TMI Blog1989 (8) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... completion. The frequency of the transactions and the substantial volume of business, make strong and intimate contacts between the petitioner and the foreign customers. This petition is not concerned with other revenue problems arising out of the transactions entered into by the petitioner with such customers, such as whether the advance payment could be treated as the income of the petitioner. The Department thought about "booking" the petitioner for wealth-tax. Proceedings could have been continued without hitch, whatever be its ultimate result, if they had been initiated reasonably early. Delay, however, occurred. The bar of limitation imposed under the statute under which the officials worked made the finalisation of the assessment within a short time thereafter an imperative exercise. It was then a matter of risky brinkmanship. The proceedings relate to the year 1984-85. Under section 17 of the Act, a four year period is the outer limit of time within which the notice is to be issued. The notice was actually issued only on March 28, 1989. The petitioner was directed to submit the return not later than April 30, 1989. The petitioner hastened to the court, protesting abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt principal. However, before a person is so treated as an agent of a non-resident principal, the requirements of section 22 have to be complied with. That requirement is couched in these terms: "22.(1) Where the person liable to tax under this Act resides outside India, the tax may be levied upon and recovered from his agent, and the agent shall be deemed to be, for all the purposes of this Act, the assessee in respect of such tax. (2) Any person employed by or on behalf of a person referred to in sub-section (1) or through whom such person is in the receipt of any income, profits and gains, or who is in possession or has custody of any asset of such person and upon whom the Wealth-tax Officer has caused notice to be served of his intention of treating him as the agent of such person shall, for the purposes of sub-section (1), be deemed to be the agent of such person : Provided that (1) no person shall be deemed to be the agent of another under this section unless he has had an opportunity of being heard by the Wealth-tax Officer as to his being treated as such ; and ... (emphasis supplied) It is submitted that, in the present case, there has not been any determination of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h a person as the agent of the non-resident. It is agreed that no notice as contemplated under section 22(3) had been served on the petitioner. If that be so, exhibit P-1 can be justified only on the basis of section 22(1). Section 22, as noted earlier, permits the levy of tax on the agent. Then comes the rub. The proviso comes into full play and effect. Under its mandate: "(1) no person shall be deemed to be the agent of another under this section unless he has had an opportunity of being heard by the Wealth-tax Officer as to his being treated as such. " (emphasis supplied). The opportunity contemplated under the proviso is not in relation to any contention about the taxability or the quantum thereof. It is in relation to the very idea of treating the resident Indian as an agent of the non-resident foreigner. The type of composite opportunity as suggested by counsel for the Revenue will not fit in with the plain and clear requirement of the proviso. It is not enough that, along with the discussion on the particulars of wealth or the claims of exemptions and allied exercises, the question of agency also is considered. The notice, exhibit P-1, cannot be treated as a notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent will harm or hurt somebody, if, ultimately, before the tax is fixed and the collection is made, he will have the opportunity to disabuse the impressions of the assessing authority in relation to the status question. It is unnecessary to speculate on what Parliament has pointedly provided for. Parliament did require the assessing authority to afford an opportunity to the person concerned to put forward his contentions as against the proposal of the officer to treat him as an agent. What Parliament has directed to be done, the assessing official is bound to, scrupulously follow. To be called as an agent, in certain contexts, may be a matter of pride and privilege for the person so called upon. An agent of a pioneering manufacturer, or an established carrier, or a reputed trading house, may declare his position as agent and exhibit his badge with a sense of pride. There was a time in India, when, in every native State, a "political agent" of the ruling emperor carried with him much of a halo of power and prestige. Even the native ruler himself had to pay obeisance to, if not declare obedience to, such powerful representative. There are, however, situations in which a reference a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he outset, and at the stage of a notice, the court can interfere-was the strenuous plea on the part of the petitioner. It is unnecessary to recollect the very many occasions where the Supreme Court of India had intervened at that very stage. Any student of constitutional law would come with the name of the Bengal Immunity case and the Beedi Supply case, which have been decided in the formative years of the constitutional working of the Indian Republic. The updated enumeration of the cases can now be left to a computer, as the principle is well-settled. Instances are not rare where the court has declined to interfere at that stage, holding that the more appropriate method of ventilating the grievance is by directing the aggrieved party to fight it out along the hierarchy of the statutory authorities. That approach is readily preferred when controversies on factual aspects predominate. In the present case, as noted earlier, a determination and assumption relating to the agency has been already come to. Even the counter-affidavit is indicative of a firm attitude of the respondents on that aspect. This is evident from the sentence reading : "From a reading of sub-section (1) along ..... X X X X Extracts X X X X X X X X Extracts X X X X
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