GOPALAKRISHNAN NAIR, J -
(1.) 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.
(2.) 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(2) 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.
(3.) 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(2)(a) 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(2)(a) 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(2) of the Act of 1961.