Falshaw, J. - (1.) A dispute has arisen on account of the fact that the claim of the Income tax Officer, Karnal, for Rs. 16574/- has been rejected, by the Liquidator of the Kaithal Grain and Bullion Exchange Limited, Kaithal, in liquidation. The company was ordered to be wound up by an order dated the 11th of July 1952, and the claim of the Income-tax Officer relates to the assessment years 1947-48 and 1948-49, i. e. to the accounting years 1946-47 and 1947-48. The ground on which the Liquidator rejected the claim was that the books of the company only showed a small profit of about Rs. (sic) for the assessment year 1947-48 and a loss in the following year, and that the income-tax assessments have not been properly contested. He relied on the decision in -- 'Income-tax Officer, Lucknow v. Lucknow Sugar Works, Ltd.', AIR 1935 Oudh 451 (A), a decision by Srivastava, J.: & the decision of the Full Bench of Harries, C. J., Abdul Rashid and Beckett JJ. in -- 'Governor General in Council v. Sargodha Trading Co., Ltd.', AIR 1943 Lah 228 (B).
(2.) Before discussing these cases the circumstances under which the assessments in dispute were made may be related. It seems from the orders of the Income-tax Officer with regard to both the assessment years dated 29-2-1949 that no returns had been filed by the company in spite of notices under Section 34, Income-tax Act, and no books lad been produced in spite of further notices under Section 22 (2). In the circumstances the Income-tax Officer assessed the income of the company under Section 23 (4) at Rs. 30,000/- for the assessment year 1947-48 and at Rs. 6,000/- for the assessment year 1948-49. Applications under Section 27 were rejected by the Income-tax Officer by orders dated 30-6-1949. Appeals were preferred by the company to the Appellate Assistant Commissioner at the hearing of which the company was represented by counsel, but both these appeals were dismissed by the orders of the Appellate Assistant Commissioner dated 17-21950. The matter was apparently not contested any further by way of appeal to the Appellate Tribunal, and as the income-tax due on these years was not paid, by orders dated 12-5-1951 under Section 28, Income-tax Act, the Income-tax Officer imposed penalties of Rs. 4,000/- and Rs. 1000/- for the respective years.
(3.) In the Oudh case the learned Judge rejected a claim of the Income-tax Officer in the case of a company which had been similarly assessed under Section 23 (4) after failing to produce its accounts and it was found by the Liquidator in the Liquidation proceedings that the company had sustained a loss for the assessment year in question. Unfortunately in the judgment, although some account is given of the proceedings before the Income-tax authorities, there is no mention of the date on which the company was ordered to be wound up, and it is therefore not possible to say what the decision of the learned Judge would have been if the assessment years were long before the order of winding up, and in fact the company's appeal against the assessment had been dismissed by the Appellate Assistant Commissioner two years before the winding-up order. In the Lahore case all that was held by the Full Bench was that income-tax which does not become due and payable until after the winding up order has been made is not a debt for which priority can be claimed. The facts of that case were that the company concerned had been ordered to produce its books before the Income-tax Officer on 14-7-1938 and the winding up order was passed on 12-7-1948. It seems that thereafter nobody ever appeared on behalf of the company before the income-tax authorities, and it was only after an assessment order had been passed 'ex parte' that the Liquidator took any steps in the matter. There were thus very special circumstances existing in that case which do not exist in the present case. On the other hand there is the English case -- 'In re Calvert; Ex parte Calvert, 1899 2 Q. B. 145, (C)', in which it was held by Wright J. that the rule that on a proof for a judgment debt the Court will go behind the judgment and ascertain whether there is a provable debt, does not apply to a proof for assessed taxes, this being a bankruptcy case, and I find that this decision was followed by a Division Bench of the Lucknow Court -- Bennett & Ghulam Hassan JJ. in -- 'Messrs Dinshaw & Co. v. Income-tax Officer Lucknow', AIR 1941 Oudh 260 (D), in which it was held that where no statement of account is filed, and notice for production of accounts is not complied with and consequently a company is assessed on an estimated income under Section 23 (4) against which there is no appeal and it becomes final, it cannot be challenged or reopened subsequently by the liquidator of the company in liquidation proceedings unless there is reason to think that the assessment is vitiated by fraud. This was a case in which although all the dates are not given in the judgment it is clear that the winding-up order of the company followed fairly soon after the assess- merit in question which was for the year 1934-35 and the company was wound up on 15-10-1935. The present case for not reopening the assessments is even stronger.;