Pathak, J. - (1.) THE petitioner is a private limited company carrying on business in cold storage and the manufacture of catechu. For the assessment year 1961-62, the petitioner filed a return of its income of the relevant previous year disclosing a loss of Rs. 1,52,860. THE Income-tax Officer took proceedings under Section 23(2) of the Indian Income-tax Act, 1922, after serving notice under that provision. While the assessment proceeding was yet pending he issued a notice under Section 143(2) of the Income-tax Act, 1961, and after affording the petitioner a hearing he completed the assessment by an order dated March 26, 1966. In the assessment order, which was expressed to he under Section 143(3) of the Act of 1961, he held that instead of the loss claimed by the petitioner there was an income of Rs. 1,03,848. Against the assessment order the petitioner preferred an appeal. One of the grounds taken by the petitioner was that the Income-tax Officer had no jurisdiction to proceed under the Act of 1961, and that by virtue of Section 297(2)(a) of the Act the proceeding lay under the Act of 1922. It was also urged that the Income-tax Officer had not afforded sufficient opportunity to the petitioner to explain the cash credits by reason of which the Income-tax Officer had found that income had arisen to the petitioner. THE Appellate Assistant Commissioner allowed the appeal by his order dated June 19, 1961. He came to the conclusion that, by virtue of Section 297(2)(a) of the Act of 1961, the Income-tax Officer should have proceeded under the Act of 1922, and that he had no jurisdiction to proceed under the Act of 1961. But on the finding that the Income-tax Officer had jurisdiction under the Act of 1922, he observed that the assessment order could be treated as one made under that Act. On the merits of the case, he held that the Income-tax Officer had not proceeded on any positive material and should provide a proper opportunity to the petitioner to prove that the deposits represented by the cash credits were genuine. Accordingly, while setting aside the assessment, he directed the Income tax Officer to frame a fresh assessment on the basis set out in the appellate order. THE petitioner, aggrieved by the order of remand, preferred a second appeal before the Income-tax Appellate Tribunal, and contended that inasmuch as the assessment proceedings taken under the Act of 1961 was a nullity, the Appellate Assistant Commissioner was in error in treating the proceeding as one under the Act of 1922, and remanded the case. It was urged that the assessment proceedings taken under the Act of 1961 being ab initio void there was nothing which could be remanded. THE Tribunal, however, rejected the contention of the petitioner and, while holding that the Income tax Officer had deliberately adopted the jurisdiction conferred by the Act of 1961, it observed that the Appellate Assistant Commissioner was right in treating the assessment as one under the Act of 1922. It explained that the assessment order, " which mistakenly purported to be an order tinder Section 143(3) of the new Act was, in fact and in law, an order under Section 23(3) of the old Act right from the beginning ".
(2.) THIS petition has now been filed under Article 226 of the Constitution praying for certiorari and prohibition. There was considerable debate before us on the question whether the petitioner should be heard on the merits of this petition inasmuch as a remedy was open to him by way of reference to this court. Indeed, it was admitted by learned counsel for the petitioner that an application had been moved before the Tribunal praying for a reference to this court and that the application was pending, I was inclined at one stage to refrain from entering upon the merits of the case on the ground that an adequate alternative remedy existed. But learned counsel for the petitioner has contended that this is a case where the existence of an alternative remedy should not act as a bar and has vigorously pressed for a decision on the merits. As, in my judgment, even on the merits of the case, the petitioner is not entitled to relief. I need express no opinion on the objection based on the existence of an alternative remedy. The sole question for consideration is whether the assessment order made by the Income-tax Officer is a nullity and, therefore, there could have been no appeal to, and consequently no remand of the case by, the Appellate Assistant Commissioner.
(3.) AT the outset, I may note the circumstance, of which the petitioner seeks to make a point, that the Income-tax Officer in proceeding to make the assessment under the Act of 1961, did so deliberately and not inadvertently. It makes no difference, I think, to the problem before us whether the Income-tax Officer preferred to proceed under the Act of 1961 by inadvertent error or upon careful deliberation. And I say so because of considerations to which I shall now advert. The Income-tax Officer was invested with jurisdiction to proceed in an appropriate case under the Act of 1922. He was also empowered to proceed in an appropriate case under the Act of 1961. The same Income-tax Officer had jurisdiction to take an assessment proceeding, either under the Act of 1922 or under the Act of 1961, depending on the particular case before him. Whether the case attracted the provisions of the one Act or the other fell to be determined by reference to Section 297 of the Act of 1961. Whether he should proceed under the Act of 1922 or under the Act of 1961 was not to be decided at his option. It was the case before him which determined which Act applied. The position is not one where an alternative jurisdiction is available to the Income-tax Officer, it is one where only the right jurisdiction can be exercised ; it is not a question of which Act he should apply, it is a question of which Act he could apply. Clearly, inasmuch as the return related to the assessment year 1961-62 and was filed before the Act of 1961 came into force, the Income-tax Officer was obliged to apply the Act of 1922, as if the Act of 1961 did not exist. In other words, if he could exercise any jurisdiction at all it was only the jurisdiction conferred under the Act of 1922. The petitioner contends that the Income-tax Officer having exercised the jurisdiction conferred by the Act of 1961, the validity of the proceeding cannot be saved by referring it to the Act of 1922. It is urged that the assessment proceeding cannot be considered as one under the Act of 1922. I am of opinion that it can. The principle on which such cases fall to be decided was considered and applied by the Supreme Court in L. Hazari Mal Kuthiala v. Income-tax Officer, Special Circle, Ambala Cantt, 1961 41 ITR 12 ; [1961] 1 S.C.R. 892 (S.C.). It was contended there by the assessee that the order of the Commissioner of Income-tax transferring his case from one Income-tax Officer to another was incompetent inasmuch as in doing so he purported to act under Sub-sections (5) and (7A) of Section 5 of the Indian Income-tax Act when properly his jurisdiction lay under the corresponding provisions of the Patiala Income-tax Act. The contention was repelled by the Supreme Court with the following observation : " This argument, however, loses point, because the exercise of a power will be referable to a jurisdiction which confers validity upon it and not to a jurisdiction under which it will be nugatory. This principle is well-settled : see Pitambar Vajirshet v. Dhondu Navlapa, 1888 12 ILR(Bom) 486, 489. " ;