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PETITIONER: HIRDAY NARAIN

       Vs.

RESPONDENT: INCOME-TAX OFFICER, BAREILLY

DATE OF JUDGMENT: 21/07/1970

BENCH: SHAH, J.C. BENCH: SHAH, J.C. HEGDE, K.S.

CITATION:  1971 AIR   33            1971 SCR  (3) 683  1970 SCC  (2) 530

ACT: Income-tax  Act  1922, Ss. 16(3) (a) (ii)-If  applicable  in case of assessment of H.U.F, income.  S. 35-Nature of  power of rectification If discretionary

HEADNOTE: The  appellant  with  his  five  sons  constituted  a  Hindu undivided  family and up to the assessment year 1950-51  the income received by the appellant was assessed to tax as  the income  of  the  H.U.F.  The  previous  year  of  the  Hindu Undivided Family for each assessment year was from October I to September 30 of the following year.  The property of  the Joint Family was partitioned on November 19, 1949.  For  the assessment year 1951-52 the income tax Officer assessed  the appellant’s  income  as that of the H.U.F.  in  appeal,  the Appellate  Assistant Commissioner directed that  the  income earned  between  October I and November 18, 1949  should  be treated  as  that  of  the  H.U.F.  and  excluded  from  the assessment.   The  I.T.O.  thereafter  made  two  orders  of assessment,  assessing Rs. 18,52.00 earned upto November  18 as  the income of the old H.U.F. and assessing  the  balance also as income of a Hindu undivided family and liable to tax in  the  hands  of the appellant by the  application  of  s. 16(3)(a)(ii),  of the Income Tax Act, 1922.   The  appellant the*  applied  for rectification of an error in  the  second order of assessment under s. 35 of the Act claiming that his income assessed as that of an H.U.F.. Section 16(3)  (a)(ii) did  not  apply.   The  I.T.O. accepted  the  plea  that  s. 16(3)(a)(ii) did not apply to an H.U.F. but declined to give relief holding that for the period between November 19  1949 and  September  30,  1950, the appellant  should  have  been assessed as an, individual. A  petition filed by the appellant in the High  Court  under Article  226  challenging  the  order  of  the  I.T.O.   was dismissed  by a Single Judge holding, inter alia,  that  the appellant  had not applied in revision to  the  Commissioner under  section 33-A.  A division Bench dismissed  an  appeal against  the  order of the single judge observing  that  the rectification  under section 35 was "discretionary", and  if the I.T.O. thought that the proceedings were  "substantially fair"  he  was  "not  bound to  rectify  the  assessment  on

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technical grounds". On appeal to this Court, HELD  :  The  income from November 19,  1949  onwards  being assessed  to tax as-the income of a Hindu  undivided  family consisting  of the appellant, his wife and a new born  minor son.  s. 16(3)(a)(ii) plainly did not apply and  writs  must issue for the rectification of the appellant’s  assessments, Gowli Buddanna v. The Commissioner of Income-tax Mysore  (1) 60 I.T.R. 293; N. V. Narendra Nath v. Commissioner of Wealth tax, (2) 74 I.T.R. 190, referred to. [686 E-F] The  High Court was wrong in assuming that exercise  of  the power  under  s. 35 to rectify an error  apparent  from  the record  was discretionary and the Income-tax Officer  could, even if the conditions for its exercise were shown to exist, decline to exercise the power.  If a statute invests 684 a public Officer with authority to do an act in a  specified set of circumstances, it is imperative upon him to  exercise his  authority  in a manner appropriate to the case  when  a party  interested and having a right to apply moves in  that behalf and circumstances for exercise of authority are shown to  exist. Even if the words used in the statute  are  prima facie enabling, the Courtswill  readily infer a duty  to exercise power which is invested in aid of enforcement of  a right-public or private-of a citizen. [688 G, 689] While accepting the appellant’s plea that the income of  his minor  children  was  not  liable  to  be  included  in  his assessment  in the status of an H.U.F. his 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. [688 B-C] Because a revision application could have been moved for  an order  correcting the order of the Income Tax Officer  under s.  35, but was not moved, the High Court was not  justified in  dismissing as not maintainable the writ petition,  which was entertained and was heard on the merits. [688 El

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos.  193  and 448 of 1970. Appeals  by special leave from the judgment and order  dated the September 19, 1968 of the Allahabad High Court in Second Appeals Nos. 12 and 13 of 1962. J. P.  Goyal, S. M. Jain and S. P. Singh, for the  appellant (in both the appeals). Jagadish Swarup, Solicitor-General, Gobind Das, R. N.  Sach- they  and  B.  D. Sharma, for the respondent  (in  both  the appeals). The Judgment of the Court was delivered by Shah,  J.-These appeals arise out of orders passed in  peti- tions  praying for a writ of mandamus to rectify  orders  of assessment relating to income assessed to tax for the  years 1951-52  and 1952-53.  The corresponding previous years  for the  assessment years were October 1, 1949 to September  30, 1950 and October 1, 1950 to September 30, 1951. Hirday  Narain  and his five sons were members  of  a  Hindu undivided family. Till  the  assessment year  1950-51  the income received by HirdayNarain -was assessed to tax as  the income of a Hindu undividedfamily.  On November 19,  1949 the  property  of the joint family was  partitioned  between

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Hirday  Narain and his. sons.  In assessing the  income  for the  assessment year 195152 the Income-tax 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 685 appeal  the  Appellate Assistant  Commissioner  treated  Rs. 18,520 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". Pursuant  to  that order, the Income-tax  Officer  made  two orders  of assessment-(I) assessing 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 s. 16 (3) (a)  (ii)  of the Indian Income-tax Act, 1922. Hirday Narain then applied for rectification of a mistake in the  order of assessment which he claimed was apparent  from the record.  He submitted that               "the  assessment of   *       *      *  Hirday               Narain   has  been  made  in  the  status   of               undivided family comprising of himself and his               minor    son   Satendra   Prakash.     Section               16(3)(a)(ii) does 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  s.               16(3) (a) (ii) may kindly be excluded under s.               35 as the mistake is apparent from record." The  Income-tax  Officer accepted the plea  that  to  income assessed to tax in the hands of Hirday Narain in the  status of  a  Hindu  undivided family s. 16 (3)  (a)  (ii)  of  the Income-tax Act, 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. Hirday Narain then moved a petition before the High Court of Allahabad  under Art. 226 of the Constitution  challenge  in the order of the Income-tax Officer.  A single Judge of  the High ,Court rejected the petition holding that at the  stage of the original assessment the question that the, income was not  liable to be assessed under s. 16 (3) (a) (ii)  of  the Income-tax Act was not raised and that the assessee had  not applied in revision to the Commissioner under s. 33-A of the Act.   A  Division Bench of the High  Court  confirmed  that order  in appeal, observing that the rectification under  s. 35  of  the Act was "discretionary", and if  the  Income-tax Officer  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 686 not clear that after November 19, 1949 there was a Hindu un- divided family which Hirday Narain represented and therefore it  was possible to say with certainty that  the  Income-tax Officer  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. In respect of the period November 10, 1949 to September  30, 1950  the income was assessed in the hands of Hirday  Narain in  the status of a Hindu undivided family.  Section  16  of

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the   Indian  Income-tax  Act,1922,  by  sub-s.   (3)(a)(ii) provides "In  computing  the total income of any individual  for  the purpose of assessment there shall be included- (a)  so much of the income of a wife or minor child ofsuch individual as arises directly or ’indirectly- (ii) from  the  admission of the minor to  the  benefits  of partnership  in  a  firm  of  which  such  individual  is  a partner". *     *    *      *    * (ii)  from  the admission of the minor to  the  benefits  of partnership  in  a  firm  of  which  such  individual  is  a partner." Income  for  the period November 19, 1949 to  September  30, 1950  being  assessed  to  tax as  the  income  of  a  Hindu undivided  family  and not of an individual, s. 16  (3)  (a) (ii)  plainly  did  not apply and the income  of  the  minor children  of  Hirday  Narain could not be  included  in  the income  of  Hirday  Narain assessed  as  a  Hindu  undivided family. Under  the  Income-tax Act it is not predicated of  a  Hindu undivided family as a taxable entity that it must consist of two   or  more  male  members  :  Gowli  Buddanna   v.   The Commissioner  of  Income-tax,  Mysore;(’)  see  also  N.  V. Narendra Nath v. Commissioner of Wealth Tax(’) (a case under the Wealth Tax Act).  Hirday Narain 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 Narain’s 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. (1) 60 I.T.R. 293.        (2) 74 I.T.R. 190. 687 But  the  Solictor-General submitted that Hirdy  Narain  had filed  his return in the status of an individual, and  since the  Appellate  Assistant Commissioner had  also  passed  an order  when  he directed separate assessment  of  the  total receipts  during the year October 1, 1949 to  September  30, 1950 as the income of two distinct assessable entities,  the Income-tax  Officer was bound to assess the income  for  the period  November  19,  1940 to September 30,  1950,  as  the income  of  Hirday  Narain as -an individual,  and  to  that income, the income of his minor children arising out of  the partnership  to  which they were admitted was liable  to  be added  under s. 16(3)(a)(ii) of the Income-tax Act, and  the Tax  Officer  was entitled and indeed bound to  rectify  the assessment when his attention was invited to the error. 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 the Income-tax Officer 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 the Income-tax Officer "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 Rs. 18,520 related to the period when  the family of the appellant was undivided, but  by  an

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order  under s. 25-A the Income-tax 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  Rs.. 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 the -Income-tax Officer 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. The  order of the Income-tax Officer is subject to a  proce- dural infirmity as well.  In rejecting the application under s.  35 the Income-tax Officer apparently assumed that in  an applica- 688 tion  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. able. It is- true that a petition to revise the order  could be moved  before the Commissioner of Income-tax.  But 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 s. 33A of  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 the Income-tax Officer  under s. 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 s. 35  of  the  Indian Income-tax  Act,  1922, the jurisdiction of  the  Income-tax Officer  is, discretionary.  If thereby it is intended  that the Income-tax Officer has discretion to exercise or not  to exercise  the power to rectify, the view is in our  judgment erroneous.   Section  35  enacts that  the  Commissioner  or Appellate  Assistant Commissioner or the Income-tax  Officer may  rectify  any mistake apparent from the  record.   If  a statute invests a public Officer with authority to do an act in  a specified set of circumstances, it is imperative  upon him to exercise his authority in a manner appropriate to the case  when  a party interested and having a right  to  apply moves  in  that  behalf and circumstances  for  exercise  of authority  are ’shown to exist.  Even if the words  used  in the statute are prima facie enabling the Courts will readily infer  a duty to exercise power which is invested in aid  of enforcement of a right -public or private-of a citizen.

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In Julius v. Bishop of Oxford(’) it was observed by  Cairns, L.C.,  at  pp. 222-223 that the words "it shall  be  lawful" con- (1) (1880) 5 A.C. 214. 689 ferred a faculty or power, and they did not of themselves do more than confer a faculty or power.  But there may be some- thing in the nature of the thing empowered to be done, some- thing in the object for which it is to be done, something in the  conditions under which it is to be done,  something  in the  title of the persons for whose benefit the power is  to be  exercised, which may couple the power with a  duty,  and make it the duty of the person in whom the power is -reposed to  exercise  that power when called upon to  do  so."  Lord Blackburn observed in the same case at pp. 244-245 that  the enabling  words  give ,a power which prima  facie  might  be exercised or not, but if the .object for which the power  is conferred  is for the purpose of effectuating a right  there may  be a duty cast upon the donee of the power to  exercise it  for  the  benefit  of those who  have  that  right  when required  on their behalf.  Lord Penzance and  Lord  Selbone made similar observations at pp. 229 and 235. Exercise of power to rectify an error apparent from the  re- cord  is  conferred upon the Income-tax Officer  in  aid  of enforcement  of  a  right.  The  Income-tax  Officer  is  an officer concerned with assessment and collection of revenue, and  the power to rectify the order of assessment  conferred upon him to ensure that injustice to the assessee or to  the Revenue may be avoided.  It is implicit in the nature of the power  and  its entrustment to the authority  invested  with quasi-judicial functions under the Act, that exercise of the power  was discretionary and the Income-tax from the  record is  brought  to  his notice by a person  concerned  with  or interested in the proceeding. The  High Court was, in our judgment, in error  in  assuming that exercise of the power was discretionary and the Income- tax  Officer could, even if the conditions for its  exercise were shown to exist, decline to exercise the power. For  the  assessment year 1952-53 the assessee is  also  en- titled to relief claimed by him. The  appeals must therefore be allowed and the order  passed by  the  High Court set aside.  Writs will  issue  directing that  the assessment of Hirday Narain for the years  1951-52 and 1952-53 be rectified by deleting the income of his minor sons  included under s. 16(3(a)(ii) of the, Income-tax  Act, 1922 from assessment.  The appellant will be entitled to his costs in this Court and in the High Court.  One hearing fee. R.K.P.S.               Appeals allowed. 13 Sup.  CI/70-15 690