TMI Blog1947 (2) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... was therefore wrong. The respondent contended first, that the impugned provision was not ultra vires the Indian Legislature, and, second, that, whether the impugned provision was or was not ultra vires, the High Court in its ordinary civil jurisdiction was precluded from entertaining the suit by reason of Section 226 of the Government of India Act, 1935, and also by reason of Section 67 of the Indian Income-tax Act, 1922. The High Court held that the provision was ultra vires and that jurisdiction to entertain the suit was not denied by either of these two sections. An order for repayment of the sum in question was therefore made. The Federal Court held that Section 226 of the Act of 1935 bared the maintenance of the suit before the High Court in its ordinary civil jurisdiction and they expressed their view that the impugned provision was not ultra vires the Indian Legislature. The Federal Court accordingly ordered the dismissal of the suit. In the proceedings before the Federal Court the point as to jurisdiction arising under Section 67 of the Act of 1922 was not taken. But jurisdiction cannot be given by consent. It is pars judicis to take jurisdiction into consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the dividends from the sterling companies amounted to ₹ 4,35,290-5-0. The demand notice required payment on or by the 23rd February, 1941, and stated that in default of payment, the appellant would be liable to penalties and that warrant of a distress might be issued. The appellant then intimated its intention of appealing against the assessment as far as it related to the taxation of dividends received from the sterling companies, and requested the Income-tax Officer to stay his hand pending the appeal. That request was refused and the appellant accordingly, on the 12th March, 1941, paid the tax demanded under protest. On the 4th June, 1941, the appellant gave notice of appeal to the Appellate Assistant Commissioner of Income-tax. On the 16th January, 1942, the appellant informed the Appellate Assistant Commissioner that it did not purpose to proceed with the appeal. By this order dated the 24th January, 1942, the Appellate Assistant Commissioner confirmed the assessment, expressing the opinion that the constitutional questions raised by the appellant could not be entertained in an appeal under the Income-tax Act, by the provisions of which the Income-tax author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o suit shall be brought in any Civil Court to set aside or modify any assessment made under this Act, and no prosecution, suit or other proceeding shall lie against any officer of the Crown for anything in good faith done or intended to be done under this Act. The argument for the appellant was that an assessment was not an assessment made under the Act if the assessment gave effect to a provision which was ultra vires the Indian Legislature. In law such a provision, being a nullity, was non-existent. An assessment justifiable in whole or in part by reference to, or by, such a provision was more aptly described as an assessment not made under the Act than as an assessment made under the Act. The section in question had therefore, it was argued, no application if the impugned provision in the Income-tax Act, 1922, was ultra vires. This construction finds some support in cases decided in India. In constructing the section it is pertinent in their Lordship's opinion to ascertain whether the Act contains machinery which enables an assessee effectively to raise in the Courts the question whether a particular provision of the Income-tax Act bearing on the assessment made is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect meaning of the phrase assessment made under this Act is an assessment finding its origin in an activity of the assessing officer acting as such. The circumstances that the assessing officer has taken into account an ultra vires provision of the Act is in this view immaterial in determining whether the assessment is made under this Act. The phrase describes the provenance of the assessment: it does not relate to its accuracy in point of law. The use of the machinery provided by the Act not the result of that use is the test. The results which would follow from the acceptance of the appellant's argument are somewhat curios. First, no distinction can for the purpose in hand be drawn between an assessment giving effect to an ultra vires provision and an assessment giving effect to a wrong construction of a provision to which no objection based on vires can be taken. There may, indeed, be practical difficulties in making out in a Civil Court that a wrong construction has been placed on a provision, but, assuming those difficulties are surmounted, the assessment is established as one which on the appellant's construction is not made under this Act. All questions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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