Case: Hirday Narain Vs. Income-Tax Officer, Bareilly

2. Hirday Narain and his five sons were members of a Hindu undivided family. Till the assessment year 1950/51 the income received by Hirday Narain was assessed to tax as the income of a Hindu undivided family. On November 19, 1949 the property of the joint family was partitioned between Hirday Narain and his sons. In assessing the Income for the assessment yearax Officer recorded an order that the property was partitioned, but he still assessed the income received by Hirday Narain as income of a Hindu undivided family. In appeal the Appellate Assistant Commissioner treated Rs. 18520/earned between October 1, 1949 and November 18, 1949 as income of the former Hindu undivided family and directed that it be "excluded from the assessment."3. Pursuant to that order, theOfficer made two orders ofassessing Rs. 18,520/ as income of the Hindu undivided family of Hirday Narain and his five sons; and (2) assessing Rs. 1,06,156/also as income of a Hindu undivided family and liable to tax in the hands of Hirday Narain by the application of Sec. 16 (3) (a) (ii) of the IndianAct, 1922.4. Hirday Narain then applied for rectification of a mistake in the order of assessment which he claimed was apparent from the record. He submittedassessment of x x x Hirday Narain has been made in the status of Hindu undivided family comprising of himself and his minor son Satendra Prakash. Section 16 (3) (a) (ii) coca not apply to cases of Hindu undivided family, but only to those of Individuals. It is therefore requested that such of the income as has by mistake been included in the assessment of the Hindu undivided family for the said year under Section 16 (3) (a) (ii) may kindly be excluded under See 35 as the mistake is apparent from record."x Officer accepted the plea that to income assessed to tax is the hands of Hirday Narain in the status of a Hindu undivided family, Sec. 16 (3) (a) (ii) of theAct, 1922, did not apply, but he declined to give relief holding that for the period November 19, 1949 to September 30, 1950 Hirday Narain should have been assessed as an individual.5. Hirday Narain then moved a petition before the High Court of Allahabad under Article 226 of the Constitution challenging the order of theOfficer. A single Judge of the High Court rejected the petition holding that at the stage of the original assessment the question the income was not liable to be assessed under Sec. 16 (3) (a) (ii) of theAct was not raised and that the assesses had not applied in revision to the Commissioner under Sec.of the Act. A Division Bench of the High Court confirmed that order in appeal observing that the rectification under Sec. 35 of the Act was "discretionary", and if theOfficer thought that proceedings were "substantially fair" he was "not bound to rectify the assessment on technical grounds".The High Court also observed that"it was not clear that after November 19, 1949 there was a Hindu undivided family which Hirday Narain represented and therefore it was possible to say with certainty that theOfficer was wrong in proceeding on the footing that the assessment could be supported as assessment of an individual.With special leave, Hirday Narain has appealed to this Court.

Reasoning:
7. In respect of the period November l9, 1949 to September 30, 1950 the income was assessed in the hands of Hirday Narain in the status of a Hindu undividedtax Act it is not predicated of a Hindu undivided family as a taxable entity that it must consist of two or more male membersNarain received a share in the properties of the Hindu undivided family of which he and his wife were members. It may again be noticed that before the previous year expired Hirday Narains wife gave birth to a son on April 6, 1950. We are therefore unable to agree that the income accruing between November 19, 1949 and September 30, 1950 could be assessed in the hands of Hirday Narain as an individual.There is no clear evidence on the record about the status in which Hirday Narain submitted the return of income. If the order of assessment made by theOfficer furnishes any indication, the return was probably filed in the status of a Hindu undivided family. By the order dated December 16, 1953 the total income of the relevant year was ordered to be assessed in the hands of Hirday Narain in the status of a Hindu undivided family. It is true that in the appeal before the Appellate Assistant Commissioner it was contended by Hirday Narain that theOfficer "had erred in including a sum of Rs. 18,520 to the income of the appellant (Hirday Narain) as an individual and in not assessing it separately as the income of the Hindu undivided family." The Appellate Assistant Commissioner observed that the income of Rsto the period when the family of the appellant was undivided, but by an order under Sectionax Officer had held that the appellant and his sons had partitioned the property of the family. He therefore directed that the amount of Rs. 18,520/which belonged to the erstwhile Hindu undivided family be excluded from the assessment which accordingly stood reduced from Rupees 1,24,676/to Rs. 1,06,156/. The Appellate Assistant Commissioner did not direct that the status in which the income was sought to be assessed for the period November 19, 1949 to September 30, 1950 be altered. Pursuant to the order of the Appellate Assistant Commissioner theOfficer assessed the income for that period as income of a Hindu undivided family represented by Hirday Narain. There was in fact an existing Hindu undivided family of which, for a part of the period Hirday Narain and his wife were members, and for the rest, besides the two, their infant son was a member.11. The order of theOfficer is subject to a procedural infirmity as well. In rejecting the application under Section 35,Officer apparently assumed that in an application made by an assessee he could exercise his power suo motu and modify the status of the assessee even without giving an opportunity to the assessee to establish that the order assessing him in the status of a Hindu undivided family was in law correct. Hirday Narain had claimed that the income of his minor children was not liable to be included in his assessment in the status of a Hindu undivided family. There was no defence to the claim for rectification on the merits of that application. Right to obtain the benefit of rectification could not be refused by changing the status on the basis of which the original assessment was made without investigating, after due notice, whether in assessing the income for the period November 19, 1949 to September 30, 1950 a mistake in fact was committed.12. An order under Section 35 of theAct is not appealable. It is true that a petition to revise the order could be moved before the Commissioner ofBut Hirday Narain moved a petition in the High Court of Allahabad and the High Court entertained that petition. If the High Court had not entertained his petition, Hirday Narain could have moved the Commissioner in revision, because at the date on which the petition was moved the period prescribed by Sectionof the Act had not expired. We are unable to hold that because a revision application could have been moved for an order correcting the order of theOfficer under Section 35, but was not moved, the High Court would be justified in dismissing as not maintainable the petition, which was entertained and was heard on the merits.The High Court observed that under Sec. 35 of the IndianAct, 1922, the jurisdiction of theOfficer is discretionary. If thereby it is intended that theOfficer has discretion to exercise or not to exercise the power to rectify, that view is in our judgment erroneous.Exercise of power to rectify an error apparent from the record is conferred upon theOfficer in aid of enforcement of a right. TheOfficer is an Officer concerned with assessment and collection of revenue, and the power to rectify the order of assessment conferred upon him is to ensure that injustice to the assesses or to the Revenue may be avoided. It is implicit in the nature of the power and its entrustment to the authority invested with quasijudicial functions under the Act, that to do justice it shall be exercised when a mistake apparent from the record is brought to his notice by a person concerned with or interested in the proceeding.15. The High Court was, in our judgment, in error in assuming that exercise of the power was discretionary and theOfficer could, even if the conditions for its exercise were shown to exist, decline to exercise the power.