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TMI Blog1978 (3) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... follows : "The revision has been made for the reason that the income from dividends suffered super-tax at the effective rate of 10% while the dividends which were exempt u/s. 15C(4) and s. 56A of the Indian Income-tax Act, 1922, were given rebate at the rate of average rate of super-tax at 26.178% which was much higher than the rate at which the dividend income actually suffered super-tax. It is also pointed out in the order u/s. 154 that the actual amount of super-tax charged on the amount of Rs. 5,68,206 representing dividends exempt u/s. 15C(4) was Rs. 56,820.60 whereas the rebate allowed on the amount was Rs. 1,49,744.97. It is also pointed out that the actual amount of super-tax charged on Rs. 24,95,480 representing dividends exempt u/s. 56A was Rs. 2,49,158 whereas the rebate allowed was Rs. 6,53,266. The Income-tax Officer sought to rectify the order u/s. 154 but the appellant had objected to the proposed rectification on the ground that the rebate was correctly allowed in the original order and that the mistake, even there be any, is not rectifiable u/s. 154. The Income-tax Officer, for the reasons mentioned in his order, which are considered later, rejected the objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the appeal before the Tribunal was incompetent. The Tribunal observed, inter alia, in its order as follows : "Before parting with the case we wish to place on record the peculiar circumstances in which the assessee has failed before us. It was the Income-tax Officer who led the assessee up the garden path of the provisions of the new Act. The assessee, therefore, lost the chance of filing a revision petition before the Commissioner of Income-tax in time. It would be, however, for the Commissioner of Income-tax to consider, if and when the assessee files the revision petition, as to whether the delay in filing the petition is condonable in the circumstances mentioned above. We express no opinion on it." The Tribunal accordingly dismissed the appeal of the assessee. Upon this, the question as mentioned hereinbefore has been referred to this court. On behalf of the assessee it was contended that under s. 297(2)(a) of the I.T. Act, 1961, it was not mandatory to complete the assessment in the instant case under the provisions of the Indian I.T. Act, 1922. It was submitted that under s. 297(2)(a) only an option or a right has been given to the revenue to complete the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33B of the Act of 1922 in view of s. 297(2) of the Act of 1961 and cl. (a) of sub-s. (2) of s. 297 of the I.T. Act, 1961, included within its scope a proceeding under s. 33B of the Indian I.T. Act, 1922. At page 690 of the report the Supreme Court observed as follows : "It is quite clear from the authorities cited above that the word 'assessment' can bear a very comprehensive meaning ; it can comprehend the whole procedure for ascertaining and imposing liability upon the taxpayer. Is there then anything in the context of section 297 which compels us to give to the expression 'procedure for the assessment' the narrower meaning suggested by the learned counsel for the assessee? In our view, the answer to this question must be in the negative. It seems to us that section 297 is meant to provide as far as possible for all contingencies which may arise out of the repeal of the 1922 Act. It deals with pending appeals, revisions, etc. It deals with non-completed assessments pending at the commencement of the 1961 Act, and assessments to be made after the commencement of the 1961 Act, as a result of returns of income filed after the commencement of the 1961 Act. Then in clause (d) it de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch that a remuneration received under the service agreement was assessable as salary income and, secondly, that the officer had jurisdiction to rectify the assessment and though by reason of s. 297(2)(a), the correct section to be invoked was s. 35 of the Indian I.T. Act, 1922, merely because he had mentioned the corresponding s. 154 of the new Act of 1961, his jurisdiction was not taken away, and as there was no appeal provided under the old Act of 1922 against an order under s. 35, the appeals to the AAC and the Tribunal as well as the consequential reference to the High Court were incompetent and hence the reference had to be returned unanswered. The facts of that case are more or less similar to the facts with which we are concerned in this reference. If the conclusions arrived at by the Division Bench of the Madras High Court are to be accepted then this reference is incompetent. It was held in that Division Bench judgment of the Madras High Court, as we have noticed before, that an order of this nature should be treated as an order passed under s. 35 of the Indian I.T. Act, 1922, and as there was no appeal from such an order, the appeal to the Tribunal did not lie. The court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gives a power and then it might be a question in what cases where the donee has power given to him by the word "may" it becomes his duty to exercise it. Therefore, the position is that the expression "may" normally must always be construed to mean enabling unless the expression is coupled with a certain duty to the donee of the power that it becomes obligatory for him to exercise the enabling power. In those circumstances the expression "may" is construed to mean "must". Therefore, bearing the aforesaid principles in mind, we must examine that, in the instant case, Parliament has deliberately chosen to use the expression it "may" in some of the sub-clauses of sub-s. (2) of s. 297 of the I.T. Act, 1961. We must give due significance and weight to the choice of language by Parliament. Secondly, we have to bear in mind that in cl. (a), though a power has been given to the ITO to proceed under the provisions of the Indian I.T. Act, 1922, there is no duty, as such, cast upon him to do in the sense that he must proceed only under the old Act and not under the new Act if the situation in a particular case so warrants. It is not possible to find such a compelling obligation on the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h there was assessment of incomes and determination of the charge to tax in accordance with the charging sections. The orders passed under section 35(1) by the Income-tax Officer on the 20th December, 1966, were all orders altering assessment orders made in the proceedings for assessment of the firms, while under the impugned notices the Income-tax Officer is proposing to rectify orders made for computation of income and imposition of tax under the charging section in the case of individual partners. Clearly, therefore, in these cases, section 297(2)(a) of the Act of 1961 permits the Income-tax Officer to proceed in accordance with the provisions of the Act of 1922 and he has rightly proposed to take action under section 35(5) of the Act of 1922 on the basis of rectifications made in the assessments of the firms under section 35(1) of that Act on 20th December, 1966, in pursuance of the appellate orders granting registration to the firms." Relying on the said decision it was urged, in the context of this controversy, that powers under s. 35 of the Indian I.T. Act, 1922, or s. 154 of the I.T. Act, 1961, being procedural in nature should be guided by the procedural law at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the ITO had the power either under s. 35 of the Indian I.T. Act, 1922, or under s. 154 of the I.T. Act, 1961, to amend the order of assessment in view of the nature of the errors alleged. The appeal before the Tribunal was not about the validity of the amended order of assessment but about the validity of the order which made the amended assessment order. The question was, therefore, not whether the amended order of assessment was validly passed but whether the amendment was validly made under the power given either under s. 35 of the Indian I.T. Act, 1922, or under s. 154 of the I.T. Act, 1961. The opinion of the Tribunal would show that two views were possible on the controversy in question. The errors alleged to have been committed were such errors which could not be described to be errors apparent from the face of the records and, therefore, did not come within the purview either of s. 35 of the Indian I.T. Act, 1922, or s. 154 of the I.T. Act, 1961. Therefore, the submission that an appeal would lie from the amended order of assessment would not, in our opinion, affect the position in this case because here the appeal before the Tribunal was not an appeal from the amende ..... X X X X Extracts X X X X X X X X Extracts X X X X
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