TMI Blog1966 (10) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... is now in-charge of the management thereof. According to the petitioner, in the year 1945-46 Rai Bahadur Oberoi purchased from him his shareholding in the Associated Hotels of India Ltd. (hereinafter referred to as the "Associated Hotels") for a sum of Rs. 20,65,705-13-0 pies. Similarly, in 1949 another block of shares was purchased by the said Rai Bahadur Oberoi in the said company. It appears that the case of Rai Bahadur Obiroi was referred to the Income-tax Investigation Commission, set up under the provisions of the Taxation on Income (Investigation Commission) Act, 1947. The said Commission, on or about 18th August, 1951 issued notices under section 5(4) of the Investigation Commission Act to the petitioner in respect of the assessment years 1940-41 to 1946-47. Before the Investigation Commission, the petitioner made various statements of his net wealth on various dates and produced various books and records of all the companies in which he was a director or managing director, and in respect of which he furnished various information. In Suraj Mall Mohta Co. v. Visvanatha Sastri and in Muthiah v. Commissioner of Income-tax the Supreme Court held that section 5(4) and section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, the Central Board of Revenue transferred the petitioner's case to the Income-tax Officer, Central Circle XII. On the 25th of May, 1955, the petitioner, in this High Court, filed an application under article 226 of the Constitution (Matter No. 92 of 1955) for the purpose of quashing and/or preventing the continuance of the said case. On the 6th of March, 1956, the Income-tax Officer, Central Circle XII, Shri R. S. Gahlot, issued a fresh set of notices under section 34(1A) in respect of the assessment years 1940-41 to 1946-47 and proceedings under the previous notices were discontinued. Accordingly, the petitioner did not press on with the rule in Matter No. 92 of 1955, which was discharged, but it was recorded that the petitioner did not abandon his contentions. The Income-tax Officer, Central Circle XII, Shri G. P. Gupta, assessed the petitioner for the years 1942-43, 1943-44, 1944-45 and 1945-46. In these assessment orders, it is mentioned that, pursuant to the notice under section 34(1A), the petitioner had filed returns according to his original assessment. It was further stated that in the meanwhile the Income-tax Officer had received the records of the Investigation Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other party by bidding a higher amount than the other party was prepared to bid. Under the said arrangement, Shri Oberoi took over the shares at 120% over the cost price. But this was not all. Under the agreement, Shri Oberoi agreed to take over all shares which the petitioner could sell to him in the said company, upto a particular date, but not exceeding 12,675 shares. This, if true, shows that the acquisition and sale of the shares was not in the nature of an investment only. It is stated in the assessment order that the petitioner was unable to satisfy the Income-tax Officer as to the particulars of the transactions that took place in respect of the said agreement. After taking into account the various facts relating to the acquisition and sale of the shares, the Income-tax Officer came to the conclusion that these shares were neither purchased for investment nor by way of a change of investment, but that the gain that the petitioner made was an operational gain in course of business, under a scheme for profit making. Also it was found that there was a huge amount of surplus cash, the source of which was not disclosed. It was held that this was nothing but secreted income, made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on with the third ground of appeal raised by the appellant it is noticed that the Income-tax Officer has obtained the approval of the Central Board of Revenue for the issue of the notices under section 34(1A) and, hence, there is no substance in this contention. 8. In the assessment for 1945-46 the Income-tax Officer has assessed a sum of Rs. 9,00,000 as the appellant's profit on sale of shares of Associated Hotels India Ltd. This sum is taken as business profit of the appellant as the Income-tax Officer has given a finding that the shares of Associated Hotels India Ltd. were sold as a part of the operation of the appellant's business in shares and in carrying out a scheme for making profits. Appellant strongly contends that the Income-tax Officer while making the original assessment had before him the information about the receipt of a sum of over Rs. 20,00,000 on the sale of the shares of Associated Hotels India Ltd. and the Income-tax Officer had in the past taxed interest on the amount so deposited and, hence, the Income-tax Officer had no new facts or new evidence on the basis of which he could come to the conclusion that the profit arising from the sale of the shares was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the impugned notices and for other reliefs. The matter came up for hearing before Banerjee J., who in his judgment and order dated 7th December, 1952, pointed out that the applications involve various points, but before him Mr. Ginwalla appearing on behalf of the petitioner made the following two points which, according to the learned judge, were of such importance that it was necessary for him to refer the matter under Chapter 5, rule 2 of the Rules on the original side of this court, for hearing by a larger Bench. These two points were as follows: The first point was that section 34(1A) of the said Act was discriminatory and violative of the provisions of article 14 of the Constitution and as such void. The second point was that the disclosures before the Investigation Commission could not be looked into by the Income-tax Officer for purposes of assessment under the said Act. It is as a result of the said reference that we are hearing this matter. Before us, Mr. Sen appearing on behalf of the petitioner took the following points : (1) that the provisions of section 34(1A) are discriminatory and violative of the provision of article 14 of the Constitution and as such ultra vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication in such a case should not be entertained. What happened in that case was that the petitioner had imported certain machinery and the customs authorities took proceedings against it and confiscated the imported goods under section 167(8) of the Sea Customs Act. Against that order, the petitioner preferred an appeal before the Central Board of Revenue and at the time the application came up for hearing, this appeal was still pending and it was stated before the court that the petitioner intended to proceed with the same. A preliminary ground was taken that it could not actively pursue a parallel remedy and yet go on with the writ application. The preliminary ground was upheld and the application dismissed. I referred to the Supreme Court decision in K. S. Rashid Sons v. Income-tax Investigation Commission and I cited the following observation of Mahajan C. J. : " We think that it is not necessary for us to express any final opinion in this case as to whether section 8(5) of the Act is to be regarded as providing the only remedy available to the aggrieved party and that it excludes altogether the remedy provided for under article 226 of the Constitution. " For purposes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en had to it, with the result that the order questioned had been confirmed. The principle laid down by the Supreme Court must be accepted and applied, but I do not see that it covers the present case. The present case is one where it is not merely the position that an alternative remedy existed when the appellant approached the court, but one where, after moving this court for a writ and after obtaining a rule, it went to pursue simultaneously a parallel remedy by way of an appeal under the ordinary law and kept his recourse to the alternative remedy from the knowledge of the court up to the last moment. We are informed that the appellant's appeal before the Appellate Assistant Commissioner is still pending. In that state of the facts, the respondent has contended that we ought to follow the principle laid down by the Supreme Court in Rashid Sons v. Income-tax Investigation Commission ... It was brought to the notice of the court that the assessee had already caused a reference to be made to the High Court of Allahabad of the points involved in these cases under section 18(5) of the Investigation Commission Act and that the reference was still pending. 'In these circumstances', ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt seeking these Rules. In these circumstances I think that each of these applications fails, and that each of these Rules ought to be discharged. " Mr. Sen appearing on behalf of the appellant, has cited several cases which were authority for the proposition that, in cases of a writ of certiorari or prohibition, the mere existence of an alternative remedy is no bar to a writ petition, particularly where the question of initial jurisdiction or violation of rules of natural justice are concerned. This proposition is not denied by the respondent. But a clear distinction is to be made between cases where one is considering the mere existence of an alternative remedy, and cases where there exists an alternative remedy in law and that remedy is being actively pursued, giving rise to parallel proceedings. It is only in such cases that the above-mentioned principle applies and a writ application should fail or at least should not be allowed to be proceeded with, so long as the legal action is pending. Two decisions cited by Mr. Sen, however, call for consideration. One is a Supreme Court decision, Chandra Bhan Gosain v. State of Orissa. The facts in that case were as follows: The app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21 had voted for the petitioner. This contention was not borne out by the electoral roll and the petitioner took the preliminary point before the Election Tribunal that the electoral roll was conclusive and the Tribunal had no jurisdiction to investigate into the correctness of the electoral roll. The Tribunal refused to entertain this point as preliminary point, whereupon the petitioner made a writ application to compel the Election Tribunal to determine this preliminary point of jurisdiction. It was held that such an application was permissible. In my opinion, this case also is not to the point, Certainly, a person defending a legal action can always come to the writ court challenging jurisdiction of the legal tribunal to proceed with the action in suitable cases. It was not he who had brought the legal action, and this makes all the difference, the principle being that the same person cannot initiate and conduct two parallel proceedings, one in a court of law and another in an equity court. On the authorities cited before us, we must hold that this preliminary point has been substantiated and because the applicant has appealed to the Appellate Assistant Commissioner, which app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bly be fulfilled on the materials before the Income-tax Officer and, therefore, there is a lack of jurisdiction. The way that this point has been formulated is as follows: Reference is first made to paragraph 4 of the petition, in which the petitioner states that in respect of the assessment of 1945-46 upon the income of the year ending 31st March, 1945, he had disclosed to the Income-tax Officer the receipt of Rs. 20,65,705-13-0 in respect of the shares of the Associated Hotels, and such receipt had been held to be a capital receipt in respect of which no income-tax was payable. It is further stated that, in the return for the subsequent years, the interest on this amount had been duly disclosed and taxed. In the affidavit-in-opposition filed by Mahadevan Hariharan, Income-tax Officer, Central Circle VI, Calcutta, affirmed on 23rd November, 1961, paragraph 4 of the petition was dealt with in paragraph 6. It is peculiar that in this paragraph what has been stated is that the petitioner had filed a return for the year 1946-47, in which the receipt of the said sum was not disclosed nor brought to the notice of the Income-tax Officer, nor was it held to be a capital receipt, nor was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e court if it wants to see it : see Daulatram Rawatmall v. Income-tax Officer, Central Circle IV, Calcutta (unreported judgment dated August 8, 1961, in appeal from Original Order No. 209 of 1969). At the hearing before us Mr. Mitter on behalf of the respondent said that the recorded reasons were available and may be inspected by the court, and that these recorded reasons showed that the Income-tax Officer had ample reason to believe that income had escaped assessment. Mr. Sen strongly opposed our looking into these recorded reasons. I might also mention here that nowhere in the materials placed before us did his client ever state that the reasons had never been recorded. In our opinion, in order to decide the point it is not necessary to travel beyond the order of the Appellate Assistant Commissioner, exhibit H, read with the income-tax assessment orders for the relevant period which are under challenge. Obviously, the Appellate Assistant Commissioner looked into the records, which included the statements and other materials filed with the Income-tax Investigation Commission by the petitioner. The order of the Appellate Assistant Commissioner read with the Income-tax assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner that there are many other points which require elucidation, and there were ample materials before the Income-tax officer which led him to reopen the assessment proceedings. It may be that the Income-tax Officer in his assessment orders had not adequately marshalled the facts, and this is the precise reason that the Appellate Assistant Commissioner has ordered a further inquiry. Doubtlessly, these matters will be gone into when the appeal is finally determined. In our opinion, the petitioner has failed to establish that the pre-condition in section 34(1A) has not been fulfilled and, consequently, there was an initial lack of jurisdiction. It remains for me to deal with the last ground, namely, the objection as to the remand order made by the Appellate Assistant Commissioner. Mr. Sen has argued that the Appellate Assistant Commissioner has not really remanded the matter under section 37(2) of the said Act but has decided part of the appeal and has remanded the rest with direction to make a reassessment. If this is a correct description of the order made by the Appellate Assistant Commissioner, it is defective. Under sub-section (2) of section 31 the Appellate Assistant Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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