The judgment of the court was delivered by
KAPUR, J.--These two appeals pursuant to special leave are
brought against two orders of the Income-tax Appellate Tribunal (Calcutta Bench)
dated November 28, 1952, passed in appeal No. I.T.A. 4067 of 1951-52 in respect
of income-tax assessment for the assessment year ending 31st March, 1944, and in
appeal No. E.P.T.A. 391 of 1951-52 in respect of excess profits tax assessment
of the appellant for the chargeable accounting period ending March 31, 1943. The
original assessee was R. B. Seth Teomal who was the manager of a Hindu undivided
family. On Seth Teomal's death on May 30, 1944, Seth Ottanmal became the
manager. He is now the appellant representing the Hindu undivided family. He
will be termed as the appellant in these appeals. Seth Teomal was carrying on
the business of a railway contractor at Lalmonirhat in the district of Rangpur
which is now in Pakistan. In April, 1943, a notice was served on him under
section 22(2) of the Income-tax Act (hereinafter called the Act). He filed the
return on February 28, 1944. The Income-tax Officer, Rangpur, served notices on
him under sections 24(4) and 23(2) for production of books etc. It appears that
assessment proceedings continued before the Income-tax Officer, Rangpur, but no
final assessment was made.
According to an affidavit which has now been filed in this
court the Central Board of Revenue by an order passed under sub-section (2) of
section 5 of the Act assigned the appellant's case along with some other
assessment cases to the Commissioner of Income-tax (Central) Calcutta. The order
contains the following endorsements which give an indication of the reason for
the case being assigned to the Commissioner of Income-tax (Central) :
" Copy forwarded to :--
(1) ........................
(2) Commissioner of Income-tax, Central Calcutta. These
cases are reported to have E.P.T. liabilities. "
Thus the appellant's case which was before an Income-tax
Officer within the area in charge of the Commissioner of Income-tax, Bengal
(Mofussil), was withdrawn from him and was assigned to the Commissioner of
Income-tax (Central), Calcutta. On February 11, 1948, the Income-tax Officer,
District N-C (I.T. cum. E.P.T.), to whom it appears the appellant's assessment
case was assigned, issued notice again under sections 22(4) and 23(2) of the
Act. That Officer after making the usual enquiries made the assessment order on
March 15, 1948. The order for excess profits tax assessment was made on March
30, 1948.
Against these orders two appeals were taken to the
Appellate Assistant Commissioner on April 30, 1948. In the appeal against
income-tax assessment the appellant inter alia raised the following two grounds
in regard to the jurisdiction of the Income-tax Officer, Calcutta :
" 5. For that the petitioner is not aware of any
order passed for the transfer of the case from Rangpur to Calcutta and it is
submitted that without such an order and communication of such order the
assessment is challengeable for want of jurisdiction. "
" 32. For that the appellants challenge the
jurisdiction as there was no proper order of transfer and the business was
carried on outside Calcutta and assessments had never before been made in
Calcutta. "
But no such ground was taken in the appeal against excess
profits tax assessment. The Appellate Assistant Commissioner dismissed both
these appeals. In regard to jurisdiction he held :
" It however appears from records on hand that the
principal place of business of the concern was at Rangpur and as the income
attracted excess profits tax liability the case was transferred to Calcutta
under orders of Central Board of Revenue. Hence there is no substance in the
contention of the learned advocate which fails. "
The appellant then took two appeals to the Income-tax
Appellate Tribunal. In the appeal against income-tax assessment he took two
objections in regard to jurisdiction :
" For that the objection taken before the learned
Appellate Assistant Commissioner on jurisdiction should not have been summarily
disposed of by passing reference to an order of transfer of the case from
Rangpur to Calcutta without at the same time discussing when the question of
jurisdiction was seriously raised and how and under what circumstances and to
whom was the case transferred and for what purpose. "
" 2. For that the appellant begs leave to repeat that
transfer was not legal or proper and was not made by any proper authority to
legalise such transfer. "
In the excess profits tax appeal also this time an
objection was taken as to jurisdiction :
" For that the assessment is bad in law having been
made without jurisdiction. "
The Appellate Tribunal held against the appellant in a
short paragraph :
" So far as the first objection is concerned, in our
opinion, it is not within our jurisdiction to go into this matter. The objection
relates to the place of assessment. As held in Wallace Brothers & Co. Ltd.
v. Commissioner of Income-tax the question as to the proper place of assessment
is not one for adjudication by a court or by any appellate authority.
Consequently we overrule the first contention of the assessee. "
The Tribunal thus held that as the objection related to
the place of assessment the Tribunal was not competent to go into that question.
Upon this the appellant applied for a reference to be made under section 66(1)
of the Act and prayed for five questions to be referred. The two questions
relating to jurisdiction were :
" (1) Had the Income-tax Officer (Non-Companies
Income-tax-cum-Excess Profits Tax District, Calcutta) jurisdiction to make the
assessment ?
(2) Was the Income-tax Appellate Tribunal correct in the
circumstances in holding that it has no jurisdiction to determine the competence
of the Income-tax Officer in making the assessment ? "
In the " facts of the case " attached to the
grounds of appeal it was stated that the accounts were produced before the
Income-tax Officer, Calcutta, under protest because the jurisdiction of that
Officer was being challenged. In reply to this the Commissioner after referring
to Wallace Brothers case, stated that it did not appear from the assessment
record that the assessee ever raised any objection to the jurisdiction of the
Income-tax Officer and if it had been taken the matter would have been referred
by the Income-tax Officer to the Commissioner as required by law. This
application under section 66(1) was dismissed on the ground that the question of
jurisdiction could not arise out of the order of Tribunal and reliance was
placed on Wallace Brothers' case, and Seth Kanhaiyalal v. Commissioner of
Income-tax. The appellant applied to the High Court under section 66(2) of the
Act and prayed for the following two questions and some others to be referred
:--
"(i) Had the Income-tax Officer (N.C.I.T. Cum E.P.T.
District, Calcutta) jurisdiction to make the assessment ?
(ii) Was the Income-tax Appellate Tribunal correct in the
circumstances in holding that it had no jurisdiction to determine the competence
of the Income-tax Officer in making the assessment ?
The High Court dismissed this application on July 23,
1954. No appeal has been filed in this court against the order of the High Court
but an appeal has been filed against the order passed by the Income-tax
Appellate Tribunal.
On behalf of the Revenue a preliminary objection was taken
that as no appeal had been filed against the order of the High Court that order
had become final and this court, therefore, should not entertain the appeal
against the order of the Tribunal and reliance was placed on the observations of
Venkatarama Aiyar, J., in Govindarajulu Mudaliar v. Commissioner of Income-tax.
At page 810 it was observed :
" The present appeal is against the decision of the
Tribunal itself. It is no doubt true that this court has decided in Dhakeswari
Cotton Mills Ltd. v. Commissioner of Income-tax, that an appeal lies under
article 136 of the Constitution of India to this court against a decision of the
Appellate Tribunal under the Indian Income-tax Act. But seeing that in this case
the appellant had moved the High Court and a decision has been pronounced
adverse to him and this has become final, obviously it would not be open to him
to question the correctness of the decision of the Tribunal on grounds which
might have been taken in an appeal against the judgment of the High Court. All
the points urged before us were taken in the reference under section 66(2) of
the Indian Income-tax Act. It would therefore follow that these grounds are not
open to the appellant. "
But counsel for the appellant relied on Dhakeswari Cotton
Mills Ltd. v. Commissioner of Income-tax, where the scope of appeals under
article 136 were set out by the learned Chief Justice. In this case, however, it
is not necessary to go into this question because in our opinion there is little
substance in the appeal itself.
Counsel for the appellant has urged two grounds in support
of his appeal : that his place of business was Lalmonirhat and under section
64(1) and (2) of the Act he was entitled to be assessed by the Income-tax
Officer of that area and (2) that assessment by the Income-tax Officer of
Calcutta was an illegal assumption of jurisdiction and therefore he was entitled
to have the order of assessment quashed. In order to decide these questions
reference has to be made to the scheme of the Act. The provisions relevant to
the issue of jurisdiction are sections 5 and 64. The former is headed "
Income-tax authorities " and the latter " Place of assessment ".
Assessment is made by the Income-tax Officer under section 23(3). Against an
order of assessment or the liability to be assessed an appeal lies under section
30 to the Appellate Assistant Commissioner and a further appeal to Income-tax
Appellate Tribunal under section 33 of the Act. And then a reference can be made
by the Tribunal to the High Court under section 66(1) of the Act and if the
Tribunal does not make such reference the High Court can under section 66(2) be
moved and it can then direct that such reference be made.
The heading of section 64 is " Place of assessment
". Sub-section (1) of section 64 provides that the assessee shall be
assessed by the Income-tax Officer of the area in which he carries on his
business. Sub-section (2) lays down that in all other cases an assessee shall be
assessed by the Income-tax Officer of the area in which he resides. Under these
two sub-sections therefore the appellant, because he was carrying on business at
Lalmonirhat, had to be assessed by the Income-tax Officer of that area, i.e., by
the Income-tax Officer of Rangpur. Sub-section (3) of that section provides that
if a question as to the place of assessment arises, it is to be determined by
the Commissioner of Income-tax or by the Central Board of Revenue according as
the case may be. Under the first proviso to this sub-section before the question
as to the place of assessment is determined the assessee has to have an
opportunity of representing his views and under the second proviso the place of
assessment cannot be called into question by the assessee if he has made a
return in response to the notice under sub-section (1) of section 22 and has
stated therein the principal place where he carries on his business or if he has
not made such a return, the time specified in the notice has expired. The third
proviso to this sub-section is :
" Provided further that if the place of assessment is
called in question by an assessee the Income-tax Officer shall, if not satisfied
with the correctness of the claim, refer the matter for determination under this
sub-section before the assessment is made. "
Thus under section 64(3) the question of determination as
to the place of assessment only arises if an objection is taken by the assessee
and the Income-tax Officer has any doubts as to the matter. But the
determination is to be by the Commissioner of Income-tax or the Central Board of
Revenue. The Act does not contemplate any other authority.
It was contended on behalf of the assessee that he
produced his accounts before the Income-tax Officer at Calcutta under protest.
There is no mention of this protest in the assessment file and that is what was
stated by the Commissioner of Income-tax in his reply which he gave on March 3,
1953, before the Income-tax Appellate Tribunal and which has been set out above.
If such an objection had been raised the question would have been referred by
the Income-tax Officer to the Commissioner as required under section 64(3). That
stage never arose because the objection does not seem to have been taken at the
stage when it should have been taken, i.e., before the Income-tax Officer,
Calcutta.
But it is contended by counsel for the appellant that in
the present case there is an illegal assumption of jurisdiction as the Officer
who made the assessment had no jurisdiction at all to make the assessment. It
was also contended that if the Central Board of Revenue wanted to transfer the
assessment proceedings from the Income-tax Officer, Rangpur, to the Income-tax
Officer at Calcutta, it could only exercise that jurisdiction by making an order
under section 5(7A) and not under section 5(2) of the Act. He relied on Taylor
v. Taylor, where it was held that if a mode of exercise of power is laid down in
the statute it has to be exercised in that way and no other. He also relied on
Nazir Ahmad v. King Emperor. He further contended that this was not a case which
fell under section 5(2) of the Act. Section 5(7A) gives to the Central Board of
Revenue the power to transfer any case from one Income-tax Officer to another
which can be made at any stage of the proceedings and does 'not necessitate the
reissuing of a notice under section 22(2) if it had already been issued by the
Income-tax Officer from whom the case is transferred and in the explanation the
word " case " in relation to any person whose name is specified in the
order of transfer means all proceedings under the Act which may be pending on
the date of the transfer and includes all proceedings which may be commenced
after the date of the transfer.
Section 5 although headed " Income-tax authorities
" also gives to the Central Board of Revenue and the Commissioners of
Income-tax certain powers in regard to withdrawing of cases from one area into
another and from one Income-tax Officer to another. Sub-section (2) of this
section gives power to the Central Government to appoint as many Commissioners
of Income-tax as it thinks fit and they have to perform their functions in
respect of different areas, persons and cases or classes thereof. The relevant
portion of the sub-section is as follows :
Section 5(2) : " The Central Government may appoint
as many Commissioners of Income-tax as it thinks fit and they shall perform
their functions in respect of such areas or of such persons or classes of
persons or of such incomes or classes of incomes or of such cases or classes of
cases as the Central Board of Revenue may direct............. "
In the present case there are more than one Commissioner
of Income-tax in Bengal and the Central Board of Revenue assigned certain cases
including the case of the appellant to the Commissioner of Income-tax (Central)
at Calcutta for the exercise of his functions as Commissioner. Now this is a
power which the Central Board of Revenue did possess under sub-section (2) of
section 5. As to which Income-tax Officer was to deal with that case was for the
Commissioner of Income-tax to designate.
Sub-section (7A) of section 5 confers on the Central Board
of Revenue the power to transfer any case from one Income-tax Officer to the
other which can be done at any stage of the proceedings. This sub-section is not
a provision which in any way modifies or cuts down the power given to the
Central Board of Revenue under section 5(2). The two sub-sections are
complementary and operate in two separate spheres. Sub-section (2) is for the
purpose of specifying as to which of the Commissioners would perform functions
in respect of different areas, persons, incomes or cases or classes thereof.
It was argued that sub-section (7A) is a special provision
and it necessarily excludes the operation of sub-section (2) but as we have said
above the two sections are not mutually exclusive. They operate in two different
spheres, their areas of operation are different and therefore the power which
the Central Board of Revenue exercised in the present case cannot be said to be
illegal. It was not transferring the appellant's case from the Income-tax
Officer, Rangpur, to the Income-tax Officer, Calcutta. It directed the
Commissioner of Income-tax, Calcutta (Central), to exercise his functions in
respect of certain cases including the case of the appellant and that falls
under section 5(2) and not under section 5(7A).
Reference was made to Pannalal Binjraj v. Union of India.
But that was a case in which the question raised
