TMI Blog1962 (8) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... ases were transferred. The three suits relate, however, to the assessment for the years 1948-49, 1949-50 and 1950-51. On 1st August, 1947, the Commissioner of Income-tax, Bihar, and Orissa, issued an order under section 5 of the Indian Income-tax Act transferring the plaintiff's assessment cases from Hazaribagh to Patna. On the 26th April, 1948, the Income-tax Officer, Special Circle, Patna, Charge III, to whom these cases had been transferred, issued to the plaintiff notices under section 22(2) of the Act, calling upon him to submit returns in respect of the three years in question within a certain period. The income-tax returns for 1948-49, 1949-50 and 1950-51 were filed before that officer by the plaintiff on the 4th January, 1949, the 26th December, 1949, and the 11th February, 1951, respectively. On the 24th October, 1950, the plaintiff had filed an application before the Commissioner of Income-tax requesting him to transfer his cases from Patna to Hazaribagh. There is, however, difference between the parties as to whether subsequently the plaintiff requested the Commissioner to transfer the cases either to Hazaribagh or to any other place near Padma. On the 21st April, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi issued notices under section 34 of the Act on the plaintiff in respect of the three years in question and these notices were served on the 25th March, 1957, by affixation. On the 8th May, 1957, the Commissioner of Income-tax, Bihar and Orissa, transferred the assessment files of the plaintiff under section 5(7A) of the Act to Hazaribagh with effect from the 15th May, 1957, and the plaintiff received a copy of that order on the 12th May, 1957. The Income-tax Officer, Hazaribagh, thereupon sent a registered letter to the plaintiff, informing him of the service of notices under section 34 and also requesting him to submit his returns of income for these years. This letter was received by the plaintiff on the 13th July, 1957. There was further correspondence between the plaintiff and the Income-tax Officer, Hazaribagh, but the plaintiff did not submit any return. On the 4th November, 1957, the plaintiff filed an application before the Patna High Court under article 226 of the Constitution for a writ against this Income-tax Officer. Subsequently, he withdrew the application and filed the present suits on the 6th February, 1959, against the Union of India (defendant No. 1), the Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he civil court mainly on two grounds. The first ground urged by Sri Lalnarain Sinha is that the Ranchi Income-tax Officer was not competent to take any action in the assessment proceedings in question, inasmuch as there was no valid and operative transfer to that officer of the proceedings pending before the Patna Income-tax Officer for the reason that the Commissioner's notification dated the 21st April, 1951, which was prospective in effect, had merely the effect of distribution and allocation of business. This notification of the Commissioner of Income-tax was made under sub-section (5) of section 5 of the Income-tax Act. Under this sub-section, an Income-tax Officer shall perform his functions in respect of such persons or classes of persons or of such incomes or classes of income or in respect of such areas as the Commissioner of Income-tax may direct. After allocation of work under this sub-section, an Income-tax Officer is competent to exercise all his powers for the assessment of income-tax on any assessee within the jurisdiction assigned to him by the order of the Commissioner. The Commissioner is also competent to reallocate or redistribute the work allotted to o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther observed that there was nothing to prevent the Commissioner, acting under sub-section (5) to arrange that the case of an assessee shall be disposed of by a particular Income-tax Officer . The aforesaid observations afford a guide, and from these observations it may reasonably be inferred that, though an order under sub-section (5) could deal only with distribution and allocation of work among the Income-tax Officer, by implication such an order would also amount to transfer of a class of cases from one Income-tax Officer to another. In Bidi Supply Co. v. Union of India [1956] 29 I.T.R. 717; [1956] S.C.R. 267. there was an omnibus general notification under sub-section (7A) to the effect that the Central Board of Revenue would hereby transfer the case of Bidi Supply Company, 3/1 Madan Street, Calcutta, from the Income-tax Officer............ Calcutta, to the Income-tax Officer, Special Circle, Ranchi. In the majority judgment of the Supreme Court, it was observed that the omnibus wholesale order made in this case was not contemplated or sanctioned by sub-section 7(A) and that this sub-section contemplated only the transfer of a particular case actually pending before an In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner of Income-tax acted contrary to the principle of law and natural justice and that the order of transfer was null and void. On the other hand, in paragraph 24 of the written statements, the defendants asserted that the transfer in question was made according to the wishes of the plaintiff for his convenience. On this point no issue was, however, raised in these suits apparently because (as stated in paragraph 10 of the judgment of the trial court) the validity of that order, that is, the said order of transfer, has not been challenged by the plaintiff. It is true that in his petition .dated the 24th October, 1950 (exhibit 4), presented to the Commissioner of Income-tax that, while his cases were pending before the Income-tax Officer of Patna, he requested the Commissioner to transfer the same to Hazaribagh mainly for the reason that his income had been much reduced on account of certain facts stated in the petition and was not, therefore, required to be assessed any longer in the Special Circle at Patna; but in the judgment of the Supreme Court dated the 20th March, 1956, which is an enclosure to the plaints, it is stated that the plaintiff had applied for transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he area in which that place is situate or, where the business, profession or vocation is carried on in more places than one, by the Income- tax Officer of the area in which the principal place of his business, profession or vocation is situate. (2) In all other cases, an assessee shall be assessed by the Income-tax Officer of the area in which he resides. (3) Where any question arises under this section as to the place of assessment, such question shall be determined by the Commissioner, or, where the question is between places in more States than one, by the Commissioners concerned, or, if they are not in agreement, by the Central Board of Revenue: Provided that, before any such question is determined, the assessee shall have had an opportunity of representing his views:...... Provided further that if the place of assessment is called in question by an assessee the Income-tax Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under this sub-section before assessment is made. (4) Notwithstanding anything contained in this section, every Income- tax Officer shall have all the powers conferred by or under this Act on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way detracts from the efficacy of the decision of the Federal Court in Wallace Brothers' case. We have already said that the Bidi Supply case# deals with the vires of section 5(7A) . It is, therefore, now well settled that the place of assessment determined by the Commissioner cannot be challenged in the civil court. It has also been said in Wallace Brothers' case* that there can be waiver as to the machinery (that is, procedure) of taxation. Hence, the plaintiff-appellant cannot be allowed to raise the question in these suits. In any view of the matter, therefore, the first ground urged by Sri Sinha is without any merit and it must be overruled. The second ground urged on behalf of the plaintiff-appellant is that there is nothing in the Income-tax Act to prevent the civil courts from entertaining the present suits, inasmuch as no assessment has been made as yet and the Income-tax Officer has acted against certain provisions of section 34. The civil court is a court of plenary jurisdiction and the courts are competent under section 9 of the Civil Procedure Code to try all suits of a civil nature excepting suits of which their cognisance is either expressly or im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain amount of tax, in accordance with the procedure contained in the machinery sections which commence from section 22. The assessment orders of Income-tax Officers are then subject to review on appeals and revisions before the Appellate Assistant Commissioner, the Commissioner and the Appellate Tribunal. The time when the tax is payable is provided by section 45, and section 46 lays down the mode and time of recovery. The Appellate Tribunal can refer a case to a High Court under section 66 and in certain cases appeals lie to the Supreme Court under section 66A. Then comes section 67 which expressly bars the jurisdiction of the civil courts in certain respects. But, it will be noticed that apart from section 67, the Income-tax Act is a comprehensive code, and therefore, if a person is liable to pay tax under the charging sections, the assessment proceedings can be questioned only in the manner prescribed by the machinery sections. This view is supported by authorities. In an appeal arising out of a civil suit in Raleigh Investment Co. Ltd. v. Governor-General-in-Council [1947] 15 I.T.R. 332 their Lordships of the Judicial Committee said that the Income-tax Act did give the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment prevents the incidence of the liability, though the amount of the deduction is not ascertained until assessment. The liability is imposed by the charging section, namely, section 38 (of the English Act), the words of which are clear. The subsequent provisions as to assessment and so on are machinery only. They enable the liability to be quantified, and when quantified to be enforced against the subject, but the liability is definitely and finally created by the charging section and all the materials for ascertaining it are available immediately. Lastly, their Lordships of the Federal Court said: In Attorney-General v. Aramayo [1925] 9 Tax Cas. 445, it was held by the whole court that there may be a waiver as to the machinery of taxation which enures against the subject. In India these well considered pronouncements are accepted without reservation as laying down the true principles of taxation under the Income-tax Act. In Chatturam Horilram Ltd. v. Commissioner of Income-tax [1955] 27 I.T.R. 709, 716; [1955] 2 S.C.R. 290, the Supreme Court approved the observations of the Federal Court regarding the Scheme of the Act. With reference to sections 3, 4 and 6 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir Lordships said that section 65 of the Bengal Act did not affect the maintainability of the suit before them, inasmuch as it was not a suit to set aside or modify an assessment . They distinguished Raleigh's case [1947] 15 I.T.R. 332 (F.C.). on the ground that the suit in that case was not to set aside or modify an assessment but was for payment of a certain amount of money out of the amount which the Raleigh Company had paid to the income-tax authorities under protest after completion of the assessment. That is why it has been observed by the Assam High Court in Hardeodas Jagannath v. Income-tax Officer, Shillong [1961] 43 I.T.R. 562 and by the Bombay High Court in S.C. Prashar v. Vasantsen Dwarkadas [1956] 29 I.T.R. 857 that the effect of the decision in Raleigh's case* has been considerably modified by the Supreme Court in Tripura case [1951] 19 I.T.R. 132; [1951] S.C.R. 1. But the only modification in Raleigh's case* is in respect of the first part of section 67 of the Indian Income-tax Act which bars a suit to set aside or modify an assessment . The same comment applies to a decision of the Patna High Court in Inderchand v. Secretary of State for India in Counc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment were taken against a non-registered dealer without the issue of a notice under section 10(1), that would be a mere irregularity in the assumption of jurisdiction and the orders of assessment passed in those proceedings cannot be held to be without jurisdiction and no suit will lie for impeaching them on the ground that section 10(1) had not been followed. This principle explains the decision in the Tripura case [1951] 19 I.T.R. 132; [1951] S.C.R. 1. There the liability of the Ruler of Tripura, a native State, to pay the tax under the charging section was itself in dispute and the agricultural income-tax authorities had not the right to decide this jurisdictional fact. In other words, there was a complete lack of jurisdiction in those authorities. The same principle explains the decision in Punjab Province v. Federation of Pakistan [1957] 32 I.T.R. 198, wherein the liability of the province to pay income-tax under the charging sections was in dispute. In the present suits, the plaintiff-appellant does not challenge his liability under the charging sections but he has challenged the action under section 34 of the Income-tax Act. Hence in view of the principle laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Madras High Court) said ...but it seems possible that the word 'intended' was used only to signify 'futurity' so as to preclude suits for injunction in respect of proceedings 'INTENDED' to be taken by the income-tax authorities. This question was considered by Fazl Ali J. in the Tripura case [1951] 19 I.T.R. 132; [1951] S.C.R. 1. It may be mentioned that he differed from the majority judgment. So far as the first part is concerned, the majority judgment must prevail. But the majority judgment did not discuss the significance of the second part of section 65 of the Bengal Act, which corresponds to section 67 of the Income- tax Act. Originally, a Government servant, namely, an Income-tax Officer, also had been impleaded as a defendant in the Tripura suit, but as appears from the judgment of Patanjali Sastri J. the name of the Income-tax Officer originally impleaded as the second defendant had been struck off the record . Hence, he observed that no question in regard to the liability of that officer arose. The word liability used here did not mean a liability in respect of a tortious act as is evident from the preceding sentence which reads thus ... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the respect they deserve. Mr. Iyengar also contended that in the present cases the Ranchi officer did not act in good faith in issuing the notice under section 34 of the Income-tax Act, and he relied on the aforesaid Rajasthan decision in which it was held that, inasmuch as the Commissioner merely reproduced the third ground of the relevant section in the detention order without any material before him, he had not acted in good faith. But, in the present case, the Income-tax Officer of Ranchi had a very good material, namely, the decision of the Supreme Court quashing the assessment proceedings of the Calcutta officer. According to the definition in the General Clauses Act of 1897, if a thing is done honestly, it is deemed to be done in good faith, notwithstanding some negligence. The act of the Ranchi officer is, in my opinion, covered by this definition. Hence, the second part of section 67 is a bar to the present suits. Sri Lalnarain Sinha contended that the jurisdiction of the civil courts could not be excluded simply because of the fact that appeals and revisions are provided up to the Supreme Court in the Income-tax Act; and he cited certain decisions in support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scussing the effect of sub-section (4) of section 117 and section 119 of the Bihar and Orissa Municipal Act, 1922. Sub-section (4) of section 117 reads thus: 117. (4) The decision of the Committee, or of a majority of the members thereof, in such cases shall be final. Section 119 lays down: 119. No objection shall be taken to any assessment or valuation in any other manner than in this Act is provided. It was held that the use of the word final in sub-section (4) of section 117 would bar the jurisdiction of the civil courts only if the committee had acted with jurisdiction or, in other words, if the decisions of the committee on the existence of the jurisdictional facts was correct; and the jurisdictional facts in that case were: (1) that the holding had been incorrectly valued or assessed; and (2) that the incorrect valuation or assessment had been made by reason of fraud, misrepresentation or mistake. In Chairman of Giridih Municipality v. Srish Chandra Mozumdar [1908] I.L.R. 35 Cal. 859 the decision turned on section 85 and 116 of the Bengal Municipal Act which merely said that no objection shall be taken to any assessment or rate in any other manner than in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittee on appeal in Secretary of State for India in Council v. Fahamidannissa Begum [1889] I.L.R. 17 Cal. 590 (P.C.). Regarding section 9, which provided that except as regards the proprietary rights to islands, no suit or action in any court of justice shall lie against the Government, or any of its officers, on account of anything done in good faith in the exercise of the powers conferred by this Act, their Lordships said that full effect can be given to the section without holding that it deprives the owner of a permanently settled estate of that right of appeal which is given to him in order that he may have determined in a civil court the justness of the demand of the revenue authorities. In Emperor v. Vimlabai Deshpande A.I.R. 1946 P.C. 123, the facts found were these. The detenue was arrested originally by a police officer under rule 129(1) of the Defence of India Rules. Then a temporary order of detention was made by the Provincial Government. It was held in a case under section 491, Criminal Procedure Code, that in the absence of a reasonable suspicion, the arrest by the police officer was illegal and, as the temporary detention by Government was to be made of a person va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his possession reason to believe that income, profits or gains chargeable to income-tax have escaped assessment for any year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under this Act or that excessive loss or depreciation allowance has been computed, he may in cases falling under clause (a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, or, if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22 and may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section: Provided that-- (i) the Income-tax Officer shall not issue a notice under this sub-section, unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reasons recorded that it is a fit case for the issue of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he jurisdiction of the High Court to interfere is very wide and even irregular assumption of jurisdiction may also come within its purview. For a suit in a court of law, however, there must be complete lack of jurisdiction. This is made clear also by the following observation of their Lordships in the same case: Mr. Sastri mentioned more than once the fact that the company would have sufficient opportunity to raise this question, viz., whether the Income-tax Officer had reason to believe that under-assessment had resulted from non-disclosure of material facts before the Income-tax Officer himself in the assessment proceedings and, if unsuccessful there, before the Appellate Officer or the Appellate Tribunal or in the High Court under section 66(2) of the Indian Income-tax Act. The existence of such alternative remedy is not however always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action.When the Constitution confers on the High Courts the power to give relief it becomes the duty of the courts to give such relief in fit cases and the courts would be failing to perform their d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istinction has been clearly pointed out in the unreported decision of the same court in Central Potteries Ltd., Nagpur v. State of Maharashtra (C.A. No. 205 of 1961) [1962] 13 S.T.C. 472 (S.C.). in an appeal arising out of a suit. The observations of the Federal Court in Chatturam v. Commissioner of Income-tax([1947] 15 I.T.R. 302 (F.C.)) approved by the Supreme Court in Chatturam Horilram Ltd. v. Commissioner of Income-tax([1955] 27 I.T.R. 709; [1955] 2 S.C.R. 290) quoted above show that the foundation of the jurisdiction of the Income-tax Officer is the liability to pay and not the machinery of assessment. Only six decisions in relation to civil suits in respect of taxation matters have come to our notice. Of these the assessees' suits which resulted in the decisions in Raleigh Investment Co. Ltd.([1947] 15 I.T.R. 332), State of Tripura v. Province of East Bengal([1951] 19 I.T.R. 132; [1951] S.C.R. 1) and Inderchand v. Secretary of State for India in Council([1941] 9 I.T.R. 673) were decreed, inasmuch as the liability of the assessee to pay the tax was itself in dispute, while the remaining three suits which resulted in the decisions in Secretary of State for India v. V.M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs it will give that tribunal or body. It may in effect say that, if a certain state of facts exists and is shown to such tribunal or body before it proceeds to do certain things, it shall have jurisdiction to do such things, but not otherwise. There it is not for them conclusively to decide whether that state of facts exists, and if they exercise the jurisdiction without its existence what they do may be questioned. But there is another state of things The Legislature may entrust the tribunal or body with a jurisdiction which includes the jurisdiction to determine whether the preliminary state of facts exists as well as the jurisdiction, on finding that it does exist, to proceed further or do something more It is an erroneous application of the formula, to say that the tribunal cannot give themselves jurisdiction by wrongly deciding certain facts, because the Legislature gave them jurisdiction to determine all the facts, including the preliminary facts on which the further exercise of their jurisdiction depends. This observation was emphatically approved in Rex v. Bloomsbury Income Tax Commissioners [1915] 3 K.B. 768, wherein Lord Reading C.J. said: In my view an examinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 66 of the Income-tax Act that assessment proceedings taken on the basis of a defective notice under section 34 were null and void. Mr. Iyengar relied on his observation that though section 22(2) is a procedural section and the failure to give notice or a defect in a notice is a procedural defect, in the case of section 34, it is not a procedural defect but it is a failure to comply with a condition precedent to the assumption of jurisdiction. But, as stated earlier, it was a decision under section 66 of the Act and this observation cannot be used to support the contention that a civil suit lies to challenge the action of the Income-tax Officer under section 34 of the Act. In conclusion, I am of the opinion that the civil court has no jurisdiction to enquire into the question whether section 34 or the other machinery provisions of the Act have been complied with or not. I shall assume, however, for the sake of argument that the civil court can enquire into the applicability or otherwise of sub-section (1) of section 34 in the present case. One of the conditions of the applicability of sub- section (1) of section 34, and this condition is common to both the clauses of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case at a stage up to which he had previously proceeded with it and made the assessment. In answer to an argument advanced on behalf of Lachhiram that, inasmuch as more than one year had expired from the end of the financial year concerned, the Income-tax Officer could take action only under section 34, Rankin C.J., with whom the other judges of the Special Bench agreed, repelled this argument on the ground that income has not escaped assessment if there are pending at the time proceedings for the assessment of the assessee's income which have not yet terminated in a final assessment thereof. This observation was justified as the assessment proceedings was still pending before the Assistant Commissioner. This observation of Rankin C.J. was approved by the Judicial Committee in Sir Rajendranath Mukherjee v. Commissioner of Income-tax#. The facts of that case were these. In pursuance of notices served under section 22(2) two companies, namely, Burn and Company and Martin and Company, filed different returns of their incomes in 1928. Meanwhile the income-tax authorities thought that Martin and Company had purchased Burn and Company and made an assessment on Martin and Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34 would be inapplicable wherever notice under section 22(2) has been issued against an assessee, a return has been submitted by him and a final order has been passed by the Income-tax Officer in the said assessment proceedings. To say that, so long as assessment proceedings are pending, it is impossible to assume that any income has escaped assessment is very much different from saying that income cannot be said to have escaped assessment wherever assessment proceedings have been taken and a final order has been passed on them. The facts in Kamal Singh's case*** were these: Following the decision of the Patna High Court in a certain case, the Income-tax Officer omitted to bring to assessment for 1945-46 a certain sum representing interest on arrears of rent due to the assessee in respect of agricultural land. Subsequently, the Privy Council set aside the decision of the High Court, holding that such interest was not agricultural income and, as a result of that decision, the Income-tax Officer initiated reassessment proceedings under section 34(1)(b) of the Income-tax Act and brought the aforesaid sum to tax. It was held by the Supreme Court that the action of the officer w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a different matter. From the foregoing discussions it is manifest that no action under section 34 can be taken when a return submitted by an assessee is still pending and undisposed of, but section 34 may sometimes be applicable in case the final order had been passed in the assessment proceedings. But what is the position if the final order is subsequently set aside as was done in the present case. In this connection Mr. Iyengar relied on certain observations in the decisions of the Supreme Court in Chatturam Horilram Ltd. v. Commissioner of Income-tax [1955] 27 I.T.R. 709; [1955] 2 S.C.R. 290. The facts of this case were these: The assessee had been assessed to income-tax which was reduced on appeal and was set aside by the Income-tax Appellate Tribunal on the ground that the Indian Finance Act, 1939, was not in force during the assessment year in Chota Nagpur. On a reference, the decision of the Tribunal was upheld by the High Court. Subsequently, the Governor of Bihar promulgated Bihar Regulation IV of 1942 and thereby brought into force the Indian Finance Act of 1939 in Chota Nagpur retrospectively with effect from March 30, 1939. This Ordinance was assented to by the Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial decisions; and (2) that the word escaped in clause (b) of section 34(1) was not confined to cases where no return had been submitted by the assessee or where income had not been assessed owing to inadvertence or oversight or other lacuna attributable to the assessing authorities. It will be noticed from a reading of clauses (a) and (b) of section 34(1) that there is practically no difference in the two clauses except in respect of the preliminary conditions for their applicability. Hence the scope of the word escaped given by the Supreme Court would apply to clause (a) also. Two propositions emerge from the foregoing discussions: (1) when a return is submitted by an assessee and it has not resulted in an assessment, that is, the return is still pending and undisposed of, no action can be taken under section 34 of the Act; and (2) in case the assessment proceedings have after submission of the return resulted in an assessment but on account of some lacuna attributable to the assessing authorities or not, the assessment has become invalid, that is, the assessment proceedings have failed to result in a valid assessment owing to such lacuna, action may be taken under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .R. 311 (F.C.), where it was observed: The assessment proceedings had not come to an end nor were they dead. The appellant had kept the proceedings alive by filing appeals and the proceedings were thus pending for decision. But the facts of that case were completely different. The appellant of that case, who is also the appellant in the present case, was assessed to income-tax for 1939-40 on the 14th February, 1940. An appeal before the Appellate Assistant Commissioner was dismissed on the 30th March, 1942. It transpired then that the relevant Finance Act had not been applied to the area concerned as required by section 92 of the Government of India Act. In order to overcome this difficulty, the Governor made a Regulation on the 30th June, 1942, to apply the Finance Act with retrospective effect. Then the Income- tax Tribunal before whom an appeal by the appellant against the assessment was pending, dismissed the appeal on the 31st March, 1943. It was argued on behalf of the appellant that, inasmuch as the first appeal before the Appellate Assistant Commissioner had been dismissed on the 3rd March, 1942, the proceedings had come to an end and, therefore, the making of the Regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Supreme Court quashing the Calcutta proceedings in the present case amounted to such information as is contemplated by this clause. Clause (b), however, applies only to those cases in which more than four years have not elapsed after the assessment year in question. But it was held by the Supreme Court in a writ proceeding in Lalji Haridas v. Income- tax Officer [1961] 43 I.T.R. 387 (S.C.) that the question of limitation under sub-section (1) of section 34 ought to be raised before the income-tax authorities and it is not a point which can be legitimately agitated in the proceedings. It is obvious that if such a question cannot be raised in a writ proceeding, it cannot also be raised in the civil court. The Supreme Court did entertain the plea of limitation in Commissioner of Income-tax v. Ranchhoddas Karsondas [1959] 36 I.T.R. 569 (S.C.), but this view was taken in an appeal to the Supreme Court under section 66A of the Income-tax Act. Assuming, however, that the plea of limitation in respect of clause (b) can be entertained by the civil court, the Income-tax Officer of Ranchi had sufficient materials to act under clause (a) of sub- section (1) of section 34. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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