9911796707
TMI Blog1950 (6) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... awalpindi and for the year of assessment 1943-44 the tax was assessed by the Income Tax Officer, A Ward, Rawalpindi, against which order he had filed an appeal before the Income Tax Appellate Tribunal, Lahore, and that he had submitted his return for the assessment years 1944-45, 1945-46, 1946-47 and 1947-48 to the Income Tax Officer, Rawalpindi, before the 15th of August, 1947, which had not so far been adjudicated upon. In December, 1947, he goes on to state, he was required by the Income Tax Officer, H Ward, Delhi, to prove that he was an assessee of Rawalpindi and on his producing the necessary documents the said Income Tax Officer accepted his contention that he had duly been assessed and was an assessee of Rawalpindi. He proceeds to say that on the 30th of December, 1948, the Income Tax Officer, 1st F Ward, served a notice dated 30th of November, 1948, under Section 34 of the Income Tax Act calling upon him to make returns for the assessment years ending 31st March, 1945, and 31st March 1946, that similar notices were also served on him by affixation for the assessment years 1946-47 and 1947-48 and that in spite of his protests the Income Tax Officer was proceeding with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at date to the date of opening of the Court, i.e., 14th March, 1950. In reply the Income Tax Officer, Mr. Ishwar Dayal, has filed an affidavit in which he state : (1) that from enquiries made by him he has discovered that Rekhi came to live in Delhi in 1926 and was residing in a house outside Kucha Ghasi Ram and had also built a house, 7/29 Darya Ganj, Delhi, and that during the relevant years he had executed a number of contracts of various officers; messes in New Delhi within his jurisdiction; (2) that on the 27th of September, 1949, the petitioner was assessed to Income Tax for the year 1944-45 and in respect of the assessment year 1944-45 and the assessment had been made on the 27th of March, 1950; (3) that the respondent had jurisdiction under Sections 34 and 64 of the Income Tax Act to call for returns as the petitioner was residing in Delhi and carried on an extensive business within the jurisdiction of the respondent and had filed returns for the assessment years 1944-45 to 1947-48; (4) that at any rate the respondent had jurisdiction to assess the petitioner in respect of income, profits and gains accruing, arising or received within the area of his jurisdiction ; (5) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in law afford any ground for proceeding under Section 345 of the Income Tax Act nor was it discovery that the applicant was chargeable; (6) that the evidence which he had produced before the Court in the form of letters and other correspondence establishes that the applicant was in fact not liable to assessment in the Union of India; and (7) that if the Court should find itself unable to arrive at the conclusion of fact on the affidavits now submitted it should direct pleadings in prohibition to determine the issue . In reply, the counsel for the Income Tax Department contended (1) that there was suppression of material facts in the affidavit on which the rule for prohibition was made and on that ground alone the Court should refuse the writ; (2) that the object of the petitioner was not to get the assessment quashed but it was merely to prevent the Income Tax Officer from proceeding with his assessment which would have become impossible if the assessment had not been made before the 31st of March, 1950; (3) that it is for the assessing authorities to decide in the first instance whether the applicant is chargeable to Income Tax; (4) that if the Income Tax has honest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been put thus in the 10th Edition of the Law of Income Tax by Konstam at p. 39 : if there is any suppression of material facts in the affidavit, on which the rule for a prohibition is moved, the Court will refuse the writ . In the 17th Vol. of Halsburys Laws of England, Hailsham Edition, at p. 369, it is state : Urberrima fields is essential where an application is made for a rule nisi for a writ of prohibition, and therefore if there is a suppression of material facts in the applicants affidavit the Court will refuse the writ without going into the merits. Lord Cozens-Hardy, M. R., in King v. General Commissioners for the Purposes of the INcome Tax Act for the Distinct of Kensington 1 has said that the rule of the Court requiring uberrima fields on the part of an applicant for an ex-parte injunction applied equally to the case of an application for a rule nisi for a writ of prohibition and, therefore, there having been a suppression of material facts by the applicant in the affidavit, the Court would refuse a writ of prohibition without going into the merits of the case. On this ground alone the petitioner is not entitled to a writ from this Court . On behalf of the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a person under Section 34 by determining in the first instance the facts and the law which would be applicable and secondly, that there was no material at all before the Income Tax Officer, with regard to the latter point. The affidavit of the officer shows that he had material before him on which he founded his opinion and, therefore, I do not think that this point is available to the petitioner. With regard to the other point as to who is to determines whether the Income Tax Officer has or has not jurisdiction my opinion is that the contention of the petitioner is again without force. The point which the petitioner wishes to make is that the Income Tax Officer cannot give himself jurisdiction by a wrong decision of facts. Lord Esher, M. R., Considered that formula in Reg v. Commissioners of Special Purposes of the Income Tax and sai :- When an inferior Court or tribunal or body, which has to exercise the power of deciding facts, is first established by Act of Parliament, the Legislature has to consider what powers it will give that tribunal or body. It may in effect say that, if a certain state of facts exists and is shown to such tribunal or body before it proceeds to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who was dissatisfied with the judgment of the assessors, had a right to dispute the propriety of their assessment in an action against the Collectors........ Without referring to the statutes, I should say, a priors, that the object of the Legislature was to make the decision of the assessor final and binding, unless disputed in the manner pointed out. On reading the statutes, I come to the same conclusion. By the 9th section of the 43 Geo. 3, C. 99, the Commissioners are to meet and appoint assessors, who are to bring in their certificates of assessment verified on bath; and the assessors are thereby required, with all care and diligence, to charge and assess themselves and all other persons chargeable with the said duties. If the language had been to charge and assess all such persons as they honestly and bona fide, after due care and diligence, believed to be chargeable, their assessment would, beyond all question, be final, and he found that under Statutes 43, Geo. 3, C. 99 and C. 161, the only remedy was by appeal to the Commissioners. It was argued in that case that the Legislature meant that the decision should be final only in respect of such persons as were liable to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson who contends that he is not chargeable as upon a person who admits that he is chargeable, but not to the extent of the assessment made upon him. I am therefore of opinion that it is for the Commissioners to decide Whether or not a person assessed by the Additional Commissioners, after discovery by the surveyor, is in fact chargeable. But there must be information before the surveyor which would enable him, acting honestly, to come to the conclusion that a person is chargeable. Avory, J., who gave a concurrent judgment said at p. 79 : - For these reasons I come to the conclusion that the surveyor has jurisdiction to discover and the Additional Commissioners have jurisdiction to make an assessment in a case where the person charged denies that he is carrying on trade in the district and disputes any liability to the duties, and the question remains to be considered whether in this particular case there is any ground for saying that the Additional Commissioners have exceeded, or that the General Commissioners are about to exceeds, their jurisdiction. Mr. Tek Chand strongly relied on Rex v. Commissioners for the General Purpose of the Income Tax for Kensington. I cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the very question which under the statute they have undertake. It is quite clear to my mind that this Court can not entertain the question whether there has been a loss in this particular year. Avory, J., in concurring judgment relied on the observation of Lord Esher, M. R., in Reg v. Commissioner for Special Purpose of the Income Tax [1888] 21 QBD 313 at p. 319.) and held that it was for the body of Commissioners to decide in accordance with their statutory duty. In Rex v. Inspector of Taxes for Parish of Kingsland [1992] 8 Tax Cas. 327. the Lord Chief Justice said in regard to a question whether there should be a writ prohibition where the surveyor or says that he discovers that a person chargeable has been allowed a deduction not authorised by la : - think it is a fact that the question which which had to be determined here was question at the outset within the jurisdiction of the surveyor, and if that is exception taken to the additional first assessment which he has accordingly made, there is a clear right of the appeal under the Act, and that right of appeal is at this present moment being persued by the applicants in this case. I think, therefore, that the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been since 31st December, 1920, resident and domiciled in South Africa, and not resident or ordinarily resident in the United Kingdom. A rule nisi as regards the six years 1920-21 to 1925-26 inclusive was granted As regards the year 1926-27, against the assessment for which notice of appeal had been given, the Court refused to grant a rules nisi. It was held that the subjects liability to assessment on question of fact which it was Commissioners function to determine, and that there was no evidence show that the Commissioner would be bound to determine those questions in the subjects favor. A perusal of these English authorities thus show that (1) if the Legislature has given to the Income Tax Officer the power under section 34 to do a certain act in consequence of information which comes into his possession and the discovery made by him there from it not for this Court to under take the very task which in the clearest language the legislature has chosen to impose upon the Income Tax Officer; (2) the proper remedy for an assessee who feels aggrieved by the action of an Income Tax Officer under Section 34 is to take the matter in appeal and then have a case started to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessment under review. Any decision of the High Court upon that question of law can be reviewed on appeal. Effective and appropriate machinery is therefore provided by the Act itself for the review on grounds of law of any assessment It is that setting that Section 67 has to be constructed. In their Lordships view the construction of the section is clear. Under the Act the Income Tax Officer is charged with the duty of assessing the total income of the assessee. The obvious meaning, and in their Lordships opinion, the correct meaning, of the phrase assessment made under this Act is an assessment finding its origin in an activity of the assessing officer acting as such. the circumstances that the assessing officer as taken into account an ultra vires provision of Act is in this view immaterial in determining whether the assessment is made under this Act. the phrase describes the provenance of the assessment : it does not relate to its accuracy in point of law. The use of the machinery provided by the Act, not the result of that use, is the test. His Lordship further sai : - The result of an enquire to the merits of the assessment is, on the appellants construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Lord Phillimore in delivering the judgment of their Lordships sai : - however that might be according to English law, where there is no such revision procedure as in India, their Lordship see no reason for narrowing the express words of the Indian Act. Certiorari according to the English rule is only to be granted where no other suitable remedy exists. if the order of the Magistrate were a judicial order, it would have been made in in the exercise either of his civil or of his criminal jurisdiction, and procedure by way of revision would have been open. even were it to be said that the was of that quasi judicial kind to which certiorari has sometime been applied in England or in India, the Press Act may quite reasonably have intended to take it away, and there is no reason why full effect should be given to its language. This would show that on a true construction of the various sections of the Income Tax Act the extra ordinary remedy by writ of certiorari or prohibition would not be available to the assessee. although the words of Section 67 of the Income Tax Act are not as wide as that of the Section 22 of the Press Act, yet their Lordships of the Privy Council in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, such question is between places in more Provinces than one, by the Commissioners concerned, or, if they are not in agreement, by the Central Board of Revenue. The provisions of Sub-sections (1) and (4) are also fatal to the submission of the petitioner. I must, therefor, hold that the jurisdiction to proceed under Section 34 is by laws vested in the Income Tax Officer who has a statutory duty imposed upon him to proceed if he makes a discovery within the meaning of Section 34 of that Act. He has to determine the facts and the law in order to give him the jurisdiction to proceed and if in the determination of this he goes wrong, the proper remedy for an assessee is to go up in appeal and to have a case stated to High Court under the provisions of the Income Tax Act. The determination of the place of assessment of an assessee on the determination of which Courts in England have issued writs of prohibition is a matter to be determined by the Commissioner of Income Tax and not by the Courts. Looked at from any angle, therefore, the petition was misconceived and must therefore be dismissed. As the matter is one which has come up for the first time before this courts and the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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