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Challenge to notice under section 148 of the Income-tax Act, 1961 for assessment year 1966-67 based on the appointment of a director as principal officer of a foreign non-resident company. Analysis: The judgment by Sabyasachi Mukherjee J. addresses the challenge to a notice under section 148 of the Income-tax Act, 1961 for the assessment year 1966-67. The petitioners, a foreign non-resident company with its registered office in Singapore, contested the validity of the notice issued on 25th February 1975. The notice was addressed to the company, represented by a director, regarding alleged income escaping assessment. The petitioners argued that the director could not be treated as the principal officer under section 2(35) of the Act, as he was only responsible for managing legal cases in India, not the overall management or administration of the company. The central issue revolved around whether the director's connection with the company's legal affairs was sufficient to deem him the principal officer. The Income-tax Officer intended to treat the director as such based on the lack of any other authority in India to handle the company's affairs. The court emphasized that the director did not need to be actively managing the company but merely have a connection with its management or administration. The judge noted that the Income-tax Officer's intention, if supported by material, was crucial in determining the director's status as the principal officer. Furthermore, the judgment discussed the relevance of section 163 of the Income-tax Act, 1961, in determining the director's role as the company's agent. The court differentiated the director's position from that of an official liquidator, citing a case from the Andhra Pradesh High Court. The judge expressed doubts about whether an official liquidator could be considered connected with the company's management or administration, highlighting varying perspectives on this issue in different cases. The judgment dismissed the petitioner's contention that the Income-tax Officer should have heard the director's submissions before treating him as the principal officer. The court held that if prima facie materials supported the officer's intention to designate the director as the principal officer, the legal requirements were met. The judge clarified that the notice's wording, with the term "principal officer" scored out, did not affect its validity, as it was evident that the director was being treated as such. In conclusion, the court rejected the application, discharged the rule nisi, and vacated any interim orders, with no order as to costs. The operation of the order was stayed for four weeks.
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