This is a write petition under article 226 of the Constitution directed against a best judgment assessment order made on the 23rd November, 1963, on the allegation that on the 23rd November, 1963, voluntary returns were presented but they were not accepted by the clerk concerned under the instructions of the Income-tax Officer.
The facts leading up to this petition are these : The petitioner-firm consists of five partners. The relevant assessment year is 1963-64, year ending 31st March, 1963. On the 9th of May, 1963, the notice under section 139(2) of the Income-tax Act, 1961 (hereinafter referred to as the Act), was issued and served on the 28th of June, 1963. The return, therefore, under this notice was due on the 27th of July, 1963. The petitioner applied for adjournment which was granted up to 30th September, 1963. On the 3rd of October, 1963, the petitioner again applied for adjournment and this application was rejected. On 17th October, 1963, a notice under section 142(1) of the Act calling for accounts on the 30th October, 1963, was issued.
On the 30th October, 1963, there was some dispute between the same Income-tax Officer and the allied firm, M/s. Sohan Lal Sardari Lal, consisting of vice partners, four of whom are common to the petitioner-firm. In that case the advance tax was demanded and Sri Sohan Lal, who is also one of the partners of the petitioner firm, had deposited the advance tax on the very day when it was demanded; but nevertheless the Income-tax Officer proceeded to levy a penalty for failure to pay the tax. Against that penalty order an appeal was filed before the Appellate Assistant Commissioner who by his order dated 16th of March, 1964, commended somewhat adversely against the conduct of the present Income-tax Officer for having been in undue haste in levying a penalty and for not having given due consideration to the fact that the advance tax in fact was deposited on the very date on which a penalty was levied.
Reverting to the facts of the present case, on the 12th of November, 1963, the opposite party again issued a notice under section 142(1) of the Act fixing 18th November, 1963, for the production of the accounts. 18th of November was a restricted holiday and on that date an application for a short adjournment was moved by the petitioner as their accountant had gone home for Diwali. According to the assessment order passed subsequently the application dated 18th November, 1963, was allowed only to the extent of adjournment of one day, i.e., to the 19th November, 1963. The case of the petitioner of the other hand is that no intimation of the adjourned date was given and the case was not fixed for the 19th of November, 1963. According to the petitioner, it had not heard anything in respect of the application for adjournment. Therefore, on the 23rd November, 1963, a return of the firm along with five returns of the partners were sent through Ramji Lal, accountant. The receiving clerk, however, refused to receive these returns without the permission of the Income-tax Officer. He went to the Income-tax Officer and on his return told the petitioner that he would not accept the returns. Thereupon, the same afternoon at 3 p.m. the petitioner, by registered post acknowledgment due, despatched the aforesaid six returns, five on behalf of the partners and one on behalf of the firm. The assessment order is also dated the same date, i.e., 23rd November, 1963. Penalty notice under section 274 of the Act was also issued on the same day and registration was also cancelled. The petitioner filed an appeal on the 28th of November, 1963, against the best judgment assessment and on the 5th December, 1963, filed an application under section 146 for setting aside the ex parte assessment. In the affidavit of the petitioner, various allegations of bias are set out and they are, inter alia, that on the 9th December, 1963, when the case of the aforesaid allied firm was called out, the Income-tax Officer enquired from Sri Sohan Lal, the aforesaid common partner of the two firms, whether the tax assessed on the petitioner-firm had been paid. To this Sohan Lal replied that their application under section 146 of the Act was fixed for hearing for December 11, 1963, and that he had every hope that the application will be allowed and the result would be the cancellation of the demand on the petitioner-firm. The counter-affidavit on this point is vague and evasive. The relevant portion of paragraph 16 of the counter-affidavit on this point merely is :
'That contents of paragraph 25 of the petition are not admitted as stated.'
This can only mean that the version as given is not admitted, but there could be no denying that some incident did take place on the 9th December, 1963, as alleged in the affidavit of the petitioner. Similarly, the allegations in paragraph 26 of the petition purported to set out the exact words said to have been used by the Income-tax Officer upon his becoming angry at the aforesaid answer given by Sohan Lal. To that also the reply merely is 'not admitted'. Similarly, in paragraph 26 of the petition it was asserted that on the 23rd of November, 1963, returns were taken to the Income-tax Officer but the clerk concerned had refused to accept them under instructions from the Income-tax Officer and when the petitioners accountant wanted to meet the opposite party personally, for which purpose he sent a slip bearing his name, he was not called till 3 p.m. He then went away and sent the returns by registered post on that very date at 3 p.m. The reply to this in the counter-affidavit is merely 'not admitted'. This is far from satisfactory state of affairs. One expects from the Income-tax Officer a little more precise and helpful attitude so as to advance the course of justice.
Be that as it may, the notice of demand and the assessment order were admittedly served on the petitioner on 23rd November, 1963, at 7-30 p.m. and the six voluntary returns were undoubtedly despatched at 3 p.m. by registered post on that very day. The real question therefore that falls for determination in this petition is whether the said voluntary returns were in fact taken on the Income-tax Officer for purpose of filing on 23rd November, 1963, as alleged by the petitioner and they were not allowed to be filed by the clerk concerned under instructions from the Income-tax Officer If the answer is in the affirmative, then it is manifest that the petitioner was denied the benefit of provisions of section 139(1) of the Act which provides for a return to be filed at any time before the assessment is made, and in those circumstances the ex parte assessment would stand to be quashed.
Two facts, as already observed, cannot be denied : (1) that the returns were filed by register post at 3 p.m. on the 23rd November, 1963; (2) the assessment order was also dated 23rd November, 1963, and the assessment order and the demand notice were served on that very day in the evening at 7-30 p.m. The unusual and undue haste with which the demand notice dated 23rd November, 1963, was served lends support to the petitioners contention that something did transpire on the 23rd November at the office of the Income-tax Officer; otherwise there is absolutely no reason for this unusual and undue haste in serving the assessment order on the very evening on which the assessment order purports to have been passed. It would also indicate that the Income-tax Officer was anxious to forestall any attempt on the part of the petitioner of file voluntary returns as provided under section 139(4) of the Act. Without, therefore, going into the question of bias, I would accept the version given in the affidavit of the petitioner particularly as the affidavit of the opposite party is vague and evasive and it is supported by the attendant circumstances of the case, that the voluntary returns were attempted to be filed on the 23rd November, 1963, before the assessment order was passed, but those returns were not allowed to be filed necessitating the unusual step on the part of the petitioner to despatch the same by registered post at 3 p.m. although the Income-tax Officer is situate in the same town.
In the above view of the matter it is unnecessary to go into the legal question raised by the petitioner that the notice issued under section 139(2) on the 9th of May, 1963, was ultra vires in view of the provisions of section 139(1) of the Act which gave all assessees, whose income was from business or profession, a period of six months from the end of the relevant accounting year in which to file the return.
The plea of alternative remedy was raised by the learned standing counsel for the department but it has been held time and again that the existence of an alternative remedy is not an absolute bar to the exercise of write jurisdiction under article 226 of the Constitution. In the present case, in view of what has been set out above, an application under section 146, which would be decided by none other than the himself, will be but an appeal from Ceasar to Ceasar and would be a complete negation of justice. The appeal filed under section 246 against the best judgment can at best give the petitioner relief in respect of the quantum of assessment but would afford him no relief in respect of all his other grievances. In these circumstances, in my judgment, the alternative remedy is wholly inadequate and certainly not equally efficacious.
For the reasons given above, the assessment order and the penalty notice dated 23rd November, 1963, are directed to be quashed. The voluntary returns sent by registered post are already on the record and the Income-tax Officer is directed to complete the assessment in accordance with law.
The writ petition is allowed with costs.