Wrong citation of tax provision does not void an assessment where authority and substantive power exist

A wrong citation of the statutory source did not invalidate an assessment where the assessing authority otherwise had power to act and the relevant provisions were materially equivalent. The High Court treated section 143(3) of the 1961 Act and section 23(3) of the 1922 Act as substantially the same for transitional assessment purposes, so the assessment order was not void for want of jurisdiction. Because the assessment remained valid, penalty proceedings under section 271(1)(c) could not fail merely on the basis that the assessment was alleged to be void. The Tribunal's cancellation of both the assessment and penalty orders was therefore incorrect in law.

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Issues: (i) Whether an assessment order made under section 143(3) of the Income-tax Act, 1961, in a case governed by section 23(3) of the Income-tax Act, 1922, was without jurisdiction and void in law; and (ii) whether penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961, failed because the assessment proceedings were invalid.

Issue (i): Whether an assessment order made under section 143(3) of the Income-tax Act, 1961, in a case governed by section 23(3) of the Income-tax Act, 1922, was without jurisdiction and void in law.

Analysis: The applicable assessment year fell under the transitional regime in which section 297(2)(a) required the assessment to be made under the 1922 Act. The Tribunal treated the order as void because the officer had cited the provision of the 1961 Act. The Court applied the principle that a wrong reference to the source of power does not invalidate an order where the authority otherwise possessed the power to act, especially where the provisions are in pari materia and deal with the same subject-matter. Section 143(3) of the 1961 Act and section 23(3) of the 1922 Act were treated as substantially equivalent provisions governing assessment.

Conclusion: The assessment order was not void for want of jurisdiction and was to be treated as having been made under the corresponding provision of the 1922 Act.

Issue (ii): Whether penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961, failed because the assessment proceedings were invalid.

Analysis: The Tribunal had cancelled the penalty on the footing that the expression "any proceeding under the Act" required a valid assessment proceeding. Since the Court held that the assessment order was not void and remained a valid exercise of assessment power, the foundation for treating the penalty proceedings as invalid disappeared.

Conclusion: The penalty order could not be struck down on the ground that the assessment proceedings were void.

Final Conclusion: The reference was answered in favour of the revenue, and the Tribunal's view cancelling the assessment and penalty orders was held to be incorrect in law.

Ratio Decidendi: A mere misdescription or wrong citation of the statutory provision does not invalidate an order if the authority otherwise had the power to make it and the provisions are materially equivalent in substance.

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