The Commissioner of Income-tax has the power to transfer a case from one Income-tax Officer to another under S. 5(5) of the Patiala Income-tax Act, 2001, even though the case was not pending at the time of transfer.

Judgment

HIDAYATUALLAH, J. : The appellant firm, L. Hazarimal Kuthiala of Kapurthala, moved the High Court of Punjab under Art. 226 of the Constitution for writs of prohibition, certiorari, quo warranto etc., against the Income-tax Officer, Special Circle, Ambala and the Commissioner of Income-tax, Punjab (I), Himachal Pradesh, Bilaspur and Simla in respect of reassessment of the income of the firm for the account year, 1945-46. The High Court dismissed the petition, but granted a certificate under Arts. 132 and 133 of the Constitution, and this appeal has been filed on that certificate.

2. The firm carried on business as forest lessees and timber merchants at Dhilwan in the former Kapurthala State. In that State, an Income-tax law was in force, and prior to the integration of the State, on April 10, 1947, the income of the firm for the account year 1945-46 (Samvat 2002) was duly assessed, and the tax was also paid. Subsequently, political changes took place, Kapurthala integrated into what was known as Pepsu, and the Rajpramukh issued two Ordinances in Samvat. 2005, by which all laws in force in Kapuurthala including the Income-tax law ceased to be operative from August 20, 1948. The two Ordinances instead applied laws in force in the Patiala State to the area of the new State which included Kapurthala, and the Patiala Income-tax Act. 2001, came into force. Later still, the Indian Finance Act, 1950 (26 of 1950) applied the Indian Income-tax Act to the Part B States, which had emerged as a result of political changes. Section 13 of the Indian Finance Act, 1950, repealed the Income-tax laws obtaining in the area of the Part B States except for the purpose of levy, assessment and collection of income-tax and super-tax in respect of the period defined therein.

3. On March 12, 1955, the Income-tax Officer, Special Circle, Ambala, issued a notice purporting to be under S. 34 of the Patiala Income-tax Act of Samvat 2001 to the appellant firm calling upon it to file a return of its income and total world income, because he had reason to believe that the income had been underassessed. Previous to this, on November 4, 1953, the Commissioner of Income-tax, Punjab (I), Himachal Pradesh, Bilaspur and Simla, purporting to act under S. 5, sub-secs. (5) and (7A) of the Indian Income-tax Act, ordered that the assessment of the appellant firm would be done by the Income-tax Officer, Special Circle, Ambala and not by the Income-tax Officer, B-Ward, Patiala, who ordinarily would be the competent authority under S. 64 of the Indian Income-tax Act to assess the appellant firm. The appellant firm raised objections, but failed, and then filed the petition under Art. 226 of the Constitution, out of which the present appeal arises.

4. Numerous objections were taken in respect of the competency of the proceedings before the taxing authorities, but some of them are no longer pressed. An argument under Art. 14 of the Constitution has now been abandoned, though it figured at earlier stages of the present case. A second point that the reassessment cannot be made under the Patiala Income-tax Act is not in dispute, because the respondents before us stated that the reassessment, if any, would have to be done in accordance with the Kapurthala law, as it existed in the assessment year (Samvat 2002). A third argument, namely, that the words of S. 13 of the Indian Finance Act, 1950, did not include reassessment, has also been abandoned, in view of the decisions of this Court in Lakshmana Sheonoy v. Income-tax Officer, Ernakulam 1959 SCR 751 and Income-tax Officer, Bangalore v. K. N. Guruswamy 1959 SCR 785. Only one point has been pressed before us, and it is that the Income-tax Officer, Special Circle, Ambala had no jurisdiction to issue a notice under S. 34 and that only the Income-tax Officer, B-Ward, Patiala, was the competent authority. Reliance is placed in this connection upon the provisions of S. 64(1) of the Indian Income-tax Act, under which the locally situ