TaxTMI 
TaxTMI 
1970 (5) TMI 12
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....r the petitioner preferred an appeal. One of the grounds taken by the petitioner was that the Incometax 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. A....
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....se by, the Appellate Assistant Commissioner. 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 applie....
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.... maintainable because the subordinate judge must be considered to have employed his jurisdiction as a judge of a small cause court. West J., who spoke for the court, pointed out : " The suit was filed in a court having a double jurisdiction. But the jurisdiction under which cognizance could be taken of the claim was one and one only, not a double or an alternative jurisdiction. Having the small cause court jurisdiction the subordinate judge must have dealt with the case under that jurisdiction, even if he was not quite alive to it at the time Dr. Groenvelt v. Dr. Burwell. We must ascribe his acts to an actual existing authority under which they would have validity rather than to one, under which they would be void. " The decision in this case is instructive even as it is apposite to the facts before us. Like the subordinate judge, the Income-tax Officer also enjoyed a double jurisdiction, jurisdiction in respect of proceedings under the Indian Income-tax Act, 1922, and jurisdiction in respect of proceedings under the Income-tax Act, 1961. Like the subordinate Judge, who tried the suit under the Code of Civil Procedure in the exercise of his normal civil jurisdiction when he s....
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....r provision of law. " The petitioner relied upon the observations of the Supreme Court in Ram Narain v. State of U.P. In our opinion, the principle laid down in that case is not attracted here. The question before the Supreme Court was whether the assessing authority, having levied a tax under section 14(1)(f) of the U.P. Town Areas Act, 1914, could say that the tax was legally valid under a different clause, namely, section 14(1)(d). The Supreme Court held that it could not. The court observed : " ........ so far as the present appellant is concerned, the list prepared under section 15 must have shown him as assessed to a certain amount of tax under clause (f) of sub-section (1) of section 14 and the assessment must have been confirmed on that basis by the District Magistrate. Therefore, the legality of the tax imposed on the appellant must be considered with reference to the clause under which the assessment was actually made, and a different clause under which the assessment might have fallen cannot be called in aid of the assessment. " It seems to me that the decision proceeded on the view that, while the tax contemplated under section 14(1)(d) is a tax on trades, call....
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....of 1922. In my opinion, that is a consideration which does not arise in this case. When the jurisdiction under the Act of 1961 cannot be invoked at all, no question can arise of applying the penalty provisions of that Act. If penalty is attracted at all, it must be under the Act of 1922. Finally, it is urged on behalf of the petitioner that the case falls to be disposed of on the rule enunciated by the Supreme Court in P. Balakotaiah v. Union of India. But even in that case the Supreme Court accepted the principle that: " ........ when an authority passed an order which is within its competence, it cannot fail merely because it purports to be made under a wrong provision if it can be shown to be within its powers under any other rule, and that the validity of an order should be judged on a consideration of its substance and not its form. " It is true that ultimately the Supreme Court did not decide the case on the basis of that principle, but that was because its application was precluded by certain distinguishing considerations, which included rule 3 of the Railway Services (Safeguarding of National Security) Rules, and also because the respondent was content to have the ....
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....forward on its behalf was that the Income-tax Officer had no jurisdiction to make the assessment under the provisions of the Income-tax Act of 1961, when the return had been filed by the petitioner before April 1, 1962. The Appellate Assistant Commissioner, however, rejected the contention. The Appellate Assistant Commissioner held that the Income-tax Officer should have ordinarily assessed the income of the petitioner for the assessment year 1961-62, under section 23(2) of the Indian Income-tax Act of 1922, but he purported to make the assessment under section 143(3) of the Income-tax Act of 1961. This was, in the opinion of the Appellate Assistant Commissioner, a case of reference to a wrong section which did not vitiate the assessment. The Appellate Assistant Commissioner., however, found that the Income-tax Officer had not given adequate opportunity to the petitioner to explain the credits and deposits appearing in the names of various persons in the books of account. The Appellate Assistant Commissioner, therefore, set aside the assessment and remitted the case to the Income-tax Officer to scrutinise the materials regarding the cash credits and to make a fresh assessment accor....