MANILAL RAMCHAND Vs. COMMISSIONER OF INCOME TAX
HIGH COURT OF GUJARAT
COMMISSIONER OF INCOME TAX,GUJARAT
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P.N.BHAGWATI, J.M.SHELAT -
(1.) This Reference arises out of an assessment made on the assessee for the assessment year 1949-50 the previous year being Samvat Year 2004 that is 13 November 1947 to 1st November 1948. The assessee was during the previous year a resident of Veraval in the erstwhile State of Saurashtra and carried on business at that place. Income-tax legislation was introduced for the first time in the State of Saurashtra by the Saurashtra Income-tax Ordinance 1949 from the assessment year 1949-50. Subsequently there was financial integration of the State of Saurashtra and the Indian Income-tax Act 1922 was made applicable to the territories of the State of Saurashtra from the assessment year 1950-51. In 1951 the Government of India announced the voluntary disclosure scheme and taking advantage of that scheme the assessee addressed a letter dated 25th January 1952 disclosing the following income alleged to have arisen to him in the State of Saurashtra from money-lending and speculation during the years mentioned against the respective figures:-- --------------------------------------------------------------------------------------------------------------------------------- Income Assessment year Previous year Rs. 50 0 1949 Samavat Year 2004 Rs. 40 0 1950 Samavat Year 2005 Rs.7 998 1951 Samavat Year 2006 __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ The assessee also disclosed that he had a share in a firm called Messrs. Rameshchandra Manilal and Company carrying on business at kozhikodefrom the assessment year 1950-51. On the basis of this disclosure the assessee was assessed to income-tax on an income of Rs. 50 0 the assessment year 1949-50 under Saurashtra Income-tax Ordinance 1949which was applicable in respect of that assessment year and for the assessment years 1950-51 and 1951-52 the assessee was assessed to income-tax on income of Rs. 40 62 Rs. 14 98 under the Indian Income-tax Act 1922 which had by then been applied to the territories of the State of Saurashtra.
(2.) It appears that in 1958 the Income-tax Officer Ward A Junagadh who has territorial jurisdiction over Veraval being the place where the assessee was residing and carrying on business during the previous year Samvat Year 2004 received information from which he had reason to believe that the assessee had remitted during that previous year certain moneys from Bombay for making an investment in Kozhikode. There being no explanation for the source of these moneys and the assessee not having filed a return of income under the Indian Income-tax Act 1922 for the assessment year 1949-50 the Income-tax Officer issued a notice under section 34(1)(a) of the Indian Income-tax Act 1922 for the assessment year 1949-50 after obtaining the necessary approval of the Commissioner of Income-tax Bombay North Ahmedabad. The notice under section 34(1)(a) along with the notice under section 22 was served on the assessee on 5th March 1958. On 8th April 1958 within the period of 35 days prescribed for filing a return after receipt of the notice under section 22(2) a letter was filed before the Income-tax Officer by the advocate appearing on behalf of the assessee and the following objections were raised:--... I had no business or business place in British India and according to section 64 of the Income-tax Act 1922 there can be no jurisdiction to assess me here. I am a permanent resident of Veraval and have already been assessed under the Saurashtra Income-tax Ordinance and hence I raise the objection to the jurisdiction of assessment and assessment place and hence withhold the return and state that I cannot be treated as defaulter for late submission etc. unless the above objections are cleared up by your honour. The Income-tax Officer thereafter issued a notice dated 13th September 1959 to the assessee under section 28(4) of the Saurashtra Income-tax Ordinance 1949 fixing an appointment on 29th September 1959. The advocate of the assessee appeared on that date and presented a letter of the same date objecting to the notice under section 28(4) of the Saurashtra Income-tax Ordinance 1949 on the ground that it was not according to law. The Income-tax Officer realising that the notice was wrongly issued under section 28(4) of the Saurashtra Income-tax Ordinance 1949 when the proceedings were initiated under section 34(1)(a) of the Indian Income-tax Act 1922 made a note on the letter of the assessee that the notice under section 28(4) of the Saurashtra Income-tax Ordinance 1949 was issued through oversight and that the pending assessment proceedings were to be completed under the Indian Income-tax Act 1922 and obtained the signature of the assessees advocate below the note. Thereafter the Income-tax Officer issued a notice on 8th December 1958 under sec. 22(4) of the Income-tax Act 1922 calling for the production of the books of account and Bank pass-books of the assessee relevant to the assessment year 1949-50 on 19th December 1958. The assessee however addressed a letter dated 18th December 1958 to the Income-tax officer contending that in respect of the assessment year 1949 it was the Saurashtra Income-tax Ordinance 1949 which was applicable and not the Indian Income-tax Act 1922 and that no proceedings could therefore be instituted against the assessee under sec. 34(1)(a) of the Indian Income-tax Act 1922 in respect of the assessment year 1949 and the notices issued under sections 34(1)(a) 22 and 22(4) of the Indian Income-tax Act 1922 were accordingly invalid. Since the assessee failed to make the return required by the notice under sec. 22(2) and did not comply with the terms of the notice issued under sec. 22(4) and determined the income accruing or arising in Bombay at Rs. 35 0 and assessed the assessee as a non-resident in respect of such income. The assessment order was made by the Income-tax Officer on 24th December 1958. The objection raised by the assessee to the jurisdiction of the Income-tax Officer was disposed of by the Income-tax Officer in the following words :- He wanted to point out that the Junagadh Income-tax Office had no jurisdiction but he has never mentioned where he wants to be assessed. Under the circumstances it is clear that the jurisdiction of the assessment is with this office as per the circular of the Central Board of Revenue......... The circular of the Central Board of Revenue referred to by the Income tax Officer was the Circular No. 9-I.T. dated 13th February 1956 adding a certain entry in the notification of the Central Board of Revenue No. 44 dated 1st July 1952.
(3.) Immediately after the assessment order was made by the Incometax Officer the assessee made an application to the Income-tax Officer under sec. 27 for canceling the assessment on the ground that he was prevented by sufficient cause from making a return required by the notice under sec. 22(2) and complying with the terms of the notice under sec. 22 The ground urged by the assessee as constituting sufficient cause was that though the assessee had raised an objection to the place of assessment the Income-tax Officer had not referred the question as to the place of assessment to the Commissioner of Income-tax as required by sec. 64(3) and the assessee had therefore a reasonable apprehension in his mind that if he submitted a return in pursuance of the notice issued under section 22(2) or complied with the terms of the notice issued undersec. 22(4) he might be regarded as having accepted the jurisdiction of the Income-tax Officer and that was the reason why he had not filed the return or complied with the notice issued by the Income-tax Officer. The Income-tax Officer rejected the application by an order dated 31st March 1959 The Income-tax Officer observed:-......... He never claimed that his jurisdiction was with a particular Income-tax Officer. Unless he informs this point the question of jurisdiction is not to be decided........... . An appeal was preferred to the Appellate Assistant Commissioner but it was rejected by him. The Appellate Assistant Commissioner took the view that the question of reference to the Commissioner under section 64(3) could arise only if the assessee claimed specifically that some Income tax Officer other than the Income-tax Officer issuing the notice had jurisdiction over the case of the assessee and that since in the present case all that the assessee did was to go on repeating that the Income tax Officer Ward A Junagadh had no jurisdiction over his case and did not claim specifically that any other Income-tax Officer had such jurisdiction he could not be said to have raised an objection to the place of assessment which was required to be referred to the Commissioner for his decision under sec. 64(3). The Appellate Assistant Commissioner also held that the question of jurisdiction of a particular Income-tax Officer to assess an assessee could not be raised in an appeal under sec. 30(1). Still however the Appellate Assistant Commissioner proceeded to consider whether the Income-tax Officer Ward A Junagadh had jurisdiction to assess the assessee and held that having regard to the circular of the Board of Revenue to which reference has already been made by us earlier while referring to the order of the Income-tax Officer the Incometax Officer Ward A Junagadh had such jurisdiction.;
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