RAJA BAHADUR KAMAKHYA NARAIN SINGH Vs. UNION OF INDIA

JUDGEMENT

(1.) These three appeals by the same plaintiff arise out of three suits governed by a judgment of the Additional Subordinate Judge of Hazaribagh dismissing the suits for a declaration and permanent injunction against certain income-tax authorities. The admitted facts are these. The plaintiff namely, the Raja Bahadur of Ramgarh, is a resident of village Padma in the district of Hazaribagh. He was assessed income-tax at Hazaribagh from some time in 1937 to August 1940. Before 1987, he was a minor under the guardianship of the court-of-wards. From September, 1940 to September, 1944, he was assessed at Patna, as his cases were transferred to that place. From October, 1944 to July 1947 he was again assessed at Hazaribagh to which place his cases were transferred The three suits relate, however, to the assessment for the years 1948-49, 1949-50 and 1950-51. On the 1st August, 1947, the Commissioner of Income-tax, Bihar and Orissa, issued an order under Section 5 of the Indian Income-tax Act transferring the plaintiff's assessment cases from Hazaribagh to Patna. On the 26th April, 1948 the Income-tax Officer, Special Circle, Patna, Charge III, to whom these cases had been transferred, issued to the plaintiff notices under Section 22(2) of the Act, calling upon him to submit returns in respect of the three years in question within a certain period. The income-tax returns for 1948-49, 1949-50 and 1950-51 were filed before that officer by the plaintiff on the 4th January, 1949, the 26th December 1949 and the 11th February, 1961, respectively. On the 24th October, 1950, the plaintiff had filed an application before the Commissioner of Income-tax requesting him to transfer his cases from Patna to Hazaribagh. There is, however, difference between the parties as to whether subsequently the plaintiff requested the Commissioner to transfer the cases either to Hazaribagh or to any other place near Padma. On the 21st April, 1961. the Commissioner, in exercise of his powers under Section 5(6) of the Act, transferred the plaintiff's cases along with the cases of a large number of assessees from Patna to Ranchi. The Income-tax Officer of Ranchi had been dealing with the cases from the 1st May, 1961 to the 18th August 1952, when the Central Board of Revenue transferred the cases under Section 5(7A) of the Act from Ranchi to Calcutta The plaintiff appeared before the income-tax Officer, Calcutta, under protest and questioned his jurisdiction to deal with his assessment cases for any of the years in question. In spite of the objection, however, the Calcutta Officer completed assessment for 1948-49 under Section 23(3) of the Act on the 26th March, 1953. Thereupon, the plaintiff filed a suit on the original side of the Calcutta High Court against the said income-tax officer of Calcutta praying for declaration and injunction, but he withdrew the suit on the 29th May, 1956. In respect of the year 1949-50. the Calcutta Income-tax Officer made an assessment under Section 23(4) of the Act; and thereupon the plaintiff filed an application under Article 226 of the Constitution of India in the Calcutta High Court, but the same was rejected on the 27th August, 1954. On the 24th March, 1955, the Calcutta Officer assessed the plaintiff, under Section 23(3) of the Act. for 1950-51. On the 28th November, 1951, the plaintiff filed a petition before the Supreme Court under Article 32 of the Constitution for a declaration that Section 5(7a) of the Act as well as the order of transfer passed by the Central Board of Revenue was unconstitutional On the 23rd March 1956. the Supreme Court quashed the impugned order of the Central Board of Revenue dated the 18th August, 1952 and granted an injunction restraining the income-tax authorities from realising any money on the basis of the assessment orders passed by the Calcutta Officer. In the meantime, the plaintiff had also preferred appeals against the assessment orders passed by the Calcutta Officer to the Appellate Assistant Commissioner, who had kept the appeals pending on account of the case in the Supreme Court. On the 15th January, 1958, the Appellate Assistant Commissioner set aside the assessment orders for the three years in question on account of the decision of the Supreme Court. Some time in March, 1957, the Income-tax Officer of Ranchi issued notices under Section 34 of the Act on the plaintiff in respect of the three years in question and these notices were served on the 25th March, 1957 by affixation. On the 8th May. 1957, the Commissioner of Income-tax. Bihar and Orissa, transferred the assessment files of the plaintiff under Section 5(7A) of the Act to Hazaribagh with effect from the 15th May, 1957 and the plaintiff received a copy pf that order on the 12th May. 1957 The Income-tax Officer, Hazaribagh, thereupon sent a registered letter to the plaintiff informing him of the service of notices under Section 34 and also requesting him to submit his returns of income for these years. This letter was received by the plaintiff on the 18th July, 1957 There was further correspondence between the plaintiff and the Income-tax Officer Hazaribagh but the plaintiff did not submit any return On the 4th November, 1957 the plaintiff filed an application before the Patna High Court under Article 226 of the Constitution for a writ against this Income-tax Officer. Subsequently, he withdrew the application and filed the present suits on the 6th February, 1959 against the Union of India (defendant No. 1), the Central Board of Revenue (defendant No. 2), the Commissioner of Income-tax, Patna (defendant No. 3), and Income-tax Officers of Ranchi and Hazaribagh (defendants 4 and 5).

(2.) In all the three suits, the plaintiff has sought for a declaration that no assessment can be legally made under Section 34 of the Act in respect of any of the three years in question on account of the decision of the Supreme Court and the bar of limitation, there being no question of escaped assessment. There is also a consequential relief for permanent injunction against the defendants. It was also asserted that the orders of transfer of the cases of the plaintiff from Hazaribagh to Patna and again from Patna to Ranchi were null and void. There is one more assertion, namely, that the notices under Section 34 had not been properly served on the plaintiff. The defendants, who filed a joint written statement in each suit, asserted, on the other hand, that the orders of transfer passed by the Income-tax Commissioner of Patna were valid and that after the decision of the Supreme Court the cases of the plaintiff for the three years in question were those of escaped assessment within the meaning of the expression in Section 34 of the Indian Income-tax Act. It was further asserted that the civil court had no jurisdiction to entertain the suits. The defendants also alleged that the notices had been properly issued by the Income-tax Officer of Ranchi after obtaining the approval of the Commissioner of Income-tax to proceed under Section 34 and that they were properly served on the plaintiff

(3.) The question of jurisdiction of the Civil Court was decided by the learned Additional Subordinate Judge against the plaintiff: and, therefore the question whether the proceedings taken under Section 34 of the Income tax Act were legal or void was left open Consequently, the suits were dismissed The learned Subordinate Judge further found that the Income-tax Officer submitted to the Commissioner a proposal for proceeding under Section 34 after recording reasons therefor and that the Commissioner had approved the proposal, as required by Section 34. He also held that the notices had been properly served on the plaintiff through his servant The last two findings were not challenged during the arguments in this Court.