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Jurisdiction of the Income-tax Officer under section 34 of the Indian Income-tax Act, 1922, in relation to the former State of Raigarh post its merger with Central Provinces and Berar. Analysis: The judgment pertains to the jurisdiction of the Income-tax Officer under section 34 of the Indian Income-tax Act, 1922, concerning the former State of Raigarh following its merger with Central Provinces and Berar. The case involved the reassessment of the assessee's income for the assessment years 1946-47 and 1947-48. The primary contention was whether the proceedings initiated by the Income-tax Officer under section 34 were valid without the sanction of the Commissioner of Income-tax as required by the amended provisions. The Tribunal accepted the assessee's plea that the proceedings were without jurisdiction due to the lack of required sanction. The central issue revolved around the applicability of section 34 of the Indian Income-tax Act, 1922, as amended by the Income-tax and Business Profits Tax (Amendment) Act, 1948, to the former State of Raigarh. The notification dated 31st July 1944, issued by the Raigarh State, extended the application of the Indian Income-tax Act, along with future amendments, to the territory of Raigarh. The judgment affirmed that the amended provisions, including the requirement of the Commissioner's sanction under section 34, were automatically applicable to the Raigarh State as per the notification. The Department argued that post the merger of Raigarh State with Central Provinces and Berar, the authority of the Ruler ceased, and the law in force in Raigarh crystallized as of 31st December 1947, making the amended provisions inapplicable. However, the court rejected this contention, emphasizing that the question at hand was solely about the applicability of section 34 in light of the Raigarh Darbar notification. The court declined to delve into factual questions regarding the jurisdiction of the Ruler post-merger, as the issue before the Tribunal was limited to the operation of the notification and the amended provisions of the Income-tax Act. Ultimately, the court held that the amended provisions of the Income-tax Act, including the requirement of the Commissioner's sanction under section 34, were applicable to the assessment proceedings against the assessee in Raigarh State. The judgment concluded by directing the Commissioner of Income-tax to bear the costs of the assessee, affirming the validity of the proceedings under section 34 in the context of the former State of Raigarh.
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