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3. On 17th March, 1951, the Income-tax Officer, Satara North, passed an order under section 23A of the Indian Income-tax Act directing that the "undistributed portion of the assessable income of the company of the previous year ended on 30th September, 1945, as computed for income-tax purposes for the assessment year 1946-47 and reduced by the amount of income-tax and super-tax payable by the company in respect thereof shall be deemed to have been distributed as dividends amongst the shareholders as at the date of the general meeting held on 11th March, 1946." The Income-tax officer then issued notice under section 23(2) of the Indian Income-tax Act to the assessee for assessing him as a non-resident for income-tax on interest and dividend deemed to have been received in Phaltan State for the year ending 31st December, 1946. In answer to that notice the constituted attorney of the assessee appeared before the Income-tax Officer and contended that the shares of the company, which stood in the name of the assessee, were in reality the property of the firm of Mafatlal Gagalbhai & Sons, Bombay, and that the shares were standing in the assessee's name as a nominee of the firm. It appears that the Income-tax Officer accepted this contention and determined the assessee's total Officer world income at Rs. 19,75,328. In this total world income were included Rs. 18 as interest on deposits in Phaltan state and Rs. 8,528 being the five annas share in the dividend of Mafatlal Apte & Kantilal Ltd., deemed to have been distributed under section 23A of the Income-tax Act from the profits of that company for the year ended September 30, 1945, received through Mafatlal Gagalbhai & Sons. The total income in the Phaltan state was, taken as the share of the assessee in the dividend of the company, was presumably arrived at by the Income-tax Officer as 5/16th of the dividend on forty shares held by Mafatlal Gagalbhai & Sons out of a total of 100 shares of the company in respect of which the net income of Rs. 68,228 was deemed to have been distributed as dividend under section 23A of the Indian Income-tax Act.

4. On April 13, 1954, the Income-tax Officer, North Satara, served a notice upon the assessee intimating that the dividends deemed to have been distributed under section 23A in respect of the shares of the company held by the assessee had been taken at "Rs. 8,528 net for the assessment year 1947-48 under the Phaltan State Income-tax Act without being grossed up, though the credit for the tax deemed to have been paid thereon" had been given, and as that was a mistake apparent from the record the Income-tax Officer intended to rectify the same under section 35 of the Income-tax Act, and called upon the assessee to submit his objection to the proposed rectification. By letter, dated 19th April, 1954, it was contended by the assessee under section 23(3), was itself ultra vires and illegal and no rectification could be sought thereof. By another letter, dated 13th September, 1955, it was contended by the assessee that the original action taken under section 23(3) was ultra vires and illegal, that in any event in the order passed under section 23(3) the amount of capital gains of Rs. 9,38,011 for computing the tax payable by the assessee under the Phaltan State Income-tax Act could not be included in the total world income, that similarly the Indian dividend income could not be grossed up by adding the tax payable thereon and that no case for rectification of a mistake under section 35 of the Income-tax Act was made out. By his order, dated 12th October, 1955, the Income-tax officer rejected the contentions raised by the assessee and he purported to rectify the mistake referred to in his notice, and ordered that an amount of Rs. 3,876, being the tax deemed to have been paid on behalf of the assessee, be added to the total world income. Accordingly, he held that Rs. 19,79,204 was total world income of the assessee for the year 1947-48, and ordered that demand notice and chalans for excess tax, income-tax and super-tax, payable thereon be issued. This order of rectification was served on the legal representatives of the assessee - whom I will hereafter refer to as "the petitioners", the assessee having died on November 7, 1955. On 28th November, 1955, the attorneys of the petitioners called upon the Income-tax Officer to treat the order, dated 12th October, 1955, as "void and a nullity" and to intimate accordingly. A similar communication was also addressed to the Commissioner of Income-tax, Bombay South, and the Secretary, Ministry of Finance. On 5th June, 1956, the Commissioner of Income-tax, Bombay South, informed the petitioners that the Central Board of Revenue declined to interfere in the matter. The petitioners then applied by this petition for a writ in the nature of certiorari or an appropriate writ under article 226 of the nature of certiorari or an appropriate writ under article 226 of the Constitution, quashing the assessment and the rectification of the order of assessment.