K.S.SIDHU, J. - (1.) KISTOORMALL & Gyanmal, sons of Kanmal Nahta, filed the present writ petition under Arts. 226 and 227 of the Constitution of India on 17th March, 1967, against the ITO, Central Circle-I, Jaipur, CIT, Delhi and Rajasthan, at New Delhi, and the Union of India, respondents Nos. 1, 2 and 3, respectively, for bringing up and quashing the notices, Exhibit H-I to H-5, dt. 21st March, 1963, issued to their father, Kanmal Nahta, deceased, by the ITO, Special Investigation Circle-A, Jaipur (hereafter called "the Jaipur ITO"), under S. 148 of the IT Act, 1961 (hereafter called "the new Act") for the asst. yrs. 1946-47 to 1950-51, and for an injunction restraining the respondents from taking any proceedings against the petitioners on the basis of the said notices.
(2.) A few facts, which are material for the decision of this petition, may be recapitulated here. Kanmal Nahta, who died on 26th June, 1964, was an assessee within the jurisdiction of 3rd ITO, C-III Ward, Bombay, till the asst. yr. 1950-51. It appears he closed his business at Bombay and shifted his residence to Jodhpur some time in the year 1949. He was being assessed by the ITO, D-Ward, Jodhpur (hereafter called the "Jodhpur ITO"), till the asst. yr. 1957-58. In 1957, an Addl. ITO was posted to D-Ward, Jodhpur. Kanmal Nahta fell in the category of assessees who were transferred to the jurisdiction of the Addl. ITO, D-Ward, Jodhpur (hereafter called the "Jodhpur Addl. ITO"), w.e.f. the asst. yr. 1958-59. Thus, Kanmal Nahta was being assessed by the Jodhpur Addl. ITO till 1962. On 9th Jan., 1962, the Jodhpur Addl. ITO sent the file of this assessee to the Jodhpur ITO, on the ground that the assessee was likely to attract the wealth-tax liability and that, therefore, his assessment should be dealt with by the latter as all cases attracting wealth-tax liability were being dealt with by him. On 10th Jan., 1962, the Jodhpur ITO sent a detailed letter to Kanmal Nahta, stating that he had concealed his income chargeable to tax from 1940-41 to 1949-50, and requiring him to explain why action under S. 34(1)(a) of the Indian IT Act, 1922 (hereinafter called the "old Act"), be not taken against him. On 26th March, 1962, the Jodhpur ITO issued notices to Kanmal Nahta under S. 34 of the old Act in respect of the asst. yrs. 1940-41 to 1949- 50. According to the petitioner, Gyanmal, these notices were served (see in this connection his application dt. 23rd April, 1981, affidavit of even date and copy of lawyer's reply to these notices) on Kanmal Nahta on 29th March, 1962. Two days after the service of the notices on Kanmal Nahta, the new Act came into force on 1st April, 1962. In exercise of his powers under sub-s. (1) of S. 127 of the new Act, the CIT, Delhi and Rajasthan, passed an order, dt. 26th June, 1962, transferring the cases arising out of the said notices from the Jodhpur ITO to the Jaipur ITO. On 3rd Nov., 1962, Kanmal Nahta filed returns of income under protest for the asst. yrs. 1946-47 to 1949-50, before the Jaipur ITO. The returns were filed with a covering letter of objection stating that the Jodhpur ITO "had no authority or jurisdiction to act in relation to the assessee's ease and the notice issued by him was void ab initio." The Jaipur ITO disposed of these cases on 19th Jan., 1963, and communicated his decision to Kanmal Nahta, vide letter, Exhibit-C, which reads as under : I am glad to inform you that the proceedings under S. 34 of the IT Act, 1922, initiated against you for the years 1940-41 to 1949-50 are being hereby dropped. On 19th Jan., 1963, itself, the Jaipur ITO addressed another letter (copy Exhibit D), to Kanmal Nahta, stating, inter alia, that his income chargeable to tax which had escaped assessment for the asst. yrs. 1946-47, 1947-48, 1948-49 and 1949-50, by reason of its concealment by him amounted to more than Rs. 50,000 for each year, and requiring him to explain why action should not be taken against him for reassessment of his income for these years in accordance with the provisions of S. 147 of the new Act. Earlier, on 15th Jan., 1963, a similar letter (see Exhibit E) had been sent to the assessee in respect of the asst. yrs. 1950-51 and 1951-52. These letters were followed by the issue of the impugned notices (Exhibit H-1, H-2, H-3, H-4 and H-5), dt. 21st March, 1963, to Kanmal Nahta under S. 148 of the new Act relating to the asst. yrs. 1946-47, 1947-48, 1948-49, 1949-50 and 1950-51, respectively. These notices are in identical terms. We may reproduce here only one of them as typical of all. The notice (H-1) relating to the asst. yr. 1946-47 reads as under: Whereas I have reason to believe that your income chargeable to tax for the asst. yr. 1946-47 has escaped assessment within the meaning of S. 147 of the IT Act, 1961 ; I, therefore, propose to reassess the income for the said assessment year and I hereby require you to deliver to me within 30 days from the date of service of this notice, a return in the prescribed form of your income assessable for the said assessment year. 2. This notice is being issued after obtaining the necessary satisfaction of the Central Board of Revenue. Sd. Anand Prakash, ITO, Special Investigation Circle, `A' Jaipur. SEAL Office of the ITO, Special Investigation Circle `A', Jaipur." The writ petition was admitted by a Division Bench of this Court on 23rd March, 1967. This Court further directed respondents Nos. 1 and 2 to stay proceedings of assessment on the basis of the notices, Exhibit H-1 to Ex. H-5. The Jaipur ITO (i.e., respondent No. 1) passed reassessment orders pursuant to these notices for the asst. yrs. 1946-47 to 1950-51 on 24th March, 1967. These orders led the petitioners to amend the writ petition. They filed the amended petition on 23rd March, 1968. In addition to the relief prayed originally for quashing the notices, Exhibit H-1 to Exhibit H-5, the petitioners prayed that the assessment orders passed on the basis of the said notices on 24th March, 1967, be also quashed and that the respondents be restrained from realising from the petitioners any amount on the basis of the impugned orders of assessment. The petitioners also challenged the reassessment orders by way of respective appeals filed before the AAC, Jaipur Range, Jaipur, on 24th April, 1967. By his order dt. 31st Jan., 1969, the AAC allowed the appeals, quashed the impugned orders of reassessment for the asst. yrs. 1946-47 to 1950-51, and remanded all the five cases to the Jaipur ITO for making reassessment de novo according to law after giving the appellants "proper hearing". The petitioners filed an application, dt. 15th Sept., 1975, in this Court with a view to bringing to the notice of the Court that the appeals in question had been decided as far back as 31st Jan., 1969, and that the proceedings for making reassessment have since been pending with the Jaipur ITO. We are informed at the bar that the ITO has not so far made any order of reassessment in respect of any of the years from 1946-47 to 1950- 51. The petitioners have challenged the notices, Exhibit H-1 to Exhibit H-5, issued by the Jaipur ITO under S. 148 of the new Act and the orders of reassessment made on the basis of these notices on a number of grounds. Now that the orders of reassessment have already been quashed by the AAC as mentioned above, the challenge survives, in effect, only in relation to the notices, Exhibit H-1 to H-5. The grounds of challenge may be summarised here as follows: (i) The original orders of assessment in respect of the asst. yrs. 1946-47 to 1950-51 were made by the ITO, C-III Ward, Bombay. No order was made by the Central Board of Revenue transferring any of these cases from the ITO, C-III Ward, Bombay, to the Jodhpur ITO or the Jaipur ITO. Hence, the notices, Exhibit H-1 to Exhibit H-5, issued by the Jaipur ITO were issued without jurisdiction. (ii) Reassessment in respect of the asst. yrs. 1946-47 and 1947-48 had already become barred by limitation when the new Act came into force. (iii) Notices under S. 34 of the old Act were issued before, and proceedings under that section were pending at, the commencement of the new Act. Therefore, by virtue of the provisions of S. 297 of the new Act, more specially sub-cl. (ii) of cl. (d) of sub-s. (2) of this section, notices, Exhibit H-1 to Exhibit-5, could not be issued lawfully under the new Act. Hence, the said notices are illegal, invalid and without jurisdiction.
(3.) THE respondents contested the writ petition and filed a return with supporting-affidavit in answer to it. THEy pleaded that since Kanmal Nahta had closed his business at Bombay on 17th Oct., 1949, and thereafter taken up residence at Jodhpur and had been filing returns at Jodhpur since the asst. yr. 1951-52, the Jodhpur ITO had acquired jurisdiction in the matter to issue notice under S. 34 of the old Act in respect of the assessment years prior to the year 1951-52. THEy further pleaded that Kanmal Nahta filed returns of his income for the asst. yrs. 1946-47 to 1950- 51, before the Jaipur ITO in pursuance of the notices, Exhibit H-1 to Exhibit H-5, without raising any objection to his jurisdiction within a period of one month from the date of filing the returns, and, therefore, he or his heirs cannot call in question the jurisdiction of the Jodhpur ITO, or, for that matter, of the Jaipur ITO, to issue notice under S. 34 of the old Act or S. 148 of the new Act. The respondents admitted that the Jodhpur ITO had issued notices under S. 34 of the old Act in respect of the asst. yrs. 1940-41 to 1949-50. They, however, pleaded that all these notices were void ab initio since the Jodhpur ITO had no jurisdiction to issue them. According to the respondents, the jurisdiction to issue such notice in respect of Kanmal Nahta vested in the Jodhpur Addl. ITO to the exclusion of the Jodhpur ITO by virtue of an order dt. 15th Oct., 1959, made by the CIT, Delhi and Rajasthan, in exercise of his powers under S. 5(5) of the old Act. The respondents admitted that the proceedings under S. 34 of the old Act which were pending at the time of the commencement of the new Act had been dropped by the Jaipur ITO to whom the cases had been transferred in the meantime, because, according to the respondents, the Jodhpur ITO who initiated the proceedings under S. 34 had no jurisdiction to do so and as such the proceedings were void and non est. Elaborating this plea further, the respondents pleaded that since the proceedings under S. 34 of the old Act which were pending at the commencement of the new Act were void ab initio and, therefore, non est, they could not be treated as proceedings pending at the commencement of the new Act, and, as such, notices under S. 148 of the new Act could be legally issued even in respect of the asst. yrs. 1946-47 to 1949-50. They explained that no notice under s.34 of the old Act had ever been issued in respect of the asst. yr. 1950-51, and, therefore, no proceedings under that section could be pending relating to that year at the commencement of the new Act. The notice under S. 148 of the new Act as respects 1950-51, according to them, is not open to objection at all. They pleaded that the impugned notices had been issued within the period prescribed by law. The respondents also raised an objection to the effect that since an alternative efficacious remedy by way of appeal is available to the petitioners and they have already taken resort to that remedy, this writ petition is liable to be dismissed on that ground alone. They also pleaded that the writ petition suffers from the vice of long delay, laches and acquiescence. ;