TMI Blog1952 (9) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... 1942, that this firm was registrable. On the case being taken to the high court at Lahore the decision was against the firm but their Lordship of privy Council ultimately held that the firm was registrable, as it was a valid partnership. This was on the July 29, 1947. For the assessment years 1940-41 to 1944-45 the assessment had been completed but was subsequently cancelled in consequence of the order of the Lahore high Court. It appears that during the pendency of the proceeding which ended with the order in question no assessments were made on the return which had been filed by the firms as constituted except for the year 1941-42. Later on as a result of proceedings being taken under Section 34 of the Income Tax act the total income of the firm except of 1941-42 was assessed in the hands of the Hindu undivided family on the February 14, 1945, but assessment in regard to other year was not made. On the March 16, 1949, Mr. Parshad, Income Tax Officer, issued five separate notices under Section 34 of the act as amended by act XLVIII of 1948 on the said firm and on the Hindu undivided family and Daulat Ram as partners. These several notices were served on the various parties o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31(4) of the Act, but the learned Advocate General read out an order of the Income Tax Officer showing that this relief had been given. The dispute still remains as to the adequacy of the relief, the petitioners claiming much more than has been given to them by the Income Tax Officer. By an order dated the April 9, 1952, the Appellate Assistant Commissioner dismissed the nine appeals which had been brought by the partners on the ground that notice under Section 34 was valid but complaint to the petitioners is that this is in disregard of the order of the Appellate Tribunal dated the October 29, 1951. It is submitted by the petitioners that the Assistant Income Tax Commissioner has failed to do what in law he was bound to do, i.e., that he could not merely dismiss but he had to carry out the orders of the Appellate Tribunal. On the March 26, 1951, Mr. Parshad, Income Tax Officer, issued nine several notices under Section 34 of the Income Tax Act as amended in 1948 in respect of three years of assessment 1942-43, 1943-44 and 1944-45, three each on the firm and three each on the two partners of the firm. This notice is annexure C attached to the petition and is based on under-as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no escapement of Income Tax as there had already been an assessment and the matter had already been decided by the Assistant Income Tax Commissioner at a pervious date. We now come to the years of assessment 1945-46, 1946-47 and 1947-48. On the May 24, 1943, the petitioner decided to effect a partial partition of the business of the firm and all the members of the undivided Hindu family including Daulat Ram became partners to the extent of two annas share each and necessary adjustments were made in the books of account. On the June 27, 1947, the Income Tax Officer accepted the facts partial partition and granted registration to the firm under Section 26A of the Act in respect of the year of assessment 1945-46, and on the July 6, 1949, assessments for the year 1945-46 were made on the individual partners of the firm. On the August 12, 1949, the Income Tax Officer cancelled the registration on the ground as stated in paragraph 24 of the petition that one of the partners Brij Behari Lal was a minor at the date of the execution of the partnership deed and therefore the instrument of partnership was void ab initio. This, the petitioners submit, was an error of law apparent on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter his refusal to register the firm the Income Tax Officer made an order of assessment on the firm and issued notices of demand on the Hindu undivided family for 14 annas of the profits and upon Daulat Ram for 2 annas of the profits, as partners under Section 23(5)(b) of the Income Tax Act. This was by an order annexure F. A similar order was made in regard to the year of assessment 1946-47 on the March 26, 1951. On the March 27, 1951, the Income Tax Officer made orders of assessment in regard to the same income on the individual partners of the newly constituted firm, i.e., the eight partners, and served notices of demand on them. This order is annexure G attached to the petition. The respondents submit in regard to this that this is a precautionary assessment and no demand has been made on the eight petitioners in regard to this assessment and it would be efficacious only if the order passed in regard to registration is not upheld. On the March 28, 1951, a similar order was made in respect of the assessment year 1947-48 and is marked annexure H. The petitioner submit that they have either individually or as members of the undivided Hindu family paid large sums of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment as made by the Income Tax Officer is final and conclusive except as challenged in the manner provided by the Income Tax Act; (ii) the Act gives adequate and effective remedy to the assessee; (iii) by interfering under Article 226 at a stage previous to that contemplated by the Act when appeals are pending the assessee will be enable to circumvent such orders as may be passed by an Assistant Income Tax Commissioner on appeal to increase the assessments or order fresh assessments and thus the limitation of time provided under Section 34 will bar the powers of the Income Tax authorities to levy proper taxation; (iv) by allowing the short circuiting of the procedure given by the Act the consequences to the collection of revenues and the administration of the country will be disastrous. Mr. Mitra for the petitioners has submitted in regard to the assessments for the years 1942-43, 1943-44, and 1944-45 that notices under Section 34 and assessments thereupon are without jurisdiction because :- (i) the notices were issued purporting to be under the amended Section 34 - amended by Act XLVIII of 1948 which has no retrospective effect; (ii) they were barred by time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court. At that time the Constitution had not come into force and there was also the prohibition under Section 226 of the Government of India Act of 1935. After referring to various authorities I said :- Relying on these observations of their Lordships, I am of the opinion that if the assessment is determined by the Income Tax Officer the jurisdiction of the civil Court to entertain a suit and of any other Court to entertain any other proceedings is excluded, and as I have said before, their Lordship were of the view that a proper machinery having been provided under the Income Tax Act the legality or illegality of the assessment is to be determined by setting in motion the machinery provided by the Income Tax Act and not through any other Tribunal. I also said that under the law in England where there is a right of appeal and an assessee fails to avail himself of it he cannot afterwards pray for a writ to recover the money over-paid. In the next case U. C. Rekhi v. The Income Tax Officer which was decided by another Bench consisting of Harnam Singh, J., and myself, a notice had been issued under Section 34 of the Income Tax Act and an objection was taken that the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Investigation commission. There the General Government referred the case of K. S. Rashid Ahmed and others to the Income Tax Investigation Commissioner for investigation and report and an application was brought under Article 226 of the Constitution for the quashing of that order and orders consequent thereupon. It was held after consideration of a large number of Indian and English cases :- The observations of their Lordships of the Privy Council seem to show that full effect has to be given to the words used in the section, and as Section 9 bars the jurisdiction of any Court to scrutinize except in the manner provided in sub-section (5) of Section 8 the acts or proceedings of the commission or of any authorised official, this Court should not issue a writ of certiorari, and this argument of counsel must, in my opinion, prevail. Counsel for the petitioners argued that as the Constitution had come into force later Section 9 must be held to have been repealed to that extent. Quite recently in an unreported case Civil Writ No. 29 of 1951, Vidya Parkash v. The state of Punjab, which is a case under the Punjab Sales Tax Act, a similar view was taken by the learned Chief J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst case which deals with this matter is Allen v. Sharp. There it was held that an assessment under the Assessed Tax Acts is final and conclusive, unless appealed against in the manner provided by the statute and therefore the decision of the assessor that the assessee was a horse-dealer, however erroneous, could not be questioned in an action. The argument of Sir F. Thesiger was that the plaintiff was not liable to be assessed to the duty imposed on horse-dealers. He was neither a horse-dealer in fact, nor within the meaning of the statutes relating to assessed taxes. Park, B., said at page 363 of 2 Exchequer or 533 of 154 English Reports :- On a careful consideration of these Acts of Parliament, they seem to me to differ from the statute of Elizabeth, as to poor rate, and that the Legislature intended that the assessment of assessors appointed by the Commissioners should be final and conclusive, unless appealed from, in the first place, to the Commissioners, and further, it necessary, to the judges of the superior Courts. It would be singular if there were no such provision; for, what a flood of litigation would follow, if every subject of the Crown, who was dissatisfied wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Legislature are establishing such a tribunal or body with limited jurisdiction, they also have to consider, whatever jurisdiction they give them, whether there shall be any appeal from their decision, for otherwise there will be none. In the second of the two cases I have mentioned it is an erroneous application of the formula to say that the tribunal cannot give themselves jurisdiction by wrongly deciding certain facts to exist, because the Legislature gave them jurisdiction to determine all the facts, including the existence of the preliminary facts on which the further exercise of their jurisdiction depends; and if they were given jurisdiction so to decide, without any appeal being given, there is no appeal from such exercise of their jurisdiction. This matter again came up for determination in The King v. Bloomsbury Income Tax Commissioners. Lord Reading, C.J., referred to the cases that I have mentioned above and said at page 784 :- In my judgment this dictum states accurately the principle applicable to such cases. His Lordship again said at page 784 :- In my judgment the decision and reasoning of Parke, B., and the other learned Judges have a direct b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground for saying that the Additional Commissioners have exceeded, or that the General Commissioners are about to exceed, their jurisdiction. In Rex v. Swansea Income Tax Commissioners, which is the next case referred to by counsel, the applicants were assessed to Income Tax by the General Commissioners under Case 1 of Schedule D, Income Tax Act of 1918. At the time the assessment was made it was impossible for the applicants to ascertain whether there would be a balance of profits for the year in question and therefore no notice of appeal against the assessment was given, and after the time for appealing had expired the applicants alleged that they had ascertained that their business had resulted in a loss, and they obtained a rule for a writ of prohibition. It was held that prohibition would not lie to the General Commissioners, who had acted in accordance with their statutory duty in making the assessment. At page 256 Lord Hewart, C.J., said :- The whole argument falls to the ground unless it is found or admitted that in the year referred to there was a loss, and it is suggested, with an appearance of seriousness, that this Court is the tribunal which should undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very, the power to deal with the assessment. If he honestly comes to the conclusion that a mistake has been made, it matters nothing so far as his jurisdiction to amend the assessment is concerned, that he may have come to an erroneous conclusion, whether on law or on fact. His jurisdiction to amend is correctly and rightly exercised, even though he has taken an erroneous view of the law with regard to the mistake in allowance that has been made. And he further said :- So that, whether one looks at the application for a writ of prohibition or the application for a writ of certiorari, one finds that in each case jurisdiction is given to Surveyor to investigate the matters and to come to a conclusion, whether it is upon a matter of law or upon a matter of fact. That being so, it seems to me that both these applications necessarily fail. In Rex v. The General Commissioners of Income Tax for the Division of St. Marylebone, an application was made for a rule nisi on the grounds :- (1) that the petitioner was not ordinarily resident within the Commissioners division when any of the assessments were made, (2) as regards the year 1920-21 his liability had already been fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of procedure and into enquiries of the same kind, into the same matter, conducted by the same official, and without any advantage to the parties. A construction so unreasonable and unpractical ought not to be preferred when another construction is open. Accordingly their Lordships are of opinion that the Income Tax Officer is not required by the section to convene the assessee, or to intimate to him the nature of the alleged escapement, or to give him an opportunity of being heard, before he decides to operate the powers conferred by the section. In the opinion of their Lordships, the view which the learned Judges of the High Court have taken of the section is too narrow, and the notice sent to respondents on February 8, 1934, is in form a competent preliminary to a new assessment. The words used in Section 34 before the amendment of 1948 were :- If in consequence of definite information which has come into his possession the Income Tax Officer discovers that......... and by the amendment of 1948 the words are :- If the Income Tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee........ . Both the words di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of construction and, indeed, it may be added that, if there were no such machinery, and if the section affected to preclude the High Court in its ordinary civil jurisdiction from considering a point of ultra vires, there would be a serious question whether the opening part of the section, so far as it debarred the question of ultra vires being debated, fell within the competence of the legislature. In their Lordships view it is clear that the Income Tax Act, 1922, as it stood at the relevant date, did give the assessee the right effectively to raise in relation to an assessment made on him the question whether or not a provision in the Act was ultra vires. Under Section 30, an assessee whose only ground of complaint was that effect had been given in the assessment to a provision which he contended was ultra vires might appeal against the assessment. If he were dissatisfied with the decision on appeal - the details relating to the procedure are immaterial - the details relating to the procedure are immaterial-assessee could ask for a case to be stated on any question of law for the opinion of the High Court and, if his request were refused, he might apply to the High Court for an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code of Income Tax law for the purpose of showing that it exhaustively defines the obligations and remedies of the taxpayer. It would be wholly incompatible with this that he should have a collateral right, necessarily vague and ill-defined, founded on the principles of equity and good conscience. Their Lordships are of opinion that the only remedies open to the taxpayer, whether in regard to appeal against assessment or to claim for refund, are to be found within the four corners of the Act. This view of his rights harmonizes with the provision of Section 67, to which reference has already been made, that no suit shall be brought in any civil Court to set aside or modify any assessment made under the Act. It is the Act which prescribes both the remedy and the manner in which it may be enforced. In another case Rai Brij Raj Krishna v. K. S. Shaw and Brothers, their Lordships of the Supreme Court again relied upon Reg v. Commissioners for Special Purposes of the Income Tax, and Colonial Bank of Australasia v. Willan, and held that no suit could lie to set aside an order of Controller under the Bihar Buildings (Lease, Rent and Eviction) Control Act of 1947, because the Controlle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perform the duty or discharge the liability, no remedy can be taken but the particular remedy prescribed by the statute. The learned Judge relied upon the observation of Lord where Esher, M.R., in The Queen v. County Court Judge of Essex and Clarke, where the learned Master of the Rolls said at page 707 :- The ordinary rule of construction therefore applies...... that where the legislature has passed a new statute giving a new remedy, that remedy is the only one which can be pursued. I shall now refer to English cases upon which reliance was placed by the learned Advocate-General. He referred to the Bloomsburys case. Sir John Simon, Attorney-General, who appeared for the Commissioners of Inland Revenue there, argued :- That the decision of the Additional Commissioners can only be challenged by an appeal to the General Commissioners whose decision is final, subject to the right of the person assessed to require the statement of a case. Lord Chief Justice Reading said at page 786 :- This proposition is really not in dispute and indeed it has been affirmed in Rex v. General Commissioners of Taxes for Clerkenwell where it was held that in these circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to be made under this Act shall, against all persons, be conclusive evidence that the forfeiture therein referred to has taken place, and no proceeding purporting to be taken under this Act shall be called in question by any Court, except the High Court on such application as aforesaid and on civil or criminal proceeding, except as provided by this Act, shall be instituted against any person for anything done or in good faith intended to be done under this Act. The words of Section 67 of the Income Tax Act are no doubt not as wide as that the Section 67 of the Press Act, but even in Income Tax cases which were decided by the Privy Council their Lordships laid down a similar rule. In Raleigh Investment Company v. Governor General in Council their Lordships said :- Jurisdiction to question the assessment otherwise than by use of the machinery expressly provided by the Act would appear to be inconsistent with the statutory obligation to pay arising by virtue of the assessment. In the Tribune case their Lordships observed :- It is the Act which prescribes both the remedy and the manner in which it may be enforced. A similar view was taken by the Madras High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that time being pursued by the applicants in that case. Mr. Mitra has referred to certain cases in which it was held that the finding of an appeal is no bar to a writ of prohibition. He relied on White v. Steel, where it was so held; Worthington v. Jeffries, The King v. North, where Scrutton and Atkin, L.JJ., made observations supporting this contention, and Rex v. Postmaster-General. He also referred to Rashid Ahmad v. The Municipal Board, Kairana, where it was held that an appeal under Section 318 of the U.P. Municipalities Act was not in the circumstances of that case an adequate legal remedy the existence of which would disentitle the petitioner for maintaining an application under Article 32 of the Constitution of India. He then referred to a judgment of this Court, Wanchoo v. The Collector of Delhi where a writ of prohibition was issued in spite of the fact that an appeal was pending with the Chief Commissioner. In the case decided by the Supreme Court as also by this Court writs of prohibition were issued because in both those cases a right of appeal was not considered to be an adequate remedy. The Advocate-General has submitted that whatever be the law in regard to app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive in effect. He relied on Commissioner of Income Tax, Bengal v. Mahaliram Ramjidas, Abbott v. The Minister for Lands, and he also referred to Odgers on the Construction of Deeds and Statutes at page 195 where the learned author said :- A new class of legislation, namely, legislation against tax evasion, which is free from any presumption against retrospective effect is indicated by the judgment of the Court of Appeal delivered by Lord Greene in Lord Howard de Walden v. Inland Revenue Commissioners. The fact that the section (Section 18 of the Finance Act, 1936) has to some extent a retroactive effect appears to us of no importance when it is realised that the legislation is a move in a long and fiercely contested battle with individuals who well understand the rigour of the contest. Reference was also made by Mr. Sikri to Section 35(1) proviso (2) which showed that that section is retroactive. Mr. Mitra next contended that the various notices complained of in regard to the years 1942-43 to 1944-45 were without jurisdiction for reasons which I have set out in the very beginning, i.e., the notices having been issued without the proper approval of the Commissioner, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants construction, to determined whether jurisdiction existed to embark on the enquiry at all. Jurisdiction is made to depend not on subject-matter, but on the correctness of the suitors contention as respect subject-matter. The language of the section is inapt to justify any such capricious method of determining jurisdiction. It follows therefore that Section 34 gives to the Income Tax Officer, if he has reason to believe that there has been an escapement, power to take action. And if in coming to this conclusion he has taken an erroneous view of the law or of the facts it does not affect his jurisdiction; because the law imposes on him the statutory duty to determine the liability of the assessee to assessment including the question of escapement of taxes. A further argument has been raised by the learned Advocate-General that by interfering with the assessment at this stage we shall be assisting a dishonest and defaulting assessee. If a petitioner is entitled to certain protection given by law the Court will not hesitate to extend to him even though he may not be a good citizen so long as he has not suppressed material facts in his petition. The morals of a citizen are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It cannot be said that they affect the jurisdiction of the Income Tax Officers. The Income Tax Officer refused registration because he was of the opinion that there was no genuine firm which had been proved to be in existence. It may be that the Income Tax Officers opinion is wrong on this point. The determination of that again is for the Income Tax Officer to make and no objection can be taken on the ground of jurisdiction in regard to this matter. The next submission of Mr. Mitra was that there has been a second assessment made on the petitioners in spite of the fact that registration has been refused. That appears to be a precautionary assessment the efficacious existence of which will depend upon the determination of the question whether there has been a partition of the various members of the joint Hindu family and whether a genuine firm of eight members in place of two partners has been formed. In my opinion all these are questions of law which fall within the rule laid down by these are of the Privy Council in the Raleigh Investments case. I would therefore dismiss the petition and discharge the rule. The opposite party will have their costs which I assessee at ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich ended with the order in question no assessments were made on the return which had been filed by the firms as constituted except for the year 1941-42. Later on as a result of proceedings being taken under Section 34 of the Income Tax act the total income of the firm except of 1941-42 was assessed in the hands of the Hindu undivided family on the February 14, 1945, but assessment in regard to other year was not made. On the March 16, 1949, Mr. Parshad, Income Tax Officer, issued five separate notices under Section 34 of the act as amended by act XLVIII of 1948 on the said firm and on the Hindu undivided family and Daulat Ram as partners. These several notices were served on the various parties on the of April 2, 1949. Under protest return were made on the June 13, 1949, which showed that an income of ₹ 7,07,000 was excluded from earlier returns. These secreted incomes were thus disclosed. On the March 15, 1950, the Income Tax Officer made five separate orders of assessment under Section 23(5) read with Section 34 of the Income Tax act including the undisclosed income (upon the firm and carried the same income in the hands of the partners thereof in accordance with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laint to the petitioners is that this is in disregard of the order of the Appellate Tribunal dated the October 29, 1951. It is submitted by the petitioners that the Assistant Income Tax Commissioner has failed to do what in law he was bound to do, i.e., that he could not merely dismiss but he had to carry out the orders of the Appellate Tribunal. On the March 26, 1951, Mr. Parshad, Income Tax Officer, issued nine several notices under Section 34 of the Income Tax Act as amended in 1948 in respect of three years of assessment 1942-43, 1943-44 and 1944-45, three each on the firm and three each on the two partners of the firm. This notice is annexure C attached to the petition and is based on under-assessment. Objection is taken to the legality of these notices on four grounds which are given in paragraph 17 of the petition and are as follows :- (a) That Section 34 as amended in 1948 has no application to assessments for the years 1942-43, 1943-44 and 1944-45. (b) That assuming but not admitting that the said amendment applies to the said years of assessments, the condition precedent to the amended section had not been fulfilled. (c) That the said notices were in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tments were made in the books of account. On the June 27, 1947, the Income Tax Officer accepted the facts partial partition and granted registration to the firm under Section 26A of the Act in respect of the year of assessment 1945-46, and on the July 6, 1949, assessments for the year 1945-46 were made on the individual partners of the firm. On the August 12, 1949, the Income Tax Officer cancelled the registration on the ground as stated in paragraph 24 of the petition that one of the partners Brij Behari Lal was a minor at the date of the execution of the partnership deed and therefore the instrument of partnership was void ab initio. This, the petitioners submit, was an error of law apparent on the face of the record. To this part of the petitioners case the respondents reply is that the Income Tax Officer was entitled to cancel the registration as he came to know the real facts and did not consider that in fact there was a partition or that there was a real new firm which had come into existence. They also submit that the order passed by the Income Tax Officer cancelling the registration is prior to the coming into force of the Constitution and therefore this Court cannot interf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in regard to the same income on the individual partners of the newly constituted firm, i.e., the eight partners, and served notices of demand on them. This order is annexure G attached to the petition. The respondents submit in regard to this that this is a precautionary assessment and no demand has been made on the eight petitioners in regard to this assessment and it would be efficacious only if the order passed in regard to registration is not upheld. On the March 28, 1951, a similar order was made in respect of the assessment year 1947-48 and is marked annexure H. The petitioner submit that they have either individually or as members of the undivided Hindu family paid large sums of Income Tax which are set out in annexure J and they also state that they have filed appeals in regards to various assessment years on the basis of being partners in the original registered firm consisting of Hindu undivided family and Daulat Ram. In annexure L which has been filed by the petitioners it is stated that on the calculations made by the Income Tax Officer ₹ 3,92,000 is the disputed amount which the Income Tax Officer is claiming and the liability for which the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssments and thus the limitation of time provided under Section 34 will bar the powers of the Income Tax authorities to levy proper taxation; (iv) by allowing the short circuiting of the procedure given by the Act the consequences to the collection of revenues and the administration of the country will be disastrous. Mr. Mitra for the petitioners has submitted in regard to the assessments for the years 1942-43, 1943-44, and 1944-45 that notices under Section 34 and assessments thereupon are without jurisdiction because :- (i) the notices were issued purporting to be under the amended Section 34 - amended by Act XLVIII of 1948 which has no retrospective effect; (ii) they were barred by time as they were beyond the period prescribed by Section 34; (iii) there was no escapement of tax due to any failure on the part of assessees, but if there was any escapement at all it was due to the Income Tax Officers not accepting the contention of the assessees for registration of the firm consisting of Hindu undivided family and Daulat Ram; (iv) that the Assistant Commissioner had already held against the Income Tax Department in regard to the notice being bad and being barred b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, their Lordship were of the view that a proper machinery having been provided under the Income Tax Act the legality or illegality of the assessment is to be determined by setting in motion the machinery provided by the Income Tax Act and not through any other Tribunal. I also said that under the law in England where there is a right of appeal and an assessee fails to avail himself of it he cannot afterwards pray for a writ to recover the money over-paid. In the next case U. C. Rekhi v. The Income Tax Officer which was decided by another Bench consisting of Harnam Singh, J., and myself, a notice had been issued under Section 34 of the Income Tax Act and an objection was taken that the Income Tax Officer had no jurisdiction to proceed to assessment as the individual to be assessed was in fact not chargeable to Income Tax, that he was not chargeable to Income Tax within the Union of India because he was not residing there at all material times, that the Income Tax Officer could not give himself jurisdiction by wrongly deciding that the individual was chargeable, that the individual was not bound to challenge the decision of the Income Tax officer by way of appeal and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be given to the words used in the section, and as Section 9 bars the jurisdiction of any Court to scrutinize except in the manner provided in sub-section (5) of Section 8 the acts or proceedings of the commission or of any authorised official, this Court should not issue a writ of certiorari, and this argument of counsel must, in my opinion, prevail. Counsel for the petitioners argued that as the Constitution had come into force later Section 9 must be held to have been repealed to that extent. Quite recently in an unreported case Civil Writ No. 29 of 1951, Vidya Parkash v. The state of Punjab, which is a case under the Punjab Sales Tax Act, a similar view was taken by the learned Chief Justice and Falshaw, J. There several applications had been made by various persons selling Indian food preparations and it was contended that they were not liable to sales tax as in the schedule to the Act among articles exempted from tax under Section 6 of the Act Indian food preparations were included. The learned Judges refused to go in to the merits of the applications because under Section 20, 21 and 22 of the Act there was provision not only for appeal and revision but also for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se-dealer in fact, nor within the meaning of the statutes relating to assessed taxes. Park, B., said at page 363 of 2 Exchequer or 533 of 154 English Reports :- On a careful consideration of these Acts of Parliament, they seem to me to differ from the statute of Elizabeth, as to poor rate, and that the Legislature intended that the assessment of assessors appointed by the Commissioners should be final and conclusive, unless appealed from, in the first place, to the Commissioners, and further, it necessary, to the judges of the superior Courts. It would be singular if there were no such provision; for, what a flood of litigation would follow, if every subject of the Crown, who was dissatisfied with judgment of the assessors, had a right to dispute the property of their assessment in an action against the collector. Without referring to the statutes, I should say, a priori, that the object of the Legislature was to make the decision of the assessor final and binding, unless disputed in the manner pointed out. On reading the statutes, I come to the same conclusion. By the 9th section of the 43 Geo. 3, c. 99, the Commissioners are to meet and appoint assessors, who are to bring in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermine all the facts, including the existence of the preliminary facts on which the further exercise of their jurisdiction depends; and if they were given jurisdiction so to decide, without any appeal being given, there is no appeal from such exercise of their jurisdiction. This matter again came up for determination in The King v. Bloomsbury Income Tax Commissioners. Lord Reading, C.J., referred to the cases that I have mentioned above and said at page 784 :- In my judgment this dictum states accurately the principle applicable to such cases. His Lordship again said at page 784 :- In my judgment the decision and reasoning of Parke, B., and the other learned Judges have a direct bearing upon the present application for prohibition. In my view an examination of the Income Tax Acts shows that the scheme of the Legislature is to entrust the decision of the facts to a tribunal of persons specially selected for the locality, and who are often in a better position than the Courts to determine the questions of fact, sometimes very complicated, which may arise. The exigencies of the state require that there should be a tribunal to deal expeditiously and at comparati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts for the year in question and therefore no notice of appeal against the assessment was given, and after the time for appealing had expired the applicants alleged that they had ascertained that their business had resulted in a loss, and they obtained a rule for a writ of prohibition. It was held that prohibition would not lie to the General Commissioners, who had acted in accordance with their statutory duty in making the assessment. At page 256 Lord Hewart, C.J., said :- The whole argument falls to the ground unless it is found or admitted that in the year referred to there was a loss, and it is suggested, with an appearance of seriousness, that this Court is the tribunal which should undertake the task of deciding whether there has been a loss or not, and for that purpose the Court ought to direct an issue of order pleadings to be delivered. In other words, the argument involves this, that this court is to undertake the very task which in the clearest language the statute has imposed upon the General Commissioners. That argument is put forward, paradoxically enough in an argument for a writ of prohibition which is based upon a lack, or an question which under the statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether one looks at the application for a writ of prohibition or the application for a writ of certiorari, one finds that in each case jurisdiction is given to Surveyor to investigate the matters and to come to a conclusion, whether it is upon a matter of law or upon a matter of fact. That being so, it seems to me that both these applications necessarily fail. In Rex v. The General Commissioners of Income Tax for the Division of St. Marylebone, an application was made for a rule nisi on the grounds :- (1) that the petitioner was not ordinarily resident within the Commissioners division when any of the assessments were made, (2) as regards the year 1920-21 his liability had already been finally determined, and (3) as regards subsequent year he had since December 31, 1920, been residing and was domiciled outside United Kingdom. It was held that the liability of an assessee to assessment depends on questions of fact which it was the Commissioners function to determine. Quite recently in Ebrahim Aboobakar v. The Custodian General of Evacuee Property, New Delhi, the Supreme Court have had occasion to consider the observations of Lord Esher, M.R., in Reg v. Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, before he decides to operate the powers conferred by the section. In the opinion of their Lordships, the view which the learned Judges of the High Court have taken of the section is too narrow, and the notice sent to respondents on February 8, 1934, is in form a competent preliminary to a new assessment. The words used in Section 34 before the amendment of 1948 were :- If in consequence of definite information which has come into his possession the Income Tax Officer discovers that......... and by the amendment of 1948 the words are :- If the Income Tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee........ . Both the words discovers as well as reason to believe have been interpreted by the learned Judges in other cases. The word discover is applied to the Surveyor was considered in Rex v. Kensington Income Tax Commissioners. It means, per Bray, J., come to the conclusion from the examination he makes and from any information he may choose to receive , per Avory, J., has reason to believe , and per Lush, J., finds or satisfied himself. In Nakkuda Ali v. Jayaratne their Lordships of the Privy Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant date, did give the assessee the right effectively to raise in relation to an assessment made on him the question whether or not a provision in the Act was ultra vires. Under Section 30, an assessee whose only ground of complaint was that effect had been given in the assessment to a provision which he contended was ultra vires might appeal against the assessment. If he were dissatisfied with the decision on appeal - the details relating to the procedure are immaterial - the details relating to the procedure are immaterial-assessee could ask for a case to be stated on any question of law for the opinion of the High Court and, if his request were refused, he might apply to the High Court for an order requiring a case to be stated and to be refereed to the High Court (see Section 30 and Secretary of State for India v. Meyyappa Chettiar). It cannot be doubted that included in the questions of law which might be raised by a case stated is any question as to the validity of any taxing provision in the Income Tax Act to which effect has been given in the assessment under review. Any decision of the High Court on that question of law can be reviewed on appeal. Effective and appropria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. This view of his rights harmonizes with the provision of Section 67, to which reference has already been made, that no suit shall be brought in any civil Court to set aside or modify any assessment made under the Act. It is the Act which prescribes both the remedy and the manner in which it may be enforced. In another case Rai Brij Raj Krishna v. K. S. Shaw and Brothers, their Lordships of the Supreme Court again relied upon Reg v. Commissioners for Special Purposes of the Income Tax, and Colonial Bank of Australasia v. Willan, and held that no suit could lie to set aside an order of Controller under the Bihar Buildings (Lease, Rent and Eviction) Control Act of 1947, because the Controller was entrusted with a jurisdiction including the jurisdiction to determine whether there is non-payment of rent or not as well as the jurisdiction, on finding that there is non-payment of rent, to order eviction of a tenant. Therefore, even if a Controller has wrongly decided the question whether there has been non-payment of rent, his order for eviction on the ground that there has been non-payment of rent cannot be questioned in a civil Court. From a perusal of all these cases I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pursued. I shall now refer to English cases upon which reliance was placed by the learned Advocate-General. He referred to the Bloomsburys case. Sir John Simon, Attorney-General, who appeared for the Commissioners of Inland Revenue there, argued :- That the decision of the Additional Commissioners can only be challenged by an appeal to the General Commissioners whose decision is final, subject to the right of the person assessed to require the statement of a case. Lord Chief Justice Reading said at page 786 :- This proposition is really not in dispute and indeed it has been affirmed in Rex v. General Commissioners of Taxes for Clerkenwell where it was held that in these circumstances the applicants remedy is by appeal and not by prohibition. An argument closely resembling that of the present applicant was there advanced in support of an application for prohibition against the Commissioners. It was there contended that the Commissioners had only acquired jurisdiction to assess the duty by an erroneous finding of facts and therefore that the prohibition should issue, but the Court of Appeal discharged the rule. They held that the remedy was by appeal on the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 67 of the Income Tax Act are no doubt not as wide as that the Section 67 of the Press Act, but even in Income Tax cases which were decided by the Privy Council their Lordships laid down a similar rule. In Raleigh Investment Company v. Governor General in Council their Lordships said :- Jurisdiction to question the assessment otherwise than by use of the machinery expressly provided by the Act would appear to be inconsistent with the statutory obligation to pay arising by virtue of the assessment. In the Tribune case their Lordships observed :- It is the Act which prescribes both the remedy and the manner in which it may be enforced. A similar view was taken by the Madras High Court in Secretary of State for India in Council v. Meyyappa Chettiar as also by the Lahore High Court in Sultan Ali v. Nur Hussian. An examination of the scheme of the Act and the words used in Section 34 of the Act and the various cases that I have referred to above show that the legislature has entrusted the determination of facts and of law to the Income Tax Officers. A particular machinery has been set up under the Act by the use of which alone total assessable income for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l under Section 318 of the U.P. Municipalities Act was not in the circumstances of that case an adequate legal remedy the existence of which would disentitle the petitioner for maintaining an application under Article 32 of the Constitution of India. He then referred to a judgment of this Court, Wanchoo v. The Collector of Delhi where a writ of prohibition was issued in spite of the fact that an appeal was pending with the Chief Commissioner. In the case decided by the Supreme Court as also by this Court writs of prohibition were issued because in both those cases a right of appeal was not considered to be an adequate remedy. The Advocate-General has submitted that whatever be the law in regard to appeals in other cases, in the matter of Income Tax the right to appeal as well as the pendency of appeals would be a bar because an appeal once filed cannot be withdrawn and therefore a finding will have to be given by the authorities to which an appeal is taken as to the liability and propriety of the assessment and therefore this Court should not allow the jurisdiction of those tribunals to be taken away particularly when as a result of an appeal the assessment can be enhanced, modifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue Commissioners. The fact that the section (Section 18 of the Finance Act, 1936) has to some extent a retroactive effect appears to us of no importance when it is realised that the legislation is a move in a long and fiercely contested battle with individuals who well understand the rigour of the contest. Reference was also made by Mr. Sikri to Section 35(1) proviso (2) which showed that that section is retroactive. Mr. Mitra next contended that the various notices complained of in regard to the years 1942-43 to 1944-45 were without jurisdiction for reasons which I have set out in the very beginning, i.e., the notices having been issued without the proper approval of the Commissioner, the notices being barred by time, the escapement of Income Tax, if any, being due not to the failure of the assessee but because the Income Tax Officer refused to accept the registrations firms and because the Dominion Legislature could not legislate in regard to territory which was not its own and in regard to time when the Legislature itself did not exist. These and the matters which I have referred to above, i.e., cases covered by the Maharaja of Pithapurams case and others, the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd if in coming to this conclusion he has taken an erroneous view of the law or of the facts it does not affect his jurisdiction; because the law imposes on him the statutory duty to determine the liability of the assessee to assessment including the question of escapement of taxes. A further argument has been raised by the learned Advocate-General that by interfering with the assessment at this stage we shall be assisting a dishonest and defaulting assessee. If a petitioner is entitled to certain protection given by law the Court will not hesitate to extend to him even though he may not be a good citizen so long as he has not suppressed material facts in his petition. The morals of a citizen are no criterion for giving of redress to which he is by the law of the land entitled. A consideration of the authorities referred to above shows that :- (1) the Income Tax Act has entrusted to the Income Tax Officer the decision of the facts and the law to decide whether the provisions of Section 34 are applicable; (2) the exigencies of the State require that there should be a tribunal to expeditiously and at a small expense decide questions which arise in the matter of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a was that there has been a second assessment made on the petitioners in spite of the fact that registration has been refused. That appears to be a precautionary assessment the efficacious existence of which will depend upon the determination of the question whether there has been a partition of the various members of the joint Hindu family and whether a genuine firm of eight members in place of two partners has been formed. In my opinion all these are questions of law which fall within the rule laid down by these are of the Privy Council in the Raleigh Investments case. I would therefore dismiss the petition and discharge the rule. The opposite party will have their costs which I assessee at ₹ 1000. Nothing that I have said in this judgment will effect the rights of the petitioners or of the Income Tax Department in regard to the assessments for the various years and I have no doubt that till the matter is decided by the appellate authority the petitioners will not be made liable for payment of the sum of ₹ 3,92,000 which is a disputed assessment. Ranbir Chand Soni, J. I agree. Writs of mandamus are issued in proper cases to fill in gaps where no legal reme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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