The requirement of notice and hearing under the proviso to Section 35 of the Income-tax Act, 1922, is mandatory and cannot be overridden by the mandatory language of Section 18A(8), which requires the addition of penal interest to the tax in certain cases.

Judgment

HIDAYATULLAH, J. : These are four appeals filed by two brothers Chockalingam and Meyyappan against a common judgment of the High Court of Madras dated September 30, 1958, by which the High Court dismissed four petitions under Article 226 of the Constitution filed by them. Each of the appellants had filed two such petitions for the assessment years 1951-52 and 1952-53 in respect of which they were ordered to pay penal interest under S. 18A (8) of the Income-tax Act. The High Court certified the cases as fit for appeal to this Court and hence the present appeals.

2. The facts are these. Chockalingam and Meyyappan are the sons of one Meyyappa Chettiar. At first the assessment was on the Hindu Undivided Family but by an order of the High Court dated December 5, 1949, a partial partition in the family was recognised from the assessment years 1940-41. It is not necessary to narrate the events that transpired after the decision of the High Court. The judgment of the High Court was given effect to after 1953 and the assessments for the years 1951-52 and 1952-53 made on the brothers as individuals were completed on July 11, 1953, and August 30, 1954, respectively for the two years. The appellants had not paid advance tax according to their own estimate of the income for these two years and they were liable to penal interest under S.18A(8) of the Income-tax Act. The Income-tax Officer, Karaikudi, overlooked this fact and did not add penal interest to the tax leviable. In 1956 the Income-tax Officer started proceedings under S. 35 of the Income-tax Act for the rectification of the assessment. No notice was sent to either brother and the income-tax Officer ordered the levy of penal interest as follows:

1. on Chockalingam

1951-52 Rs. 13,391-7-0

1952-53 Rs. 8,2,81/-

II. on Meyyappan.

1951-52 Rs. 13,440-11-0

1952-53 Rs. 8,2,54-6-0

3. There is no appeal against the order under S. 35 Income-tax Act. The appellants therefore applied under S.33 A to the Commissioner of Income-tax for revision of these orders. We were told at the hearing that they were not heard by the Commissioner. They were informed by the Income-tax Officer by a letter dated April 9, 1956, that their applications were rejected. As there was no further remedy, the appellants filed four petitions under Art. 226 of the Constitution, challenging the orders of the Income-tax Officer and the Commissioner of the Income-tax on the ground that they were opposed to the principles of natural justice. Before the High Court it was contended by the Department that there was a patent failure on the part of the Income-tax Officer to add penal interest to the tax, which he could rectify under S. 35 as an error apparent from the record. This contention of the Department was accepted and the High Court dismissed the petitions because in its opinion there was a substantial but a procedural defect and the failure to issue the notice caused no prejudice because the result would have been the same even if the notice had been issued. In our opinion and we say it respectfully, the High Court was in error in holding that there was no breach of the principles of natural justice in this case and the High Court ought to have quashed the orders.

4. Sections 35 which deals with the rectification of mistakes provides that the Income-tax Officer(among other officers) may at any time within four years from the date of any assessment order etc. passed by him, on his own motion rectify any mistake apparent from the record of the assessment and shall within the like period rectify any mistake which has been brought to his notice by an assessee. One of the provisos says that no such rectification shall be made, having the effect of enhancing as assessment or reducing the refund unless the Income-tax Officer has given notice to the assessee of his intention so to do and has allowed him a reasonable opportunity of being heard.

5. Section 18A which was inserted by the Income-tax Amendment Act, 1944 (11 of 1944