R. S. PATHAK J. - This is a special appeal directed against an order of our brother Manchanda dismissing a petition for certiorari.
The appellant enjoys income from various sources, including income from interest on securities, property, sayar and sale of jungle trees of spontaneous growth as well as from a share in a partnership firm. The appellant was assessed to income-tax for the assessment years 1949-50 and 1950-51, the relevant years of account being the years commencing October 1, 1947, and ending September 30, 1948, and beginning October 1, 1948, and ending September 30, 1949, respectively. On March 17, 1954, the Income-tax Officer, A-Ward, Sitapur, issued a notice under section 34 of the Indian Income-tax Act, 1922, to the appellant in respect of each of the assessment years 1949-50 and 1950-51. The appellant filed his return in response to the notice for the assessment year 1950-51 disclosing the same income as had been returned originally by him. The Income-tax Officer, on March 5, 1955, made an assessment under section 23(3)/34 including a sum of Rs. 2 lakhs in the total income of the appellant as income from sale of forests which had escaped assessment earlier. The appellant appealed against this assessment and the appeal was allowed by the Appellate Assistant Commissioner who directed the Income-tax Officer to make a fresh assessment. It is alleged by the appellant that during the assessment proceedings taken subsequently by the Income-tax Officer the appellant came to know that the Income-tax Officer had got the impression that the appellant had sold the forests from a statement on oath made before him on December 18, 1950, by a partner of the firm, M/s. Chunni Lal & Co., which had purchased the forests, and it was urged by the appellant before the Income-tax Officer that this information had been available to him at the time when the original assessment was made and, therefore, he had no jurisdiction to initiate proceedings under section 34. It is said that despite this objection the Income-tax Officer continued the proceeding under section 34; this led to the appellant filing a petition under article 226 of the Constitution in this court (Writ Petition No. 321 of 1957) praying that the notice under section 34 and the proceedings consequent to it be quashed. The petition was admitted by a Bench of this court and an interim order was issued directing that no assessment order be passed upon those proceedings. It is alleged that the Income-tax Officer, having thus been frustrated in assessing the appellant to tax in respect of a sum of Rs. 2 lakhs, now turned his attention to the pending assessment proceedings consequent to the notice under section 34 for the assessment year 1949-50 and included the sum of Rs. 2 lakhs as escaped income in that assessment proceeding. Upon a notice of demand being issued requiring the appellant to pay the tax assessed, the instant petition was filed by him in this court. This petition as well as Writ Petition No. 321 of 1957 were heard together, and were dismissed on the ground that the appellant was guilty of laches in filing the petitions and also that an alternative remedy existed and the circumstances did not call for the exercise of this courts extraordinary jurisdiction under article 226.
Learned counsel for the appellant complains that the grounds upon which the instant petition was dismissed are not sustainable. He points out that the petition was filed three days after receipt of the notice of demand for the assessment year 1949-50 and that the existence of an alternative remedy could be no bar when the principal allegation upon which the petition was founded was that the Income-tax Officer had acted mala fide in assessing the petitioner upon the sum of Rs. 2 lakhs for the assessment year 1949-50, in order to circumvent the order of this court in the earlier writ petition restraining him from making an assessment order for the assessment year 1950-51 in which the proposed assessment of the sum of Rs. 2 lakhs was challenged. We have heard learned counsel at length, and, in our judgment, there is not sufficient material before us to justify the finding that the Income-tax Officer acted mala fide. The affidavit accompanying the petition does not clearly allege mala fides against the Income-tax Officer. It merely states, by paragraph 13 :
'13. That the Income-tax Officer having thus been prevented from passing an order under section 34 for the assessment year 1950-51 proceeded to by-pass the order of the honble High Court by proceeding under a similar notice under section 34 on the same facts, by his assessment order dated January 8, 1958. A true copy of the order is appended to the accompanying affidavit and is marked annexure F.'
The interim order issued by this court in the earlier petition merely restrained the Income-tax Officer from making an assessment order in the proceedings for the assessment year 1950-51. There was nothing in that order which prohibited him from completing the assessment proceedings for the assessment year 1949-50. There was no question here of circumventing or by-passing the interim order of this court, which related to the assessment year 1950-51. This court did not by that order restrain the Income-tax Officer from assessing the sum of Rs. 2 lakhs to tax for any other assessment year. To out minds, there can be no charge of mala fides if the Income-tax Officer assessed that sum as income for another assessment year, and the question whether it could be so assessed was a matter to be decided in proceedings assailing the assessment order. Moreover, even assuming that the effect of the interim order issued by this court was to restrain the Income-tax Officer from at all assessing the sum of Rs. 2 lakhs, it does not appear to us that the Income-tax Officer can be said to have acted mala fide. To substantiate the charge of mala fides it was necessary for the appellant to show that the sum of Rs. 2 lakhs could not have been assessed to tax at all by the Income-tax Officer for the assessment year 1949-50 and that it was not possible for him to have reasonably taken the view that the sum was assessable in that assessment year. The appellant could only succeed if he was able to establish that the act of the Income-tax Officer in assessing the sum of Rs. 2 lakhs for the assessment year 1949-50 was so patently unreasonable, arbitrary and perverse that the court could not but conclude that he was acting mala fide. In this case, the Income-tax Officer expressed the view that the sum of Rs. 2 lakhs was income from a transaction which represented a different business from that disclosed by the appellant and in respect of which the appellant had maintained no account books at all, and, therefore, that the relevant previous year in which this receipt of income fell was the financial year 1948-49, the sale of the forests having taken place on October 4, 1948. It may be open to the appellant to resort to the remedies under the income-tax law for the purpose of challenging this assessment, and we would therefore prefer at this stage merely to state that in our opinion the circumstances attending the assessment of the sum of Rs. 2 lakhs assessable for the assessment year 1949-50 do not establish that he was moved by mala fides. The material on the record is not sufficient to warrant the finding of mala fides. The only ground upon which the extraordinary jurisdiction of this court under article 226 of the Constitution was invoked although an alternative remedy admittedly existed cannot, therefore, avail the appellant. Reliance was placed by him upon the decision in British India Corporation v. Industrial Tribunal, but that was a case where the bona fides of the Government in referring an industrial dispute for adjudication was challenged, and the observations of the Supreme Court that it was the duty of the High Court to have issued notice to the respondent and investigated the charge of mala fides must be appreciated in the context of the facts in that case. No appeal or other remedy was available to the appellant in that case against an order of the State Government making a reference for adjudication. Learned counsel also referred to Pratap Singh v. State of Punjab, but we do not find in this decision anything to support the appellants submission that although an adequate alternative remedy may be available the court is bound to investigate the allegation of mala fides made against a statutory authority.
Learned counsel for the appellant then contends that the information relating to the sale of the forests was before the Income-tax Officer when he made the original assessment, and that because of this he had no jurisdiction to re-open the proceedings under section 34. It is unnecessary for us to dwell upon this submission. This question could be more adequately dealt with by the remedies available to the appellant under the Income-tax Act. It is urged that the period of limitation for preferring an appeal against the assessment order has already expired and that, therefore, this court should not have dismissed this petition on the ground of the existence of an alternative remedy. We are unable to subscribe to this reason in support of maintaining the petition. The appellant, when he filed the petition, was aware that there was an alternative remedy available to him and that the objection as to the existence of that remedy could be raised both at the stage when the petition was heard in admission and also subsequently upon its final hearing. Merely because the petition has been admitted does not deprive the respondents of raising the objection as to the existence of an alternative remedy at any time after the admission of the petition. It was a risk which the appellant took when he filed the petition and which risk he faced throughout the pendency of the petition. We are, therefore, not inclined to grant relief in this case only because the period of limitation for appealing against the assessment order has expired.
We are, therefore, of the view that there is no force in this appeal which is accordingly dismissed with costs.