COLLISTER AND BAJPAI, JJ. - (1.) -
(2.) THIS is a reference by the Commissioner of Income Tax, Central and United Provides, under Section 66(2) of the Income Tax Act, which has been made at the instance of the Maharaja of Benares, Captain His Highness Maharaja Sir Aditya Narain Singh Bahadur, K.C.S.I. The Income Tax Officer assessed the Maharaja to tads on an income of Rs. 48,180 in respect to property in British India. The assessment year is 1934-35. There was an appeal to the assistant Commissioner, who reduced the estimate of income to Rs. 47,174 but otherwise upheld the assessment of the Income-tax Officer. Thereafter an application was made to the Commissioner of Income Tax under Section 66(2) of the Act, requiring him to state a case for the decision of this Court upon certain questions. Three questions of law have been referred as by the Commissioner. Of these, No. (2) reads as follows :- Granting that the assessee was a non-resident, was the Income Tax Officer precluded by any provision of the Act from serving a notice on him without appointing an agent within the meaning of Section 43" ? The Commissioners opinion is that the question should due answered in the negative. He says :- Section 43 gives an Income-tax Officer discretion to treat certain persons as agent of a non-resident for the enforcement of the liability in special cases under Section 42. This section does not create any liability that is not already there in Section 4(1) of the Act and is an extension of the meaning of this section; not a section that creates a new liability, but one that facilitates assessment and collection of the demand in the case of non-residents or in other words, a machinery section - not a section that lays down that the profits or gains are assessable to income-tax only in the name of an agent of the non-resident.... It was, therefore, open to the Income Tax Officer the address notices direct to the assessee even though he be a non-resident. That is what he has don and the fact that the notices were served on the representative of the assessee in British India without recourse to the provisions of section 43, therefore, makes no difference to the validity of the assessment, specially as the notices duly reached the assessee and were formally complied with.
(3.) THE Commissioner quotes as authority the case of Chief Commissioner of Income Tax, Madras v. Bhanjee Ramjee Co. In that case the assessee was riding in Cochin State but did considerable business in British Cochin. He accepted notices and submitted returns to the Collector of Malabar, of which district British Cochin forms a part for the purposes of income-tax. THE learned Judges of the Madras High Court were of opinion that the proviso to Section 33(1) of Act VII of 1918 (which corresponded with Section 42 (1) of the present Act) supports the construction that the profits or gains are chargeable if they can be got at in British India whether they are assessed in the name of an agent of the non-resident or not. Further on they say :- All that the latter part of the section does is to provide machinery by which the tax can be lagged where the non-resident cannot himself be got at. The point fell to be considered by the Bombay High Court in the case of Commissioner of Income Tax, Bombay and Aden v. The National Mutual Life Association of Australasia Ltd., in which reference was made to Bhanjee Ramjee Co.s Case. At page 527 (of 57 Bom.) the learned Chief Justice remarked : It is, further, to be observed that the Madras High Court in Chief Commissioner of Income-tax v. Bhanjee Ramjee Co., held that a principal could be assessed under Section 42 without the necessity of appointing an agent under the latter part of the section and Section 43. ;