1956 (4) TMI 62 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Income Tax Officer, Ajmer, to issue a notice under Section 34 of the Income Tax Act.
2. Requirement for the Income Tax Officer to refer the dispute about the place of assessment under Section 64(3) of the Income Tax Act.
3. Applicability of the Income Tax Act 1922 to the State of Mewar for the assessment year 1945-46.

Detailed Analysis:

1. Jurisdiction of the Income Tax Officer, Ajmer:
The applicant contended that the Income Tax Officer, Ajmer, lacked jurisdiction under Section 64 of the Income Tax Act to issue the notice. The court examined Section 64, which deals with the place of assessment, and noted that the applicant should have raised the objection to the place of assessment by 1-5-1954, as per the second proviso to Section 64(3). Since the applicant did not object within the stipulated time, the objection was barred, and the Income Tax Officer, Ajmer, was not required to refer the question to higher authorities. The court emphasized that the legislative intent was to limit the time within which such objections could be raised to ensure administrative convenience.

2. Requirement to Refer the Dispute Under Section 64(3):
The applicant argued that the Income Tax Officer should have referred the dispute about the place of assessment under Section 64(3) of the Income Tax Act. The court clarified that Section 64(3) requires such a referral only if the objection is raised within the time allowed by the notice under Section 34. Since the applicant did not raise the objection within the allowed time, the Income Tax Officer was not obligated to refer the matter. The court cited multiple precedents to support this interpretation, including Wallace Brothers & Co. Ltd. v. Commissioner of Income Tax and Talchar Sabai Grass Trading Co. Ltd. v. Commissioner of Income Tax.

3. Applicability of the Income Tax Act 1922 to Mewar:
The applicant claimed that there was no Income Tax in Mewar for the assessment year 1945-46 and that the Income Tax Act 1922 did not apply to the State of Mewar. The court noted that the applicant had already been assessed and had the remedy of appeal under Section 30 of the Income Tax Act, which he was pursuing. The court declined to intervene at this stage, emphasizing that the Income Tax Act provides a comprehensive mechanism for appeals and that the applicant should exhaust these remedies before seeking judicial intervention.

Additional Observations:
The court also addressed the applicant's argument that his fundamental right to hold property was being jeopardized by the tax assessment. The court distinguished this case from the precedent cited by the applicant, Himmatlal Harilal v. State of Madhya Pradesh, by noting that the Income Tax Act does not require the deposit of tax before filing an appeal, unlike the onerous provisions in the Sales Tax Act discussed in Himmatlal Harilal Mehta's case. The court concluded that there was no justification for judicial intervention at this stage, as the applicant had not challenged the constitutionality of any part of the Income Tax Act.

Conclusion:
The application was dismissed with costs awarded to the opposite parties, as the applicant failed to raise the objection to the place of assessment within the stipulated time and had adequate alternative remedies available under the Income Tax Act.