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TMI Blog1971 (12) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... , at the instance of the assessee. Facts relevant for answering the question referred to us are these : Messrs. Udaipur Distillery Company (hereinafter called " the assessee " was a firm constituted by two partners, viz., (1) Sohan Lal Golcha, acting as " karta " of the Hindu undivided family, and (2) F.B. Elavia. The firm owned and operated a distillery at Udaipur. During the assessment year 1945-46, relevant to the previous year of the firm ending on October 16, 1944, it sold some of its products in areas then included in British India. In the relevant period in the erstwhile State of Mewar, of which Udaipur was the capital, there was no income-tax. The Income-tax Officer, Ajmer, issued a notice to the firm under section 34 of the Act on January 27, 1953. The assessee received it on January 31, 1953. The Commissioner of Income-tax exercising his powers under section 5(7A) of the Act transferred the case of the assessee to the Income-tax Officer, Central Circle III, Delhi, by his order, dated February 5, 1953. The assessee, however, addressed a letter, dated March 2, 1953, to the Income-tax Officer, Ajmer, challenging his jurisdiction and requested him to refer the question to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se order passed by the Commissioner of Income-tax has not been included either, but the purport of it has been incorporated in the order of the Tribunal. Section 64 runs as follows : " 64. Place of assessment.-(1) Where an assessee carries on a business, profession or vocation at any place, he shall be assessed by the Income-tax Officer of the area in which that place is situate or, where the business, profession or vocation is carried on in more places than one, by the Income-tax Officer of the area in which the principal place of his business, profession or vocation is situate. (2) In all other cases, an assessee shall be assessed by the Income-tax Officer of the area in which he resides. (3) Where any question arises under this section as to the place of assessment, such question shall be determined by the Commissioner, or, where the question is between places in more States than one, by the Commissioners concerned, or, if they are not in agreement, by the Central Board of Revenue : Provided that, before any such question is determined, the assessee shall have had an opportunity of representing his views : Provided further that the place of assessment shall not be ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, was the proper officer who should have issued notice under section 34. Notice in this case was, however, issued by the Income-tax Officer, Ajmer, under the misapprehension that he had jurisdiction to do so. Under Notification No. 44 dated July 1, 1952, the Income-tax Officer, Ajmer, was empowered to deal with pending assessments for the period before the merger of Indian States. The assessment proceedings in the present case were, however, not pending when Notification No. 44 dated July 1, 1952, was issued. As such, the Income-tax Officer, Ajmer, had no jurisdiction to issue a notice under section 34 to the assessee. The assessee raised an objection that the Income-tax Officer, Ajmer, had no jurisdiction to issue notice to him. After this objection had been raised his case was transferred to the Income-tax Officer, Central Circle III, Delhi, by the Commissioner of Income-tax under section 5(7A). This order, however, could not confer jurisdiction on the Officer to whom the case had been transferred from the file of the Income-tax Officer, Ajmer, as the latter officer had no jurisdiction to issue notice to the assessee. The question as to the place of assessment was referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment after the assessment has been made..... The fact that the Tribunal nevertheless thought fit to allow the question to be raised and even included it in the reference to the High Court cannot alter the legal position." Note. - the underlining is by us. The above decision was approved by their Lordships of the Supreme Court in Rai Bahadur Teomal v. Commissioner of Income-tax in which they observed as follows : " The question then arises whether the objection as to the place of assessment, i.e., by the Income-tax Officer of Calcutta, could be challenged in appeal to the Appellate Assistant Commissioner and then before the Appellate Tribunal. In our opinion it could not be. The scheme of the Act shows that no appeal in regard to the objection to the place of assessment is contemplated under the Act. Under proviso (iii) of section 64(3) of the Act a question as to the place of assessment, when it arises, is determined by the Commissioner. Any such order cannot be made a ground of appeal to the Appellate Assistant Commissioner under section 30 of the Act which provides for appeals against orders of assessment and other orders enumerated in section 30 but no appeal is there prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... require consideration. They are : (a) Rs. 35,615, (b) Rs. 9,000, (c) Rs. 2,000 and Rs. 1,000, (d) Rs. 14,919, (e) Rs. 2,55,313 and (f) Rs. 23,450. Their total comes to Rs. 3,41,297. We are dealing with these items separately. (a) Rs. 35,615. The Tribunal has found it as a fact that this amount of money was deposited in cash by the buyers of the assessee's products in the assessee's accounts with a bank in British India. (b) A sum of Rs. 9,000 was deposited by buyers in cash in the assessee's bank accounts with the National Bank at Bombay. (c) The sum of Rs. 3,000 is composed of two items. A sum of Rs. 2,000 was paid in cash to Shri B. S. Elavia, father of the partner, F. B. Elavia at Bombay. Rs. 1,000 were received in cash by the other partner, Sohanlal Golcha, of the assessee-firm at Bombay. Items (a), (b) and (c) were received in cash on behalf of the assessee in Bombay, British India, towards the price of the goods supplied by the assessee to the buyers and are clearly covered by the language of section 4(1)(a), which reads : " 4. Application of Act.- (1) Subject to the provisions of this Act, the total income of any previous year of any person includes all income, pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Reserve Bank of India at Bombay and the receipts were incorporated therein. After the receipts of the goods the Government of India made payment by cheques which were received by the assessee at Jaipur, and the assessee made them over to a Hindu undivided family at Jaipur and that firm sent them for collection to Bombay where they were realised. There was no material on record to show how these cheques were sent by the Government of India to the assessee and the place where the payments were to be made. Nor was there a finding that the Government of India was invariably sending the cheques to Jaipur through the post. The learned judges of the Delhi High Court held that : " The assessee received the payments at Jaipur outside the taxable territories and the profits and gains in respect of the sales made to the Government of India must be deemed to have been received by the assessee outside the taxable territories. The burden of proving that the assessee received any income, gain or profit within the taxable territories is on the revenue. The department cannot ask the court to presume facts and circumstances in its favour. The factum of the cheques towards payment for supplies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the taxable territory. The railway receipt having been handed over to the bank in the non-taxable territory and the bank in its turn having discounted and passed the price of it in Udaipur, a non-taxable territory, the price was received in non-taxable territory and the assessee was not liable. Reliance was placed on Commissioner of Income-tax v. Shivnarayan Harigopal. On behalf of the revenue, Mr. Bhandari submitted that the negotiations of the " hundis " by the bank before the goods were delivered to the buyer was a part of the banking business and did not mean that the sales took place when the banks discounted the " hundis " in the non-taxable territory. Reliance was placed on Seth Pushalal Mansinghka (P.) Ltd. v. Commissioner of Income-tax and Commissioner of Income-tax v. Bhopal Textiles Ltd. Put in other words, the question is whether the amount of money, which the assessee's bankers credited to the assessee's accounts, in the non-taxable territory, could be called the price of the goods supplied by the buyer. The answer to this question, in our opinion, must be in the negative. In Seth Pushalal Mansinghka's case the facts were these. The assessee had its mica mines at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Part A and Part C States and the appellant was not, therefore, entitled to any rebate under the Part B States (Taxation Concessions), Order 1950. The case of Commissioner of Income-tax v. Bhopal Textiles Ltd. is also relevant. Goods were supplied to the Government of India and its nominees from Bhopal, a non-taxable territory, to Agra, Allahabad and Delhi in British India. The railway receipts were in the name of the buyer. They were forwarded through banks to be delivered against payment. Their Lordships of the Supreme Court held that income must be deemed to have been received by the assessee in British India and the reason for the view was that the railway receipt was a document of title to goods, and, for all purposes, represented the goods. The railway receipt was given on payment in British India and the property in the goods was thus transferred. The bank acted as the assessee's agent and not that of the buyer because the bank was to obey the seller's instructions. Commissioner of Income-tax v. Shivanarayan Harigopal no doubt supports the contention of the assessee. The facts of this case were that goods from Indore (non-taxable territory) were sent to the taxable ter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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