TMI Blog1929 (10) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... for interest which was paid to the female members of the family. This went on according to the petitioners till the accounting year 1925-26. In 1926-27 enquiry was again opened on this question. The Income Tax Officer wanted to reopen the question and he asked the assessees to produce the accounts from 1917-20. A combined notice was issued under Section 22(4) and 23(2). The accounts from 1917-20 were not produced, it being alleged that the books were not available as they were lost. Upon that the Income Tax Officer of Sattur disallowed the claim made for reduction en account of interest paid to the female members and his note is: Interest payments to the assessee's female relations have been disallowed as the assesses have withheld the production of earlier books which alone will show whether the amounts standing to their credit are their own stridhanam amounts or not. 2. He evidently acted on the mere fact of non-production of the account books. An appeal was made to the Assistant Commissioner of Income-tax who after setting out all the facts in para. 2 of his order held that the Income Tax Officer was not precluded from re-opening the question. He made further enquiries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to an assessee for the purpose of sale on commission and a certain small amount of charged on the consignor for each bag sent as and from mahimai which is paid over by the assessee either immediately or subsequently to the trustees of the mahimai fund (sic) intact, the said amount is liable to be assessed for income-tax. (g) Whether when debts are actually written off by the assessees as an irrecoverable bad debt it is open to the authorities to disallow a deduction in respect of the same on the ground that the origin of the debt has not been proved. 3. It is argued before us that where an Income Tax Officer holds an enquiry and comes to a decision that decision has the force of res judicata and precludes the question feeing re-opened subsequently and that even if not res judicata it operates as a*n estoppel; secondly, that the Income Tax Officer was not entitled to call for accounts relating to a period more than three years prior to the previous year as he is prohibited from doing so by the proviso to Section 22(4); that the requisition for the production of the account books for the years 1917-20 was, therefore, illegal and consequently no adverse inference can be drawn f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23(2), Income Tax Act, is a judicial proceeding only for the purposes of Sections 193 and 228 but not of Section 198 of the Penal Code and that a conviction under Section 196 for the production of false accounts is bad in law. The learned Judges (C.C. Ghose and Cammiade JJ.) observed: As we read Section 37, it seems to us to be clear that the Legislature has for the purpose of punishing offences under Sections 193 and 228 of the Penal Code (and under no others) converted proceedings before the officers mentioned therein, which are not judicial proceedings ordinarily, into judicial proceedings. 9. In In the matter of Harmukhrai Dulichand 114 Ind. Cas. 90 : 56 C. 39 : A.I.R. 1928 Cal. 587 : 32 C.W.N. 710 : I.L.T. 40 Cal. 169 : Ind. Rul. (1929) Cal. 180 (F.B.) the question arose whether an Income Tax officer is a Court. Rankin, C.J., observed: It has been said that the Income Tax Officer mast proceed in a judicial manner and Section 37 has been mentioned in this connexion. Fundamentally, no doubt, the Income Tax Officer must proceed in a judicial spirit and come to a judicial conclusion upon properly ascertained facts though I would point out that the Income Tax Officer is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Chap. IV which refer to assessment should be deemed to be judicial proceedings within the meaning of Sections 193 and 228, Indian Penal Code. So that, where proceedings are sought to be taken for perjury it may well be contended that so far as the proceedings are concerned, the Income Tax Officer should be deemed to be a Court attracting the provisions of the Code as regards revision and appeal to the High Court. So far as we can see, the question was not raised nor was it necessary to be raised as to whether an Income Tax Officer was a Court when he assessed parties to income-tax. The contention of the petitioner was that the Income-Tax Officer in determining the appeal did not act as a Come, that he had no jurisdiction to pass an order under Section 476, Criminal Procedure Code, and that even if he was a Court, he had no jurisdiction to pass the order long after the proceedings terminated. The Public Prosecutor stated that there was no power in the High Court to issue a writ of certiorari for various reasons. It was unnecessary for the purpose of that case to decide whether an Income Tax Officer proceeding to assess an assessee was a Court, And if the observations of the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; means that a result or process should be just, it is a harmless though it may be high sounding expression. 17. There can be little doubt that Income Tax Officers in conducting enquiries have to act judicially and to exercise their discretion not capriciously but on recognized judicial principles but that would not constitute the officer making the enquiry a Court. 18. Reference has been made to Hill v. Clifford (1907) 2 Ch 236 : 76 L.J. Ch. 627 : 97 L.T. 266 : 23 T.L.R. 601, In this case, the General Medical acting under the powers of the Dentists Act, 1876, made an order directing that the name of one Clifford should be struck off the Register of Dentists on the ground that he had been guilty of professional misconduct. Thereupon his partner gave notice determining the partnership. Suits were filed to determine the validity of the notice and the order of the Medical Council was tendered in evidence. Warrington, J., rejected, it and decreed the action of the plaintiff. It was held by Cozens Hardy, M.R., and Buckley, L.J., that the order was admissible as prima facie evidence of the fact that Clifford was guilty of acts unfamous or disgraceful in a professional sense. The Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y one deduction contending that the beneficiaries were not joint owners within the meaning of the Act. Upon a case stated the Court in Australia upheld the contention that only one deduction of 5,000 ought to be made. But their Lordships of the Privy Council reversed the decision on the ground that the previous proceedings estopped the Commissioner from contending that only one and. not six deductions should be made. Reliance was placed on the following passage in the judgment of Lord Shaw. Very numerous authorities were referred to. In the opinion of their Lordships it is settled, first, that the admission of a. fact fundamental to the decision arrived at cannot be withdrawn and a fresh litigation started, with a view of obtaining another judgment upon a different assumption of fact; secondly, the same principle applies not only to an erroneous admission of a fundamental fact, but to an erroneous assumption as to the legal quality of that fact. Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be the proper apprehension by the Court of the legal result either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or not it has nothing to do with fluctuations in the income, such question, if decided by Court on a reference made to it would be res judicata in that the same question cannot be subsequently agitated. But if the question is decided by a Court on a reference which depends upon considerations which may vary from year to year e.g., the case in Broken Hill Proprietary Co. v. Broken Hill Municipal Council (1926) A.C. 94 : 95 L.J.P.C. 33 : 134 L.T. 335 in which the average valuation had to be taken, there could be no question of res judicata. 25. The next question is whether even assuming that the matter is not res judicata it would not create an estoppel by record against the Income Tax Officials. 26. In this connexion the argument of Mr. Krishnaswami Iyengar, is that even treating the Income Tax Officials as a quas judicial body and not a Court the principle, of natural justice and expediency ought to prevent Income Tax Officers from going back on their previous decisions. Reference has been made to the passage in Halsbury' Laws of England I have already quoted. 27. It seems to us that where Income Tax Officials have after enquiry proceeded to assess the assessee on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-Tax Officer to serve a notice upon the assessee requiring him to furnish within the period specified therein a return in the prescribed form of his total income during the previous year. Sub-section (4) enables the officer to require the assessee to produce such accounts or documents as the officer may require. So far as the accounts are concerned, the proviso says that the Income Tax Officer shall not require the production of any accounts relating to a period more than three years prior to the previous years. 29. Section 23, Sub-section (4) deals with cases where the Income Tax Officer is empowered to make an assessment to the best of his judgment and it says that he can do so if the assessee fails to make his return under Sub-section (1) or Sub-section (2), Section 22 as the case may be, or fails to comply with all the terms of the notice issued under Sub-section (4) of the same section, or having made a return fails to comply with all the terms of the notice issued under Sub-section (2), Section 23, which refers to the appearance of the person submitting the return at the office of the Income Tax Officer and the production of any evidence on which such person may re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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