1927 (8) TMI 2 - HC - Income Tax

Summary

Issues:
1. Whether a suit can be filed against the Secretary of State for India in Council to recover Income Tax assessment and penalty.
2. Whether the assessment made by the Income Tax Officer on the plaintiff was ultra vires.
3. Whether Section 67 of the Income Tax Act bars the present case.
4. Whether Section 67 of the Income Tax Act is ultra vires.

Analysis:

1. The plaintiff filed a suit against the Secretary of State for India in Council to recover the Income Tax assessment and penalty levied by the Income Tax Officer. The trial Court held that no suit would lie under Section 67 of the Income Tax Act. The plaintiff appealed to the District Court, which summarily dismissed the appeal. The High Court considered the second appeal challenging the dismissal.

2. The plaintiff argued that he was not the individual mentioned in the assessment, as he claimed to be a medical practitioner and not the proprietor of Bassein Pharmacy. However, the Income Tax Officer assessed him and recovered the amount based on the assessment. The plaintiff contended that the assessment was ultra vires as it was made on the wrong person.

3. The High Court analyzed previous cases, including Rahemtulla Haji v. Secretary of State, to determine the applicability of Section 67. The Court emphasized that the Income Tax Act provides remedies for assessed persons to challenge assessments through prescribed procedures. The Court held that unless an assessment is proven erroneous, the money collected under a valid assessment cannot be claimed back, thus invoking the bar under Section 67.

4. The Court also examined the argument regarding the vires of Section 67. The plaintiff relied on Section 32 of the Government of India Act, claiming that a similar suit could have been filed against the East India Company before 1858. The Court considered precedents like The Secretary of State v. J. Moment to assess the validity of Section 67. Ultimately, the Court found no evidence to prove Section 67 as ultra vires and dismissed the appeal, upholding the validity of the Income Tax Act.

Overall, the High Court ruled that the suit against the Secretary of State for India in Council to recover the Income Tax assessment was barred by Section 67 of the Income Tax Act, and the assessment made by the Income Tax Officer was deemed valid unless proven erroneous. The Court also upheld the constitutionality of Section 67, rejecting the argument that it was ultra vires based on legal precedents and lack of evidence to the contrary.