P.K. Goswami, C.J. -
(1.) THE petitioner describes herself as heiress and legal representative of late Barin Raha and an assessee under the Income-tax Act. By this application under Article 226 of the Constitution, she is challenging three orders of the Income-tax Officer, A-Ward, Digboi. THE first is an assessment order dated November 25, 1965, under Section 144 of the Income-tax Act, 1961 (hereinafter referred to as the "new Act"), for the assessment year 1961-62. THE second is an order dated December 26, 1967, rectifying the above order under Section 154 of the new Act and the consequent notice of demand dated December 29, 1967, under Section 29 of the Indian Income-tax Act, 1922 (hereinafter referred to as the "old Act"). THE third is a notice dated March 13, 1967, under, Section 148 of the new Act.
(2.) THE facts necessary for appreciation of the questions raised in this application may briefly be set out: A notice dated May 11, 1961, under Sections 22(2) and 38 of the old Act was served on the assessee, Barin Raha, by the Income-tax Officer, Digboi, in respect of the assessment year 1961-62 on May 16, 1961. THE assessee did not submit his return and died on February 22, 1963, after the commencement of the new Act with effect from April 1, 1962. Notice under Section 142(1) of the new Act was served upon the legal successor of the assessee on May 14, 1963. Another notice, dated June 4, 1964, under Section 22(4) of the old Act was also issued to the legal successor of the assessee. No one complied with the above notices and the order of assessment was passed under Section 144 of the new Act on November 25, 1965. Notice of demand under Section 156 of the new Act was accordingly issued to the legal successor on December 8, 1965, demanding payment of a sum of Rs. 19,597 within 35 days from the date of service of the said notice. THE petitioner applied to the Income-tax Officer for allowing her to pay the tax by instalments and she paid the entire tax in instalments by June 30, 1966. On March 13, 1967, a notice was issued under Section 148 of the new Act in respect of the assessment year 1961-62. On November 23, 1967, the petitioner challenged the entire proceedings before the officer as ultra vires and illegal and claimed refund of the tax already paid. On December 26, 1967, the Income-tax Officer passed an order under Section 154 of the new Act rectifying the earlier assessment order dated November 25, 1965. This rectification has not altered the quantum of assessment but substituted certain old sections of the Act in place of the new sections appearing in the earlier assessment orders. Consequent upon this rectification, a revised notice of demand was issued under Section 29 of the old Act on December 29, 1967. THE petitioner has preferred an appeal against this order to the Appellate Assistant Commissioner.
In this case we are not concerned with the notice dated November 25, 1965, under Section 274 read with Section 271 of the new Act and the resultant order dated November 23, 1967, imposing penalty, against which also there is said to be an appeal pending.
At the outset, the learned counsel for the department submitted that this application is liable to be dismissed on the ground that the alternative remedy by way of appeal has already been resorted to by the petitioner. He further submits that the petitioner could seek cancellation of the assessment under Section 27 of the old Act. The application under Article 226 of the Constitution is, therefore, not maintainable, says the learned counsel. We are, however, not impressed with the preliminary objection raised in this case as the petitioner is seeking to question the very jurisdiction of the Income-tax Officer to make the impugned orders. The preliminary objection, therefore, is overruled.
(3.) THE learned counsel for the petitioner submits that the order of assessment dated November 25, 1965, is null and void because the provisions of the new Act could not be invoked for the assessment year 1961-62. Secondly, he submits that the above order being absolutely invalid in the eye of law could not be rectified by the order dated December 26, 1967. Thirdly, he contends that in any event the order of rectification is without jurisdiction and is also bad for violation of the principles of natural justice. Lastly, he submits that the order under Section 148 is also without jurisdiction on account of the fact that the conditions precedent for such an order were lacking in this case. THE learned counsel also took in his petition the question of the vires of Section 297(2)(d)(ii) of the new Act, but did not press this point on account of a recent decision of the Supreme Court in Civil Appeal No. 1593 of 1969 (Jain Bros. v. Union of India, 1970 77 ITR 107 disposed of on November 18, 1969.
With regard to the first submission, we have to see whether the order in this case could be quashed for not correctly describing the section under which the order was passed. Both the learned counsel admit that the provisions of the old Act are applicable in respect of the assessment year in question. But, says Mr. Ray, that the fact that the orders and notices were given to the petitioner under the provisions of the new Act, these were mere scraps of paper and could be ignored by the assessee who cannot be held liable under these orders and notices. When a question was put to Mr. Ray that if the particular orders and notices are held by the court as those passed under the provisions of the old Act in spite of the fact that the sections of the new Act were quoted therein, he fairly submitted that his position would then be difficult. We have, therefore, to consider whether the assessment orders could be said to be passed under the provisions of the old Act in the entire facts and circumstances of the case. It is not denied that the Income-tax Officer had powers both under the old Act as well as under the new Act. The exercise of the power of assessment in this case, therefore, can be referred to his jurisdiction which he undoubtedly has under the provisions of the old Act, although wrong sections were initially inserted in the proceedings and later rectified. In this context we may refer to a decision of the Supreme Court in Hazari Mal Kuthiala v. Income-tax Officer, 1961 41 ITR 12 This was a case in which the Income-tax Officer, Special Circle, Ambala, issued a notice under Section 34 of the Patiala Income-tax Act to reopen the firm's assessment deriving his jurisdiction from an earlier order made by the Commissioner of Income-tax under Sections 5(5) and 7A of the Indian Income-tax Act, ordering disposal of the case by him and not by the Income-tax Officer, Patiala, who was the competent authority to assess the firm. The firm contended that the officer at Ambala had no jurisdiction as the order of the Commissioner was ultra vires, since it was not issued under the Patiala Income-tax Act, which applied to the assessment year in question and as the Commissioner had not consulted the Central Board of Revenue as provided under Section 5(5) of the Patiala Income-tax Act before passing the order. This was even a stronger case than the present one as there was the requirement of consultation with the Central Board of Revenue, which, however, the Supreme Court held to be directory. The Supreme Court held:
" That the exercise of a power would be referable to a jurisdiction which conferred validity upon it and not to a jurisdiction under which it would be nugatory; and the order of the Commissioner was not invalid merely because it was not made under the Patiala Act. "