We are in respectfu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner in this writ petition is that the notice dated 6th May, 1965, was invalid as it was issued beyond the period of limitation of eight years prescribed in section 12 of the Act. We may refer in this connection to the well-known decision of the Supreme Court in Calcutta Discount Co. Ltd. v. Incometax Officer, Companies District I, Calcutta[1961] 41 I.T.R. 191 (S.C.); A.I.R. 1961 S.C. 372., wherein it was held: "It is well-settled however that though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts, it is well-settled, will issue appropriate orders or directions to prevent such consequences." It was also observed by their Lordships of the Supreme Court in the aforesaid case that the existence of an alternative remedy is not always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have found that it is beyond any doubt that the notice issued on 6th May, 1965, was per se invalid, having been issued beyond the period of limitation prescribed in section 12 of the Act and, as such, the Commercial Taxes Officer would be clearly acting without jurisdiction, if he is allowed to continue with the proceedings for reassessment on the basis of such an invalid notice. In our view, it would be causing harassment to the petitioner, if, in such circumstances, he is left to avail of the ordinary remedy of appearing before the assessing authority and after the order of reassessment is passed by him, then, to take recourse to the remedies provided under the Act of filing appeal, revision and reference. We think that this is a proper case, where the assessing authority has assumed jurisdiction although he had none on 6th May, 1965, the date when the fresh notice for reassessment was issued by him, and adequate relief should be given to the petitioner in the proceedings under article 226 of the Constitution. It may also be pointed out that the reference application which has been preferred by the company before this Court for seeking a direction to the Board of Revenue to st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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