AHMEDABAD SARANGPUR MILLS COMPANY LIMITED Vs. MANOHAR A S ITO

JUDGEMENT

(1.) THIS is petition under article 226 of the Constitution of India by the Ahmedabad Sarangpur Mills Company Ltd., a company incorporated under the Companies Act having its registered office at Ahmedabad, challenging the notices and the orders issued under section 154 of the Income -tax Act, 1961, by the respondent herein seeking to rectify the original orders of assessment in respect of assessment years 1961 -62 to 1963 -64, and also the notice of demand for the year 1963 -64, which have been annexed collectively at exhibits E, G and H, respectively, to the petition. Shortly stated the facts leading to this petition are as under :

(2.) THE petitioner -company is a public limited company carrying on its business of manufacture of cloth at Ahmedabad. The petitioner -company was assessed for the assessment years 1961 -62 to 1963 -64 by the predecessor -in -office of the respondent herein. The assessment order for assessment year 1961 -62 was passed on December 26, 1962, for assessment year 1962 -63, it was passed on March 25, 1966, and for assessment year 1963 -64, it was passed on July 5, 1966. It appears that the respondent herein who was the Income -tax Officer at the relevant time having jurisdiction in the matter of assessment of the petitioner -company was of the opinion that a mistake had crept in computing loss for assessment year 1954 -55 and effect of the loss would be arising for the first time in 1961 -62 as there was positive income in that year. The respondent herein, therefore, wanted to rectify the assessment orders for assessment years 1961 -62, 1962 -63 and 1963 -64; the reasons for rectification for all these assessment orders were identical. The respondent, therefore, issued notices under section 154 of the Income -tax Act, 1961, on February 3, 1968. The petitioner -company resisted the rectification proceedings sought to be initiated, contending, inter alia, that the proposed rectification would be beyond limitation as prescribed under the relevant sections. It should be noted that though the notices for initiation of rectification proceedings were issued under section 154 of the 1961 Act, for assessment year 1961 -62 it was virtually a notice under section 35 of the 1922 Act. The objections of the petitioner -company did not find favour with the respondent, who, therefore, rejected all the objections including the one on the point of limitation. It should be noted that the petitioner -company had meanwhile moved this court on March 23, 1968, under article 226 of the Constitution of India by Special civil Application No. 424 of 1968, against the orders of the Income -tax Officer rectifying the assessment orders. On an objection being taken on behalf of the revenue in that special civil application that the petitioner -company had not exhausted the alternative remedy, The same was allowed to be withdrawn on October 7, 1968. The petitioner -company had taken the matter in appeal from the orders of the respondent herein rectifying the original assessment orders for assessment years 1961 -62 to 1963 -64 before the Appellate Assistant commissioner, who, however, rejected the appeals and confirmed the orders of the respondent herein. The petitioner -company, therefore, took the matters in further appeal before the Tribunal which appeals were also rejected on the ground that, as the rectification order made in the original assessment order for the assessment year 1961 -62 was virtually one under section 35, no appeal was competent, and as the rectification orders in the original orders of assessment for the years 1962 -63 and 1963 -64 were consequential there would be no appeal against those orders also. On the point of limitation raised by the petitioner -company, the Tribunal, however, found that the order of rectification made in the original order of the assessment year 1961 -62 was beyond the period of limitation prescribed under the relevant sections, and, therefore, beyond the competence, of the respondent herein. The Tribunal, therefore, rejected the appeal of the petitioner -company by its order of August 22, 1972. It appears that the petitioner -company sought reference from the Tribunal in these matters of rectification orders pertaining to assessment years 1961 -62 to 1963 -64. Simultaneously, the petitioner -company moved this court on October 20, 1972, under article 226 of the Constitution challenging these notices for initiation of rectification proceedings as well as the final rectification orders passed by the respondent herein. The Tribunal granted the reference and it has come before this court as Income -tax Reference No. 10 of 1972, which we have disposed of by separate order rejecting the said reference.

(3.) FOR the assessment year 1954 -55, the Income -tax Officer by his order of February 27, 1958, completed assessment of the petitioner -company and determined the business loss of the petitioner -company at Rs. 12,39,626 and the Income -tax Officer observed :