1965 (6) TMI 10 - HC - Income Tax

Summary

Issues Involved:

1. Assessment of income from wakf estate and personal properties.
2. Computation of tax at the maximum rate.
3. Applicability of Section 41(1) of the Income Tax Act, 1922.
4. Jurisdiction of the Income Tax Officer.
5. Appropriateness of invoking Article 226 of the Constitution.

Issue-wise Detailed Analysis:

1. Assessment of Income from Wakf Estate and Personal Properties:

The appellant was appointed mutwalli of a wakf estate by Md. Ibrahim Barry through a deed dated June 22, 1930. The wakf estate included properties at 11, Lindsay Street, and 8, Kanai Seal Street, Calcutta. For the assessment years 1958-59, 1959-60, and 1960-61, the income from the appellant's personal properties was combined with the income from the wakf estate, and the appellant was assessed as an individual. The Appellate Assistant Commissioner directed that the appellant should be taxed separately for the income arising from the wakf estate, excluding specific amounts from the appellant's individual assessment for the respective years.

2. Computation of Tax at the Maximum Rate:

For the assessment year 1958-59, the income from the wakf estate was assessed as "wakf estate of the late Ibrahim Barry through mutwalli Shaik Md. Shaffi Barry," in the status of an association of persons, and tax was computed at the maximum rate under the first proviso to Section 41(1) of the Income Tax Act, 1922, on the ground that the shares of the beneficiaries under the wakf were not determinate. The appellant contested the computation of tax at the maximum rate for the assessment years 1959-60, 1960-61, and 1961-62, arguing that the Income Tax Officer failed to indicate that the assessments were made under Section 41(1) and did not hold that the beneficiaries were an indeterminate class of persons.

3. Applicability of Section 41(1) of the Income Tax Act, 1922:

The appellant argued that the authority to compute tax at the maximum rate was derived from the first proviso to Section 41(1) of the Act, which required a finding that the beneficiaries were an indeterminate class of persons. The Income Tax Officer did not specify in the assessment orders that Section 41(1) was invoked, leading to the appellant's contention that there was an error of law apparent on the face of the records.

4. Jurisdiction of the Income Tax Officer:

The court examined whether the statute imposed a duty on the Income Tax Officer to specify the section under which the assessment orders were made and to state the reasons for computing tax at the maximum rate. It was held that the failure to quote the section or give reasons did not constitute an error of law apparent on the face of the records, provided the Income Tax Officer had jurisdiction to make the order. The court relied on precedents, including the Supreme Court's decision in L. Hazari Mal Kuthiala v. Income Tax Officer, Special Circle, Ambala, which held that the validity of an order is not affected by the incorrect citation of the statute.

5. Appropriateness of Invoking Article 226 of the Constitution:

The court held that the appellant's writ petition under Article 226 of the Constitution was misconceived, as the Income Tax Act, 1922, provided a complete machinery for relief to an aggrieved assessee. The appellant should have preferred appeals against the orders of the Income Tax Officer instead of seeking discretionary relief under Article 226. The court cited the Supreme Court's decision in Shivram Poddar v. Income Tax Officer, Central Circle, which emphasized that bypassing the provisions of the Income Tax Act by invoking the High Court's extraordinary jurisdiction is not permissible unless fundamental rights are infringed or the taxing authorities assume jurisdiction they do not possess.

Conclusion:

The court dismissed the appeal, holding that the appellant's contentions did not constitute an error of law apparent on the face of the records. The appellant was directed to seek relief through the appellate machinery provided under the Income Tax Act, 1922, rather than invoking the High Court's jurisdiction under Article 226 of the Constitution. Each party was ordered to bear its own costs.