1970 (11) TMI 14

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.... the case, the Tribunal was right in law to hold that the penalty proceedings were invalid and cancel the order of penalty passed by the Inspecting Assistant Commissioner of Income-tax ?" The assessment year in question is 1961-62 for which a return declaring an income of Rs. 63,576 was filed by the assessee on March 31, 1962, before the Income-tax Act, 1961, came into force. Later on, the assessee filed a revised return on November 15, 1962, declaring its income as Rs. 71,137. The Income-tax Officer made the assessment under section 143(3) of the 1961 Act instead of under section 23(3) of the Income-tax Act, 1922. Admittedly, according to the provisions of section 297(2)(a) of the 1961 Act, the assessment had to be made under section 23....

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....r of assessment should have been considered to have been passed under section 23(3) of the Income-tax Act 1922, and should not have been held to be void in law having been passed under section 143(3) of the 1961 Act. Strong reliance is placed in support of this submission on a judgment of their Lordships, of the Supreme Court in Hazari Mal Kuthiala v. Income-tax Officer Special Circle, Ambala Cantt. wherein an order of the Commissioner of Income-tax passed under sections 5(5) and 5(7A) of the Indian Income-tax Act, 1922, was attacked as ultra vires and incompetent for the reason that the correct provision to be invoked for the assessment in question was section 5(5) of the Patiala Income-tax Act. Their Lordships upheld the order treating th....

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....de does not Per se vitiate the order if there is some other power under which the order could lawfully be made. The validity of the impugned order has to be tested by reference to the question whether the Income-tax Officer had any power at all to make an order of this nature. If the power is otherwise established, the fact that the source of power has, been incorrectly described would not make the order invalid. As there is no difference in the nature and content of the power whether it is exercised under section 35 of the old Act or under section 154 of the new Act, the order of rectification cannot, therefore, be assailed on the ground that it has been made in exercise of power which did not exist. " We respectfully agree with the obs....