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Vithaldas Kedar Nath v. Income Tax Officer
Case Summary — Rectification under Section 35 of the Indian Income-tax Act, 1922
Factual and Procedural Background
These three connected petitions under Article 226 of the Constitution arose from related rectification proceedings under section 35 of the Indian Income-tax Act, 1922. The opinion focuses on the facts of one case (Civil Misc. Writ No. 21 of 1967) brought by Sri Vithaldas.
On 15-12-1955 the Income-tax Officer, District II, Kanpur passed an assessment fixing the petitioner's total income for 1952–53 at Rs. 57,992, which included an assumed share of Rs. 21,291 from the firm Bhawani Prasad Girdhar Lal, Bombay. The Bombay Income-tax Officer later passed an assessment for the firm on 27-3-1956 fixing the firm's total income and the petitioner's share at Rs. 9,678 (considerably less than the earlier assumed Rs. 21,291).
The petitioner applied to respondent no. 1 for rectification under section 35, seeking substitution of Rs. 9,678 for Rs. 21,291. The application before respondent no. 1 is dated 13-5-1959. Respondent no. 1 did not pass the requested rectification order despite reminders. The petitioner made further representations and revisions to higher authorities (Inspecting Assistant Commissioner, Commissioner, Central Board of Revenue) without relief, and filed the writ petition on 12-1-1967 requesting directions for rectification.
Legal Issues Presented
- Whether an Income-tax Officer can be compelled by the High Court under Article 226 to rectify an assessment under section 35 of the Indian Income-tax Act after the statutory period (four years) has expired, when the assessee had brought the mistake to the officer's notice within the statutory period.
- How subsections (1) and (5) of section 35 (limitation and special rule where the firm's final assessment is the starting point) operate in circumstances where the partner's assessment requires modification in view of a subsequent firm assessment.
- Whether the statutory time-limits in the relevant provisions are directory (permitting remedial action after the period in suitable circumstances) or mandatory (prohibiting any action after expiry), and the extent to which mandamus can be issued to compel performance of a public duty after the prescribed time.
Arguments of the Parties
Petitioner's Arguments
- The petitioner contended that the mistake (overstated share of firm income in his assessment) was brought to the attention of respondent no. 1 within the period allowable for rectification: the application to respondent no. 1 is dated 13-5-1959, which is prior to the relevant limitation date of 27-3-1960 arising under sub-section (5) of section 35.
- Documents and correspondence indicate that the necessary material (including the Bombay firm assessment and share particulars) was made available or communicated to respondent no. 1 well before 27-3-1960, so respondent no. 1 had opportunity to act.
- The petitioner had repeatedly sought relief by representations and revisions to higher authorities up to October 1966, showing continued attempts to obtain rectification and justifying condonation of any delay in instituting the writ petition filed on 12-1-1967.
Respondents' Arguments
- Respondent no. 1 (in paragraph 8 of the counter-affidavit) asserted that the four-year period for rectification under section 35 had expired on 26-3-1960 (or March 1960), and therefore he had no power to rectify the assessment thereafter; consequently nothing was done by him.
- Before the Court, Mr. Gopal Behari for the respondents argued that the writ petitions were belated: rectification should have been sought by March 1960, whereas the writ was filed on 12-1-1967. He also contended that because the statutory period expired in March 1960, the Court could not now intervene to direct rectification.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Kadirvel Nadar v. State of Madras (1962) 46 I.T.R. 251 (Mad) | Explained that section 34 of the Madras Agricultural Income-tax Act lays down a period within which proceedings should be commenced; if proceedings are commenced within that period the power can be exercised at any time thereafter — the time provision is not a bar to later exercise of power. | Used to support the proposition that a statutory time limit for commencement does not necessarily preclude later exercise of the power, thereby supporting directory interpretation of limitation provisions in analogous contexts. |
| Commissioner of Income-tax, West Bengal v. Duncan Brothers (1955) 28 ITR 427 (Cal) | Held that a provision requiring the Appellate Tribunal to act within 90 days is not mandatory; a reference after 90 days is not incompetent; statutory provisions about public duties should be construed as directory where strict compliance would produce injustice. | Relied upon to show that time limits relating to the performance of public duties may be construed as directory rather than mandatory, particularly where treating them as mandatory would work injustice. |
| All India Ground Nut Syndicate Ltd. v. Commissioner of Income-tax, 25 ITR 90 (AIR 1954 Bom 232) | Principle that no person can set up his own default in defence to a right asserted by the other party. | Applied to the situation where respondent no. 1's failure to act cannot be used by him to defeat the assessee's right to rectification. |
| Rajagopala Chettiar v. 4th Income-tax Officer (1968) 67 ITR 210 (Mad) | Expressed doubt whether a court can compel an officer to go outside the time limits prescribed by section 35 of the Indian Income-tax Act and direct him to rectify after expiry of time prescribed. | The opinion notes this authority as expressing judicial doubt on the point, but the present court proceeded to hold there was no difficulty in issuing directions in the facts of these cases. |
| Rex v. Hanley (1912) 3 K.B. 518 | Established that a mandamus will lie to compel the performance of a public duty by a public officer even though the time prescribed by statute for the performance has passed. | Relied on to support the proposition that mandamus can be used to compel performance of public duties after statutory time limits where appropriate. |
| Halsbury's Laws of England, 3rd Ed., Vol. XI, para 172 (pp. 91–92) | States that if public officials fail to perform a public duty, an order of mandamus will lie to compel them to carry out the duty even though the statutory time for performance has passed. | Used as authoritative legal doctrine supporting the court's power to direct performance of public duties after the prescribed time has expired. |
Court's Reasoning and Analysis
The Court proceeded by examining the statutory text of section 35 (sub-sections (1) and (5)) and the factual chronology. Sub-section (1) requires that the Income-tax Officer "shall within the like period rectify any such mistake which has been brought to his notice by an assessee." Sub-section (5) provides a special rule where a partner's assessment must be rectified in view of a subsequent firm assessment, fixing the limitation starting point at the firm's final order.
The Court found that:
- The petitioner brought the mistake (the overstatement of his firm share in the Kanpur assessment) to respondent no. 1's notice by an application dated 13-5-1959, which was within the limitation period measured from the firm's final assessment dated 27-3-1956 (the operative limitation date being 27-3-1960).
- Documentary material (including a copy of the Bombay assessment fixing the petitioner's share at Rs. 9,678, correspondence and rectification orders in other matters) indicated that respondent no. 1 had access to the necessary material by or before March 1960; in particular, an order of rectification in respect of other firms dated 5-12-1959 and correspondence showing receipt of share reports in August 1959 were relied on to show availability of material.
- Respondent no. 1's stated reason for non-action was that the four-year period had expired and he had no power to rectify; however, the Court examined authorities and principles indicating that where an assessee brings a mistake to an officer's notice, the officer's omission to act cannot be allowed to defeat the assessee's rights.
- The Court considered precedents and legal doctrine (including Kadirvel Nadar, Duncan Brothers, Rex v. Hanley and Halsbury) supporting the view that, in appropriate circumstances, statutory time provisions concerning the performance of public duties may be construed as directory for purposes of compelling later action, and that mandamus may lie to compel performance even after the prescribed time has passed.
On the basis of these findings and authorities, the Court concluded there was no difficulty in directing respondent no. 1 to make the necessary rectification notwithstanding the lapse of the period, because the assessee had brought the mistake to the officer's notice within the operative period and the officer's failure to act had prejudiced the assessee.
Holding and Implications
PETITIONS ALLOWED; respondent no. 1 directed to pass necessary orders for rectification under section 35 of the Indian Income-tax Act, 1922, and to modify the assessment in question.
Direct effect on the parties:
- The three connected writ petitions were allowed.
- The Court directed respondent no. 1 to pass the necessary rectification orders under section 35 and to modify the assessment (assessment No. 1) in accordance with the correction (i.e., to reflect the petitioner's proper share as shown in the Bombay firm assessment).
Broader implication stated by the Court (as expressed in the opinion):
- The Court indicated that where an assessee brings a mistake to an officer's notice within the operative period and the officer omits to perform the statutory duty, the Court can give appropriate direction (including mandamus) to compel rectification even after the statutory period has expired. The opinion relies on authorities and legal doctrine supporting issuance of mandamus to compel performance of public duties after the prescribed time in appropriate circumstances.
Petitions allowed. (HGP/D.V.C — as recorded in the opinion.)
Oak, C.J:— These three connected petitions under Article 226 of the Constitution arise out of three connected proceedings for rectification under section 35 of the Indian Income-tax Act, 1922 (hereafter referred to as the Act). The facts of the three cases are similar. They raise common questions of law. It will, therefore, be sufficient to refer to the facts of one of the three cases.
2. Sri Vithaldas is the petitioner in Civil Misc. Writ No. 21 of 1967. On 15-12-1955 the Income-tax Officer, District II, Kanpur passed an assessment order against the petitioner for the year 1952-1953. His total income was fixed at Rupees 57,992/-. This total income included a sum of Rs. 21,291/- being the petitioner's share Income from a certain firm, Bhawani Prasad Girdhar Lal, Bombay. The assessment was subject to rectification under Section 35 of the Act. On 27-3-1956 the Income-tax Officer, Bombay assessed the firm Bhawani Prasad Girdhari Lal, Bombay. The total income of the firm was fixed at Rs. 66,472/-. The present petitioner's share was fixed at Rs. 9678/-. The share so fixed by the Income-tax Officer, Bombay was far less than the share assumed by the Income-tax Officer, Kanpur. So, the petitioner moved an application before respondent no. 1 to rectify the petitioner's assessment. It was requested that the income of Rupees 9,678/- be substituted for the assumed income of Rs. 21,291/-. In spite of several reminders, respondent no. 1 did not pass any order of rectification as requested by the petitioner. The petitioner made a series of representations or revisions before the Inspecting Assistant Commissioner, Income-tax Commissioner and the Central Board of Revenue. But none of these authorities gave any relief to the petitioner. So, on 12-1-1967 Sri Vithaldas filed the writ petition before this Court requesting that necessary directions be given for rectification.
3. Section 35 of the Act provides for rectification of mistake. Sub-section (1) of section 35 states:
“…the Income-tax Officer may at any time within four years from the date of any assessment order or refund order passed by him on his own motion rectify any mistake apparent from the record of the appeal, revision, assessment or refund, as the case may be, and shall within the like period rectify any such mistake which has been brought to his notice by an assessee”.
4. Sub-section (5) of section 35 deals with special cases where a partner's assessment has to be rectified in view of the subsequent assessment of the firm. In such a case the starting point for limitation is the date of the final order passed in the case of the firm.
5. Annexure A to the writ petition is a copy of the order of assessment dated 27-3-1956 passed against the Bombay firm. Annexure ‘A’ shows that the petitioner's share of income was fixed at Rs. 9678/-. In the assessment order dated 15-12-1955 the petitioner's share in the income of the firm was fixed at Rupees 21,291/-. The share ultimately fixed in Annexure ‘A’ was a good deal below the share assumed in the order dated 15-12-1955. The petitioner was, therefore entitled to rectification under section 35 of the Act. But respondent no. 1 did not pass any order of rectification in favour of the petitioner.
6. Two counter-affidavits have been filed on behalf of the respondents. The first counter-affidavit has been filed by respondent no. 1. In paragraph 8 of the counter-affidavit he has attempted justification for declining to pass an order for rectification. In paragraph 8 of the counter-affidavit it is stated:
“…as the period of limitation of 4 years for rectification u/s 35 of the I.T Act 1922 had expired on 26-3-1960, the opposite party No. 1 had no power to rectify the assessment and consequently nothing was done by him”.
7. The assessment order against the Bombay firm was passed on 27-3-1956. So, action under sub-section (5) of section 35 of the Act could be taken up to 27-3-1960; Long before 27-3-1960 the petitioner moved respondent no. 1 for rectification. The petitioner's application Annexure ‘B’ is dated 13-5-1959. The respondent's excuse for not taking action under section 35 of the Act is that necessary material was not available to respondent no. 1 up to 27-3-1960.
8. Apart from the firm ‘Bhawani Prasad Girdhar Lal, Bombay’, the petitioner had shares in certain other firms also. In connection with the assessment of those firms, the question arose about rectification of the petitioner's assessment. Such rectification was actually carried out. Annexure ‘D’ dated 5-12-1959 is-such an order passed under section 35 of the Act with reference to those firms. Annexure ‘D’ concluded thus:
“The share income of Bhawani Pd. Girdhar Lal Bombay is under correspondence with the Income-tax Officer Bombay and necessary action will be taken after receipt of reply from him”. This order dated 5-12-1959 indicates that at least since December 1959 respondent no. 1 was making attempts to obtain the petitioner's share income with Bhawani Prasad Girdhar Lal, Bombay. There should have been no difficulty in obtaining the necessary information from Bombay by March 1960. Annexure RA-5 to the rejoinder-affidavit is a copy of another order of rectification with respect to Dwarka Nath, Kanpur. In that order dated 5-10-1959 it was mentioned that the share report from the Income-tax Officer, Bombay was received by respondent no. 1 in August 1959. Annexure RA-1 to the rejoinder-affidavit is a copy of the assessment order dated 27-3-1956. The petitioner's share in the income of the firm was specified in the order. The endorsement at the foot of Annexure RA-1 indicates that a copy of the assessment order dated 27-3-1956 was sent to respondent no. 1 on 3-4-1959. All these documents filed by the petitioner indicate that the necessary material was available to respondent no. 1 by 27-3-1960. It is not clear why respondent no. 1 declined to pass the necessary order for rectification in favour of the petitioner.
9. We have shown that the petitioner was entitled to have a rectification order passed in his favour. That was not done. The omission of respondent no. 1 to pass the necessary order for rectification has been prejudicial to the petitioner. Prima facie the petitioner is entitled to have suitable directions issued by this Court to respondent no. 1.
10. Mr. Gopal Behari for the respondents urged before us that no intervention of the Court is called for in these cases. Firstly, he urged that the writ petitions are belated. He points out that the assessment order was passed in December 1955. Rectification ought to have been done by March 1960. The present writ petitions were moved on 12-1-1967 several years after the passing of the assessment orders. It is true that several years have elapsed since the passing of the assessment orders and the appropriate time for passing orders under section 35 of the Act. But the petitioner has explained that between 1959 and the end of 1966 he made a series of representations and revisions to the higher authorities. Annexure ‘Z’ to the petition is a copy of the order dated 27-10-1966 passed by the Commissioner of Income-tax, U.P He regretted that the petitioner's claim could not be entertained. It is thus clear that the petitioner was-adopting different methods for getting some relief up to October 1966. The writ petition was moved on 12-1-1967. There is sufficient ground for condoning delay in moving the writ petition.
11. Secondly, Mr. Gopal Behari urged that the period of limitation under section 35 of the Act is four years. That period expired in March 1960. It is not now possible for the Court to intervene in the matter.
12. In Kadirvel Nadar v. State of Madras (1962) 46 I.T.R 251 (Mad) it was explained that section 34 of the Madras Agricultural Income-tax Act merely lays down a period within which proceedings under the section should be commenced. If the proceedings commenced within the period prescribed in the section, the power of the Commissioner under the section can be exercised at any time thereafter. It is not necessary that the power should be exercised within the period fixed in the section.
13. In Commissioner of Income-tax, West Bengal v. Duncan Brothers, (1955) 28 ITR 427 (Cal) Calcutta High Court had to examine the provisions of section 66(1) of the Indian Income-tax Act. It was held that the provision to the effect that the Appellate Tribunal shall within 90 days of the receipt of an application draw a statement of the case and refer it to the High Court is not mandatory. The reference made by the Tribunal to the High Court is not incompetent merely because it was made after the expiry of 90 days from the date of receipt of an application by the assessee. Where the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of that duty would work serious general inconvenience or injustice to persons who had no control over those entrusted with the duty, and at the same time would not promote the main object of the legislature, such provisions should be construed as being directory only and not imperative.
14. In All India Ground Nut Syndicate Ltd. v. Commr. of Income-tax 25 ITR 90 : (AIR 1954 Bom 232) Chagla, C.J observed at page 100:
“It is an elementary principle of law that no person….can put forward his own default in defence to a right asserted by the other party”.
15. In Rajagopala Chettiar v. 4th Income-tax Officer (1968) 67 ITR 210 (Mad) Madras High Court expressed doubt whether the Court can compel an officer to go outside the limits of time prescribed by section 35 of the Indian Income-tax Act and direct him to rectify an order after the expiry of the time prescribed by the section.
16. In Rex v. Hanley (1912) 3 K.B 518 it was observed at page 531 that,
“a mandamus will lie to compel the performance of a public duty by a public officer although the time prescribed by statute for the performance of it has passed”.
17. In Halsbury's Laws of England 3rd Ed. Vol. XI it is observed on pages 91 and 92 under paragraph 172 that
“if public officials fail to perform any public duty with which they have been charged, an order of mandamus Will lie to compel them to carry out even though the time prescribed by statute for the performance of the duty may have passed”.
18. In the present case the rules of limitation are contained in sub-sections (1) and (5) of section 35 of the Act. The material words in sub-section (1) are:
“….shall within the like period rectify any such mistake which has been brought to his notice by an assessee”.
19. These words require that the officer must rectify if the mistake has been brought to his notice by the assessee. In the instant case the assessee did bring the mistake to the notice of respondent no. 1. It was the duty of respondent no. 1 to make the necessary correction in the initial assessment order. By omitting to carry out the necessary correction, respondent no. 1 cannot defeat the rights of the assessee. If respondent no. 1 failed to carry out his duty at the proper time, this Court can give the appropriate direction to respondent no. 1 to do the needful now. There is, therefore, no difficulty in this Court's giving necessary direction to respondent no. 1 to make the necessary rectification at this late stage. These three connected petitions are allowed. We direct respondent no. 1 to pass necessary orders for rectification under section 35 of the Indian Income-tax Act, 1922 and modify the assessment no. 1.
HGP/D.V.C
20. Petitions allowed.
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