TMI Blog1936 (7) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... rough its business connection with the Bombay Company. The Income-tax Officer having on March 29, 1930, made an assessment upon this footing the matter came on appeal from him before the Assistant Commissioner. The Assistant Commissioner, on July 12, 1930, confirmed the assessment. The Bombay Company having requested the Commissioner to make a reference to the High Court under s. 66 of the Act, the Commissioner, on March 2, 1931, exercised his powers of review under s. 33, and remanded the appeal for a fresh decision by the Assistant Commissioner after taking certain further evidence. In the end the Assistant Commissioner on October 9, 1931, assessed the Bombay Company as agent of the Hong Kong Company upon a sum of ₹ 20,50,000 which involved a liability to tax, including super- tax of ₹ 3,17,187-8-0. On December 8, 1931, the Bombay Company again applied to the Commissioner for a reference of Certain questions of law to the High Court. This the Commissioner refused to do, but upon application made to the High Court for an order under s. 66, sub-s. 3, the High Court by order Dated October 6, 1932, required the Commissioner to refer the Following question of law: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey were agreeable to all their deposits with the Bombay Company being on call as from the dates of the deposits. On October 28, a reply was received from the Hong Kong Company agreeing to this proposal. On November 13, the Hong Kong Company telegraphed requiring repayment of their deposits amounting to ₹ 11,01,85,918 through Messrs. E.D. Sassoon and Company, Limited, of Shanghai. On November 16 and 17 the Income tax Officer came to a finding that the Bombay Company should be held to be agent of the Hong Kong Company, and called for a return upon that footing. On November 19, the Bombay Company wrote to Messrs. E.D. Sassoon and Company, Limited, of Bombay asking them to remit to Messrs. E.D. Sassoon and Company, Limited, Shanghai (whom their Lordships will refer to as the Shanghai branch), the sum of ₹ 11,42,29,931-10-9. They also wrote to the Shanghai branch advising that they had remitted this amount through Messrs. E.D. Sassoon and Company, Limited, Bombay, the amount being made up as follows:- Rs. As. P. Amount of Call Loans repaid by you on our behalf 11,04,85,918 0 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny portion of that loan from the Hong Kong Company, and that the Shanghai branch had not since November 17, 1926, borrowed any taels from the Hong Kong Company or paid to that Company any interest which they themselves had received from India. There was a further declaration from Mr. Priestly, Director of the Hong Kong Company stating that the Bombay Company on November 17, 1926, paid off the loans and that the Hong Kong Company had made no new loan of six and a half crores of taels to the Bombay Company or to Messrs. E.D. Sassoon Company, Limited, and that there were no transactions between the Bombay Company and the Hong Kong Company in 1927. This declaration was accompanied by the certificate of a firm of chartered accountants, auditors to the Hong Kong Company. At a later stage, namely, in June, 1931, a letter from Sir Victor Sassoon was put into the effect that in 1926 when he was in China he set to work to make arrangements on behalf of the Bombay Company so that after his return to India that company was in a position to send the telegram of October 27, 1926. When the Commissioner, in compliance with the High Court's order came to state in his letter of reference th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be some evidence to show that in 1927 the loan from the Hong Kong Company continued and that interest accrued or arose to that company thereon. If the entries in the books show no payment to the Hong Kong Company, and nothing due to the Hong Kong Company, the Income tax authorities cannot without evidence insist upon a right to treat entries showing a tael loan of six and a half crores made by a Shanghai Company, and interest calculated in taels paid thereon, as evidence that a somewhat similar amount was due from and was being paid by the Bombay Company to the Hong Kong Company. The only rule of evidence to be discovered in the Indian Evidence Act having any bearing upon this question would appear to be illustration (d) to Sec. 114 of the Indian Evidence Act:- The Court may presume that a thing or state of things which has been shown to be in existence within a period shorter than that within which such things or state of things usually cease to exist is still in existence . This rule cannot in the present case supply the want of evidence. Their Lordships are not considering a case in which by reason of the entries in an assessee's books of account being inconsistent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cient to entitle the Income tax authorities to hold that in 1927 the Hong Kong Company was in receipt of profits and gains from the Bombay Company. Comment has been made by different income tax officials that the Bombay Company has not produced the books of the Hong Kong Trust Corporation which are at Hong Kong. Also and less unreasonably, that the Bombay Company was at first unwilling to disclose the name of the firm from which the Sassoon Company at Shanghai obtained the finance which enabled them to make the tael loan to the Bombay Company. At a later stage of the proceedings, the Bombay Company, the assessees, stated that Sassoons of Shanghai obtained this finance from a company called Arnold and Company in China. It is said also that Arnold and Company is closely associated with the Sassoon Companies. If on these lines it could be shown-not that Arnold and Company lent the money and became entitled as upon a tael transaction with Sassoons of Shanghai to the rights of a lender-but that the tael loan made by Sassoons was in fact and in law made by the Hong Kong Company, no doubt there would be something upon which the assessment order could be supported. But the case stated d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany for the year ended December 31, 1927. He also required the Bombay Company as such agent to produce at the same time any evidence on which it might rely in support of its original return. On February 5, the Solicitors for the assessees wrote to the Commissioner claiming that this procedure was unwarranted and asking whether it was proposed to proceed upon the notice issued by the Income-tax Officer pending application for leave to appeal to the Privy Council. On February 15, the assessees appeared under protest before the Income- tax Officer. On February 20, the Income-tax Officer purported to make an assessment under sub-s. 4 of s. 23 of the Act because of the failure of the Bombay Company to produce the books of the Hong Kong Company upon that date. He invited the assessees, however, to make an application under s. 27 to set aside this assessment. At the same time he purported to act under s. 48 (A) of the Act and to set off the amount due upon this fresh assessment against the refund due to the assessees under the order of January 16, 1934. The application under s. 27 having been made (together with an appeal preferred before the Assistant Commissioner notwithstanding the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pears that the Court considered that, as a result of the previous order of the High Court, the proceedings should have been terminated forthwith. They were of opinion that the Commissioner had no jurisdiction to direct the Assistant Commissioner to take back the appeal to him. They also considered that there was no justification for directing the Income-tax Officer to make further enquiry, because the whole assessment was covered by the judgment of the Court, and the Income-tax Officer had already obtained production of all the documents for which he asked. The learned Chief Justice commented with some severity upon that part of the order of the Commissioner which imposed as a condition of refund that a guarantee should be given by E.D. Sassoon and Company, saying that the Commissioner must have known perfectly well that he was not justified in imposing as a condition of the refund that a guarantee should be given by some third party for the amount of any fresh assessment. He further observed with reference to the order under Sec. 23(4) made by the Income-tax Officer on February 20, 1934, that it was perfectly obvious, and the Income-tax Officer must have known, that it would not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner was obliged to discontinue proceedings against the Bombay Company as agent of the Hong Kong Company in respect of the year of assessment 1928-29. It was within the jurisdiction of the Commissioner to direct further enquiry if he thought such enquiry to be reasonable and to be profitable in the public interest. Under s. 33(2) he has a general power to make enquiry or to cause an enquiry to be made. It was certainly unfortunate that his order for further enquiry took the form of quoting the power given to Assistant Commissioner by clause (b) of sub-s. 3. of s. 31. That is one of several powers mentioned in the sub-section each of which is to be used in a proper case. As the whole question at issue was whether or not the Hong Kong Company, or the Bombay Company as its agent, were liable to be assessed at all, to direct the Income tax Officer to make a fresh assessment after making such further enquiry as he thought fit was an inappropriate form of order. But in substance the Commissioner was within his rights in directing further enquiry, and however disappointing this course may have been to the assessees, it is a matter which a Court of law must leave in the discretion of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecific Relief Act does not mean that orders can be made to enforce the satisfaction of a claim upon the Crown provided that the Court acts with some additional motive or has some further intention. The words of the clause have been taken verbatim from a well-known judgment on mandamus, the judgment of Coleridge, J., in Baron De Bode's case: But, against the servants of the Crown, as such, and merely to enforce the satisfaction of claims upon the Crown, it is an established rule that a mandamus will not lie. I call this an established rule. I believe it has never been broken in upon . The doctrine is well illustrated by that decision and by the cases therein mentioned, but is even more fully expounded in Regina v. Lords Commissioners of Treasury. The principle is that the Court cannot claim even in appearance to command the Crown, and where an obligation is cast upon the principal the Court cannot enforce it against the servant merely as such. Before mandamus can issue to a public servant it must, therefore, be shown that a duty towards the applicant has been imposed upon the public servant by statute so that he can be charged thereon, and independently of any duty which as se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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