Y. Narayana Chetty and Another vs The Income-Tax Officer, Nellore

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeals Nos. 317 to 320 of 1957

Decision Date: 15 October 1958

Coram: P.B. Gajendragadkar, A.K. Sarkar, A. Iyyar, T.L. Venkatarama

The Court recorded that the petitioners were Y Narayana Chetty and another individual, while the respondents were the Income‑Tax Officer of Nellore together with other officials. The judgment was delivered on 15 October 1958 by a bench presided over by P B Gajendragadkar, with A K Sarkar serving as a member. The case citation appeared as 1959 AIR 213 and also as 1959 SCR Supl. (1) 189. The matter concerned the validity of a provision in the Income‑Tax Rules that empowered the Income‑Tax Officer to cancel the registration of a firm when the firm was found not to be genuine. The petitioners challenged the cancellation of registration of three partnership firms that had been dissolved earlier, arguing that the rule was inconsistent with Section 23(4) of the Indian Income‑Tax Act of 1922 and therefore ultra vires. The factual background showed that two partners, identified as B and C, formed a partnership on 20 April 1936, which was dissolved on 31 March 1948. A second partnership involving I, C and R was created on 30 July 1941 and dissolved on 31 March 1949. A third partnership comprising B, C and five additional persons was established on 1 December 1941 and was dissolved on 1 January 1949. All three firms operated in the yarn and cloth trade and had been registered under Section 26‑A of the Income‑Tax Act. For the assessment years 1943‑44 and 1944‑45 the firms were treated as separate entities, and distinct assessment orders were issued for each firm. Subsequently the Income‑Tax Officer served notices under Section 34 of the Act upon C on behalf of the three firms. After hearing the parties, the Officer concluded that the firms were fictitious, cancelled their registrations pursuant to Rule 6B of the Income‑Tax Rules, and issued fresh assessment orders on the basis that the firms were unregistered. One partner of the third firm, identified as Y, together with C, filed four writ petitions under Article 226 of the Constitution in the High Court, contesting the validity of the Officer’s orders. The High Court dismissed the petitions but granted certificates of fitness to appeal under Article 133. The appellants contended that Rule 6B conflicted with Section 23(4) of the Act, that the cancellation was beyond the Officer’s jurisdiction and therefore void, and that the proceedings under Section 34 were invalid because the required notice had not been served on the individual partners who were the assessors.

The Court held that Rule 6B of the Income‑Tax Rules was not inconsistent with Section 23(4) of the Act and was not ultra vires. The rule specifically dealt with the cancellation of registration where a certificate had been granted despite the absence of a genuine firm, whereas Section 23(4) dealt with cancellation arising from failure to comply with legal requirements, even where the firm was genuine. Consequently, Rule 6B was intended to implement the purpose of the Act and was valid. The Court observed that the absence of a provision for appeal against an order made under Rule 6B did not constitute a ground for challenging its validity. Furthermore, the Court rejected the appellants’ argument that the orders were invalid because the rule did not require notice prior to cancellation, noting that notice had indeed been given and the appellants had been afforded an opportunity to be heard. The Court further decided that in cases of registered firms, the firm itself was the assessee; therefore, the notices issued under Section 34 against the firms and served upon C were proper and valid. It was unnecessary to serve notices on the individual partners of the firms. The notice prescribed by Section 34 was not a mere procedural formality; it fulfilled a substantive requirement, and the absence of such notice would have rendered the assessment invalid.

The Court observed that Rule 6B was enacted to fulfil the purpose of the Income‑Tax Act and therefore possessed legal validity. The fact that the Rules did not provide a right of appeal against an order passed under Rule 6B was held not to constitute a ground for challenging the Rule’s validity. The appellants were not permitted to argue that orders made under Section 6B were invalid because the Rule did not require a prior notice before cancellation of registration; in the present case notice had indeed been given and the appellants had been afforded a proper opportunity to be heard. The Court further held that, with respect to registered firms, the firm itself is the assessee. Consequently, notices issued under Section 34 of the Act against the firms and served upon the firm’s authorized representative were deemed valid and appropriate, and it was unnecessary to serve separate notices upon each individual partner. The notice prescribed by Section 34 was characterised as more than a mere procedural formality; the absence of a valid notice or the issuance of an invalid notice would render the Income‑Tax Officer’s proceedings illegal and void. The Court endorsed the authorities in Commissioner of Income‑Tax, Bombay City v. Ramsukh Motilal [1955] 27 I.T.R. 54 and R. K. Das & Co. v. Commissioner of Income‑Tax, West Bengal [1956] 30 I.T.R. 439. Moreover, the contention that the assessments were completely illogical and therefore illegal could not be pursued in a petition under Article 226 of the Constitution, since such a claim did not raise any question of jurisdiction.

The judgment arose in a civil appellate jurisdiction involving Civil Appeals Nos. 317 to 320 of 1957, each appeal being filed against the judgment and order dated 5 March 1954 of the Madras High Court in Writ Petitions Nos. 613 and 629 of 1952 and Nos. 201 and 202 of 1953. Counsel for the appellants were engaged to represent their interests, while counsel for respondent No. 1 represented the Income‑Tax Officer, Nellore Circle. The judgment was delivered on 15 October 1958 by Justice Gajendragadkar. These four appeals originated from four writ petitions filed against the Income‑Tax Officer, Nellore Circle, respondent 1, concerning proceedings taken against three firms under Section 34 of the Indian Income‑Tax Act. The first firm, M/s Bellapu Audeyya and Chilla Pitchayya, was constituted on 20 April 1936 and dissolved on 31 March 1948; its partners were Chilla Pitchayya and Bellapu Audeyya. The second firm, G. Pitchayya & Co., was set up by Chilla Pitchayya in partnership with R. Subba Rao on 30 July 1941 and dissolved on 31 March 1949. The third firm, Prabbat Textiles, was formed on 1 December 1941 by Bellapu Audeyya, Chilla Pitchayya, and five additional partners, and it was dissolved by a decree of the civil court (the decree being passed on 22 December 1949, with effect from 1 January 1949). All three firms carried on business in yarn and cloth and were registered under Section 26A of the Act. The Court’s analysis thus covered the statutory framework governing cancellation of registration, the adequacy of notice, and the proper locus of assessment for registered firms.

The partnership known as Prabhat Textiles was formally dissolved by a decree dated 22 December 1949, with the dissolution deemed effective from 1 January 1949. All three of the firms in question were engaged in the manufacture and trade of yarn and cloth, and each had been registered under section 26A of the Income‑Tax Act. For the assessment of the financial years 1943‑44 and 1944‑45, the Income‑Tax Officer of Nellore (respondent 1) conducted inquiries and concluded that each firm operated as a distinct legal entity; consequently, separate assessment orders were issued for the income of each firm for those two years. On 14 August 1951, respondent 1 served a notice under section 34 of the Act against Prabhat Textiles. In the proceedings that followed, respondent 1 held that Prabhat Textiles was a fictitious firm and that the actual partners were C. Pitchayya and B. Audeyya. Based on that determination, respondent 1 cancelled the firm’s registration pursuant to rule 6B of the Income‑Tax Rules and thereafter issued fresh assessment orders treating the firm as unregistered for the years 1943‑44 and 1944‑45, the former on 14 August 1952 and the latter on 25 February 1953. Similar notices, cancellations, and fresh assessments were made against the other two firms on the same dates. In response, Y. Narayana Chetty, a partner of Prabhat Textiles, filed writ petition No. 613 of 1952 in the Madras High Court under article 226 of the Constitution, seeking a writ of prohibition or any other appropriate order to restrain respondent 1 from pursuing the proceedings commenced by the 14 August 1951 notice and from enforcing the fresh assessment dated 14 August 1952 for the 1943‑44 assessment year. Likewise, Chilla Pitchayya filed writ petition No. 201 of 1953 requesting similar relief concerning the assessment order for the 1944‑45 year, and he also filed writ petitions Nos. 629 of 1952 and 202 of 1953 challenging the proceedings and fresh assessments against the remaining two firms for the 1943‑44 and 1944‑45 years respectively. The High Court heard all four petitions together and dismissed them on 5 March 1954. Subsequently, the petitioners obtained a certificate from the High Court under article 133 read with article XLV, rules 1, 2, 3 and 8, confirming that the value of the subject matter of the petitions and the present appeals exceeded Rs. 20,000. It is on the basis of that certificate that the four appeals were brought before this Court. Y. Narayana Chetty is the appellant in Civil Appeal No. 317 of 1957, while Chilla Pitchayya is the appellant in Civil Appeals Nos. 318, 319 and 320.

In the proceedings before the High Court, the appellants argued that the actions taken under section 34 of the Act against each of the firms were without jurisdiction and therefore void. They also maintained that the cancellation of the registration of each firm was likewise void and beyond the court’s authority because rule 6B, which authorized the cancellation orders, exceeded the powers of the Central Board of Revenue that had formulated the rules under the powers given by the Act. In addition, the appellants challenged the validity of the orders issued under section 31, contending that it was illegal to assess escaped income under section 34 on the basis that the firms were unregistered, while the original assessments for those firms were based on the premise that the firms had been duly registered under section 26A of the Act. The High Court rejected all of these contentions and ruled against the appellants on each of the points raised. The High Court further observed in its judgment that the appellants had admitted that appeals had already been filed against every order that was being contested in the writ petitions, and the Court held that this admission alone justified its refusal to exercise jurisdiction under Article 226 of the Constitution. Nevertheless, because the primary relief sought by the appellants in their petitions was the issuance of a writ of prohibition, the High Court decided that it could also consider the merits of the arguments presented by the appellants, and consequently it examined those merits. Representing the appellants, counsel Mr. Viswanatha Sastri reiterated the same three arguments before this Court. The first argument put forward by Mr. Sastri was that the proceedings initiated by respondent I under section 34 of the Act were invalid because the notice required by that provision had not been served on the assessee to whom it was directed. In the present case, the Income‑Tax Officer purported to act under subsection 34(I)(a) against the three firms. That subsection provides, inter alia, that if the Income‑Tax Officer has reason to believe that, due to an omission or failure by the assessee to file a return of income under section 22 for any year or to disclose fully and truly all material facts necessary for assessment for that year, income, profits or gains chargeable to income‑tax have been under‑assessed, then the Officer may, within the prescribed period of nine months, serve on the assessee a notice containing any of the requirements that may be included in the notice under subsection (2) of section 22 and may thereafter proceed to reassess such income, profits or gains. The appellants argued that the service of the requisite notice on the assessee is a condition precedent to the validity of any reassessment made under section 34, and that if a valid notice is not issued as required, the proceedings taken would be invalid.

According to the Court, any reassessment made by the Income‑tax Officer on the basis of a notice that does not satisfy the requirements of section 34 is void and shall have no legal effect. The Court held that the notice prescribed by section 34 is not a mere procedural formality; the officer is empowered to proceed against a taxpayer only after the notice has been properly served as mandated. If the officer fails to issue a notice, or if the notice issued is later found to be invalid, the subsequent proceedings undertaken without a valid notice are illegal and must be set aside. This principle has been endorsed by the Bombay and Calcutta High Courts in the decisions Commissioner of Income‑tax, Bombay City v. Ramsukh Motilal (1) and B. K. Das & Co. v. Commissioner of Income‑tax, West Bengal (2). The Court agreed with that view and applied it to the present matter. Turning to the facts of the case, it was admitted by the counsel representing the opposite side that the Income‑tax Officer had served a notice on the appellant, C. Pitchayya, on behalf of the three firms that were under scrutiny. Each of those notices expressly stated that the officer had reason to believe that the income of the assessee had been under‑assessed for the relevant assessment years. The notice further demanded that the assessee submit, within thirty‑five days of receipt, a return in the prescribed form containing the total income and total world income assessable for the period in question. In compliance with that demand, the appellant Pitchayya actually appeared before the officer during the proceedings that were initiated under section 34. The notice, therefore, was a factual instrument that set out the officer’s belief of under‑assessment and imposed a specific deadline for filing a return, and the appellant acted upon it by presenting himself before the officer.

The opposing counsel argued that the notice was defective because it was addressed to the firm rather than to the individual partners of the firm, and consequently no notice had been served upon the partners themselves. He cited the fact that no notice had been issued to the respective partners, asserting that section 34(1)(a) confers the right to receive a notice on each individual partner, not on the firm as a collective entity. Accordingly, he maintained that each partner should have been separately called upon to file a return of his own total income for the relevant year, and that a notice addressed only to the firm was therefore invalid. To support this contention, he referred to the definition of “assessee” contained in section 2, clause (2) as it existed before the 1953 amendment, which described an assessee as “person by whom income‑tax is clearly payable”. He argued that, in the case of a registered firm, income‑tax is clearly payable by the individual partners under section 23(5) of the Act, and thus any notice issued under section 34 must be directed to those partners. He concluded that because the notice in the present case was issued to the firm and not to the individual partners, the notice was invalid and any assessment proceeding based upon it was untenable.

In this case, the Court examined the contention that the Income‑Tax Officer was required to issue the statutory notice under section 34(1)(a) to each partner of a registered firm because, according to the advocates, the partners alone were liable to pay tax on their respective incomes. The argument relied on the wording of section 23(5) as it existed before the amendment of 1956. That provision stated that the sum payable by the firm itself would not be fixed; instead, the total income of each partner, including the partner’s share of the firm’s income, profits and gains for the previous year, would be assessed and the tax payable by each partner would be determined on that basis. From this wording, the counsel submitted that the tax liability fell on the individual partners and therefore the notice prescribed in section 34(1)(a) should have been directed to each partner rather than to the firm.

The Court held that this line of reasoning was not well‑founded. It pointed out that section 3 of the Income‑Tax Act, which is the charging provision, expressly provided that tax could be levied “in respect of the total income of the previous year of every firm.” In other words, the statute specifically treated a firm as an assessee for the purpose of charging tax. Moreover, the definition of “assessee” in section 2(2) used the term “person.” Under section 3(42) of the General Clauses Act, the word “person” includes “any company or association or body of individuals whether incorporated or not.” Consequently, a firm fell within the meaning of “person” and could be an assessee under the Income‑Tax Act; it was therefore incorrect to assert that the definition limited the term to individual partners alone.

The Court further observed that the reliance on the pre‑amendment wording of section 23(5) did not alter the position that, for all material stages of assessment under sections 22 and 23, the firm was the entity to which the assessment provisions applied. When a return of income was filed for the relevant year, the return concerned the total income of the firm as a whole, as required by section 22. During assessment under section 23, the officer first ascertained the firm’s total income and only thereafter could compute the total income of each partner by apportioning the firm’s share to the individual partners. While it was true that the earlier version of section 23(5) mandated the officer to determine the total income of each partner, that requirement operated within a framework where the firm remained the assessee for the purposes of the assessment.

Accordingly, the Court concluded that the argument that the notice should have been issued to the individual partners was untenable. The statutory scheme treated the firm as the primary assessee, and the definition of “person” encompassed the firm. The liability of the partners to pay tax on their shares did not negate the firm’s status as the assessee, nor did it require the officer to serve notices to each partner under section 34(1)(a). The Court’s analysis thereby affirmed that the appropriate notice was correctly addressed to the firm itself.

The Court explained that section 23(5) required the Income‑tax Officer to determine the total income of each partner, including that partner’s share of the firm’s income, and to assess each partner with respect to such income; consequently, individual partners inevitably became liable to pay income‑tax. However, the Court emphasized that while the share of the firm’s income must be taken into account in calculating each partner’s total income, the firm itself does not cease to be an assessee for the purposes of section 23(5). This principle is now made explicit by the amended wording of section 23(5)(a)(i) and (ii) as introduced in 1956. The present provision reads as follows:

“(5) Notwithstanding anything contained in the foregoing sub‑sections, when the assessee is a firm and the total income of the firm has been assessed under subsection (1), sub‑section (3) or sub‑section (4), as the case may be (a) in the case of a registered firm‑ (i) the income‑tax payable by the firm itself shall be determined; and (ii) the total income of each partner of the firm, including therein his share of its income, profits and gains of the previous year, shall be assessed and the sum payable by him on the basis of such assessment shall be determined.”

The Court therefore held that the registration of a firm does not terminate its status as an assessee under this provision. The Court further referred to section 23(4), which provides that if any person fails to make the return required by a notice under subsection (2) of section 22, or fails to make a return or a revised return under subsection (3) of the same section, or fails to comply with the terms of a notice issued under subsection (4) of that section, or, having made a return, fails to comply with the terms of a notice issued under subsection (2), then the Income‑tax Officer shall make an assessment to the best of his judgment and determine the sum payable by the assessee on the basis of that assessment. In the case of a firm, the Officer may refuse to register it or may cancel its registration if it is already registered, provided that cancellation shall not occur until fourteen days have elapsed from the issue of a notice to the firm intimating the Officer’s intention to cancel its registration. This provision clearly indicates that the term “assessee” in the first part of the subsection includes a firm, and it expressly authorizes the imposition of a penalty against a firm that commits any of the defaults specified. Accordingly, the Court concluded that section 23(4) treats the firm as an assessee and provides for punitive measures against the firm itself when it defaults, leaving no doubt that the firm remains an assessee within the framework of the relevant provisions.

Section 23 requires that, for the purpose of assessing the total taxable income, the tax authorities examine the affairs of the firm that is the assessee. After the total income of the firm is determined, that income is distributed among the individual partners in proportion to each partner’s share in the firm. This allocation makes each partner liable to pay tax on the portion of income that has been assigned to him or her. However, the fact that the partners are taxed on their respective shares does not lead to the conclusion that the firm itself is not an assessee in the assessment proceedings. When a notice is issued under section 34(1)(a), the Income‑Tax Officer proceeds on the basis that the income, profits and gains of the firm that are taxable have been under‑assessed. It is the firm’s income that is first ascertained in the assessment under section 23, and it is on the basis of that firm‑income that the Officer discovers a portion which has escaped assessment. Consequently, the argument that the notice issued against the firm and served on the appellant is invalid under section 34(1)(a) cannot be accepted.

The appellants further contend that, because the firms had been dissolved at the relevant time, the Income‑Tax Officer should have issued notices to the individual partners instead of to the firms. Section 63(2) does allow a notice or requisition to be addressed to any member of a firm, but that provision applies only while the firm continues to exist; it does not extend to a firm that has already been dissolved. If dissolution had terminated the business, the officers would have been required to give notice of discontinuance under section 25(2). In the present case, the principal appellant was personally served with the notice, and the other partners, who were not served, have made no objection. Accordingly, the Court is satisfied that the appellants cannot claim that the proceedings under section 34(1)(a) are invalid because the notices were not served on the other alleged partners. It is noteworthy that the Income‑Tax Officer found that the only persons with an interest in the business of the three firms were B. Audeyya and C. Pitchayya, and that B. Audeyya has not challenged the proceedings or questioned the validity of the fresh assessment orders. The appellants also challenge the cancellation of the registration of the three firms on the ground that Rule 6B, under which the Officer acted, is ultra vires.

The Court considered whether the Income‑tax Officer’s power to cancel a firm’s registration under Rule 6B exceeded the authority that the Central Board of Revenue possessed under the Income‑Tax Act. Rule 6B authorises the Officer, upon being satisfied that a certificate granted under Rule 4 or Rule 6A was obtained without a genuine firm existing, to cancel that certificate. The Court noted that the material rules, of which Rule 6B forms a part, were framed by the Central Board of Revenue pursuant to the authority given by Section 59 of the Act. Section 59 authorises the Board, subject to the control of the Central Government, to make rules for carrying out the purposes of the Act. Sub‑section (2)(e) of that section further provides that such rules may prescribe any matter that the Act requires to be prescribed. The provisions that precede Rule 6B set out the procedure to be followed and prescribe the application to be made for the registration of firms under Section 26A of the Act. Moreover, Section 59(5) stipulates that rules made under this section, once published in the Official Gazette, acquire the force of law as if they were enacted by the Act itself. Consequently, the Court held that there is no doubt that the rules are statutory in nature and become operative upon Gazette publication as if they formed part of the Act. While Mr Sastri acknowledged this position, he argued that Rule 6B is inconsistent with the substantive provisions of the Act and therefore is ultra vires the Central Board of Revenue. His argument relied principally on Section 23(4). The Court recalled the earlier discussion of that subsection and observed that Mr Sastri contended that a firm’s registration may be cancelled only when the conditions of Section 23(4) are satisfied. The registration of firms is governed by Section 26A, which requires an application to be made to the Income‑tax Officer on behalf of any firm constituted under a partnership instrument, specifying each partner’s share for purposes of the Act and any other enactment relating to income‑tax and supertax. Sub‑section (2) of Section 26A mandates that the application be made by the persons concerned, at the prescribed times, containing the required particulars, in the prescribed form, verified as prescribed, and that the Officer deal with it in the manner prescribed. It is on the basis of these requirements that the relevant rules for firm registration were framed. The Court then identified the issue for determination: when, after a firm has been registered under Section 26A, may such registration be cancelled? The appellant asserted that cancellation is permissible only in the cases enumerated in Section 23(4). The Court concluded that this contention is untenable and that the argument put forward by the appellant is fallacious.

The Court explained that when a registration is cancelled pursuant to section 23(4), the cancellation operates as a penalty that may be imposed on a firm if it is found guilty of any of the defaults enumerated in that subsection. It was observed that a cancellation under section 23(4) necessarily implies that the original application for registration had been duly approved. The ground for an order made under section 23(4) is therefore not that the firm which had been registered was fictitious; rather, even if the firm was genuine, its failure to obey the legal requirements results in the penalty of having its registration revoked. That is the effect intended by the provisions of section 23(4). By contrast, rule 6B addresses situations in which the Income‑tax Officer is satisfied that a certificate of registration was issued under rule 4 or rule 6A despite the absence of a real firm. In such cases the application for registration was made in the name of a firm that in fact did not exist, and the Officer seeks to correct the mistake by cancelling the certificate that should never have been granted. Because rule 6B is intended to achieve that result, the Court rejected the contention that the rule conflicts with section 23(4) of the Act. Since the Income‑tax Officer, under section 26A together with the applicable rules, is authorised to grant or refuse a firm’s request for registration, it follows that he may also cancel a registration if he discovers that it was mistakenly granted to a non‑existent firm. Rule 6B was therefore enacted to clarify this position and to give the Officer express authority to review his own earlier decision when it is later discovered that the decision was based on a wrong assumption about the firm’s existence. In the Court’s view there is no difficulty in holding that rule 6B is plainly intended to give effect to the purpose of the Act and, being consistent with every provision of the Act, its validity cannot be questioned. The Court also addressed the argument that a firm aggrieved by an order made under section 23(4) may challenge the order by appealing against the final assessment order, whereas a firm whose registration is cancelled under rule 6B has no such remedy. The Court was not persuaded by this argument; it held that the validity of the rule cannot be attacked merely because no specific appeal mechanism is provided for orders made under it. Finally, the Court noted that, unlike actions taken under section 23(4) where the Officer is required to issue a notice to the firm before proceeding, rule 6B contains no such notice requirement. However, the appellant had been given notice and an opportunity to demonstrate that the firms were genuine. Consequently, the Court concluded that it would not be appropriate for the appellant to claim that an order under rule 6B is invalid solely on the ground that the rule does not mandate a notice before cancellation.

The Court observed that the Income‑Tax Officer is statutorily obligated to serve a notice on a firm before taking action, whereas rule 6B contains no such requirement. Nevertheless, counsel for the respondent conceded that the appellant in the present proceedings had indeed received notice and had been afforded an opportunity to demonstrate to the Income‑Tax Officer that the firms involved were genuine and not fictitious. In view of this admission, the Court held that the appellant could not successfully argue that the order issued under rule 6B is void merely on the theoretical basis that the rule fails to prescribe a notice requirement before the cancellation of a firm’s registration. The Court further explained that, if the Income‑Tax Officer were to invoke the power under rule 6B without first issuing a notice and without permitting the firm to show that it is a genuine entity, the firm would be entitled to challenge the validity of that order on the ground of denial of procedural fairness. However, the Court clarified that no such scenario arose in the present appeals and therefore it would not be required to consider that issue. In passing, the Court referred to its earlier decision in Ravula Subba Rao v. Commissioner of Income‑Tax, Madras, wherein it was held that rules 2 and 6 made under section 59 of the Indian Income‑Tax Act were within the authority of the rule‑making power and not ultra vires. The final argument raised by counsel for the respondent concerned the alleged illogical and consequently illegal nature of the revised assessment. According to that argument, the original assessment for the two assessment years remained based on the premise that the firms were registered, while the fresh assessment of escaped income for the same years was premised on the opposite conclusion that the firms were not registered. The respondent submitted that it is impermissible for the Income‑Tax Officer to adopt such a mixed approach; once a firm’s registration is cancelled, the entire assessment for the relevant years should be made on that basis, and the department should not treat the firm as registered for part of the income and unregistered for the remainder. The Court declined to pronounce on the merits of this contention, noting that the appellants are free to raise the issue in the appeals they have filed against the fresh assessment orders. The Court noted that applications under section 27 of the Act appear to have been filed by the appellants in respect of those orders, and if so, the appellants may, where permissible, articulate their grievance in those proceedings as well. Finally, the Court held that the contention regarding the logical inconsistency of the assessment cannot be raised in writ petitions under article 226 of the Constitution, because such petitions do not raise a question of jurisdiction; the only argument the appellants could advance on this ground would be that the course pursued by the Income‑Tax Officer in making the fresh assessment orders is irregular and illogical and therefore should be corrected, an issue that falls within the merits of the assessment and not within the jurisdictional scope of article 226.

In this case the Court observed that the method adopted by the Income‑tax Officer in issuing fresh assessment orders was irregular and illogical and therefore required correction. The Court described this issue as one relating to the merits of the assessment orders and stated that it did not raise any question of jurisdiction under Article 226 of the Constitution; consequently the Court declined to express an opinion on that particular point. Before concluding the matter, the Court noted that counsel for the respondent had raised three preliminary objections. The first objection asserted that the grant of a writ is a matter of discretion and, because the High Court had declined to exercise its discretion in favour of the appellants, the present appeals would be virtually incompetent, the Supreme Court being reluctant to interfere with the High Court’s discretionary exercise. The second objection argued that the original petitions filed in the High Court were incompetent under Article 226, since the statute provided an alternative effective remedy in the form of appeals against the impugned assessment orders; the appellants had indeed filed such appeals and had also made applications under section 27 of the Act. The third objection contended that the High Court lacked jurisdiction to issue a writ of prohibition against the tax authorities. The Court stated that it would not consider these objections at this stage because it was satisfied that the view adopted by the High Court on the matters before it was correct. The Court added that the objections might be examined in the future on an appropriate occasion. Consequently, the Court held that the appeals failed and ordered them dismissed with costs, expressly stating that the appeals were dismissed.