GRINDLAYS BANK LIMITED versus THE INCOME TAX OFFICER, H WARD COMPANIES, DISTRICT-IV, CALCUTTA AND ORS.

Citation: [1980] 2 S.C.R. 765 · Decided: 15-01-1980 · Supreme Court of India · Bench: N.L. UNTWALIA · Disposal: Dismissed

Cited by 2 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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765 
GRINDLA YS BANK LIMITED 
v. 
THE INCOME TAX OFFICER, 'H' WARD COMPANIES, 
DISTRICT-IV, CALCUTTA AND ORS. 
January 15, 1980 
[N. L. UNTWALIA AND R. s. PATHAK, JJ.] 
• 
Bar of linlitation under section 153(1)(a)(iii) of the lnco111e Tax Act, 1961···-
When the as~ssment proceeding remained during the entire per!od by successiv·e 
orders of the Court, the fresh assessn1ent order cannot be faulted 011 grounds of 
limitation. 
Powers of High Court to make the order a ftehll a,~sessnient und,::r certiorari 
;urisdiction under Art. 226 of the Constitution. 
The appellant, a banking compooy incorporated in the United Kingdom, 
carries on banking business in India and is assessed under the Income Ta-x Art, 
1961. The appellant filed a return of it~ income for the assessment year 1972-73. 
During the assessment proceedings the1 Income Tax Officer issued a notice under 
•cction 142 (I) of the Income Ta,x Act requiring the appellant to produce certain 
account books and documents. The appellant applied against the notice to thei 
High Court of Calcutta under Article 226 'of tho Constitution. The High Court 
construing the notice in specifically limited terms. directed the appellant to comply 
with it. The appellant preferred an appeal in the High Court. Meanwhile, 
pursuant to the direction by the learned single judge~ the Income Tax Officer 
made an assessment 
order on March 31, 1977. Thereafter the appeal was 
allowed by a Division Bench of the High Court by its judgn1ent dated May 8 
and 12, 1978, and the impugned notice under section 142(1) aruf the consequent 
assessment order were quashed. But while' doing so;· 'the Division Bench also 
directed the Incon1e Tax Officer to make a fresh··iissessn1ent. 
1\ggrieved 
by 
that direction, the appellant applied for, and o1:¢ajned special lea\'e to appeal 
to this Court. 
,,,.· 
Dismissing the appeal, the Court 
HELD : 1. The Hight Court was competent to make the order dircctiilg a\ 
fresh assessment since the limitation for making the assessment had not expired 
and no valuable right to be assessed had thereby accrued to the appellant. [769 
D-EJ 
The facts of the case ma..ke it clear that the assessment proceedings ren1ained 
pending during the entire period from March 17, 1975 to March 31, 1977 by 
virtue of successive stay orders of the Court. If regard be had to clause (ii) 
of Explanation 1 to section 153 which provides that in computing 1he period 
of limitation for rhe purposes of section 153 the period during which the 
assessment is st&•yed by an order or injunction of any court shall be excluded, 
it is abundantly clear that the assessment order dated March 31, 1977 is not 
barred by limitation. In computing the period for 111aking the assessn1ent, the 
Income 1·ax Offic~r would be entitled to exclude the entire period from March 
17, 1975, on which date there were fourteen: days still left \Vithin the norm:i,l 
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766 
SUPREME COURT REPORTS 
[1980] 2 S.C.R. 
operation of the rule of limitation. 
TheJ assessment order wa:! made on the 
very first day after the period of stay expired; it could not be faulted on the 
ground of li1nitation. [769 B-D] 
2. The character of an assessment proceeding of which the impugned notice 
a·;id the assessment order formed part, being 
quasi-judicial, 
the 
"certiorari'' 
jurisdiction of the I-Iigh Court under Article 226 was attracted. Ordinarily, where 
the High Court exercises such jurisdiction it merely quashes the offending order, 
and the consequential legal effect is that but for the offending order the remaining 
part of the proceeding stands automatically reviewed before the inferior court 
or tribunal \vith the need for fresh consideration and disposal by a fresh order. 
Ordinarily the High Court does not substitute its own ord~r for the order 
quoohed by it. It is, of course, a different case where' the adjudication by the 
High Court establfahes a comPiete \Vant of jurisdiction in the inferior court or 
tribunal to entertain or to take the proceeding a.t all. 
Jn that event on the 
quashing of the proceeding by the High Court there is no revival at all. 
But 
although in the former kind of case the High Court, after quashing tht offending 
order, does not substitute its own order it has pD\Ver nonetheless to pass such 
further orders as the ju!:itice of the case requires. [769 F-H, 770 A] 
3. When passing such orders the High Court draws on its inherent power 
to ma·ke 

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