GOPALAKRISHNA NAIR J. - These five writ petitions arise out of certain proceedings under the Income-tax Act relating to five assessment years 1951-52 to 1955-56.
A separate petition is filed in respect of the proceedings taken in regard to each of the five years. In respect of the year 1952-1953, the relief asked for is a writ of certiorari. In respect of the other four years, the petitioner has sought a writ of prohibition to forbid the Income-tax Officer at Visakhapatnam to continue the proceedings he has initiated. In respect of the year 1952-53 he has already made an order and the petitioner seeks to quash it as one made utterly without jurisdiction and contrary to the provisions of the Income-tax Act.
As the parties to these petitions are the same and as the petitions raise common question of law they have been heard together and can conveniently be disposed of by a common judgment.
The facts are not in dispute and lie within a brief compass.
The petitioner is a partner of two different firms; one of them carries on business in respect of oil mill and the other in respect of commission agency. Each of the two minor sons of the petitioner has been admitted to the benefits of one of these two partnerships. It appears that there are also other major partners in each of these firms. The firms have been duly registered under the Income-tax Act.
The individual assessment on the petitioner for the year 1951-52 was completed on October 31, 1951; for the year 1952-53 on April 21, 1954; for the year 1953-54 on January 23, 1954; for the year 1954-55 on February 10, 1956, and for 1955-56 on March 20, 1957; subsequently on the assessment of the firm in each of these five years, 1951-52 to 1955-56, the share income of the petitioner was rectified on March 31, 1956, April 30, 1957, March 2, 1959, and April 18, 1960, respectively.
The oil mill firm appealed against each of the assessment orders. The Tribunal reduced the assessment made on the firm for the first four years. The appellate orders of the Tribunal concerning the years 1951-52 to 1954-55 were made on November 14, 1960, February 9, 1959, April 5, 1961, and April 5, 1961, respectively. Regarding the year 1955-56 the Appellate Assistant Commissioner reduced the assessment of the oil mill firm on October 20, 1962. The matter did not go up to the Tribunal and the Appellate Assistant Commissioners order became final.
In February, 1963, the Income-tax Officer, Visakhapatnam, issued notices to the petitioner intimating to him that his individual assessments have to be altered because the share income of his minor sons had not been included in computing his total income of his minor sons had not been included in computing his total income in any of the five years. It is well to state here that each of the two minor sons had been separately assessed each year in respect of his share of the profits of the respective firm. The admitted position, therefore, is that the petitioner as also each of his minor sons had been separately assessed by the Income-tax Officer in each of the five years under consideration and the tax so assessed was duly paid.
The petitioner on receipt of the notices of the Income-tax Officer in February, 1963, protested that it was not open to him in law to revise of alter the individual assessment orders which had become final long ago and the tax according to which had also been paid. But the Income-tax Officer proceeded to make additional assessment in respect of the year 1952-53 and issued a demand on the petitioner for payment of Rs. 11,786.84 nP. In respect of the other four years his proceedings are still pending.
On these admitted facts two main question have been raised. First, whether it is the old Income-tax Act of 1922 or the new Income-tax Act of 1961 that will apply to proceedings now impugned. Second, whether the Income-tax Officer had power and jurisdiction under the provisions of the relevant Act to take the proceedings under challenge. This question relates primarily to the merits of the case.
I shall take up the first question immediately. According to Mr. Kondaiah, appearing for the department, it is only the new Act which came into force on April 1, 1962, that can apply to the present case and not the provisions of the old Act. This contention, according to him, assumes considerable importance for the reason that under the new Act an appeal is provided against any order passed by the Income-tax Officer in matters like the present, whereas under the old Act there is no such provision for appeal. The argument on behalf of the respondent is that if the new Act applies the orders which the Income-tax Officer has already passed or may pass hereafter will become appealable and, therefore, the petitioner will not be entitled to maintain the present petitions for issuance of writs. In view of this submission it becomes necessary to consider briefly it is the old Act or the new Act that will apply to the instant cases.
Reliance is place by the learned counsel for the department on section 297 of the Act of 1961 which repeals the old Act of 1922 and also makes certain savings as to the applicability of the old Act. But none of the saving provisions contained in section 297 relates in plain terms to proceedings similar to those taken by the Income-tax Officer in the present cases. Even so, there is nothing in section 297 to indicate that the new Act will apply to cases like the present. Section 297 does not destroy the rights already created or acquired under the Act of 1922, so far as the present enquiry is concerned. The operation of the General Clauses Act is, therefore, not excluded. And the legal principles governing retrospectivity of statutes also come into effect.
It is well settled that in the absence of express words or necessary implication to the contrary, a statute which is not purely procedural can have only prospective and not retrospective operation. There is nothing in the new Act which either expressly or by necessary intendment gives it retrospective effect in respect of the proceedings now in question. The learned counsel for the respondent has drawn my attention to section 155 of the new Act. A plain reading of that section shows that it has only prospective operation.
In the instant cases proceedings for rectification of the completed assessments of the petitioner are said to be taken because of certain appellate orders passed by the Income-tax Appellate Tribunal and the Income-tax Assistant Commissioner. These appellate orders were passed before the coming into force of the new Act of 1961. Admittedly what the Income-tax Officer sought to do in the present cases was by virtue of those appellate orders. It is therefore only reasonable that the statutory provisions which were in force at the time the appellate orders were passed must govern the proceedings now in question.
Besides, there is the important aspect provided by section 6 of the General Clauses Act. Clause (c) of it says that when an Act is repealed, in the absence of a different intention appearing from the repealing Act, all rights and privileges which were acquired or which accrued under the repealed Act would remain unaffected. Clause (e) preserves intact the remedies in respect of such rights and privileges. Therefore, if the new Act does not express or necessarily imply any different intention within the meanings of section 6 of the General Clauses Act, the provisions of the old Act must govern the present cases. The correct approach is not to ascertain whether the new Act has expressly saved the rights and liabilities acquired or incurred under the old Act. We have to look to the new Act only for the purposes of seeing whether it does embody a different intention and does expressly or by necessary implication destroy the rights and liabilities acquired or incurred under the old Act. If this approach is made to the Act of 1961 it will be seen that so far as the present matters are concerned there is nothing in it which in any manner destroys the rights and privileges acquired under the old Act or the liabilities incurred thereunder. This circumstances leads to he conclusion that the relevant provisions of the old Act of 1922 should govern the impugned proceedings.
There is yet another aspect. Section 297 of the new Act says :
'Where a return of income has been filed before the commencement of this Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed.'
Therefore, if the proceedings launched in the present cases by the Income-tax Officer can be construed as proceedings for assessment, they are in express terms saved by section 297 of the new Act and only the provisions of the old Act can apply to them. There has been considerable debate at the bar as to the scope and import of the expression 'proceedings for assessment'. It seems to me however that these words are of sufficient amplitude to comprehends within their scope the proceedings taken by the Income-tax Officer in the present cases. In essence, what he sought to do was to compute the petitioners income at a higher amount and fix his tax liability in a larger sum. Judging by the object which actuated the proceedings, it therefore appears very reasonable to say that they were in truth and effect proceedings for assessment. 'Assessment' includes not only the computation of income but also the determination of the sum payable as tax. Both these elements seems to be included in the proceedings taken by the Income-tax Officer against the petitioner. In seeking to include the income of his minor sons in the total income of the petitioner, proceedings are in effect taken under the provisions of section 16(3)(a)(ii) of the Income-tax Act of 1922. Section 16(3) opens with the words 'in computing the total income of any individual for the purpose of assessment, there shall be included........' Therefore, there is undoubtedly involved a process of computation of income in the proceedings taken by the Income-tax Officer in these cases. On the income of the petitioner so computed, the amount of tax payable by him has naturally to be determined. The respondent Income-tax Officer did determine this amount in respect of the assessment year 1952-53 and he intends to do so in respect of the other four years. All the necessary elements of an assessment thus seem to be present in these cases. Therefore, I think, it is legitimate to hold that the present cases are covered by the saving provision of section 297 of the Act of 1961.
Furthermore, proceedings for rectification of an individual assessment of a partner on the basis of the assessment or reassessment of the firm affect vested rights and are not merely matters of procedure. Section 155(1) of the new Act, which incidentally is substantially similar to section 35(5) of the old Act, cannot therefore be given retrospective operation unless the legislature enacts otherwise expressly or by necessary implication. As I already stated there is nothing either in section 297 or in section 155(1) to give any retrospective operation to the new Act in matters like the present.
In view of these consideration I think the present cases have to be decided on the basis of the provisions of the Income-tax Act of 1922.
Before going into the merits of the case, I think it is convenient to dispose of a connected argument. According to the learned counsel for the department, these writ petitions would become non-maintainable, if the provisions of the new Act which provide for an appeal are held to be applicable to the impugned proceedings. I do not think this contention is entitled to succeed, even if it be held that the new Act governs the present cases. Unlike in the case of mandamus, there is no rule of law which enjoins that when an alternative remedy is available, a writ of certiorari or prohibition should not issue. On the contrary, reported decisions disclose many instances where such writ have been issued in spite of the admitted availability of alternative remedies by way of appeal and revision. In State of U.P. v. Mohammad Nooh (1) ( S.C.R. 595, 605; (1958) S.C.J. 242, 248, 249, 250.) Venkatarama Ayyar J., speaking for the Constitution Bench of the Supreme Court, observed :
'In the next place it must be borne in mind that there is no rule, with regard to certiorari as there is with mandamus, that it will lie only where there is no other equally effective remedy. It is well established that, provided the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by statute (Halsburys Laws of England, 3rd edition, vol. 11, page 130 and the cases cited there). The fact that the aggrieved party has another and adequate remedy may be taken into consideration by the superior court in arriving at a conclusion as to whether it should, in exercise of its discretion, issue a writ of certiorari to quash the proceedings and decisions of inferior courts subordinate to it and ordinarily the superior court will decline to interfere until the aggrieved party has exhausted his other statutory remedies, if any. But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies.'
Again at page 608 his Lordship said :
'On the authorities referred to above it appears to us that there may conceivably be cases - and the instant case is in point - where the error, irregularity or illegality touching jurisdiction or procedure committed by an inferior court or tribunal of first instance is so patent and loudly obtrusive that it leaves on its decision an indelible stamp of infirmity or vice which cannot be obliterated or cured on appeal or revision. If an inferior court or tribunal of first instance acts wholly without jurisdiction or patently in excess of jurisdiction or manifestly conducts the proceedings before it in a manner which is contrary to the rules of natural justice and all accepted rules of procedure and which offends the superior courts sense of fair play the superior court may, we think, quite property exercise its power to issue the prerogative writ of certiorari to correct the error of the court or tribunal of first instances, even if an appeal to another inferior court or tribunal was available and recourse was not had to it or if recourse was had to it, it confirmed what ex facie was a nullity for reasons aforementioned.'
True, this decision of the Supreme Court was not rendered on an income-tax matter, but this principle undoubtedly does apply equally to an income-tax case.
In Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District In Calcutta, the Supreme Court has reiterated the position. Head-note (v) at page 195 reads :
'That though the writ of prohibition or certiorari would not issue against an executive authority, the High Courts had 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 subjected, or was likely to subject, a person to lengthy proceedings and unnecessary harassment, the High Court would issue appropriate orders or directions to prevent such consequences. The existence of such alternative remedies as appeals and reference to the High Court was not, however, always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action. When the Constitution conferred on the High Courts the power to give relief it became the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief were refused without adequate reasons.'
It seems unnecessary to multiply citations in view of these weighty pronouncements. It follows that even if the new Act be held to apply to the present cases, the availability of an appeal under it will not be an obstacle in the way of the petitioner successfully seeking the writs of certiorari or prohibition in the instant cases.
We have now to turn to the merits of the case. It is unnecessary to restate the facts which, as already mentioned, are admitted. The simple question is whether the provisions of section 35(5) of the Act of 1922 enable an Income-tax Officer only to rectify a mistake in regard to the share income of an individual partner as a consequence of the final order of assessment of the firm or whether that opportunity can be availed of by him to correct other errors in the completed individual assessment of a partner, although correction of those errors is not consequent upon the final order of assessment or reassessment of the firm Even if there was a mistake apparent from the record of the assessment of an individual partner, which could have been rectified by the Income-tax Officer by resort to section 35(1) of the Act without any reference whatsoever to section 35(5), but he arming himself with a belated opportunity for rectification available under section 35(5), seek to go back and rectify the original error which he failed to rectify under section 35(1) in proper time I think the answers must be in the negative. The scope of section 35(1) and that of section 35(5) appear to be distinct and different. Section 35(1) is attracted when there is a mistake apparent from the record of an individual assessment. If that mistake becomes apparent not from the record of individual assessment but from the record of the assessment of the firm which, for the purpose of the income-tax, is another entity, he cannot resort to section 35(1). Further, section 35(1) can avail him only if he seeks to rectify the mistake apparent from the record within four years of the assessment order made by him. After the expiry of this period of four years, he will have no right to act under section 35(1).
Section 35(5) can come into play only 'where in respect of any completed assessment of a partner in a firm it is found on the assessment or reassessment of the firm or on any reduction or enhancement made in the income of the firm under section 31, section 33, section 33A, section 33B, section 66 or section 66A that the share of the partners in the profit or loss of the firm has not been included in the assessment of the partner or, if included, is not correct'. The purpose and object of section 35(5), to use the words of the section itself, is 'the inclusion of the share in the assessment' of the partner 'or correction thereof, as the case any be.' The section deems 'such inclusion' or 'correction' to be 'a rectification of a mistake apparent from the record'. This section can, therefore, be invoked only if three conditions concur : (a) the share income of the partner is found to be not included or not correctly included in the individual assessment of the partner; (b) it is so found on an assessment or reassessment of the firm or on any reduction or enhancement made in the income of the firm under section 31, 33, 33A, etc.; (c) it is desired to include the share income in the partners assessment or to correct the share income as the case may be. And the period of limitation prescribed for making the rectification under section 35(5) is different from that prescribed for a rectification under section 35(1). Under section 35(5) a period of four years is to be completed from the date of the final order passed in respect of the firm; whereas under section 35(1) it is four years from the date of the order of assessment of the individual partner. It often happens that the assessment of a firm is made only years after the assessment order in respect of the individual partner is made. If after a lapse of, say, 8 or 9 years after the individual assessment order, a rectification legitimately arising under section 35(5) is to be made and if that opportunity can be availed of by the Income-tax Officer for rectifying other mistakes coming exclusively under section 35(5) is to be made and if that opportunity can be availed of by the Income-tax Officer for rectifying other mistakes coming exclusively under section 35(1) and not at all under section 35(5), the period of limitation prescribed by section 35(1) will become wholly nugatory. The present cases afford a striking illustration of this proposition. Here the final orders on appeals from the assessments of the firm were passed mush more then four years after the individual assessment orders regarding the petitioner had been made. Now if a rectification which does not legitimately arise under section 35(5) is permitted to be made in respect of the individual assessment order orders of the partner-petitioner, it will amount to permitting the Income-tax Officer to rectify under section 35(1) mistakes apparent from the record of the individual assessment of the partner years after the expiry of the time expressly limited by section 35(1). This clearly will not be a justifiable method of putting to use the provision of section 35(5). This provision itself was inserted in the Income-tax Act by an amendment of 1953, which gave it retrospective effect from April 1, 1952. This amendment was obviously made for the purpose of enabling the result of a subsequent assessment on modification in the assessment of the firm to be given effect in respect of the completed individual assessment of a partner. It could not, therefore, have been intended to give it any extended operation or function. Otherwise, there would have been no purpose or point in enacting the stringent provision of limitations contained in section 35(1). Section 35(5) has therefore to be confined to its own appropriate share and not be permitted to make authorised inroads upon the finality of individual assessments. As pointed out by the Judicial Committee in Commissioner of Income-tax v. Khemchand Ramdas (1)  6 I.T.R. 414 (P.C.).
'Thought the Indian Income-tax Act nowhere imposes any limit of time within which an assessment under the provisions of section 23 and 29 is to be made and the service of notice of demand can, therefore, be made at any time, yet, after a final assessment under those sections has been made, the Income-tax Officer cannot go on making fresh computations and issuing fresh notices of demand to the end of all time. A final assessment once made cannot be reopened except in circumstances detailed in section 34 and 35 of the Act and within the time limited by those sections. The Commissioners powers under section 33 can only be exercised subject to the provisions of section 34 and 35. The provisions of these two sections are exhaustive and prescribe the only circumstances in which and the only circumstances in which and the only time in which such fresh assessments can be made fresh notices of demand can be issued.'
If section 35(5) is confined to serve the purpose for which it was enacted, there will be no case at all for taking any fresh proceedings against the petitioner-assessee for enhancing his tax liability or recomputing his income.
In the appeals against the assessments of the firm, the appellate authorities in fact reduced the assessment of the firms income. Therefore, in respect of each of the five years in question, the petitioner became entitled to some refund. But the learned counsel for the department has urged that even if the firms income has been reduced, a formal rectification to that effect has to be made under section 35(5) in the partners individual assessment, and that when the final assessment of the partners is reopened for making such rectification to his advantage, any other rectification to his disadvantage can also be made by the Income-tax Officer even if it falls outside the ambit of section 35(5). This, as I have already pointed out, does not appear to me to be a tenable contention at all. It is also not clear to me why a formal rectification of the partners assessment should at all be made in cases like the present where all that is necessary is to give him a refund. In any event, the purported rectification, in circumstances like the present, cannot be designed to cast any additional tax burden on the partner. Therefore, even if it be considered necessary, in spite of the implications of section 35(3), to make a formal rectification in accordance with the order of refund in favour of the individual partner, I do not think that can at all lead to any other rectification of the final order of assessment of the partner. In the instant cases the attempt obviously is to bring into the assessment of the individual partner, which became final years ago, the shares of the two minor sons in the firms profits. It is almost impossible to say that a rectification for this purpose is in any reasonable or direct manner connected with a rectification contemplated by section 35(5). It is admitted that in all the returns, the petitioner had shown himself as a partner of two different firms in each of which one of his minor sons was admitted to the benefits of the partnership. In spite of this, the orders of assessment of the father-partner did not take into account the share income of the minor sons. What is more, the minor sons were separately assessed in respect of their share income and the tax was collected from them. Assuming that non-inclusion of the minor sons share of profits in the total income of the father is a mistake apparent from the assessment records of the father, I find it very difficult to say that this mistake has anything to do with section 35(5). It might have been possible for the Income-tax Officer to correct the error in the order of the assessment of the petitioner within four years of the passing of that order, but he did not do so. He was content to assess the father and the minor sons separately and collect the tax from each of them. It seems to me hopelessly time barred now to attempt to make a rectification which he ought to have made years ago. What he is not entitled to do directly he cannot be permitted to do indirectly by resorting to the doubtful course of unduly stretching the scope of section 35(5).
All that I have stated above will apply to the four assessment years, 1952-53 to 1955-56; but the assessment years 1951-52 stands on a special footing. The final assessment order on the petitioner was admittedly made for that year on October 31, 1951. Section 35(5) was enacted by the Amending Act of 1953 but it was given limited retrospective effect from April 1, 1952. Any assessment of a firm or any individual assessment of a partner completed before April 1, 1952, cannot, therefore, fall within the preview of section 35(5). Income-tax Officer, V. Circle, Madras v. S. K. Habibullah and Second Additional Income-tax Officer, Guntur v. Atmala Nagaraj are clear authorities for this proposition. In Second Additional Income-tax Officer, Guntur v. Atmala Nagaraj the assessment of the partner was completed before April 1, 1952, and the Supreme Court held that section 35(5) could not apply to that case. This precisely is the position here in respect of the assessment for the year 1951-52. Therefore, neither section 35(5) of the old Act nor section 155(1) of the new Act can be invoked in respect of it. The Income-tax Officer had clearly no jurisdiction to initiate any proceedings under section 155(1) of the new Act with a view to reopening or amending the assessment order passed as early as October 31, 1951, in respect of the year 1951-52. Therefore, a writ of prohibition has to issue to prevent him from taking further proceedings in the matter.
In respect of the year 1952-53 he passed an order on February 8, 1963. By that order he virtually amended the assessment for the year 1952-53 which had been completed on January 24, 1954. He purported to do this by invoking the provisions of section 155(1) of the new Act. What I already stated is sufficient to show that he was wrong in having done so and that he had no jurisdiction to do so. I am, therefore, satisfied that his order dated February 8, 1963, has to be quashed by certiorari.
Regarding the other three years 1953-54 to 1955-56, I think it is necessary to issue a writ of prohibition as asked for by the petitioner to restrain the Income-tax Officer from proceeding further.
None of these cases really fall within the scope of section 35(5); final assessment orders have been sought to be amended in respect of an alien matter in the guise of taking action under section 35(5) which, as I stated before, is not permissible in law. The Income-tax Officer purported to act clearly in excess of his jurisdiction. The result is that the petitioner succeeds in all the five writ petitions but as they have been heard together, I do not think I should award costs in each of them. I think it is sufficient if costs are awarded in Writ Petition No. 191 of 1963 which is for certiorari and Writ Petition No. 206 of 1963 which is for prohibition. In each of these two petitions counsels fee is fixed at Rs. 250.