Case: P.C. Doshi Vs. 7Th Income Tax Officer, C-I Ward, Bombay

( 1 ) THIS is petition challenging the orders made by the respondent, the 7th Income-tax Officer, C-I Ward, Bombay, under section 35 (8) and 35 (7) of the Indian Income-tax Act, on the 23rd February, 1961, and on the 15th March, 1961, respectively, in relation to the assessment of one Chaturbhuj Sunderji Doshi for the assessment years 1950-51 and 1951-52 for which the relevant previous years were S. Y. 2005 and 2006 respectively. Chaturbhuj Sunderji Doshi died on the 21st of March, 1963, and the petitioners are the executors of his estate. Until his death the said Chaturbhuj Sunderji Doshi was assessed as an individual. In the relevant years with which we are concerned, he held certain shares in Bharat Silk Mills (Pvt.) Ltd. , a company to which the provisions of section 23a of the Indian Income-tax Act were applicable. On the 5th March, 1955, the Income-tax Officer, Companies Circle, passed an order under section 23a (1) upon the said company for the assessment year 1949-50, as the said company had declared dividend, which was below 60% of its assessable income According to the said order, the share of Chaturbhuj Sunderji Doshi in the dividend which was deemed to have been distributed was determined at Rs. 37,148. The said order made on the 5th March, 1955, was subsequently rectified by the Income-tax Officer, Companies Circle, had given intimation of the original as well as the rectified order under section 23a made on the company to the respondent, who was dealing with the individual assessment of Chaturbhuj Doshi. The intimation of the original order was given on the 13th April, 1955, and of the rectified order on the 28th December, 1955. The respondent completed the assessment of Chaturbhuj Doshi for the assessment year 1951-52, on the 31st December, 1955, but he failed to include therein the share of the dividend deemed to have been distributed. However, subsequently, on the 24th February, 1956, he intimate to Chaturbhuj Doshi that he proposed to rectify the assessment order made by him under section 35 of the Act so as to include therein a sum of Rs. 31,568 which represented his share in the dividend of the Bharat Silk Mills (Pvt.) Ltd. , which was deemed to have been distributed under the order under section 23a on that company. On the 5th of March, 1956, the respondent rectified the original assessment as had been proposed by him. The assessee, Doshi, had filed an appeal against the order of assessment made against him, and in the said appeal he also raised a contention with regard to the rectification made in the original assessment by the respondent. The Appellate Assistant Commissioner dismissed the appeal as against the original assessment and as to the assessees contention with regard to the rectification, he did not entertain the same on the ground that it did not form part of the assessment order the same on the ground that it did not form part of the assessment order appealed against. In the further appeal taken by the assessee, Doshi, to the Income-tax appellate Tribunal, it was pleased to take the view that the order of rectification was in effect an order of assessment, and, consequently, formed a part of the assessment order which was appealed against, and hence it was incumbent on the Appellate Assistant Commissioner to have gone into the contention raised by the appellant assessee on merits. In that view of the matter, it set aside the order passed by the Appellate Assistant Commissioner relating to the remanded the case back to him for decision on merits. On remand the Appellate Assistant Commissioner passed an order on the 22nd October, 1962, holding that the Income-tax Officer was not justified in including the said dividend in assessment under section 35 of the Act and directing that the amount should be deleted from the assessment. Now, in the mean while, proceedings under section 34 of the Act were initiated against Bharat Silk Mills (Pvt.) Ltd. as a result of which a revised order under section 23a read with section 35 (7) of the Act came to be made upon the company on the 30th January, 1958, under which the total income of the company was enhanced, resulting in the share of Chaturbhuj Sunderji Doshi in the dividend deemed to have been distributed correspondingly increasing to Rs. 41,665. After receipt of the intimation of this revised order against the company, the respondent intimated to the assessee, Doshi, on the 6th May, 1959, that he proposed to rectify his assessment for the year 1951-52 under section 35 (7) to give effect to the Tribunals order dated 30th March, 1959, and thereafter on the 15th March, 1961, he passed the order under section 35 (7) including the sum of Rs. 41,665 as deemed dividend in the assessment of Doshi. This is one of the two orders which is challenged in the present petition. After the said order was passed the assessee, Doshi, made an application under section 35 of the Act for rectification of the mistake apparent on the face of the record. This application was allowed to the extent of deleting the addition of Rs. 42,090 which appears to have been wrongly added to the income of the assessee. This rectification order which was made on the 1st September, 1963, was served on the petitioners on the 24th January, 1964, as the executors of the estate of the deceased, Chaturbhuj Sunderji Doshi, who had died pending the proceedings on 21st March, 1963, and it was follows by a notice of demand on the 20th February, 1964. The petitioners have asked for the setting aside of this notice of demand also and have prayed for a prohibitory order restraining the respondent from taking any further proceedings in pursuance thereof. ( 2 ) AS against the assessment made on Chaturbhuj Sunderji Doshi for the assessment year 1950-51, he had appealed to the Appellate Assistant Commissioner. In the said appeal, which was decided on the 13th January, 1961, the Appellate Assistant Commissioner gave certain directions to the respondent. While carrying out the said directions, the respondent by his order dated 23rd February, 1961, included a sum of Rs. 41,262 net as the assessees share of the dividend deemed to have been distributed by the company for the S. Y. 2005. On the 18th January, 1963, the assessee, Doshi, requested the Income-tax Officer to delete the said addition and rectify his order but the said request was refused by the order made by the respondent on the 24th April, 1964. The petitioners have challenged the orders passed by the respondent on the 23rd February, 1961, and 24th April, 1964, and have prayed for an appropriate writ for quashing the same. ( 3 ) NOW, the main contention, which has been raised by the petitioners challenging the orders made by the respondent under section 35 (7) and 35 (8) is that the orders complained of could not have been passed under the said provisions and, consequently, the respondent in passing the said orders has exercised jurisdiction not vested in him by law. It is the petitioners contention that, since the orders under section 35 (7) and 35 (8) are without jurisdiction, the further proceedings proposed to be taken by him by way of notice of demand are also illegal and without jurisdiction. ( 4 ) NOW, the orders, which are complained of as having been made without jurisdiction, are the orders passed on the 23rd February, 1961, in respect of the assessment for the assessment year 1950-51 and on the 15th March, 1961, in respect of the assessment for the assessment year 1951-52. The present petition challenging the said orders has been filed on the 11th July, 1964, and, consequently, there has been a gross delay in the filing of this petition, on which ground alone it is liable to be rejected, unless the petitioners are in a position to explain the delay or to contend successfully that the ground of delay should not be regarded as disentitling them to the reliefs prayed for by them. ( 5 ) IN the petition itself no explanation has been sought to be given by the petitioners as to the delay nor any grounds urged why the petition should to be rejected on that ground. Mr. Trivedi, the learned counsel, who appears for the petitioners, has urged before us three reasons for condoning the delay. He has urged, in the first place, that the orders complained of being patently without jurisdiction, the delay on the part of the petitioners in coming to the court should not come in their way of obtaining a writ of certiorari for quashing the orders, which are illegal and without jurisdiction, or for obtaining a writ of prohibition preventing further action being taken in pursuance of the said orders. Secondly, he says that since action under the said orders by issuing the notice of demand was not taken until recently, it could not be said that there has been any under delay on his part in coming to the court. It is argued by him that, since the orders passed by the respondent were without jurisdiction, he could wait until an effective threat had arisen as a result of any action, which would harm him was taken by the respondent in pursuance of the said orders and, since such effective step could be said to have been taken only when the said notices of demand were issued to him, the petition filed by him does not suffer from any delay. Thirdly, he argues that, since after the passing of the orders in 1961, he had applied for the rectification of the orders, the time taken in prosecuting the said remedy should be allowed in considering the delay which had occurred in coming to this court against the said orders and if that time is excluded his present petition does not suffer from a gross delay at any rate. ( 6 ) IN support of his first submission that there being a patent lack of jurisdiction on the part of the respondent in passing the impugned orders, delay on the part of the petitioners to come to the court cannot disentitle them to get the orders quashed from this court on a writ petition, Mr. Trivedi has referred us to a decision of this court in Madhavlal Sindhoo v. V. R. Idurkar and the decision of the Privy Council in Estate and Trust Agencies Ltd. v. Singapore Improvement Trust. ( 7 ) IN Madhavlal Sindhoo v. V. R. Idurkar, Mr. Justice S. T. Desai was considering the question of delay in relation to an application for a writ of prohibition. It was contended before him that, where the absence of jurisdiction was patent in any judicial or quasi-judicial matter, a writ of prohibition would issue as a matter of right and regardless of any delay on the part of the petitioner, and the contention was sought to be supported on the basis of certain English decisions relating to the said proposition. The learned judge pointed out that, under the Indian Constitution, the power to grant all kinds of writs including a writ of prohibition was discretionary and not as under the English Law, where, if the absence of jurisdiction was apparent on the face of the record, a writ of prohibition was a matter of right and not a matter of discretion. He further pointed out that although the grant of a writ of prohibition was a matter of course if there was a patent absence of jurisdiction. Considering the true measure and scope of the exercise of the jurisdiction and discretion to issue a writ of prohibition under the Constitution, the learned judge laid down four proposition : (I) The High Court has always the power and the discretion to grant or refuse to grant this writ which though it is primarily intended for enforcement of fundamental rights must also issue where necessity demands immediate and decisive interposition. (ii) The considerations that arise when this writ is asked for on the ground that any inferior court or person or body of persons having legal authority is committing or has committed an error of law apparent on the face of its proceedings and those that arise in a case of excess or usurpation of jurisdiction by any such court or authority must necessarily be differentiated, for in the former case there is an erroneous exercise of jurisdiction which exists while in the latter case there is no jurisdiction at all. (iii) Absence of jurisdiction may be patent, that is, apparent on the face of the proceedings, or latent in the sense that it is not so apparent. Where the defect is not apparent, the court in its discretion may refuse the writ if the facts or circumstances attending the case show under delay, insufficient materials, misconduct, laches or acquiescence on the part of the party applying for it or are such a would render it unjust on the part of the court to interpose. (iv) Where, however, there is patent lack of jurisdiction and the court is immediately satisfied that the inferior court or authority has exceeded its jurisdiction, the court will very readily interpose. The discretion to grant or refuse to grant the writ is of course there. But since discretion contemplates an exercise of arbitrium and not arbitrariness, the writ must go though not of right nor, of course, yet almost as a matter of course, unless an irresistible case for withholding the writ is made out. ( 8 ) THESE propositions are laid down as relating to a writ of prohibition, but Mr. Trivedi argues that they would apply even in the cases where writs of certiorari are prayed for, because the said writ also is employed for quashing order, which are made either without jurisdiction or in erroneous assumption of jurisdiction or in excess of jurisdiction. He has also further pointed out that in the present petition he has claimed a writ of prohibition also to prohibit the respondent from enforcing the notice of demand, which he has issued to the petitioners. ( 9 ) NOW, so far as the writ of prohibition is concerned, it cannot be said that the notices of demand suffer from a patent lack of jurisdiction. If the order, in pursuance of which they have been issued, stand, no objection can be taken with regard to the consequential notice of demand. We may, however, agree with him that, in so far as the relief by way of writs of certiorari seeking to quash the order made under section 35 (7) and 35 (8) are concerned, he may be entitled to rely on the said decision provided he can satisfy us that there is a patent lack of jurisdiction on the part of the respondent in making the said orders. In the Privy Council case, Estate and Trust Agencies Ltd. v. Singapore Improvement Trust, relied on by him, it has been observed that an application for prohibition or certiorari is never too late as long as there is something left for it to operate upon. This observation was made in the context of a prayer for a writ of prohibition seeking to prevent the action of pulling down a building which was being done in consequence of an order, which was ultra vires of the authority making it. The said decision, in our opinion, is consistent with the view which Mr. Justice S. T. Desai has taken in Madhavlal Sindhoo v. V. R. Idurkar that, if there is a patent lack of jurisdiction, normally the court will interfere and will not stay its hands merely on the ground of delay on the part of the petitioner to come to the court. The question, however, to be considered is whether the present case is one which falls in the category of cases where there is a patent lack of jurisdiction and the court could be immediately satisfied that the order complained of or the action proposed to be taken in pursuance thereof is illegal and without jurisdiction. ( 10 ) NOW the circumstances in which the order came to be passed have been already stated by us. The order dated 23rd February, 1961, relating to the assessment for the assessment year 1950-51, was made in consequence of the directions given by the Appellate Assistant Commissioner in his decision in the appeal preferred by the assessee, Doshi, against his assessment for the assessment year 1950-51. It appears from the order, which is produced at Exhibit K, that the assessees share of the dividend deemed to have been declared under section 23a by the Income-tax Officer, Companies Circle, was added under section 33 (8) of the Act after due notice was given to the assessee. Section 35 (8) provides :where, as a result of proceedings initiated under clause (a) of sub-section (1) or under sub-section (1a) of section 34, - (a) a firm or an association or persons is assessed or reassessed, or (b) a company is assessed or reassessed and in respect thereof an order under section 23a is subsequently made, and the Income-tax Officer concerned is of opinion that it is necessary to compute or recompute the total income of a partner in the firm or a members of the association of persons or a shareholder in the company, as the case may be, the Income-tax Officer may proceed to compute or recompute the total income and determine the sum payable on the basis of such competition or recomputation as if the computation or recomputation is a rectification of a mistake apparent from the recorded within the meaning of this section; and the provision of sub-section (1) shall apply accordingly, the period of four years specified therein being reckoned from the date of the final order passed in the case of the firm, association or a company, as the case may be. ( 11 ) IT is not contended by the petitioners that the conditions necessary for the applications of this sub-section, viz. , thatas a result or proceedings initiated under clause (a) of sub-section (1) of section 34 the company is assessed or reassessed and in respect thereof an order under section 23a is subsequently made is not satisfied in the present case. What is contended by the petitioners is that, even though the company might have been assessed or reassessed under section 34 (1) (a), the shareholders assessment cannot be ratified under section 35 (8) unless the assessment or reassessment order under section 23a in the case of a company has been followed by an order under section 34 in the case of a shareholder. The argument of the learned counsel is that where the share of the assessee of the dividend deemed to have been distributed by an order made on the company under section 23a is not included in the original assessment of the assessee, it cannot thereafter be included on rectification under section 35. The only course available to the Income-tax Officer to include the said divided is by having recourse to proceedings under section 34. Where there is no such inclusion either in the original assessment or in the reassessment of the assessee under section 34, a reassessment of the company and the consequent order under section 23a against the company will not permit the application of section 35 (8) for the purpose of adjusting the assessment of the assessee-shareholder on the basis of a mistake apparent from the record. ( 12 ) IT is difficult, in the first place, to agree with the submission, at any rate to the whole extent. Secondly, it is difficult to see whether the submission that is advanced can apply to the case. The original assessment which was made on the assessee is not produced before us. Whether in the said original assessment any share of the deemed divided of the company was included or not is not known. It is also not known whether at the time when the assessees assessment was made, an order under section 23a was or was not made against the company. In the absence of proper facts being placed before the court, it is difficult to see whether the submission made by the learned counsel, even if it is substantial, can have application to the present case. Moreover, the argument of the learned counsel that the only way to include the deemed dividend under section 23a in the assessment of the assessee is by having recourse to section 34-proceedings is not correct. Thus, for instance, where even before the assessees assessment is completed there is an order made under section 23a upon the company and the Income-tax Officer dealing with the assessees assessment is aware of the same, there is no difficulty in his way in including the deemed dividend of the assessee in the original assessment itself. It is not necessary in such a case that he must first complete the assessment and thereafter reopen it under section 34 for the purpose of inclusion of the deemed divided. It is no doubt true that when at the date of the assessment of the assessee the order under section 23a is not made upon the company or that, even if such an order is made, the Income-tax Officer assessing the assessee the assessee is not aware of the same and, subsequently, after the competition of the assessees assessment, he becomes aware of the same or the order is thereafter made, he may have to have recourse to section 34 and reopen the assessment of the assessee on the basis of the subsequent information. In a case, however, where the Income-tax Officer has the information about the companys assessment under section 23a and of the share of the deemed divided of the assessee and through inadvertance, oversight or negligence, he omits to include it in the original assessment and realises his mistake, which is obvious and apparent, subsequently, there should, in our opinion, be no difficulty in his way to treat the said omission as a mistake apparent from the record and rectify it under section 35. The argument of the learned counsel, therefore, that in every case recourse must be had to section 34 for the purpose of including the deemed dividend in the assessees assessment does not appear to sustainable. Secondly, in cases falling within the purview of section 35 (8), computation or recomputation of the total income of a partner of the firm is permitted treating the computation or recomputation as a mistake apparent from the record without having recourse to section 34-proceedings or without being hampered by the time-limit prescribed therein. Now one of the cases falling within the purview of section 35 (8) would be, when the firm was originally assessed there was no order under section 23a passed on it, but on subsequent proceedings initiated under section 34 (1) against the firm, it was reassessed and an order section 23a came to be made against it. In such a case, there being no order under section 23a against the firm in the original assessment, there would be no inclusion of any deemed divided in the individual assessment of the partner and the computation of the total income of the partner will obviously not contain any such inclusion. As a result of the order made under section 23a passed on the firm on its reassessment under section 34 (1), recomputation of the total income of the partner will be necessary in order to include therein his share of the deemed dividend. Such a recomputation the Income-tax Officer may be able to make by reopening the assessment of the partner under section 34 (1) (b), but it may as well happen that when the order under section 23a comes to be passed against the firm in its reassessment proceedings, the time to reopen the partners assessment under section 34 (1) (b) may have already lapsed. Mr. Trivedi argues that if section 34 (1) (b) proceedings cannot be availed of, the Income-tax Officer has no other power to bring the said income to tax. We do not agree with him. It appears to us that the Income-tax Officer can also avail of the provisions of section 35 (8) in such a case and recompute the total income of the partner, treating the computation as a mistake apparent from the record within four years of the computation as a mistake apparent from the record within four years of the date of the order under section 23a against the firm and the provision of section 35 (8) is intended to apply to such cases. It seems to us, therefore, that the order passed by the Income-tax Officer against the petitioners under section 35 (8) is not without jurisdiction. At any rate, we have no doubt whatsoever that the order under section 35 (8) relating to the assessment for the assessment year 1950-51 is not patently without jurisdiction so as to entitle the petitioners to have it quashed on a writ petition irrespective of any delay on their part in approaching the court. ( 13 ) COMING now to the order passed in relation to the assessment for the assessment year 1951-52, it would be event from the facts, which we have already narrated, that on the 31st December, 1965, when the Income-tax Officer completed the original assessment of the assessee for the said assessment year, he had the information about the section 23a order passed against the company according to which the assessees share of the deemed divided was Rs. 31,568. With that information in his possession, his failure to include the same in the assessees total income could not be regarded as anything else except an obvious or patent mistake through over sing or inadvertence or negligence or lack of mind to the facts on record. It appears that within a short time of making the assessment order he realised his mistake and sought to correct it by an order made under section 35. This order, which he made on the 5th March, 1956, and which was complained of by the assessee in the appeals, which he preferred against the orders of assessment, came to be ultimately deleted by an order of the Appellate Assistant Commissioner on remand to him of the case from the Appellate Tribunal. Thereafter, when in the proceedings initiated under section 34 against the company, a revised order under section 23a read with section 35 (7) came to be passed against the company, the respondent sought to invoke the aid of section 35 (7) for the purpose of giving effect to the said order by rectifying the assessment of the assessee. It is contended by Mr. Trivedi that section 35 (7) was not clearly applicable since that section applies where the order under section 23a is modified in appeal, revision or any other proceeding and not in cases where the company is assessed or reassessed as a result of proceedings initiated under section 34. Mr. Trivedi argues that since in the present case the company was reassessed as a result of proceedings initiated under section 34, the provision applicable was section 35 (8) and not section 35 (7) and consequently the order, which purports to have been passed under section 35 (7), is illegal and without jurisdiction. Here again, we must state, in the first place, that the proper material necessary for the purpose of appreciation of the point has not been put before us by the petitioners. What has been produced as exhibit H purports to be an order made under section 23a read with section 35 (7) and not an order section 23a read with section 34, nor an order under section 23a read with section 35 (8 ). In the body of the order it is stated that in view of the reopening of the assessment under section 34 for the assessment year 1949-50, the total income of the company is enhanced and the net deemed dividend under section 23a is also revised as specified therein. It would thus be seen that the reopening of the assessment of the company under section 34 resulted not in the passing of an order section 23a as a consequence of the reassessment as contemplated under section 35 (8) but only a revision of the order already passed. Now, section 35 (7) applies to case where the order under section 23a is modified in appeal, revision or any other proceeding or the order is cancelled or varied. The order which is produced before us is a revised order which appears to have been properly passed under section 23a read with section 35 (7) as it is described to be, although the initial reopening of the proceedings might have been on the basis of section 34. It also appears to us that if, as a result of the revision of the order under section 23a made on the company, whether as a result of proceedings under section 34 or by way of appeal or revision, an adjustment was necessary to be made in the assessees assessment, it could be made under section 35 (7) and the action of the respondent in proceeding to make the assessment could not be said to be without jurisdiction. Moreover, even if it were assumed that the proper provision to which he should have had recourse was sub-section (8) and not sub-section (7), it would make no material difference to the assessees case. Mr. Trivedi has argued that section 35 (8) could not have been resorted to by the officer, although the order under section 23a against the company was revised as a result of the proceedings instituted under section 34 because, if the said section was to be applicable, its operation was only confined to the adjustment required to be made on the difference between the original share of deemed dividend and the revised share of the deemed dividend in accordance with the revised order of the company. In cases falling under section 35 (8), says the learned counsel, the jurisdiction of the Income-tax Officer is only confined to recompute the total income and determine the sum payable on the basis of such recomputation as if the recomputation is the rectification of a mistake apparent the total income and determine the sum payable on the basis of such recomputation as if the recomputation is the rectification of a mistake apparent on the face of the record. In other words, argues the learned counsel, what can be deemed to be a mistake apparent on the face of the record. In order words, argues the learned counsel, what relates to the adjustment in consequence of the difference between the original and the recomputed share of the assessee. In the present case the Income-tax Officer has made the adjustment including the whole of the deemed dividend as determined by the revised order inasmuch as the original or the unrevised share of the deemed dividend was not included in the assessees original assessment, the purported addition thereof to the assessment having been found to be erroneous and deleted in accordance with the Appellate Assistant Commissioners order. Here again, we may state that it is not as if the original share of the deemed dividend was never included in the assessees income. Although in the original assessment the Income-tax Officer had overlooked to include it, he had tried to do it by a subsequent rectification order, which he had made. Unfortunately, however, the said order came to be set aside by the Appellate Assistant Commissioner on the provision of section 35. If the inclusion made in the original assessment had not been wrongly deleted, there was no difficulty of the nature pointed out by Mr. Trivedi in applying the provisions of section 35 (8) to the case. Even otherwise it does not appear to us quite clear that section 35 (8) could not be invoked. The argument of the learned counsel that the recomputation must be combined only to the difference does not appear to us to be invincible. What the section speaks of is the recomputation of the total income of the assessee and the expression total income may permit the addition of the entire amount since the total income is the income on which the tax is liable to be paid. At any rate, the argument advanced by the learned counsel does not convince that there is an error apparent on the face of the record, which would make us ignore the effect of the delay on the part of the petitioners in coming to this court on the present writ application. We cannot, therefore, accept Mr. Trivedis contention that we should overlook the delay in the filing the present petition on the strength of the principles laid own in the cases to which he has made a reference. ( 14 ) THE next contention of Mr. Trivedi is that inasmuch as the order purported to be passed under section 35 (7) and 35 (8) were without jurisdiction and of no effect, he could ignore the same and need not come to the court until actually a threat arose which could effectively harm him. Such a threat, he says, only arose when the notices of demand were issued to him and, since that was done only in the month of January, 1964, the present petition which he has filed in July, 1964, does not suffer from any gross delay. In support of this submission he has invited our attention to a decision of this court in Rasiklal Amritlal Doshi v. A. Nundy, Addl. Income-tax Officer, where it was held that, since the notice of demand complained of in that case was a nullity, it was not necessary for the petitioner to come to the court on a writ application until some action was taken in pursuance of the notice, which really and effectively affected his interest. Now, in that case a notice of demand was served on the petitioner on the 29th March, 1956, intimating to him that a sum of Rs. 97,223-7-0 had been determined as payable by him and calling upon him to make the said payment. No order of assessment, however, in pursuance of which the said notice of demand was purported to have been issued was supplied to the petitioner either before or at the time of the said notice of demand. The petitioner made repeated requests to the Income-tax Officer to furnish to him the said assessment order and ultimately on the 7th May, 1959, he was informed that the assessment order was not traceable. The department thereafter started the recovery proceedings by issuing a certificate under section 46 (1) of the Indian Income-tax Act and on the 16th of August, 1960, prohibitory order came to be issued in the said recovery proceedings. The petitioner requested the authorities to withdraw the said proceedings on the ground that they were patently illegal and without jurisdiction and, since his request was not heeded to, he made the writ petition on the 12th November, 1960, praying for a writ to quash the notice of demand and the recovery proceedings and for directions restraining the respondents from taking any further action in pursuance of the said notice of demand. Now the notice of demand, which could only follow on a proper and legal assessment order having been made in accordance with law, was patently illegal and without jurisdiction inasmuch as no order of assessment had been made or served on the petitioner either proper to or at the time of the issue of the notice of demand. The petitioner had requested the authorities to supply to him the order of assessment on the basis of which the notice of demand was issued but he was never supplied with the same. It was in these circumstances that this court took the view that, although the writ petitioner, the delay could not be put against him so as to disentitle him to the relief inasmuch as the notice of demand being a nullity, in the circumstances of the case he could ignore the same and wait until some effective action was taken against him, which really affected his interest. The case does not, in our opinion, lay down a general rule that delay is immaterial where the order sought to be quashed is alleged to be without jurisdiction and the petitioner is entitled to wait until further steps in execution of the order are taken by this court was that, on the facts and circumstances, of the case, the delay was excusable and was not such as to entail the rejection of the writ petition in limine. ( 15 ) IN the present case the orders under sections 35 (7) and 35 (8), which really and effectively affected the interest of the petitioners, were passed as early as in February and March, 1961. The further proceedings were consequential proceedings, which were bound to follow in pursuance of the said order. Although it was the petitioners allegation were substantiated by him and the orders quashed, he could not afford to ignore them and treat them as nullities. It was, therefore, necessary for the petitioners to challenge those orders on a writ petition when they were made and the question as to whether they have sought their remedy without any delay has got to be considered with reference to the point of time when the orders were passed and gave a cause of action to the petitioners to complain about them. The contention urged by the learned counsel for the petitioners, therefore, that, since the petition does not suffer from any gross delay when issued, cannot help him in explaining the delay on his part in challenging the orders which really affect the petitioners interest and which were passed as long back as in 1961. ( 16 ) THE third contention of Mr. Trivedi is that after the order were passed he had sought to get them set aside by way of making applications for rectification and the time taken by him in the said rectification proceedings should be excluded in considering the question of delay. Now, in respect of the order relating to the assessment for the assessment year 1951-52, which was made on the 15th March, 1961, the petitioners appears to have made an application for rectification of the same nearly two years thereafter on the 16th of January, 1963. This application was entertained by the respondent in so far as it really and truly related to a mistake apparent on the face of the order and the rectification was allowed. What had happened was that in the order a double addition of the deemed dividend. He deleted the excess part which had been inadvertently added and rectified the order on the 1st September, 1963. On that date at any rate it was clear to the petitioners that their remedy to persuade the Income-tax Officer to delete the entire inclusion of the deemed dividend had failed. Even thereafter the present application, which is made on the 11th July, 1964, is filed after a period of nearly ten months and there is no explanation whatever offered as to why it had not been made earlier. The writ petition so far as it relates to the order made under section 35 (7) relating to the assessment orders for the assessment year 1951-52 still suffers from gross delay. As to the order made under section 35 (8) relating to the assessment for the year 1950-51, which was made on the 23rd February, 1961, an application for rectification appears to have been made on the 18th January, 1963, and the same has been turned down on the 24th April, 1964. In our opinion, this application was a futile application and could not be regarded as any step taken by the petitioners to have their grievance remedied. The order made under section 35 (8) was made by the respondent on the assumption that he had the jurisdiction to pass the same. It did not suffer from any error apparent on the face of the cord as did the order made for the other assessment year, which had inadvertently included an excess amount as the deemed dividend of the assessee. It was, therefore, impossible for the respondent to entertain the application that the order which he had made on his interpretation of the provisions of law, which gave him jurisdiction to make it, suffered from a patent lack of jurisdiction so as to constitute an error apparent on the face of the record. The petitioners, in our opinion, therefore, cannot get themselves excused on the basic of a futile remedy attempted to have been sought by them, which, it may be pointed out, was also after a lapse of nearly two years after the order complained of was made. It appears to us that this application for rectification of the order made after a period of two years was nothing more than an attempt on her part to save the objection of delay to a writ application which may thereafter be made to the court complaining against the original order. ( 17 ) ALL the three arguments, which have been advanced by Mr. Trivedi for the purpose of getting out of the initial difficulty in his way created by the gross delay in the filing of the present writ petition, fail. As we have already pointed out, the petitioners in their application have given no explanation whatsoever for the delay.

Decision:
0[ds]The only course available to thex Officer to include the said divided is by having recourse to proceedings under section 34. Where there is no such inclusion either in the original assessment or in the reassessment of the assessee under section 34, a reassessment of the company and the consequent order under section 23a against the company will not permit the application of section 35 (8) for the purpose of adjusting the assessment of ther on the basis of a mistake apparent from the record.( 12 ) IT is difficult, in the first place, to agree with the submission, at any rate to the whole extent. Secondly, it is difficult to see whether the submission that is advanced can apply to the case. The original assessment which was made on the assessee is not produced before us. Whether in the said original assessment any share of the deemed divided of the company was included or not is not known. It is also not known whether at the time when the assessees assessment was made, an order under section 23a was or was not made against the company. In the absence of proper facts being placed before the court, it is difficult to see whether the submission made by the learned counsel, even if it is substantial, can have application to the present case. Moreover, the argument of the learned counsel that the only way to include the deemed dividend under section 23a in the assessment of the assessee is by having recourse to sections is not correct. Thus, for instance, where even before the assessees assessment is completed there is an order made under section 23a upon the company and thex Officer dealing with the assessees assessment is aware of the same, there is no difficulty in his way in including the deemed dividend of the assessee in the original assessment itself. It is not necessary in such a case that he must first complete the assessment and thereafter reopen it under section 34 for the purpose of inclusion of the deemed divided. It is no doubt true that when at the date of the assessment of the assessee the order under section 23a is not made upon the company or that, even if such an order is made, thex Officer assessing the assessee the assessee is not aware of the same and, subsequently, after the competition of the assessees assessment, he becomes aware of the same or the order is thereafter made, he may have to have recourse to section 34 and reopen the assessment of the assessee on the basis of the subsequent information. In a case, however, where thex Officer has the information about the companys assessment under section 23a and of the share of the deemed divided of the assessee and through inadvertance, oversight or negligence, he omits to include it in the original assessment and realises his mistake, which is obvious and apparent, subsequently, there should, in our opinion, be no difficulty in his way to treat the said omission as a mistake apparent from the record and rectify it under section 35. The argument of the learned counsel, therefore, that in every case recourse must be had to section 34 for the purpose of including the deemed dividend in the assessees assessment does not appear to sustainable. Secondly, in cases falling within the purview of section 35 (8), computation or recomputation of the total income of a partner of the firm is permitted treating the computation or recomputation as a mistake apparent from the record without having recourse to sections or without being hampered by thet prescribed therein. Now one of the cases falling within the purview of section 35 (8) would be, when the firm was originally assessed there was no order under section 23a passed on it, but on subsequent proceedings initiated under section 34 (1) against the firm, it was reassessed and an order section 23a came to be made against it. In such a case, there being no order under section 23a against the firm in the original assessment, there would be no inclusion of any deemed divided in the individual assessment of the partner and the computation of the total income of the partner will obviously not contain any such inclusion. As a result of the order made under section 23a passed on the firm on its reassessment under section 34 (1), recomputation of the total income of the partner will be necessary in order to include therein his share of the deemed dividend. Such a recomputation thex Officer may be able to make by reopening the assessment of the partner under section 34 (1) (b), but it may as well happen that when the order under section 23a comes to be passed against the firm in its reassessment proceedings, the time to reopen the partners assessment under section 34 (1) (b) may have already lapsed. Mr. Trivedi argues that if section 34 (1) (b) proceedings cannot be availed of, thex Officer has no other power to bring the said income to tax. We do not agree with him. It appears to us that thex Officer can also avail of the provisions of section 35 (8) in such a case and recompute the total income of the partner, treating the computation as a mistake apparent from the record within four years of the computation as a mistake apparent from the record within four years of the date of the order under section 23a against the firm and the provision of section 35 (8) is intended to apply to such cases. It seems to us, therefore, that the order passed by thex Officer against the petitioners under section 35 (8) is not without jurisdiction. At any rate, we have no doubt whatsoever that the order under section 35 (8) relating to the assessment for the assessment year1 is not patently without jurisdiction so as to entitle the petitioners to have it quashed on a writ petition irrespective of any delay on their part in approaching the court( 13 ) COMING now to the order passed in relation to the assessment for the assessment year, it would be event from the facts, which we have already narrated, that on the 31st December, 1965, when thex Officer completed the original assessment of the assessee for the said assessment year, he had the information about the section 23a order passed against the company according to which the assessees share of the deemed divided was Rs. 31,568. With that information in his possession, his failure to include the same in the assessees total income could not be regarded as anything else except an obvious or patent mistake through over sing or inadvertence or negligence or lack of mind to the facts on record. It appears that within a short time of making the assessment order he realised his mistake and sought to correct it by an order made under section 35. This order, which he made on the 5th March, 1956, and which was complained of by the assessee in the appeals, which he preferred against the orders of assessment, came to be ultimately deleted by an order of the Appellate Assistant Commissioner on remand to him of the case from the Appellate Tribunal. Thereafter, when in the proceedings initiated under section 34 against the company, a revised order under section 23a read with section 35 (7) came to be passed against the company, the respondent sought to invoke the aid of section 35 (7) for the purpose of giving effect to the said order by rectifying the assessment of the assessee. It is contended by Mr. Trivedi that section 35 (7) was not clearly applicable since that section applies where the order under section 23a is modified in appeal, revision or any other proceeding and not in cases where the company is assessed or reassessed as a result of proceedings initiated under section 34. Mr. Trivedi argues that since in the present case the company was reassessed as a result of proceedings initiated under section 34, the provision applicable was section 35 (8) and not section 35 (7) and consequently the order, which purports to have been passed under section 35 (7), is illegal and without jurisdiction. Here again, we must state, in the first place, that the proper material necessary for the purpose of appreciation of the point has not been put before us by the petitioners. What has been produced as exhibit H purports to be an order made under section 23a read with section 35 (7) and not an order section 23a read with section 34, nor an order under section 23a read with section 35 (8 ). In the body of the order it is stated that in view of the reopening of the assessment under section 34 for the assessment year, the total income of the company is enhanced and the net deemed dividend under section 23a is also revised as specified therein. It would thus be seen that the reopening of the assessment of the company under section 34 resulted not in the passing of an order section 23a as a consequence of the reassessment as contemplated under section 35 (8) but only a revision of the order already passed. Now, section 35 (7) applies to case where the order under section 23a is modified in appeal, revision or any other proceeding or the order is cancelled or varied. The order which is produced before us is a revised order which appears to have been properly passed under section 23a read with section 35 (7) as it is described to be, although the initial reopening of the proceedings might have been on the basis of section 34. It also appears to us that if, as a result of the revision of the order under section 23a made on the company, whether as a result of proceedings under section 34 or by way of appeal or revision, an adjustment was necessary to be made in the assessees assessment, it could be made under section 35 (7) and the action of the respondent in proceeding to make the assessment could not be said to be without jurisdiction. Moreover, even if it were assumed that the proper provision to which he should have had recourse wasn (7), it would make no material difference to the assessees case. Mr. Trivedi has argued that section 35 (8) could not have been resorted to by the officer, although the order under section 23a against the company was revised as a result of the proceedings instituted under section 34 because, if the said section was to be applicable, its operation was only confined to the adjustment required to be made on the difference between the original share of deemed dividend and the revised share of the deemed dividend in accordance with the revised order of the company. In cases falling under section 35 (8), says the learned counsel, the jurisdiction of thex Officer is only confined to recompute the total income and determine the sum payable on the basis of such recomputation as if the recomputation is the rectification of a mistake apparent the total income and determine the sum payable on the basis of such recomputation as if the recomputation is the rectification of a mistake apparent on the face of the record. In other words, argues the learned counsel, what can be deemed to be a mistake apparent on the face of the record. In order words, argues the learned counsel, what relates to the adjustment in consequence of the difference between the original and the recomputed share of the assessee. In the present case thex Officer has made the adjustment including the whole of the deemed dividend as determined by the revised order inasmuch as the original or the unrevised share of the deemed dividend was not included in the assessees original assessment, the purported addition thereof to the assessment having been found to be erroneous and deleted in accordance with the Appellate Assistant Commissioners order. Here again, we may state that it is not as if the original share of the deemed dividend was never included in the assessees income. Although in the original assessment thex Officer had overlooked to include it, he had tried to do it by a subsequent rectification order, which he had made. Unfortunately, however, the said order came to be set aside by the Appellate Assistant Commissioner on the provision of section 35. If the inclusion made in the original assessment had not been wrongly deleted, there was no difficulty of the nature pointed out by Mr. Trivedi in applying the provisions of section 35 (8) to the case. Even otherwise it does not appear to us quite clear that section 35 (8) could not be invoked. The argument of the learned counsel that the recomputation must be combined only to the difference does not appear to us to be invincible. What the section speaks of is the recomputation of the total income of the assessee and the expression total income may permit the addition of the entire amount since the total income is the income on which the tax is liable to be paid. At any rate, the argument advanced by the learned counsel does not convince that there is an error apparent on the face of the record, which would make us ignore the effect of the delay on the part of the petitioners in coming to this court on the present writ application. We cannot, therefore, accept Mr. Trivedis contention that we should overlook the delay in the filing the present petition on the strength of the principles laid own in the cases to which he has made a referenceNow, in that case a notice of demand was served on the petitioner on the 29th March, 1956, intimating to him that a sum of Rs.0 had been determined as payable by him and calling upon him to make the said payment. No order of assessment, however, in pursuance of which the said notice of demand was purported to have been issued was supplied to the petitioner either before or at the time of the said notice of demand. The petitioner made repeated requests to thex Officer to furnish to him the said assessment order and ultimately on the 7th May, 1959, he was informed that the assessment order was not traceable. The department thereafter started the recovery proceedings by issuing a certificate under section 46 (1) of the Indianx Act and on the 16th of August, 1960, prohibitory order came to be issued in the said recovery proceedings. The petitioner requested the authorities to withdraw the said proceedings on the ground that they were patently illegal and without jurisdiction and, since his request was not heeded to, he made the writ petition on the 12th November, 1960, praying for a writ to quash the notice of demand and the recovery proceedings and for directions restraining the respondents from taking any further action in pursuance of the said notice of demand. Now the notice of demand, which could only follow on a proper and legal assessment order having been made in accordance with law, was patently illegal and without jurisdiction inasmuch as no order of assessment had been made or served on the petitioner either proper to or at the time of the issue of the notice of demand. The petitioner had requested the authorities to supply to him the order of assessment on the basis of which the notice of demand was issued but he was never supplied with the same. It was in these circumstances that this court took the view that, although the writ petitioner, the delay could not be put against him so as to disentitle him to the relief inasmuch as the notice of demand being a nullity, in the circumstances of the case he could ignore the same and wait until some effective action was taken against him, which really affected his interest. The case does not, in our opinion, lay down a general rule that delay is immaterial where the order sought to be quashed is alleged to be without jurisdiction and the petitioner is entitled to wait until further steps in execution of the order are taken by this court was that, on the facts and circumstances, of the case, the delay was excusable and was not such as to entail the rejection of the writ petition in limine( 15 ) IN the present case the orders under sections 35 (7) and 35 (8), which really and effectively affected the interest of the petitioners, were passed as early as in February and March, 1961. The further proceedings were consequential proceedings, which were bound to follow in pursuance of the said order. Although it was the petitioners allegation were substantiated by him and the orders quashed, he could not afford to ignore them and treat them as nullities. It was, therefore, necessary for the petitioners to challenge those orders on a writ petition when they were made and the question as to whether they have sought their remedy without any delay has got to be considered with reference to the point of time when the orders were passed and gave a cause of action to the petitioners to complain about them. The contention urged by the learned counsel for the petitioners, therefore, that, since the petition does not suffer from any gross delay when issued, cannot help him in explaining the delay on his part in challenging the orders which really affect the petitioners interest and which were passed as long back as in 1961.( 16 ) THE third contention of Mr. Trivedi is that after the order were passed he had sought to get them set aside by way of making applications for rectification and the time taken by him in the said rectification proceedings should be excluded in considering the question of delay. Now, in respect of the order relating to the assessment for the assessment year, which was made on the 15th March, 1961, the petitioners appears to have made an application for rectification of the same nearly two years thereafter on the 16th of January, 1963. This application was entertained by the respondent in so far as it really and truly related to a mistake apparent on the face of the order and the rectification was allowed. What had happened was that in the order a double addition of the deemed dividend. He deleted the excess part which had been inadvertently added and rectified the order on the 1st September, 1963. On that date at any rate it was clear to the petitioners that their remedy to persuade thex Officer to delete the entire inclusion of the deemed dividend had failed. Even thereafter the present application, which is made on the 11th July, 1964, is filed after a period of nearly ten months and there is no explanation whatever offered as to why it had not been made earlier. The writ petition so far as it relates to the order made under section 35 (7) relating to the assessment orders for the assessment year2 still suffers from gross delay. As to the order made under section 35 (8) relating to the assessment for the year, which was made on the 23rd February, 1961, an application for rectification appears to have been made on the 18th January, 1963, and the same has been turned down on the 24th April, 1964. In our opinion, this application was a futile application and could not be regarded as any step taken by the petitioners to have their grievance remedied. The order made under section 35 (8) was made by the respondent on the assumption that he had the jurisdiction to pass the same. It did not suffer from any error apparent on the face of the cord as did the order made for the other assessment year, which had inadvertently included an excess amount as the deemed dividend of the assessee. It was, therefore, impossible for the respondent to entertain the application that the order which he had made on his interpretation of the provisions of law, which gave him jurisdiction to make it, suffered from a patent lack of jurisdiction so as to constitute an error apparent on the face of the record. The petitioners, in our opinion, therefore, cannot get themselves excused on the basic of a futile remedy attempted to have been sought by them, which, it may be pointed out, was also after a lapse of nearly two years after the order complained of was made. It appears to us that this application for rectification of the order made after a period of two years was nothing more than an attempt on her part to save the objection of delay to a writ application which may thereafter be made to the court complaining against the original order( 17 ) ALL the three arguments, which have been advanced by Mr. Trivedi for the purpose of getting out of the initial difficulty in his way created by the gross delay in the filing of the present writ petition, fail. As we have already pointed out, the petitioners in their application have given no explanation whatsoever for the delay.