TMI Blog1931 (3) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... ny company or any other person fails to make a return under Sub-section (1) or sub Section (2), Section 22, as the case may be, or fails to comply with all the terms of a notice issued under Sub-section (4) of the same section or, having made a return, fails to comply with all the terms of a notice issued under Sub-section (2) of this section, the Income Tax officer shall make the assessment to the best of his judgment and, in the case of a registered firm, may cancel its registration. Provided that the registration of a firm shall not be cancelled until fourteen days have elapsed from the issue of a notice by the Income Tax officer to the firm intimating his intention to cancel its registration: Section 27.--Where an assessee or, in the case of a company, the principal officer thereof, within one month from the service of a notice of demand issued as hereinafter provided, satisfies the Income Tax officer that he was prevented by sufficient cause from making the return required by Section 22, or that he did not receive the notice issued under Sub-section (4), Section 22, or Sub-section (2), Section 23, or that he had not a reasonable opportunity to comply, or was prevented by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of being heard. 3. Now, the questions that arise in the course of assessments to Income Tax are mainly, indeed, almost wholly, questions of fact, and the policy of the legislature, both in India and in England, has been that questions of fact concerning the profits and gains that a person has derived from his property or his business can more readily and effectively be determined by laymen conversant with the circumstances in which the assessee lives and moves and has his being than in proceedings in a Court of law. In England the persons entrusted with the duty of making assessments to Income Tax, generally speaking, are non-official laymen appointed, as commissioners in that behalf for divisions and areas in respect of which they have special knowledge of the local conditions (8 and 9 Geo. 5, Clause 40, Sections 58, 61, 65, 67 to 70). The decision of the commissioners on questions of fact is conclusive if there is any evidence upon which it could be based; but in respect of every assessment an appeal lies to the High Court by way of case stated if it is alleged that the determination of the commissioners is erroneous in point of law (Section 149): Farmer v. Cotton's Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for which no warrant can be found in the language in which its terms are couched. 4. It is the function of a Court however merely to administer the law as it is, and not to attempt by judicial decisions to amend what the Court may rightly or wrongly deem to be faulty legislation. Now, I am not satisfied as to the meaning that the learned Judges intended the word arbitrary to bear on the question propounded. If the word is taken to mean that the Income Tax Officer, regardless of information in his possession, deliberately, recklessly or fraudulently has made an assessment under Section 23(4), which he knows that he was not justified in making, in such circumstances and assuming that the assessee has failed to obtain redress as provided in the Act, I should not be prepared to hold, as at present advised, apart altogether from the provisions of the Income tax Act, that this Court does not possess jurisdiction in virtue of its inherent prerogative powers to order the Income Tax Officer to do his duty. In Dyson v. Attorney-General [1911] 1 K.B. 410 Farwell, L.J., observed that the Courts are the only defence of the liberty of the subject against departmental aggression, and, as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out materials Upon which an accurate assessment can be based? Suppose the assessee has Refused to furnish any statement, or to Produce any materials upon which an assessment can be made, is he for that reason to escape assessment altogether Certainly not. I respectfully agree with the observations of Lord Mackenzie that with regard to the practical difficulty of finding out the amount of profits upon which the Assessment is to be laid, I can only say this: that is not necessary to arrive at any satisfactory Conclusion upon that matter, because it is not a matter with which the Court is concerned. If the Act of Parliament says the amount of profits is to be ascertained, ascertained they must be whether that can be done in a satisfactory Method or not. 9. The estimated assessment is a mere guess. Who is to determine whether the guess is a reasonable one or not? Under Section 23(4) the Income Tax Officer is the persona designata to make the assessment, and from an assessment so made no appeal lies. If an assessment under Section 23(4) is made by the Income Tax Officer mala fide, and is arbitrary in the sense that I first indicated, it cannot tie doubted, I imagine, that the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the power to act or not to act in a particular way. Such a discretion no doubt, must be exercised within the limit to which an honest man competent to the discharge of his office ought to confine himself: Wilson v. Kastall 4 T.R. 757. So in Reg v. Boteler [1864] 33 L.J.M.C. 101 where Justices thought proper not to enforce the law because they considered that the Act in question was unjust in principle, the Court of Queen's Bench compelled them by a peremptory order to do the act which nevertheless the statute had said was in their discretion to do or leave undone (per Lord Halsbury, ibid, p.179). 12. In like manner the Court has a discretion with respect to the payment to costs and as to whether a receiver should or should not be appointed or an injunction granted. It is unnecessary to multiply instances in which the Court is regarded as invested with a discretion which it must exercise judicially. For the purposes of this case it is important to bear in mind that in every case in which a tribunal is bound to exercise a judicial discretion power has been confided to the tribunal to act or refrain from acting in a particular way in certain proved or admitted circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me question of fact as that which fell to be determined by the Income Tax Officer under Section 27, and in such an appeal it is immaterial whether the assessment made under Section 23(4) was valid or not; A.K.R.P.L.A. Chettiar Firm v. Commissioner of Income tax A.I.R. 1931 Rang. 98. The only question of law that could arise is whether there were any materials upon which the Income Tax Officer or the Assistant Commissioner could find that there was no sufficient cause excusing the assesses from complying with the requirements of the law, as prescribed in Section 27. In Commissioner of Income Tax v. A.K.R.P.L.A. Chettyar Firm A.I.R. 1931 Rang. 97 , the Court held that in that case the sole question of law that could arise was: Was there any evidence upon which the Assistant Commissioner could find that there was no sufficient cause preventing the assessee from producing the Shan States account on 20th November 1919. 16. In the circumstances of that case I think that what was there held to be the sole question of law that could arise was correctly stated, but I wish to add that, of course in a proceeding under Section 27 the onus lies upon the assessee, and if the assessee fails ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax officer shall cancel the assessment. He has no option or discretion in the matter. For these reasons, in my opinion, the law on this subject enunciated in The Commissioner of Income tax v. A.R.A.N. Chettyar Firm A.I.R. 1928 Rang. 108, S.P.K.A.A.M. Chettyar Firm v. The Commissioner of Income tax A.I.R. 1930 Rang. 35, P.K.N.P.R. Chettyar Firm v. The Commissioner of Income Tax A.I.R. 1930 Rang. 33 and The Commissioner of Income Tax v. P.K.N.P.R. Chettyar Firm A.I.R. 1930 Rang. 78 was incorrectly laid down, and these cases pro tanto must be regarded as overruled. Under Section 66(2) the assesses as therein provided may require the Commissioner of Income Tax inter alia to refer to the High Court any question of law arising out of an order of the Assistant Commissioner under Section 31. and if the Commissioner refuses to state a case on the ground that no question of law arises under Section 66(3) on the asseasea's application the High Court may require the Commissioner to state the case and to refer it. Inasmuch as the question whether an assessment made by the Income Tax officer under Section 23(4) is valid or not is not a question of law that arises or can arise out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application under Sub-section (2), and which he has refused to refer. Hence, the only matters, which can possibly be brought before the High Court, under Section 66, Sub-sections (2) or (3), are matters arising out of an appellate order of the Assistant Commissioner, passed under Section 31(3), or an appellate order of the Commissioner, passed under Section 32(3). 24. The proviso to Section 30, Sub-section (1) prohibits in terms an appeal against an assessment made under Section 23(4), but an appeal is allowed against an order of the Income Tax officer, passed under Section 27, refusing to cancel an assessment made under Section 23(4) and to make a fresh assessment. Therefore the only question arising in connexion with an assessment under Section 23(4) which can come before the Assistant Commissioner on appeal, is whether the Income Tax officer was justified in refusing to cancel that assessment. 25. It follows that a question arising from the actual assessment under Section 23(4) cannot be brought before the High Court under the provisions of Section 66, Sub-sections (2) or (3) under any circumstances. The only question in any way connected with such an assessment which coul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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