MAHARAJ KUMAR KAMAL SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this case Maharaja Bahadur Ramran Vijay Prasad Singh was assessed to income-tax in the first instance by an order of the INcome-tax Officer dated 12-12-1944. The assessee had shown in his return a gross figure of Rs. 87,910 as interest on arrears of rent from the agricultural land. But the INcome-tax Officer excluded this amount from the total assessable income on the basis of a Full Bench decision of the Patna High Court holding that the interest on the agricultural income was not liable to be taxed under the INdian INcome-tax Act. The decision of the Patna High Court was reversed by the Judicial Committee some time in the year 1948. The Judicial Committee took the view that interest on arrears of rent was not agricultural income and was liable to be taxed under the provisions of the INdian INcome-tax Act.

(2.) AFTER the decision of the Judicial Committee was pronounced the Income-tax Officer started a proceeding against the Maharaja under Section 34. The proceeding was started on 25-9-1948. The provisions of Section 34 were later amended and though the actual date of the amendment was 8-9-1948 the amendment was made with retrospective effect from 30-3-1948. In view of the amendment of Section 34 the Income-tax Officer started a fresh proceeding on 18-3-1949. On 30-9-1949 the Income-tax Officer granted certain deductions and held that the amount of Rs. 76,921 should be added to the assessable income of the Maharaja of Dum-raon. The Maharaja died on 13-11-1949 and his son Maharaj Kumar Kamal Singh has been substituted in his place in the proceedings of the Income-tax authorities. An appeal was taken against the order of the Income-tax Officer to the Appellate Assistant Commissioner. The contention of the assessee was that the decision of the Judicial Committee was not tantamount to definite information or discovery within the meaning of Section 34 and the Income-tax Officer had no jurisdiction to start a proceeding. The argument was rejected by the Appellate Assistant Commissioner and the appeal was dismissed.

(3.) THE answer to this question depends upon the correct interpretation of Section 66(1) and Section 66 (2), Income-tax Act. Section 66(1) states--