1963 (8) TMI 72 - HC - Income Tax

Summary

Issues Involved:

1. Jurisdiction of the Income Tax Officer (ITO) to finalize proceedings before the question of jurisdiction was disposed of under section 64(3) of the Indian Income Tax Act, 1922.
2. Whether the assessee was prevented by sufficient cause from making the return required under section 22 read with section 34 of the Indian Income Tax Act within the meaning of section 27 of the Act.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Income Tax Officer (ITO):

The assessee raised an objection to the jurisdiction of the Income Tax Officer, Ward-A, Junagadh, to assess him. The objection was raised by a letter dated 7th April 1958, stating that the ITO had no jurisdiction to assess him as he was a permanent resident of Veraval and had already been assessed under the Saurashtra Income Tax Ordinance. The assessee contended that under section 64(3) of the Indian Income Tax Act, 1922, the ITO was bound to refer the matter to the Commissioner if he did not accept the validity of the objection. The ITO, however, proceeded with the assessment without referring the matter to the Commissioner.

The court analyzed the provisions of section 64, which deals with the place of assessment. Sub-section (3) provides the machinery for determining the place of assessment when an objection is raised by the assessee. The court held that for section 64(3) to apply, the assessee must raise a specific objection stating the grounds for the objection, which would indicate who the other ITO entitled to assess him was. The objection raised by the assessee was merely a negative one, without stating any grounds or indicating another ITO who had jurisdiction. Therefore, no question as to the place of assessment was raised by the assessee that required referral to the Commissioner under section 64(3). Consequently, the ITO did not act illegally in not referring the matter to the Commissioner.

2. Sufficient Cause for Not Making the Return:

The assessee argued that he was prevented by sufficient cause from making the return required under section 22(2) read with section 34 because he had raised an objection to the jurisdiction of the ITO, which was not referred to the Commissioner. The court noted that the Tribunal found as a matter of fact that the assessee had no intention of filing a return and was avoiding it by taking a frivolous plea that the ITO had no jurisdiction. The court held that this finding of fact could not be challenged as unreasonable or perverse. Since the assessee had no genuine belief in the plea taken by him and was merely avoiding filing the return, it could not be said that he was prevented by sufficient cause from making the return. Therefore, the assessee did not have sufficient cause within the meaning of section 27.

Conclusion:

The court answered both questions in the negative, holding that:

1. No question as to the place of assessment was raised by the assessee as contemplated by section 64(3) that required referral to the Commissioner.
2. The assessee was not prevented by sufficient cause from making the return required under section 22(2) read with section 34 as contemplated by section 27.

The assessee was ordered to pay the costs of the reference to the Commissioner.