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Srimati Suniti Devi Jaipuria Vs. Income-tax Officer, a Ward and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberMatter No. 537 of 1967
Judge
Reported in[1971]79ITR391(Cal)
ActsIncome Tax Act, 1922 - Sections 5, 34 and 64
AppellantSrimati Suniti Devi Jaipuria
Respondentincome-tax Officer, "a" Ward and ors.
Appellant AdvocateD. Pal, Adv.
Respondent AdvocateD. Gupta, Adv.
Cases ReferredLtd. v. Singapore Improvement Trust
Excerpt:
- .....income-tax officer, refund' circle, has jurisdiction only over cases which result in refund, the return filed by the petitioner for the assessment year 1956-57 before that officer was invalid as in that year the petitioner was liable to be assessed on a substantial income. the officer having jurisdiction over the petitioner was the income-tax officer, district 11(2), within whose territorial jurisdiction the petitioner resided at the material time and a return should have been filed before that officer. it is submitted that as no valid return had been filed for 1956-57, the respondent no. 1 had rightly issued the impugned notice under section 148. so far as the intermittent transfers of the petitioner's file from one income-tax officer to another is concerned the only comment made in.....
Judgment:

K.L. Roy, J.

1. This is one more application under Article 226 of the Constitution for a writ in the nature of certiorari for quashing a notice under Section 148 of the Income-tax Act, 1961, served on the petitioner and all proceedings taken thereunder and also for a writ in the nature of prohibition restraining the respondents from taking any further steps in respect of the impugned notice and for other ancillary reliefs. The petitioner is Srimati Suniti Devi Jaipuria and the respondents are, (1) the Income-tax Officer, Central Circle XI, (2) the Income-tax Officer, Refund Circle, Calcutta, (3) the Income-tax Officer, ' C ' Ward, District II{2), Calcutta, (4) the Income-tax Officer, ' B ' Ward, District VI, Calcutta, (5) the Commissioner of Income-tax, Central, Calcutta, (6) the Commissioner of Income-tax, West Bengal-I and (7) the Union of India. As the facts narrated and/or alleged in the petition as also the replies therefor in the affidavits-in-opposition would be material for the purpose of considering one of the contentions raised by learned counsel for the department, it would be necessary to set out the facts in some detail. The petitioner had income from dividends and in respect of the assessment year prior to the year 1956-57, the petitioner used to file her returns with the Income-tax Officer, Refund Circle, Calcutta, in order to claim refund of excess tax deducted at source and her general index register number in that circle was No. RC/ II(I)/235-J. For the assessment year 1956-57, for which the corresponding accounting year was 2013 S.Y., the petitioner filed her return before the said Income-tax Officer, Refund Circle, the second respondent herein, on the 29th March, 1561, i.e., only two days before the time to file a return expire^. Apparently, no order was passed on this return by the second respondent. A notice purported to be under Section 148 of the Income-tax Act, 1961, dated the 6th June, 1963, requiring the petitioner to submit her return for the assessment year 1956-57, as the Income-tax Officer was of the opinion that her income for that year had escaped assessment, was served on the petitioner by the third respondent, the Income-tax Officer, ' C ' Ward, District 11(2), Calcutta, the income-tax file of the petitioner having been transferred to the said officer some time in July, 1961, without any intimation to the petitioner. By her advocate's letter dated the 6th July, 1961, the petitioner challenged the validity and/or legality of the said notice. Thereafter, some time in the year 1964, the petitioner's income-tax file was again transferred to the Income-tax Officer, ' B ' Ward, District VI, Calcutta, being respondent No. 4 herein, but again no intimation of such transfer was given to the petitioner. The petitioner through her advocate demanded of the said respondent No. 4 to supply her with materials or reasons which had led the Income-tax Officer to believe that her income had escaped assessment. On or about the 28th August, 1964, the said respondent No. 4 refused to disclose or communicate the alleged reasons as amended. Thereafter, some time in the year 1966, the petitioner's assessment file was transferred back to the Income-tax Officer, Central Circle XI, the respondent No. I again without any intimation of such change to the petitioner. Having been aware of the last transfer the petitioner through her advocate's letter dated the 20/27th September, 1966, again challenged the jurisdiction of the said respondent No. 1 to initiate the assessment proceedings under Section 148 and pointed out that the return already filed by the assessee might be treated as her return in compliance with the aforesaid notice. It was also recorded that the aforesaid submission was under protest and without prejudice to the petitioner's contentions. Thereafter, the respondent No. 1 issued the usual notice under Section 142(1) of the Act on the '16th May, 1967, which was duly complied with by the petitioner through her advocate on the 24th May, 1967, under protest and without prejudice. On the last mentioned date the respondent No. 1 required the petitioner to submit a fresh return of income and by his letter dated the 5th August, 1967, the said respondent No. 1 informed the petitioner that as her return for the assessment year 1956-57 had not been filed, penal action would be taken against her. This application was made on the 5th September, 1967, and a rule nisi was obtained on that date.

2. In the affidavit-in-opposition affirmed by Patri Seshadri Rao, the respondent No. 1 in this application, none of the allegations made in the petition are denied. It is contended that as the Income-tax Officer, Refund' Circle, has jurisdiction only over cases which result in refund, the return filed by the petitioner for the assessment year 1956-57 before that officer was invalid as in that year the petitioner was liable to be assessed on a substantial income. The officer having jurisdiction over the petitioner was the Income-tax Officer, District 11(2), within whose territorial jurisdiction the petitioner resided at the material time and a return should have been filed before that officer. It is submitted that as no valid return had been filed for 1956-57, the respondent No. 1 had rightly issued the impugned notice under Section 148. So far as the intermittent transfers of the petitioner's file from one Income-tax Officer to another is concerned the only comment made in the affidavit is that where the file is transferred from one Income-tax Officer to another situated in the same city it is not necessary to give any notice to the assessee and it is further submitted that when the petitioner demanded to be informed of the reasons for the Income-tax Officer's belief that income had escaped assessment, she was not entitled to such information at that stage. That an original return was received in respect of the assessment year 1956-57 is substantiated by the entry in the order sheet included in paragraph 11 of the said affidavit. The contention of the respondent is that no valid return having been filed for the assessment year 1956-57, there was no bar to the respondent No, 1 issuing a notice under Section 148 of the Act for reassessment of the petitioner's income for that year.

3. Dr. Pal, the learned counsel for the petitioner, submitted that as the income-tax file along with the general index number of the petitioner was with the Income-tax Officer, Refund Circle, the petitioner could only file her return before that officer. Until the file was transferred to respondent No. 1 in July, 1961, the petitioner could not have filed her return before that officer and in this case the petitioner had already filed the return on the 29th March, 1961. It cannot, therefore, be argued that no valid return was filed by the petitioner for that year. Dr. Pal referred me to the two well-known decisions of the Supreme Court, viz., Commissioner of Income-tax v. Ranchhoddas Karsondas, : [1959]36ITR569(SC) and Commissioner of Income-tax v. S. Raman Chettiar, : [1965]55ITR630(SC) for the proposition that, if a return has been filed for any particular year, the Income-tax Officer is not justified in making a reassessment for that year by ignoring the return filed. In the first case the Supreme Court observed that a return in answer to the, general notice under Section 22(1) of the Income-tax Act, 1922, could, under Section 22(2) thereof, be filed at any time before assessment and for this there was no time limit. Further, where in respect of any year a return has been voluntarily submitted before assessment the Income-tax Officer could not choose to ignore the return and any notice of reassessment and consequent assessment under Section 34 ignoring the return was invalid. It is also submitted that, though in the present case the notice has been issued under Section 148 of the 1961 Act, as the assessment year is 1956-57, the provisions applicable would be the provisions of the repealed Act of 1922. In the first of the above cases the Supreme Court's attention was drawn by the learned counsel for the department to the impossibility of the department dealing with any return filed immediately before the limitation for the assessment for that year expired. It was in fact contended that if such a return was filed on the last date the department would be driven to complete the assessment proceedings within a few hours or lose the right to send a notice under Section 34(1). The Supreme Court observed that an argument ab inconvenienti was not a decisive argument. The Income-tax Officer could have avoided the result by issuing a notice under Section 23(2) and not remaining inactive until the period was about to expire. Further, all laws of limitation lead to some inconvenience and hard cases. In the second decision the court more, or less reiterated what had been said in Ranchhoddas's case. Dr. Pal accordingly submitted that the action of the respondent No. 1 in issuing a notice under Section 148 for the assessment year 1956-57, ignoring the return that the petitioner had already filed for that year, was without jurisdiction and void.

4. Mr. D. Gupta, the learned counsel for the department, made two submissions for his contention that this application should be rejected. He pointed out that for the assessment year 1956-57, the limitation period for completing the assessment being four years, such assessment would have become barred on the 31st March, 1961. The petitioner voluntarily filed the return on the 29th March, 1961, which gave the department little time to deal with such a return. I am entirely unable to accept this as an excuse for ignoring the original return. The Supreme Court has specifically dealt with this question and said that even if the return be filed on the last day of limitation the Income-tax Officer has got to deal with it and he could not take recourse to reassessment proceedings ignoring such a return.

5. The next contention of Mr. Gupta is the one raised in the affidavit-in-opposition, viz., that the return filed on the 29th March, 1961. before the Income-tax Officer, Refund Circle, was not a valid return as that Income-tax Officer had no jurisdiction over the assessee. Certain sections of the repealed Act was referred to by Mr. Gupta for his contention. Section 5(5} enjoins, inter alia, an Income-tax Officer to perform his functions in respect of such persons or classes of persons or of such incomes or classes of income or in respect of such areas as the Commissioner of Income-tax may direct. Section 64(1) prescribes that where an assessee carries on a business, profession or vocation at any place, he shall be assessed by the Income-tax Officer of the area in which that place is situated and in Section 64(2) it is provided that in all other cases, an assessee shall be assessed by the Income-tax Officer the area in which he resides. Mr. Gupta submitted that as in this case the respondent No. 1 was the Income-tax Officer in whose area the petitioner resided at the material time, the petitioner should have filed the return before this officer and any return filed before any other officer could not be treated as a valid return. I am entirely unable to accept this contention As pointed out by Dr. Pal, the said Section 64 itself in Sub-section (4) provides that, notwithstanding anything contained in that section, every Income-tax Officer shall have all the powers conferred by or under that Act on an Income-tax Officer in respect of any income, profits or gains accruing or arising or received within the area for which he is appointed. The Income-tax Officer, Refund Circle, was, therefore, not precluded from receiving the return filed by the petitioner and if he was of the opinion that the assessment should properly be made by another officer there was nothing to prevent him from transferring the file to that particular officer Further, in my opinion, Mr. Gupta has overlooked the fact that the general index number of the petitioner's file was with the Income-tax Officer Refund Circle, and a return filed must mention such index number and must be filed with the Income-tax Officer with whom such number isrecorded. The petitioner in this case filed the return before the Income-tax Officer, Refund Circle, and it cannot be said that the return so filed was invalid or inoperative. In any event on the day of filing the said return the petitioner's file had not been transferred from the Income-tax Officer, Refund Circle.

6. The second and the more substantial contention raised by Mr. Gupta is that as in this case the impugned notice under Section 148 was served on the petitioner on the 6th June, 1963, and the present application was made on the 5th September, 1967, the inordinate delay of four years would disentitle the petitioner from claiming any relief under a high prerogative writ. While the issue of a writ is always at the discretion of the court, the court would not exercise such discretion where the delay is excessive and there is no explanation for such delay. In support of his contention Mr. Gupta cited the decision of the Supreme Court in State of Madhya Pradesh v. Bhailal Bhai, : [1964]6SCR261 . That was a case under the Madhya Bharat Sales Tax Act. In the course of the judgment the Supreme Court observed that the power to give relief under Article 226 is a discretionary power and this is specially true in the case of the power to issue writs in the nature of mandamus. Among the several matters which the High Court rightly took into consideration in the exercise of that discretion was the delay made by the aggrieved party in seeking this special remedy and what excuse there was for it. It is further observed that while it is neither easy nor desirable to lay down any rule for universal application, it may, however, be stated as a general rule that if there has been unreasonable delay the court ought not ordinarily to lend its aid to a party by this extraordinary remedy of mandamus. The provisions of the Limitation Act do not as such apply to the granting of relief under Article 226. However, the maximum period fixed by the legislature as the time within which the relief by a suit in a civil court must be prayed for may ordinarily be taken to be a reasonable standard by which the delay in seeking remedy under Article 226 could be measured. The court may consider the delay unreasonable even if it is less than the period of limitation prescribed for a civil action for the remedy but where the delay is more than this period, it would almost always be proper for the court to hold that it is unreasonable. Mr, Gupta submitted that in this case if a declaratory suit was filed in respect of the impugned notice such a suit could only be filed within three years from the date of the notice, and, in any event, in September, 1966, the period of limitation for such a suit had expired and as such this court would not allow the petitioner to take advantage of her laches and be granted extraordinary relief under the writ jurisdiction of this court.

7. I have already set out the facts alleged in .the petition and from the way they have been traversed in the affidavit-in-opposition there can be no dispute that, since the issue of the impugned notices on or about the 6th June, 1963, the department could not make up its mind but kept on transferring the petitioner's assessment file from one Income-tax Officer to another, starting with the transfer to the respondent No. 1 in July, 1961, and ending with the transfer of the file back to the same officer on or about August, 1966. The petitioner has been systematically challenging the validity of the impugned notice before each successive Income-tax Officer to whom the file was transferred and it was only on the 5th August, 1967, when she was threatened with penalty proceedings for non-filing of her return that she demanded justice and came to this court for relief. I do not think there has been any delay on the part of the petitioner to seek the protection of this court in its writ jurisdiction.

8. Further there is a great deal of substance in Dr. Pal's submission that the observations of the Supreme Court in Stale of Madhya Pradesh v. Bhailal Bhai, : [1964]6SCR261 are limited to a writ of mandamus which is a writ commanding an authority to do or abstain from doing certain things. But where writs of certiorari or prohibition are concerned a challenge to the exercise of a jurisdiction not vested or against action in excess of such jurisdiction or for error apparent on the record are always amenable to the writ jurisdiction of the High Courts and in such cases consideration of delay will not at all be material. In support of his contention the first case cited by Dr. Pal was a decision of Desai J. (as his Lordship then was) in Madhavlal Sindhoo v. V. R. Idurkar : [1956]30ITR332(Bom) , where the learned judge observed :

' That while under the Indian Constitution the power to grant all kinds of writs, including the writ of prohibition, was discretionary, the rule of English law that if absence of jurisdiction is apparent on the face of the record, a writ of prohibition was a matter of right and not a matter of discretion was the result of the historical background of such a writ under the English law.

9. The learned judge continued to observe that:

' Where, however, there is patent lack of jurisdiction and the court isimmediately satisfied that the inferior court or authority has exceeded itsjurisdiction, the court will very readily interpose. The discretion to grantor refuse to grant the writ is of course there. But since discretion contemplates an exercise of arbitrium and not arbitrariness the writ must gothough not of right nor of course yet almost as a matter of course unless anirresistible case for withholding the writ is made out. '

10. The above observations were approved of by a Division Bench of the Bombay High Court in P. C. Doshi v. Seventh Income-tax Officer, Bombay : [1967]65ITR187(Bom) , where, after quoting with approval the aforesaid extract from Desai ].'s judgment, the court further observed as follows :

' These propositions are laid down as relating to a writ of prohibition, but Mr. Trivedi argues that they would apply even in the cases where writs of certiorari are prayed for, because the said writ also is employed for quashing orders, which are made either without jurisdiction or in erroneous assumption of jurisdiction or in excess of jurisdiction. '

11. After referring to the decision of the Privy Council in Estate and Trust Agencies (1927) Ltd. v. Singapore Improvement Trust , and of the aforesaid decision of Desai J., the court went on to declare that if there was a patent lack of jurisdiction, normally the court would interfere and would not stay its hands merely on the ground of delay on the part of the petitioner to come to the court. Dr. Pal also referred me to the aforesaid decision of the Privy Council in Estate and Trust Agencies (1927) Ltd. v. Singapore Improvement Trust, and the material point is enunciated in Clause (d) of the head-note to that report, namely :

' A proceeding is none-the-less a judicial proceeding subject to prohibition or certiorari because it is subject to confirmation or approval by some other authority. An application for prohibition or certiorari is never too late as long as there is something left for it to operate upon. '

12. Looked at from the point of view of established decisions Dr. Pal'scontention that delay in presenting the petition would not bar the petitionerfrom obtaining relief by way of prohibition or certiorari against orderseither in excess of jurisdiction or in exercise of erroneous jurisdiction mustbe upheld. None of the grounds urged by Mr. Gupta is of any substance.

13. The rule would be made absolute in terms of prayers (a) and (c). Therewill be no order as to costs.


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