Civil Appeal No 2009 of 1978
Appeal by Special Leave from the Judgment and Order dated 812th May 1978 of the Calcutta High Court in Appeal from Original Order No 88476
Devi Pal
P K Pal J B Dadachanji and K J John for the Appellant
The appellant is a banking company incorporated in the United Kingdom with its registered office at London
It carries on banking business in India and is assessed under the Income tax Act 1961
The appellant filed a return of its income for the assessment year 1972 73
During the assessment proceeding the Income tax Officer issued a notice under section 1421 of the Income tax Act requiring the appellant to produce certain account books and documents
The appellant applied against the notice to the High Court at Calcutta under Articles 226 of the Constitution
A learned Single Judge of the High Court did not accept the wide construction which the appellant sought to put upon the impugned notice and construing it in specific limited terms he directed the appellant to comply with it
The appellant preferred an appeal in the High Court
Meanwhile pursuant to the direction by the learned Single Judge the Income tax Officer made an assessment order on March 31 1977
Thereafter the appeal was allowed by a Division Bench of the High Court by its judgment dated May 8 and 12 1978 and the impugned notice under section 1421 and the 768 consequent assessment order were quashed
But while doing so the Division Bench also directed the Income tax Officer to make a fresh assessment
Aggrieved by that direction the appellant applied for and obtained special leave to appeal to this Court
The sole question before us is whether the High Court erred in directing a fresh assessment
The appellant contends that the High Court was in error in making the direction because the assessment had already become barred by limitation and thereby a valuable right not to be assessed had accrued to the appellant and the High Court was not competent to deprive the appellant of that accrued right
It is necessary first to examine whether the bar of limitation had come into play at any time before the High Court passed the impugned order
The assessment year under consideration is the year 1972 73
By virtue of section 1531 a iii of the Income tax Act no assessment order in respect of that assessment year could be made after two years from the end of that assessment year
The end of the assessment year is March 31 1975
However the appellant filed the writ petition on March 17 1975 fourteen days before the end of the period for making the assessment order
On the same date March 17 1975 the learned Single Judge granted an interim injunction restraining the Income tax Officer from proceeding with the assessment and on March 25 1975 the injunction was made operative for the pendency of the writ petition
The writ petition was disposed of by the learned single judge by his judgment dated August 31 1976
It is apparent that the assessment proceedings remained stayed throughout the period from March 17 1975 to August 31 1976 by virtue of the orders of the court
As has been mentioned the learned Single Judge disposed of the writ petition on August 31 1976
In his judgment besides directing the appellant to comply with the notice under section 1421 as construed by him he also included a direction to the Income tax Officer to complete the assessment by March 31 1977
On September 22 1976 he amended his judgment inasmuch as it now required that the assessment for the relevant year must be completed on the 31st of March 1977 but must not be completed before 31st March 1977
 In other words while the Income tax Officer could continue with the assessment proceedings he was restrained by the Court from making the assessment order before and in fact could make it only on March 31 1977
Now it is important to note that when the amendment was made by the learned Single Judge in his judgment it was an amendment made by him to a judgment disposing of the writ petition and having regard especially to the nature and the terms of the amend 769 ment it must be deemed to have taken effect as from August 31 1976 the date of the original judgment
In the appeal filed thereafter by the appellant no interim order was made suspending the operation of the direction that the assessment order be made on March 31 1977 only
A stay order was made against the enforcement of the notice of demand alone
Adhering to the directions of the learned Single Judge the Income tax Officer made an assessment order on March 31 1977
In the result the assessment proceeding remained pending during the entire period from March 17 1975 to March 31 1977 by successive orders of the Court
If regard be had to clause ii of Explanation 1 to section 153 which provides that in computing the period of limitation for the purposes of section 153 the period during which the assessment is stayed by an order or injunction of any court shall be excluded it is abundantly clear that the assessment order dated March 31 1977 is not barred by limitation
In computing the period for making the assessment the Income tax Officer would be entitled to exclude the entire period from March 17 1975 on which date there were fourteen days still left within the normal operation of the rule of limitation
The assessment order was made on the very first day after the period of stay expired it could not be faulted on the ground of limitation
There is therefore no force in the submission of the appellant that the limitation for making the assessment had expired and a valuable right not to be assessed had thereby accrued to it and that consequently the High Court was not competent to make the order directing a fresh assessment
The next point is whether the High court possessed any power to make the order directing a fresh assessment
The principal relief sought in the writ petition was the quashing of the notice under section 1421 of the Income tax Act and inasmuch as the assessment order dated March 31 1977 was made during the pendency of the proceeding consequent upon a purported non compliance with that notice it became necessary to obtain the quashing of the assessment order also
The character of an assessment proceeding of which the impugned notice and the assessment order formed part being quasi judicial the certiorari jurisdiction of the High court under Article 226 was attracted
Ordinarily where the High court exercises such jurisdiction it merely quashes the offending order and the consequential legal effect is that but for the offending order the remaining part of the proceeding stands automatically revived before the inferior court or tribunal with the need for fresh consideration and disposal by a fresh order
Ordinarily the High Court does not substitute its own order for the order quashed by it
It is of course a different case where the adjudication by the High Court establishes a complete want of jurisdic 770 tion in the inferior court or tribunal to entertain or to take the proceeding at all
In that event on the quashing of the proceeding by the High Court there is no revival at all
But although in the former kind of case the High court after quashing the offending order does not substitute its own order it has power nonetheless to pass such further orders as the justice of the case requires
When passing such orders the High court draws on its inherent power to make all such orders as are necessary for doing complete justice between the parties
The interests of justice require that any undeserved or unfair advantage gained by a party invoking the jurisdiction of the court by the mere circumstance that it has initiated a proceeding in the court must be neutralised
The simple fact of the institution of litigation by itself should not be permitted to confer an advantage on the party responsible for it
The present case goes further
The appellant would not have enjoyed the advantage of the bar of limitation if notwithstanding his immediate grievance against the notice under section 1421 of the Income tax Act he had permitted the assessment proceeding to go on after registering his protest before the Income tax Officer and allowed an assessment order to be made in the normal course
In an application under section 146 against the assessment order it would have been open to him to urge that the notice was unreasonable and invalid and he was prevented by sufficient cause from complying with it and therefore the assessment order should be cancelled
In that event the fresh assessment made under section 146 would not be fettered by the bar of limitation
Section 1533i removes the bar
But the appellant preferred the constitutional jurisdiction of the High Court under Article 226
If no order was made by the High Court directing a fresh assessment he could contend as is the contention now before us that a fresh assessment proceeding is barred by limitation
That is an advantage which the appellant seeks to derive by the mere circumstance of his filing a writ petition
It will be noted that the defect complained of by the appellant in the notice was a procedural lapse at best and one that could be readily corrected by serving an appropriate notice
It was not a defect effecting the fundamental jurisdiction of the Income tax Officer to make the assessment
In our opinion the High Court was plainly right in making the direction which it did
The observations of this court in Director of Inspection of Income tax Investigation New Delhi and Another vs Pooran Mall  Sons and another1 are relevant
It said The court in exercising its powers under article 226 has to mould the remedy to suit the facts of a case
If in a particular case a court takes the view that the Income tax 771 Officer while passing an order under section 1325 did not give an adequate opportunity to the party concerned it should not be left with the only option of quashing it and putting the party at an advantage even though it may be satisfied that on the material before him the conclusion arrived at by the Income tax Officer was correct or dismissing the petition because otherwise the party would get an unfair advantage
The power to quash an order under Article 226 can be exercised not merely when the order sought to be quashed is one made without jurisdiction in which case there can be no room for the same authority to be directed to deal with it
But in the circumstances of a case the court might take the view that another authority has the jurisdiction to deal with the matter and may direct that authority to deal with it or where the order of the authority which has the jurisdiction is vitiated by circumstances like failure to observe the principles of natural justice the court may quash the order and direct the authority to dispose of the matter afresh after giving the aggrieved party a reasonable opportunity of putting forward its case
Otherwise it would mean that where a court quashes an order because the principles of natural justice have not been complied with it should not while passing that order permit the tribunal or the authority to deal with it again irrespective of the merits of the case
 The point was considered by the Calcutta High court in Cachar plywood Ltd vs Income Tax Officer A Ward Karimganj Dist Cachar  Another1 and the High court after considering the provisions of section 153 of the Income Tax Act considered it appropriate while disposing of the writ petition to issue a direction to the Income tax Officer to complete the assessment which but for the direction of the High court would have been barred by limitation
Our attention has been drawn to a recent decision of this Court in Rajinder Nath etc
vs The Commissioner of Income tax Delhi2 by a Bench of this Court of which one of us was a member
In that case the Court considered the provisions of section 1533 ii of the Income tax Act and laid down that the word direction in that subsection refers to a direction necessary for the disposal of the case and which the court has power to make while deciding the case
In the view taken by us that the order made by the High Court directing a fresh assessment is necessary for properly and completely disposing of 772 the writ petition the appellant can obtain no assistance from Rajinder Nath supra
Mr A P Mohanti who appeared for the intervener supported the contention that the High Court was not entitled to make an order directing a fresh assessment and has referred us to three cases Pickles vs Falsham1 Anisminic Ltd vs The Foreign Compensation Commission and Another2 and Bath and West Countries Property Trust Ltd vs Thomas Inspector of Taxes3
We are of the opinion that the cases are distinguishable
In Pickles supra Cave LC declined to remand the case to the Special Commissioners because the time for making the requisite assessment had expired
In Anisminic Ltd supra the decision of the Commissioner considered by the House of Lords was a nullity
The present case is one of a mere procedural lapse an imperfect notice which is replaceable by a proper notice
The third case Bath and West Countries Property Trust Ltd supra was again a case where it was too late for the Inspector to make a fresh assessment
In the case before us a direction by the High court is sufficient to raise the bar of limitation a power absent in the aforesaid cases
In our Judgment the order made by the High Court directing the Income tax Officer to make a fresh assessment was necessary in order to do complete justice between the parties
The High Court had jurisdiction to make the order and it acted in the sound exercise of its judicial discretion in making it
The appeal is dismissed with costs
VDK Appeal dismissed


Summary:
The appellant a banking company incorporated in the United Kingdom carries on banking business in India and is assessed under the Income Tax Act 1961
The appellant filed a return of its income for the assessment year 1972 73
During the assessment proceedings the Income Tax Officer issued a notice under section 1421 of the Income Tax Act requiring the appellant to produce certain account books and documents
The appellant applied against the notice to the High Court of Calcutta under Article 226 of the Constitution
The High Court construing the notice in specifically limited terms directed the appellant to comply with it
The appellant preferred an appeal in the High Court
Meanwhile pursuant to the direction by the learned single judge the Income Tax Officer made an assessment order on March 31 1977
Thereafter the appeal was allowed by a Division Bench of the High Court by its judgment dated May 8 and 12 1978 and the impugned notice under section 1421 and the consequent assessment order were quashed
But while doing so the Division Bench also directed the Income Tax Officer to make a fresh assessment
Aggrieved by that direction the appellant applied for and obtained special leave to appeal to this Court
Dismissing the appeal the Court  HELD 1
The High Court was competent to make the order directing a fresh assessment since the limitation for making the assessment had not expired and no valuable right to be assessed had thereby accrued to the appellant
769 D E The facts of the case make it clear that the assessment proceedings remained pending during the entire period from March 17 1975 to March 31 1977 by virtue of successive stay orders of the Court
If regard be had to clause ii of Explanation 1 to section 153 which provides that in computing the period of limitation for the purposes of section 153 the period during which the assessment is stayed by an order or injunction of any court shall be excluded it is abundantly clear that the assessment order dated March 31 1977 is not barred by limitation
In computing the period for making the assessment the Income Tax Officer would be entitled to exclude the entire period from March 17 1975 on which date there were fourteen days still left within the normal 766 operation of the rule of limitation
The assessment order was made on the very first day after the period of stay expired it could not be faulted on the ground of limitation
769 B D 2
The character of an assessment proceeding of which the impugned notice and the assessment order formed part being quasi judicial the certiorari jurisdiction of the High Court under Article 226 was attracted
Ordinarily where the High Court exercises such jurisdiction it merely quashes the offending order and the consequential legal effect is that but for the offending order the remaining part of the proceeding stands automatically reviewed before the inferior court or tribunal with the need for fresh consideration and disposal by a fresh order
Ordinarily the High Court does not substitute its own order for the order quashed by it
It is of course a different case where the adjudication by the High Court establishes a complete want of jurisdiction in the inferior court or tribunal to entertain or to take the proceeding at all
In that event on the quashing of the proceeding by the High Court there is no revival at all
But although in the former kind of case the High Court after quashing the offending order does not substitute its own order it has power nonetheless to pass such further orders as the justice of the case requires
769 F H 770 A 3
When passing such orders the High Court draws on its inherent power to make all such orders as are necessary for doing complete justice between the parties
The interests of justice require that any undeserved or unfair advantage gained by a party invoking the jurisdiction of the court by the mere circumstance that it has initiated a proceeding in the court must be neutralised
The simple fact of the institution of litigation by itself should not be permitted to confer an advantage on the party responsible for it
770 A C In the present case the appellant would not have enjoyed the advantage of the bar of limitation if notwithstanding his immediate grievance against the notice under section 1421 of the Income Tax Act he had permitted the assessment proceeding to go on after registering his protest before the Income Tax Officer and allowed an assessment order to be made in the normal course
In an application under section 146 against the assessment order it would have been open to him to urge that the notice was unreasonable and invalid and he was prevented by sufficient cause from complying with it and therefore the assessment order should be cancelled
In that event the fresh assessment made under section 146 would not be fettered by the bar of limitation
Section 1533i removes the bar
But the appellant preferred the constitutional jurisdiction of the High Court under Article 226
If no order was made by the High Court directing a fresh assessment he could contend that a fresh assessment proceeding is barred by limitation
That is an advantage which the appellant seeks to derive by the mere circumstance of his filing a writ petition
It will be noted that the defect complained of by the appellant in the notice was a procedural lapse at best and one that could be readily corrected by serving an appropriate notice
It was not a defect affecting the fundamental jurisdiction of the Income Tax Officer to make the assessment
The High Court was plainly right in making the direction which it did
770 C G Director of Inspection of Income Tax Investigation New Delhi and Anr
vs Pooran Mall and Sons and Anr
 395 followed
767 Cachar Plywood Ltd vs Income Tax Officer A  Ward Karimganj Dist
Cachar and Anr 1978 114 ITR Cal approved
Rajinder Nath etc
vs The Commissioner of Income Tax Delhi  distinguished
Pickles vs Falsham 9 Tax Cases 261 288 Anisminic Ltd vs The Foreign Compensation Commission  Anr
1969 1 All ELR 208 Bath and West Countries Property Trust Ltd vs Thomas Inspector of Taxes  distinguished