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TMI Blog1965 (12) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... gs were taken against the plaintiff, who was one of the heirs, being the son of the deceased, to assess the estate of the deceased for the assessment year 1942-43 for the period from 1st April, 1941, to 31st March, 1942. The assessment proceedings were started in 1947 against the plaintiff. By the order passed at exhibit 65 on 23rd March, 1947, the income was assessed at Rs. 21,347 and the plaintiff was asked to pay Rs. 4,743-12-0 on account of income-tax for the said year. As the plaintiff did not pay the tax, recovery certificate under section 46 of the Indian Incometax Act, 1922 (hereinafter referred to as "the Act"), was issued and sent to the Collector for the recovery of the tax as arrears of revenue. In pursuance of this certificate, the plaintiff's bungalow known as ''Bage Azam" in the village, Dumas, and which he had inherited from his father and which had fallen to his share under partition in 1950 was sought to be attached. The plaintiff, therefore, gave statutory notice, exhibit 27, on 14th December, 1953, and filed the present suit for a declaration that the said order of assessment and the said recovery certificate were illegal and without jurisdiction and for the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, reversed the decree of the trial court and decreed the plaintiff's claim as aforesaid. The defendants have, therefore, filed the present appeal. The learned Assistant Government Pleader raised three points in this appeal: (1) that the appellate court had clearly erred in the construction of section 46 of the Act and in holding that the plaintiff was not the defaulting assessee; (2) that the appellate court had clearly erred in considering that the question of notice under section 34 was a pure question of law and, in permitting this contention, the appellate court had allowed the plaintiff to raise a new ground which was not raised in the statutory notice or in the suit at any stage; (3) that, in any case, the appellate court ought to have held that the plaintiff's suit was barred under section 67 of the Act. As regards the first point, there is no dispute that the present case is covered by the decision of the Supreme Court in Additional Income-tax Officer, Circle I, Salem v. E. Alfred[1962] 44 I.T.R. 442 (S.C.). In that case the Supreme Court had in terms held that the generality of the definition of the "assessee" in section 2(2) of the Act was sufficient to include e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be considered to be a defaulting assessee for the purposes of section 46 of the Act. As regards the next contention of the learned Assistant Government Pleader, it should be kept in mind that the plaintiff's statutory notice was in general terms and it was clearly alleged in paragraph 1 of exhibit 27 that the plaintiff was in Rangoon in March, 1947, and no assessment could be legally made for the year 1942-43 in his absence without serving on him the proper notices. In the plaint, even though in paragraph 3 it was stated that no notices under sections 23 and 34 were issued, in paragraph 4 it was clearly alleged that no assessment could have been legally made on the plaintiff in his absence without serving on him personally legally proper notices. In the written statement, even though the defendants denied the allegation that no notice under section 22(2) was served on him, as regards the allegation in paragraph 4 there was a vague denial that the statement of the plaintiff that the assessment for the year 194243 was made behind his back and without his knowledge was not correct. That is why the learned trial judge had framed an issue No. 1 as under: "Whether the defendants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to lead the necessary evidence by producing all the requisite notices and it would be really allowing them to fill up the lacuna, if the matter were to be remanded as requested by the learned Assistant Government Pleader to enable him to lead further additional evidence. Finally, the learned Assistant Government Pleader in this connection argued that the trial court had erred in casting the burden of proof as to this issue on the defendants as it was the plaintiff who had challenged the assessment on the ground that no proper notices had been served on him. When the parties have actually led evidence this question would be merely academic. The plaintiff was in Rangoon and the evidence which was led by the defendants was to examine a bailiff. Thus all the necessary evidence was led and still the defendants were not in a position to show that any such notice under section 34 had been served on the plaintiff. In this state of the record, the appellate court was right in treating this question as a pure question of law on the evidence which had been tendered by the parties. The want of notices under section 34 would be clearly fatal to the assessment which was sought to be done in 1947 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of section 67 which bars a civil court from entertaining any suit wherein it is sought to set aside or modify any assessment made under the Act. Mr. Kaji argued that section 67 would have no application whatsoever to a case where the assessment was a void assessment and was, therefore, no assessment at all. The Income-tax Officer had no jurisdiction to initiate the machinery of assessment for escaped income unless the condition precedent was first fulfilled of serving a requisite notice under section 34 of the Act. As such a notice was held to be a condition precedent by the Supreme Court, the assessment done by any Incometax Officer without giving this requisite notice was illegal and a void assessment. The error in such a case was not merely a procedural error in the exercise of jurisdiction but it was an error which went to the root, which was completely fatal to the final order of assessment. Such assessment being therefore a nullity, Mr. Kaji argued that the bar under section 67 would not be applicable. Mr. Kaji in this connection would be right in relying upon the decision of the Supreme Court in Laxman v. State of BombayA.I.R. 1964 S.C. 436 at page 443. While considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and no order was recorded by the Income-tax Officer about the partition, and so, by virtue of sub-section (3), the Hindu family which had ceased to be undivided had to be deemed to be continuing to be a Hindu undivided family for the purposes of the Act. The Supreme Court in that case in terms pointed out that though the method of assessment and the procedure to be followed in that behalf were statutory, any error or irregularity in the assessment could be rectified in the manner provided by the statute alone by resorting to the machinery under the Act and that section 67 barred a suit in any civil court to set aside the assessment made under the Act. That view had been taken in that case as the error was held to be a procedural error and the assessment which was made by the Incometax Officer was held to be an assessment of tax under the Act. Even though error had been committed in making the assessment without holding an inquiry into the alleged partition, such an error could be rectified only by resorting to the machinery provided under the Act and not by a suit in the civil court. That decision could have no application to the present case where the error was not a procedural er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , however, added that such an exclusion of jurisdiction would be subject to two limitations. The first reservation was the one made by Lord Thankerton in Secretary of State v. Mask Co.A.I.R. 1940 P.C. 105, 110. The scope of the said exception had been examined by the Supreme Court in the case of Firm Illuri Subbayya Chetty v. State of Andhra Pradesh[1963] 14 S.T.C. 680; 50 I.T.R. 93, 100; [1964] S.C.R. 752., where Gajendragadkar, J. (as he then was), speaking for the court, said: ''Non-compliance with the provisions of the statute to which reference is made by the Privy Council must, we think, be noncompliance with such fundamental provisions of the statute as would make the entire proceedings before the appropriate authority illegal and without jurisdiction. Similarly, if an appropriate authority has acted in violation of the fundamental principles of judicial procedure, that may also tend to make the proceedings illegal and void and this infirmity may affect the validity of the order passed by the authority in question. It is in cases of this character where the defect or the infirmity in the order goes to the root of the order and makes it in law invalid and void that these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in conjunction with the scope of the enquiry entrusted to the tribunal set up and other relevant factors. The question before me is, therefore, to be decided in the light of these principles as to the exclusion of the jurisdiction of the civil courts, because the statute sets up a hierarchy of judicial tribunals for the determination of all questions regarding the income-tax under the Act. The question which I have to consider falls within the scope of the first reservation, because the non-compliance in the present case is of a fundamental provision of section 34, which makes the entire proceedings before the Income-tax Officer illegal and without jurisdiction and, therefore, makes the entire order of assessment void. The learned Assistant Government Pleader, however, argued that in view of the second reservation, such a contention that the provisions of section 34 were not complied with can be determined only by a tax tribunal created under the Act and the jurisdiction of the civil courts was completely ousted by reason of the wide amplitude of section 67 by the words "assessment made under the Act''. It is true that the decision is not merely made final only for the purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was construed in Chetty's case[1963] 14 S.T.C. 680; 50 I.T.R. 93; [1964] S.C.R. 752., and, therefore, finality was only for the purposes of the Act, and it did not make valid an action which was not warranted by the Act, as, for example, the tax on a commodity which was not taxable at all or was exempt. Where a similar provision like the present section 67 was present in section 20 of the Bombay Sales Tax Act, 1946, protecting assessments "made under the Act", it was held at page 1947 of the aforesaid decision that the said clause took in all assessments made or purported to have been made under the Act. At page 1948, the entire scheme of the said Act was considered and it was held that all questions pertaining to the liability of the dealers to pay assessment in respect of their transactions were expressly left to be decided by the appropriate authorities under the Act as matters falling within their jurisdiction. Whether or not a return is correct, whether or not transactions which were not mentioned in the return, but about which the appropriate authority had knowledge, fall within the mischief of the charging section, what was the true and real effect of the transactions whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 964] 15 S.T.C. 144; A.I.R. 1964 S.C. 1873. , the order was held to be final only for the purpose of the Act in the absence of a provision like section 18A corresponding to the present section 67, while in the case of Kamala Mills Ltd.(1) due to the presence of such a section, it was held that even a finding as to the transaction being taxable or not was also a finding of a fact in issue as distinguished from a finding on a collateral fact and it would not make the assessment order without jurisdiction or a nullity, and, therefore, such an assessment would be entitled to claim the protection of the wider exclusion made by a provision like section 18A of the Madras Sales Tax Act or section 20 of the Bombay Sales Tax Act or section 67 of the present Act. I cannot agree with the learned Assistant Government Pleader that this question arises in the present case. The learned Assistant Government Pleader tried to argue that whether the notice under section 34 was served or not was a decision as to a preliminary fact and, on the analogy of the aforesaid decision in Kamala Mills Ltd.(1), he further sought to argue that such a contention could be raised only before the tax tribunals, and civ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction might necessitate the consideration of the very constitutionality of the provision which contained this expression and that aspect of the matter did not appear to have been considered in the case of Raleigh Investment Co. Ltd.[1947] 15 I.T.R. 332 (P.C.). In this decision, at page 92, the decision in Secretary of State v. Mask Co.A.I.R. 1940 P.C. 105., was said to have been approved in Chetty's case[1963] 14 S.T.C. 680; 50 I.T.R. 93. It was held that what was clearly prohibited by the Act could not be claimed to be purported to be done in pursuance of an intended execution of the Act. Finally, at page 93, it was pointed out that, even if section 84(3) of the Municipalities Act was to be interpreted in the same manner as section 67 of the Indian Income-tax Act, where there was an express prohibition in a statute against a local authority from imposing a tax, the action of a local authority or of any of its instrumentalities in transgressing that prohibition must be regarded as being in excess of its jurisdiction and a provision like section 84(3) would not bar the jurisdiction of the civil court to entertain a suit instituted by a person from whom it was collected for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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