TMI Blog1935 (3) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) for an order directed to the Commissioner of Income Tax, Bengal, requiring him to hear and determine the assessees application of the 15th September, 1934, and/or to state a case, according to law, and (ii) for an injunction restraining the Income Tax Officer and/or the Commissioner from further proceeding under any order purporting to be under section 34 of the Income Tax Act in regard to the assessees income for the Sambat year 1987-88 pending the disposal of this motion. The petitioners are a registered partnership carrying on business in Calcutta and use the Sambat year for accounting in the usual course of their business. The Sambat year 1987-88 corresponds to the period from the 31st October, 1930, to the 9th of November, 1931. Their income during the Sambat year 1987-88, for the purpose of income tax, fell to be assessed during the financial year ending on the 31st of March, 1933. The return which was submitted by the petitioners contained a statement that the firm sustained a loss of over ₹ 8 lakhs. The Income Tax Officer, on the 23rd December, 1933, made an assessment pursuant to Section 23 (3) of the Income Tax Act assessing the petitioners firm a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repared to interfere or to take any action under section 33 or 66 of the Act, at this stage, when the assessment is still before the Income Tax Officer. The assessees may be informed accordingly. The petitioners complained that this method of disposing of this matter was to pass an order prejudicial to the petitioners and they submitted that the Commissioners action was without jurisdiction. They submit that the machinery of the Act, does not give them any method of obtaining relief, and they accordingly applied to this Court for the issue of a writ of certiorari addressed to Commissioner, to have the proceedings paused. In the alternative, they asked for an order under Section 45 of the Specific Relief Act, 1877, requiring the Commissioner to hear the complaint or to state a case. During his reply Mr. Barwell for the petitioners stated that the only relief for which he was now asking in view of the arguments for the Crown and the affidavit of the Commissioner, was for a writ of prohibition. At the outset of the hearing, the Advocate-General, who appeared to oppose the application, submitted a preliminary objection to the effect that the application, as framed would not lie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixty days of the date on which he is served with notice of an order under Section 33 enhancing an assessment or otherwise prejudicial to him an assessee may by application accompanied by a fee of one hundred rupees or such lesser sum as may be prescribed, require the Commissioner to refer to the High Court any question of law arising out of such order and the Commissioner, shall, within sixty days, state a case and refer it to the High Court. There follow two provisos. The first, that a reference shall lie from an order under Section 33 only on a question of law arising out of that order itself, and not on a question of law arising out of a previous order under Section 31 or Section 32, revised by the order under Section 33. The second, that, if in exercise of his power of revision under Section 33, the Commissioner decides the question or rejects the application, or refuses to state the case, the assessee may, within thirty days from the date on which he receives notice of the order passed by the Commissioner, withdraw his application and obtain a refund of his fee. Sub-Section (3) provides that if an application be made under sub-Section (2) and the Commissioner refuses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to order him to state a case . Since the enactment of the new Income Tax Act of 1922 the above case has to some extent become obsolete. The new Act has in Section 66 empowered the Court to require the Commissioner to state a case and refer it and has laid down the limitations under which such a reference shall be made. There is in the framework of the Act provides no specific or adequate remedy. See V. E. A. Chettyar Firm v. Commissioner of Income Tax, The Commissioner of Income Tax, Burms v. C. P. L. E. Firm and Tata Hydro Electric Agency, Limited v. Commissioner of Income Tax, Bombay. This objection is in my opinion valid. I will deal with it more fully in regard to the claim for a writ of prohibition at the conclusion of my judgment. The next contention of the Advocate-General is that there is no power in the High Court to issue a writ against the Income Tax Commissioner. He refers to Clause 4 of the Charter establishing the Supreme Court at Fort William in Bengal. By that clause, the Chief and Puisne Justices are to have such jurisdiction and authority as the Justices of the Court of Kings Bench have, and may lawfully exercise within that part of Great Britain ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nent or a temporary nature..... subject to certain provisos which are cumulative. A question in the appeal was whether the Court had any jurisdiction to order the Chief Revenue Authority to state a case, and from the report it appears, that, before the Board, it was argued that even if the Authority had a duty, the Court could not require him to exercise it ; and for this purpose reliance was placed upon the well-known general purview of Indian legislation which excludes matters of revenue from the consideration of the ordinary Civil Courts, the principle being exemplified in the case of Spooner v. Juddow, and upon Section 106, sub-section (2) of the Government of India Act . LORD PHILIMORE in delivering the opinion of the Board says [I. L. R. 47 Bom. 742 ] :- Upon the point thus broadly stated, their Lordships have no difficulty in pronouncing a decision. To argue that if the legislature says that a public officer, even a Revenue Officer, shall do a thing, and he without cause or justification refuses to do that thing, yet the Specific Relief Act would not be applicable, and there would be no power in the Court to compel him to give relief to the subject, is to state a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d plead. This is not a reference, nor is it an application under Income Tax Act, and neither that Act not the rules under it are applicable. Although, incidentally, the matter concerns income tax, and the provisions of the Income Tax Act have to be considered in coming to a decision, yet this is not an application under Section 66 or any other section of the Income Tax Act. The relief sought is by a writ of certiorari or prohibition which is issued by the Court under the power and authority conferred on it by the Charter. I have already referred to those powers and it was recently decided in In re national Carbon Company, Incorporated, that those powers include the power in a proper case to issue a writ of prohibition. It was there pointed out, that there is, in the Charter, no mention of any authority to issue a writ of prohibition, but PANCKRIDGE, J., sitting on the Original Side of this Court, held in a decision with which I am fully in accord, that there was no intention by Clause 21 of the Charter to curtail the powers, co-extensive with those of the Kings Bench, which had been given by Clause 4 and which include the power to issue a writ of prohibition. In was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be included in notice under sub-section (2) of Section 22, and may proceed to assess or re-assess such income, profits or gains, 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. The section provides for a re-opening of the assessment and empowers the Income Tax authorities to call for books and evidence, but before these powers may be exercised and the assessment that has been closed may be re-opened the essential pre-requisite is that something chargeable to Income Tax has escaped assessment. The notice under Section 34, it will be observed, merely states that the income tax authority has reason to believe that income has escaped assessment. That Mr. Barwell contends, is not sufficient. The Act in many instances, notably in Sections 22 (2), 23 (1) and (2), 23A, 24A, 25, 46 (1) and elsewhere uses expressions such as in the Income Tax Officers opinion , If the Income Tax Officer is satisfied or If the Income Tax Officer has reason to believe or the Income Tax Officer may in his discretion direct, which give the Income Tax Officer a discretion and power to use that discretion. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escaped assessment within the statutory meaning. In In re Satyendramohan Roy Chaudhuri, the question for decision was whether, after an assessment made under section 23(4) of the Act is reopened under Section 34, by reason of certain specified heads of income having been assessed at the option of the assessee, so that his income under one head should be reduced if his income under another head were enhanced. The Commissioner of Income Tax was of opinion that Section 34 : gives no general powers of revision to the Income Tax Officer and that the Income Tax Officer cannot reopen the assessment of the income, profits or gains of an assessee from any source in respect of which he has no reason to believe that the assessee has been under-assessed. In his view, it appears to be the intention of the Act that general powers of revision should only be exercised by the Commissioner acting under Section 33 and that the powers of the Income Tax Officer under Sections 34 and 35 are strictly limited by the terms of the sections themselves. It was held that the assessee had no right to have the whole assessment reopened. In delivering judgment the learned Chief Justice says ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, the Income Tax Officer was empowered to perform the function entrusted to him under Section 22 and Section 34 and for that purpose to come to a finding of fact. I cannot agree that the mere grant of territorial jurisdiction entitles the Income Tax Officer to come to a finding of fact enabling him to reopen an assessment under Section 34. The real question in my opinion is whether the section is so worded as to grant the Income Tax Officer apart from his territorial jurisdiction, the power to determine conclusively the question of fact upon which his jurisdiction depends. The legislature, in my view, has provided that if a certain state of facts exists and is shown to the Income Tax Officer to exist, before he proceeds to reopen the assessment under Section 34, he shall have jurisdiction to take proceedings, but not otherwise. It is not for him to decide whether that state of facts exists, and if he reopens the assessment without its existence he is acting without jurisdiction. I find no words in Section 34 which empower the Income Tax Officer to determine whether the preliminary state of facts exists. In this connection I have been referred to the cases of The Queen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g heard. If that be so the question raised is a question on the construction of the Act and so a question of law, and as it is an order which the assessees consider prejudicial to them, they could have availed themselves of the provisions of Section 66 and had the legality of the order tested by the Court. Their contention that an application under Section 66 would entail delay and that delay is the essence of their complaint, even if correct, does not justify them in neglecting the remedy provided by the Act, and in seeking instead to call in aid the extraordinary powers of the Court. It is evident that the legislature intended the Commissioner to deal with questions that came to his notice under Section 33, and if he passed an order which the assessees considered prejudicial it provided a method by which the legality of the proceedings could be tested. It was obviously their intention that the provision of Section 66 relating to a reference should be strictly complied with, and if there was no such compliance, they intended the Commissioners orders to be final and the jurisdiction of the High Court to be excluded. It is clear from the English decisions that the power of exe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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