TMI Blog1936 (5) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... e income assessable under the Act. It recorded a concession by the plaintiff's vakil that issue (5) in the case, viz., Whether the assessment was made without giving the plaintiff an opportunity to prove his contentions could not be tried by the civil court. Issue (5) (a) raised the question of fact, whether the plaintiff had ceased to reside in British India, and whether he had no assessable income in British India . The other issues were consequential. The lower appellate court accordingly remanded the suit for trial of issue 5 (a) and for findings on the other issues in the light of the finding that may be come to on issue 5 (a). Against that order of remand, this appeal has been preferred by the Secretary of State. In view of the arguments urged before us, it is necessary to refer to a few facts appearing from the documents put in evidence as bearing on the preliminary issue. The plaintiff was at one time admittedly a resident of Palavangudi in the Chettinad (Ramnad District) but his case was that from 1926 he had been permanently residing at Pondicherry in French territory and that after a partition in his family in 1928, he had no proprietory interests, business or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention of the legislature that civil Courts should in a separate suit be at liberty to examine the correctness of the conclusions arrived at by the Income-tax authorities. Before dealing with the decisions cited before us, it is necessary to emphasise the fact that, in some of them, the question of exclusion of the Civil Court's jurisdiction had to be dealt with merely on general principles and in the absence of a statutory prohibition, while in others the decision turned upon the scope of the prohibition, enacted by statute. In the former class of cases, reliance has naturally to be placed on the general scheme of the law creating or empowering the authority whose acts are sought to be challenged. The observations of the Judicial Committee in The Colonial Bank of Australia v. Willan (L. R. 5 P. C. 417) are frequently referred to, as defining the limits of the civil court's powers of intervention. But even in applying these observations it seems to me unwarranted to assume that in all cases in which a prerogative writ can, according to those observations issue from a superior court, there must also exist a right of civil suit in the ordinary courts of the land. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1920 and Section 228 of the Madras Local Boards Act of 1920 which preclude the challenge in a civil court of any assessment etc., provided that the provisions of the Act have been in substance and effect complied with). The result of such language is practically to assimilate this class of cases to those where the statute contains no express words of exclusion of civil court's jurisdiction [cf. Navadip Chandra Pal v. Purnananda Saha (3 C. W. N. 73) and Chairman, Giridhi Municipality v. Srish Chundra Mozumdar (I. L. R. 35 Cal. 859) which turned on Section 116 of the Bengal Municipal Act which merely said that no objection shall be taken to any assessment or rating in any other manner than in this Act provided]. Even where the words of exclusion in the statute are positive enough to exclude a writ of certiorari, the Judicial Committee made a reservation in (L. R. 5 P. C. 417) in respect of manifest defect of jurisdiction or fraud of the party. Whatever may be the disinclination of the legislature in England against enacting a total exclusion of the civil courts' authority or of English courts in inferring it, such exclusion is not unknown in this country. The decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 67 at page 84) that the former question had always been treated as and declared to be a matter for courts of justice. The same distinction was recognised in Section 58 of the Madras Revenue Recovery Act which excludes from the cognisance of Civil Courts only questions as to rate of land revenue or as to the amount of assessment. In 14 Cal. 67 the question was raised whether any and what departure had been made from this underlying principle by Act IX of 1847, either by reason of its general scheme or by the specific provision in Section 9 which enacted that ' no suit or action in any courts 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.' The majority approached this question from the point of view that because of the declared policy of the Indian Legislature for at least 66 years, they should not adopt a construction involving a departure from it unless the Legislature had expressed such intention in clear and unmistakable language. As regards Section 9, they held that it only referred to suits for damages. This method of approach was approved of by the Judi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioners (1914) 3 K.B. 429 at 447] it was decided that ' Prohibition ' will lie and is an appropriate remedy if the Commissioners acted without jurisdiction. The case there was clearly within the principle of Reg v. Bolton (supra) because, according to the law, only certain specified Commissioners could assess a person to income-tax in respect of profits derived from foreign possessions. Even on the facts found or assumed to exist, the court held that the particular Commissioner whose proceedings were sought to be restrained had no jurisdiction to proceed with the assessment, as he admittedly was not one of those specified in the Acts as competent to deal with such profits. The sense in which that decision must be understood was explained in The King v. Bloomsbury Income tax Commissioners [(1915) 3 K.B. 768]. When it was argued that the Commissioners had no jurisdiction to make or proceed upon the assessment, because, according to the petitioner's contention, he was not chargeable to income tax, and it was further contended that the Commissioners could not give themselves jurisdiction to assess a person by determining in the first instance that he was chargeable w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e set forth as underlying the English Income tax Law) As I have already indicated, it may be open to doubt whether an ordinary civil action will lie in all cases in which and in all circumstances under which a writ of certiorari or prohibition may issue from a superior Court. But it certainly cannot be said that an assessment may be challenged by a civil suit even in circumstances in which a writ of certiorari or of prohibition will not be available. According to the facts which have been set out at the commencement of this judgment, the present case is one in which the Assessing Officer did make an enquiry as to the facts relating to the plaintiff's residence in British India and there is no reason to think that he did not or could not honestly come to the conclusion that the plaintiff was a resident of British India (cf. Rogers v. Inland Revenue, 1 Tax Cases 225) and received in British India the income remitted from Saigon. In this view the plaintiff's suit must fail. Mr. Rajah Iyer contended that according to the scheme of the Income tax Act, it must not be held applicable to a nonresident assessee who disputed his liability to be assessed and that it did not entrust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase to decide whether the language of Section 67 of the Act of 1922 is clear or comprehensive enough to exclude a suit even in cases like those instanced by Avory and Lush, JJ., in (1915) 3 K.B. 768 as fit cases for the Court's interference by writs of certiorari or prohibition. The answer to that question will in some measure depend upon the construction to be placed on the expression made under this Act , occurring in the section. As observed by Muthuswami Iyer, J., in Venkata v. Chengadu (I.L.R. 12 Mad. 175) with reference to similar language in Section 59 of the Madras Revenue Recovery Act 'the section presupposes that certain proceedings were professedly taken under the Act and that there might be a valid claim to redress on the ground that they were not in accordance with the provisions of the Act.' The question (which was left open in that case) is whether the proceedings contemplated are those which are vitiated by mere errors of procedure or include those taken without jurisdiction. Later decisions relating to sales for arrears of public charges have proceeded not so much on the construction of this or like expressions but on the broad ground that sales not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid down that ' if the assessment is clearly ultra vires we do not think the provisions of that Act will apply'. There was no further discussion of the question of jurisdiction and the rest of the judgment deals only with the propriety of the assessment. The ground of denial of liability in that case no doubt was that the profits did not arise or accrue in British India but the rival contentions would seem to have turned on a point of law, the facts not being in dispute; and the learned judges held that on the facts stated 'the profits accrued in the Baroda State'. The case is accordingly of no help to the present plaintiff, though it is an authority against a total denial of a right of suit. The Act of 1896 contained no provisions corresponding to the second part of Section 67 of the present Act which I have referred to above as throwing some light on the construction of the first part: nor did it contain the safeguards enacted in the present Act, by way of a right of appeal (under Section 30), reference to a Board of Referees (under Section 33A) and reference to the High Court with a right of appeal to the Privy Council, under Sections 66 and 66A. I am not prepare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in or brought into British India, any assessment in respect of such income would be outside the scope of the Act and a civil suit to recover it would not be barred ; but the observation was obiter and it became unnecessary to purse the matter as the assessee's suit failed on another ground. Further, no reference was made to the possible distinction between cases in which the item of income was even on the admitted facts outside the scope of the Act and those in which the assessing authorities had to decide on evidence, whether it was within the Act or not. Dayaram Ratndas v. Secretary of State for India, (78 I. C. 940 ; A.I.R. 1925 Sind 130) likewise contains only a dictum that if the Income tax authorities had assessed any thing but 'income' or had levied assessment on the classes of in come exempted by the Act they would have overstepped the limits of their jurisdiction and the assessment would not have been under the Act. Dr. R, N. Singha v. Secretary of State for India in Council, (I.L.R, 5 Rang. 125) adds very little, beyond referring to the distinction between 'erroneous' assessment and 'ultra vires' assessment. In Forbes v. Secretary of Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent contended before the Income-tax Officer that he did not reside in British India, but the Income-tax Officer found against him and required him under Section 22 to submit a return of his income. He did not do this and was assessed under Section 23, sub-section (4), and under Section 30 became debarred from the remedies provided by the Act: namely, from the right of appeal to the Assistant Commissioner and second appeal to the Commissioner; and from the right conferred by Section 66 of having a reference made to the High Court. Incidentally it may be observed that plaintiff contended also that he had no property in British India, but he must have had some property which could be proceeded against for the realisation of the tax ; for he paid the tax. Plaintiff then filed this suit for a declaration that he was not liable to be assessed and to recover the tax paid by him. He contended that he was not a resident of British India but of Pondicherry in French India. He contended firstly, that the Income tax Officer had not conducted a proper enquiry into the question of his residence and that he had no proper opportunity of stating his case on this point; and secondly, that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erogative writs such as prohibition or certiorari. See Robertson's Civil proceedings by and against the Crown; and Halsbury's Laws of England under the title Crown Practice, Chapters II to V, and the judgments of Bankes, L.J., and Atkin, L.J., in Rex . v. Electricity Commissioners ([1924] 1 K.B. 171) and more particularly the general observations of Atkin, L.J., at page 204: Wherever any body of persons having legal authority to determine questions affecting the rights of subjects and having the duty to act judicially act in excess of their authority they are subject ,to the controlling jurisdiction of the King's Bench exercised_ in these writs (p. 205). The point which we have to decide in this appeal is whether the decision which the Income-tax Officer made as to the residence of the respondent was made in excess of his authority. A question of that kind must obviously arise in all cases in which under the Income-tax Act the taxing officer has to decide whether any particular item of income is or is not chargeable. I may observe also that the exempting clause in the Income-tax Act, namely, section 67, and similar clauses in other Acts which protect acts done and dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a tax might be levied and (2) that the suit was not barred by the excluding clauses, namely, section 101 of the District Municipalities Act, 1884. The assessment or demand of any tax, when no appeal is made as hereinafter provided and the adjudication of an appeal by the Municipal Council shall be final and Section 162 (2) No suit should be brought in any Court to recover any sum of money collected under the authority of the Act. . . . . . . . . provided that the provisions of this Act have been in substance and effect complied with . Their Lordships say The question really is whether when a company . . . . . which is not taxable under the Act, is nevertheless taxed, it can be said that the provisions of the Act have been in substance and effect complied with . In other words the immunity conferred on statutory authorities by the provision which shuts out the jurisdiction of the Civil Court does not extend to cases where their decisions are ultra vires. The respondent here, as I have said, does not quarrel with the general proposition of law that the statutory authority is immune from suit so long as it acts in conformity with the statute and does not exceed its powers. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the interpretation of the words at the end of the year . The Commissioners for General Purposes were empowered to grant certificates for refund of income tax overpaid, on application made at the end of the year . Having done so in certain cases in which the applications were made long after the end of the year, the Commissioners for Special Purposes refused to honour the certificates on the ground that they were granted without jurisdiction. It was held that the Commissioners for General Purposes had jurisdiction to decide whether in the circumstances the applications were made in time. Lord Esher (Master of the Rolls) dealing with this point observed: When a tribunal or body which has to exercise the power of deciding facts, is first established by Act of Parliament, the Legislature has to consider what powers it will give that tribunal or body. It may in effect say that, if a certain state of facts exists and 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 withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch they did not possess. It was held that they were merely deciding facts going to the quantum of taxable liability and that the proper remedy was by appeal upon a case stated; that is to say, the remedy provided by the statute. The Commissioners, having jurisdiction under the Income tax Act (1842) to assess a certain Company to income tax in respect of profits of a business carried on either wholly, or in part only, in Great Britain, they had for the purposes of that assessment jurisdiction to decide all questions of fact necessary for ascertaining the amount of those profits, and therefore prohibition would not lie. What the Commissioners had decided was that the profits of the Eastern Kodak Company carrying on business in the United States were technically the profits of the Kodak Company which carried on business in London. The Court refused to enter into the merits of this decision. Colonial Bank of Australia v. Willan [Privy Council Appeal Cases Vol. V (1873-1874) p. 417] is an interesting and authoritative case which is relevant here on two grounds. The appeal was brought from a judgment of the Supreme Court of Victoria which quashed an order made by a Court of Mines esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has acted without or in excess of jurisdiction, for in such a case the Court has not brought itself within the terms of the Statute taking away certiorari This is the exact position contended for by the respondent here. Section 67 does not bar a suit to set aside an assessment made without jurisdiction for the reason that such an assessment is not made under the Act. The second main contention of the respondent is that being a foreign national he was entitled to ignore the requisitions made by the Income Tax Officer calling upon him to make a return of his income under Section 30 of the Act. Having thus become debarred by the remedies provided by the Act by way of appeal and second appeal etc., he is left without remedy unless he can file a suit against the Government to establish that he is not assessable to income tax. The fact that a person has no other remedy has however been held by the highest authority to be no answer to the objection that no action lies in the ordinary Civil Courts to challenge the act of a statutory authority so long as the latter acted within his authority. In Spooner v. Juddow (4 M. I. A. p. 353) which was an appeal by a Collector of Revenue against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich accrued in the native state of Baroda and were received by him in the native state of Gondal. Such profits are clearly outside the scope of the present Income Tax Act as they were outside the scope of the then existing Act II of 1886. On the facts of the case the Income Tax Officer had no jurisdiction and his fallacious reasoning that the profits were taxable because they accrued on the sale of grain which was grown in British India and exported into Baroda was rejected. See also the observations of the learned Judges in Raja of Ramnad v. Secretary of State for India (I.L.R. 52 M. page 12) if the tax was levied under the Act no doubt a suit would be barred but if the assessment was made in respect of an item of income which is not assessable under the Act, a civil suit would lie to recover it inasmuch as the officer making the assessment had no jurisdiction to make it. In cases in which the Income Tax Officer had to decide whether a certain item of income is assessable or not, his decision cannot be said to be ultra vires even if it is illegal. But where a certain income is outside the scope of the Act, such as agricultural income or income not earned in or brought into Britis ..... 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