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HIGH COURT OF BOMBAY
CHAGLA, TENDOLKAR, JJ.
Commr. of Income-tax Central Bombay
Versus
Govind Ram Seksaria
, D/- 16 -2 -1955.
(A) Income-tax Act (11 of 1922), S.64 - INCOME-TAX - Right of territorial assessment - Claim by assessee when not tenable.
The right to territorial assessment only exists where there is no assignment of the particular case of the assessee to a specific Income-tax Officer.
Where there is an assignment of the case to specific income-tax officer, S.64(5) overrides S.64 (1) and the assessee cannot claim the right of territorial assessment conferred upon him by S.64(1). (Para 3)
Anno : AIR Man.: I.T. Act, S.64 N.2.
(B) Income-tax Act (11 of 1922), S.5 and S.66 - INCOME-TAX - Jurisdiction of Income-tax officer.
The assessee had his head office at Indore, an Indian State to which the Income-tax Act did not apply prior to 1950. On 18-4-1939, under sub-s. (2) of S.5 the Central Board of Revenue appointed the Commissioner of Income-tax, Bombay to try certain specific cases and one of the cases assigned to this Commissioner was the case of the assessee. On 27-4-1939, the Commissioner of Income-tax by reason of the powers vested in him under S.5(5) of the Act allotted the case of the assessee to an Income-tax officer under his control. On 4-5-1945, by reason of the powers vested in him under sub-s. (7A) of S.5 he transferred the case of the assessee from that Income-tax Officer to another Income-tax Officer. That officer assessed the assessee for the assessment year 1951-52. The assessee contended that after the merger of Madhya Bharat the officer had no jurisdiction in the absence of a fresh notification to assess him. He urged that the notification issued under the Income-tax Act could only apply to what was British India at the time and as soon as Indore became part of India and the Income-tax Act applied to that part, it was necessary to issue a fresh notification.
Held that the contention would have had considerable force if the notification was a notification with a territorial operation. But it was clear that the notification applied to the specific case of the assessee irrespective of his residence, irrespective of the country of which he was a citizen, and irrespective of where he might be carrying on his business. The notification was, as it were, in personam and not territorial. Therefore the merger of Madhya Bharat with India could not have any effect on the notification validly issued under the Income-tax Act. If the case of the assessee could be dealt with under these notifications by the specific Income-tax Officer appointed, that Income-tax Officer still had the jurisdiction to deal with that case by reason of the same provisions of the law which provisions were in no way affected by the merger of Madhya Bharat with India or the application of the Income-tax Act to Madhya Bharat. (Para 4)
Anno : AIR Man.: I.T. Act, S.5 N.2.
(C) Income-tax Act (11 of 1922), S.66(5) - INCOME-TAX - Subsequent change of address of assessee - Effect on jurisdiction of Income-tax Officer.
The income-tax Officer to whom a case has been specifically referred is not divested of his jurisdiction by a change in address of the assessee. If it were possible for an assessee to so divest the jurisdiction most assessees would be doing nothing else except trying to alter their addresses so as to deprive the Income-tax Officer of the jurisdiction under the Act. (Para 5)
Decided On : 16-02-1955
INCOME TAX - JURISDICTION - ASSIGNMENT OF CASE TO SPECIFIC INCOME-TAX OFFICER - EFFECT OF EXTENSION OF INCOME-TAX ACT TO NEW TERRITORY - SECTION 64(5) OF THE INCOME-TAX ACT, 1922.
Fact of the Case:
The assessee, whose principal place of business was in Indore, was assessed to income tax for the assessment year 1950-51 and earlier years by the Additional Income-tax Officer, S.VI (Central), Bombay. The assessee contended that by reason of the application of the Indian Income-tax Act to Indore, the jurisdiction which was rightly vested in the Income-tax Officer became divested.
Finding of the Court:
The court held that the assessee was not entitled to the right of territorial assessment conferred upon him by Section 64(1) of the Income-tax Act, 1922, as the specific case of the assessee was assigned to a specific Income-tax Officer under Section 5(2) of the Act. The court further held that the notification issued under Section 5(2) of the Act was not a territorial notification and its validity was not affected by the merger of Madhya Bharat with India or the application of the Income-tax Act to Madhya Bharat.
Issues: Whether the assessee was entitled to the right of territorial assessment conferred upon him by Section 64(1) of the Income-tax Act, 1922.
Ratio Decidendi: The court held that Section 64(5) of the Income-tax Act, 1922, overrides Section 64(1) and the assessee cannot claim the right of territorial assessment conferred upon him by Section 64(1). The court further held that the notification issued under Section 5(2) of the Act was not a territorial notification and its validity was not affected by the merger of Madhya Bharat with India or the application of the Income-tax Act to Madhya Bharat.
Final Decision: The court answered the question raised in the negative and directed the assessee to pay the costs.
CHAGLA, C.J.:- The assessee was assessed to income-tax for the assessment year 1950-51 and earlier years by the Additional Income-tax Officer, S.VI (Central), Bombay. The jurisdiction of this officer to assess the assessee is not in question. The head office of the assessee was at Indore and the Income-tax Act did not apply to Indore which was prior to 1950 an Indian State. Section 3 of the Finance Act of 1950 made the Income-tax Act applicable to the whole of India excepting Kashmir which included Madhya Bharat and Indore. The assessee was assessed by the same officer for the assessment year 1951-52, and the contention put forward by the assessee was that by reason of the application of the Indian Income-tax Act to Indore the jurisdiction which was rightly vested in the Income-tax Officer became divested. This contention of the assessee has been accepted by the Tribunal and we have now to examine whether the Tribunal was correct in the view that it took.
2. Now, on 18-4-1939, under sub-s. (2) of S.5 the Central Board of Revenue appointed the Commissioner of Income-tax to try certain specific cases and one of the cases assigned to this Commissioner was the case of the assessee. Under S.5(2) the Central Government may appoint a Commissioner of Income-tax for a specified area or it may appoint a Commissioner to discharge, without reference to area the functions of a Commissioner in respect of any class or classes of cases assigned to him by the Central Board of Revenue, and in this case the Central Board of Revenue has directed the Commissioner of Income-tax (Central) to discharge the functions in respect of certain specific cases without reference to area.
On 27-4-1939, the Commissioner of Income-tax (Central) by reason of the powers vested in him under S.5(5) of the Act allotted the case of the assessee to Section I (Central), and on May 4, 1945, by reason of the powers vested in him under sub-s. (7A) of S.5 he transferred the case of the assessee from the Income-tax Officer, Section I (Central), to the Income-tax Officer, Section VI (Central), and it is this officer who has assessed the assessee.
3. Now, what is urged by Mr. Kolah is that as soon as the Income-tax Act became applicable to Indore, the assessee was entitled to the right conferred upon him by S.64(1) and that section provides:
"(1) Where an assessee carries on a business, profession or vocation at any place, he shall be assessed by the Income-tax Officer of the area in which that place is situate or, where the business, profession or vocation is carried on in more places than one, by the Income-tax Officer of the area in which the principal place of his business, profession or vocation is situate." Sub-section (2) provides:
"(2) In all other cases, an assessee shall be assessed by the Income-tax Officer of the area in which he resides."
The contention is that inasmuch as the assessee has his principal business in Indore, by reason of sub-s. (1) of S.64 he is entitled to be assesed by the Income-tax Officer of that area. It is said that before the Income-tax Act was made applicable to Indore the assessee could not claim his right under S.64(1), but as soon as this section applied, whatever the jurisdiction of the Income-tax Officer, Bombay, was, that jurisdiction ceased and the only officer who had jurisdiction was the Income-tax Officer of the area in question, viz., Indore.
In putting forward this argument Mr. Kolah completely ignores and overlooks the provisions of sub.s. (5) of S.64, and the provisions of that subsection are:
"The provisions of sub-section (1) and sub-section (2) shall not apply and shall be deemed never at any time to have applied to any assessee- (a) on whom an assessment or re-assessment for the purposes of this Act has been, is being or is to be made in the course of any case in respect of which a Commissioner of Income-tax appointed without reference to area under sub-section (2) of section 5 is exercising the functions of a Commissione
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