P. Chandra Reddy, Offg. C.J.
1. Writ Appeal No. 9 of 1958:
This appeal is filed against the judgment of our learned brother Justice Kumarayya who dismissed a petition for the issue of a Writ of certiorari to quash the order of the Additional Income-tax Officer, Visakhapatnam, dated 31-3-1955. The facts giving rise to the appeal may be briefly stated:
2. The appellant, one of the partners of a registered firm of Messrs. Vuppala Peda Venkata Ramaiah and Sons, submitted a return of income-tax on 31-1-1951 for the assessment year 1951-52. He declared an income of Rs. 30,823/- including therein a provisional sum of Rs. 10,986/- as his share of income from the aforesaid firm. At that time, the firm's assessment was not completed. Therefore, the assesses requested the Taxing Officer to accept his share of the income from the profits derived by the firm as shown in the return as correct subject to the condition that the assessment may be revised by the Department as and when the firm's assessment was completed.
The Income-tax Officer acceded to the request and that is not in dispute now. Accordingly, he made an assessment determining the tax payable as Rs. 5,841/-, Finally, the assessment of the Firm was made on 31-3-1955 under Section 23(1) computing the total income at Rs. 1,10,934/- for the assessment year 1951-52, which means the appellant's correct share of the income was at Rs. 27,279/- and not of Rs. 10,986/- as adopted in the original assessment.
The Income-tax Officer thereupon made the final assessment on the basis of this income as per the agreement reached between him and the asses-see and passed an order that was the subject-matter of the challenge before the learned Judge and before us too. Several points were debated before the learned Judge but only two or three contentions are relevant for the purpose of this enquiry. One is whether the order can be said to have teen made under Section 23-B of the Indian Income-tax Act (hereinafter called the Act) and whether Section 35 of the Act is attracted to the instant case.
3. The first problem to be solved is whether the assessment made in the year 1951 is a provisional or final one. The answer to this depends upon the interpretation of Section 23B of the Indian income-tax Act. Section 23-B recites:
'(1) The Income-tax Officer may at any time after the receipt of a return made under Section 22, proceed to make in a summary manner, a provisional assessment of the tax payable by the assessee, on the basis of his return and the accounts and documents, if any, accompanying it, after giving due effect (i) the allowance referred to in paragraph (b) of the proviso to Clause (vi) of Sub-section 2 of Section 10, and (ii) any loss carried forward under Sub-section (2) of Section 24.
(2) A partner of a firm may be provisionally assessed under Sub-section (1); in respect of his share in the firm's income, profits and gains, if its return has been received, although the return of the partner himself may not have been received.
(3) A firm may be provisionally assessed under Sub-section (l)as if it were am in registered firm unless the firm fulfils such conditions as the Central Government may by notification in the Official Gazette, specify in that behalf.
(4) There shall be no right of appeal against a provisional assessment made under Sub-section (1).
(5) For the avoidance of doubt, it is hereby declared that the provisions of Section 45 (except the first proviso) and Section 46 apply in relation to any tax payable in pursuance of a provisional assessment made under Sub-section (1) as if it were a regular assessment made under Section 23.
(6) Income-tax paid or deemed to have been paid under Section 18 or Section 18A in respect of any income provisionally assessed under Sub-section (1) shall be deemed to have been paid towards the provisional assessment.
(7) After a regular assessment has been made under Section 23, any amount paid or deemed to have been paid towards provisional assessment made under Sub-section (1) shall be deemed to have been paid towards the regular assessment and where the amount paid or deemed to have been paid towards the provisional assessment, exceeds the amount payable under the regular assessment, the excess shall be refunded to the assessee.
(8) Nothing done or suffered by reason or in consequence of any provisional assessment made under this Section shall prejudice the determination on the merits, of any issue which may arise in the course of the regular assessment under Section 23.'
It is plain from Sub-section 1 that it confers powers upon the Income-tax Officer to make provisional assessment in advance of regular assessment. At the relevant time the taxable income of the firm could not be determined and consequently the tax exigible in regard to the share of the income of the appellant could not be fixed.
That being so, the appellant requested the Department to make an assessment on the basis of the figure mentioned in his return and that in the event of larger income being found to have been received by him he had no objection to have the assessment made on the basis of the correct figure. It is in compliance with this request of the appellant that the assessing authority computed the taxable income of the assessee. In this situation, we think that the assessment comes within Section 23-B (1).
4. Assuming it is not governed by that Sub-section we feel that this could be sustained under Sub-section 2. It is urged by the learned Advocate-General that Sub-section 2 comes into operation only when the partner has not submitted his return and that it excludes the case of a partner submitting a return. We cannot accede to this contention. We think this provision enables the officer concerned to invoke the Sub-section even in a case where the return of the partner has not been received. This interpretation of ours receives support from the language used, namely 'although the return of the partner ...... has not been received' which means 'even if the return of the partner has not been received'.
If the intendment of the Sub-section was to exclude cases of partners submitting the return, the appropriate language would have been 'if the return of the partner himself has not been received To accept the contention of the learned Advocate-General is to restrict unduly the scope and ambit of the Section. For these reasons, we feel that the order of the assessment as made in the year 1950-51 was only a provisional one having regard to the circumstances in which it came into being and that the order falls within the purview of either of the two Sub-sections of Section 23-B.
5. There is another consideration which applies to the contention of the appellant. Admittedly, the assessment made on 31-10-1951 was the result of the request of the appellant as mentioned supra. That being the case, we feel that it is not cpen to the appellant to challenge the validity of the order on the ground that such a course is not permissible under the provisions of the Act. Having induced the Department to adopt the course it did by his representation and conduct, he would not be permitted to question the validity of the order based upon his undertaking to pay the correct tax after the firm was finally assessed. In our judgment, the case falls within the doctrine embodied in Section 115 of the Evidence Act.
6. We are also supported in our view by the judgment of this Court in Baroness v. Customs Collector, Visakhapatnam 1957 2 A WR 207: AIR 1958 A P 122 which arose under Section 30 of the Sea Customs Act. The learned Judges had to deal with the scope of Clauses (a) and (b) of that section. The objection, that the relevant provision of Section 30 did not authorise the Customs Department for any provisional assessment and that consequently the authorities concerned could not call upon the assessee to pay the difference between the amount as assessed under the provisional assessment and the tax as determined on the final valuation of the property shipped, was negatived. In repelling the argument this is what Justice Manohar Pershad who spoke for the court observed:
'Strictly speaking, in the absence of any provision for provisional assessment, such an assessment would not be justified, but the question that arises is what is the effect and whether the petitioner can challenge the provisional assessment. The provisional assessment, we may point out, was made at the instance of the petitioner's husband. Though such a provisional assessment was not permitted by the provisions of the Sea Customs Act, yet when the petitioner's husband has taken advantage of the same, the petitioner cannot, in our opinion, now turn round and challenge it'
This sums up the correct law, if we may say so with respect, and we concur in the opinion expressed therein.
7. Another argument pressed by the learned Advocate General was that since notice of making the final assessment was not served upon his client that would vitiate the impugned order. In support of this he relied on the proviso to Section 35(1) of the Act which reads:
'Provided further that no such rectification shall be made ........ having the effect of enhancing the assessment or reducing the refund unless the Assistant Commissioner or the Income-tax Officer has given police to the assessee of his intention to do so and he has allowed him a reasonable opportunity of being heard'.
The stress of the argument on behalf of the appellant is that since it is the notice that gives jurisdiction to the assessing officer to enhance the assessment the want of it is fatal to the proceedings under the Section.
8. We do not think this argument is admissible. It is not by virtue of Section 35 that the Department is empowered to levy the income-tax. The charging Sections are sections 3 and 4 of the Act and it is by force of these provisions that the concerned officers are competent to low the income-tax. The other sections only provide a machinery for quantifying the liability and the tax. In rejecting a similar argument Kania J. (as he then was) in Chatturam v. Commr. of Income-tax, Bihar, 1947 15 ITR 302: AIR 1947 FC 32 stated that jurisdiction to assess and the liability to pay income-tax were not conditional on the validity of notice.
In that context, the learned Judge quoted with approval the dictum of Lord Dunedin in Whitney v. Commr. of Inland Revenue, 1926 AC 37: 10 Tax Cas 88:
'Now, there are three stages in the imposition of a tax. There is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on the assessment, that ex hypothesi has already been fixed. But assessment particularises the exact sum which a person liable has to pay. Lastly, comes the methods of recovery if the person taxed does not voluntarily pay.'
We may also extract a passage from the judgment of Sargant, L. J. in the case of W. H. Cockerline and Co. v. Commrs. of Inland Revenue, 19-30-16 Tax Cas 1 at P-19 (referred to with approval in the judgment of Justice Kania):
'I cannot see that the non-assessment prevents the incidence of the liability, though the amount of the deduction is not ascertained until assessment The liability is imposed by the charging section, namely, Section 38 (of the English Act) the words of which are clear. The subsequent provisions as to assessment and so on are machinery only. They enable the liability to be quantified and when quantified to be enforced against the subject, but the liability is definitely and finally created by the charging Section and all the materials for ascertaining it are available immediately.'
There is thus no scope for the contention that the failure to issue notice has rendered all the proceedings void. Even otherwise, we think there is no substance in that contention for the reason that the appellant who was one of the partners of the firm was present at the time when the assessment of the firm was completed. That being so, there is no question of his not having any notice of the final determination of the firm's income which has furnished the basis for the rectification of the provisional assessment.
9. In the view taken above, it is not necessary for us to consider whether there is a mistake apparent from the record and which of the two views is correct, namely, whether the one adumbrated by this Court in Lakshminarayana Chetty v. 1st Addl. Income-tax Officer : 29ITR419(AP) or that the Madras High Court in Habibullah v. Income-tax Officer : 32ITR369(Mad) .
10. Leaving these considerations apart, there is another weighty reason which necessitates the dismissal of the Writ appeal. The jurisdiction of this court under Art. 226 of the Constitution could be invoked only in furtherance of justice, ex debito justitiae, and not in the interests of injustice. It is not pretended by the learned Advocate General that the requirements of justice impel us to exercise the extraordinary jurisdiction in favour of his client. Here, the assessee has induced the Income-tax Officer to believe that he could make an assessment provisionally subject to it being reopened when the final assessment of the firm was made, Having succeeded in making the Department act upon his assurance he wants to turn round and question the legality of the order of the Income-tax Officer for which he was himself responsible. In such circumstances, it would be a perverse exercise of jurisdiction under Article 226 to quash the order of the Income-tax Officer.
11. Another answer to this appeal is that it is within the discretion of the learned Judge to issue certiorari or not and this court will not interfere with the exercise of the discretion unless it finds that it was exercised erroneously or improperly. It cannot be postulated in this case that any such complaint can be made as against the orders under appeal.
12. For all the above reasons this appeal is dismissed with costs. Advocate's fee Rs. 100/-.
13. The above judgment covers the other writappeals 15, 16 and 17 of 1958 as the questions raised by them also are the same as those in Writ appeal No. 9 of 1958. These appeals are also dismissed with costs. Pleader's fee Rs. 50/- in each.