Extraneous administrative influence invalidates pre-assessment exemption orders; assessment officer may still inquire and decide exemption.

An assessing officer's pre assessment order refusing exemption that merely records and enforces an external administrative opinion is vitiated by extraneous influence and by making an advance determination outside the statutory assessment process; certiorari quashed that order. However, an assessing officer retains jurisdiction to initiate enquiries and require returns and to determine exemption claims in assessment proceedings after factual inquiry into application of income and the trust's conduct; mere assertion of exemption does not oust that jurisdiction and no jurisdictional error was shown to justify prohibition, so prohibition petitions were dismissed.

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Issues: (i) Whether the order dated 6 November 1961 of the Income-tax Officer refusing exemption under section 4(3)(i) of the Income-tax Act, 1961, on the basis of the Central Board of Revenue's opinion is legally sustainable and liable to be quashed by certiorari; (ii) Whether writs of prohibition should be issued to restrain the Income-tax Officer from proceeding with enquiries/notices issued under section 34 and section 22(2) of the Income-tax Act, 1961.

Issue (i): Whether the Income-tax Officer's order of 6 November 1961 refusing exemption under section 4(3)(i) of the Income-tax Act, 1961, by adopting the Board's view amounts to a vitiated quasi-judicial order subject to certiorari.

Analysis: The Court examined the record and found that the Income-tax Officer's order merely recorded and gave effect to the opinion of the Central Board of Revenue without independent deliberation. The relevant statutory framework (including Sections 5(7B) and 5(8) of the Income-tax Act, 1961) permits guidance and directions but does not empower the Board to substitute or usurp the assessing officer's statutory function of making an assessment. The Court also noted that there is no provision for an advance, final decision on exemption outside the assessment process; the question of exemption under section 4(3)(i) must ordinarily be determined in the course of assessment based on evidence as to application of income and the true character and conduct of the trust beyond the bare terms of the trust deed.

Conclusion: The order dated 6 November 1961 is vitiated by extraneous influence and by giving an advance determination outside the statutory assessment process; certiorari is granted and the impugned order is quashed (in favour of the assessee on this issue).

Issue (ii): Whether prohibition should issue to restrain the Income-tax Officer from proceeding with enquiries under section 34 or from requiring returns under section 22(2) of the Income-tax Act, 1961, on the ground that the trust's income is exempt under section 4(3)(i).

Analysis: The Court reviewed the nature and scope of prohibition and held that prohibition issues only where there is an excess or usurpation of jurisdiction or a breach of rules of natural justice. The assessing officer has jurisdiction to initiate enquiries under section 34 and to call for returns under section 22(2); the mere claim of exemption under section 4(3)(i) does not oust that jurisdiction. Determination of exemption depends on factual inquiry into application of income and conduct of the trust, which the officer is competent to undertake in the assessment proceedings. No jurisdictional error was shown that would justify prohibition.

Conclusion: Writs of prohibition are not warranted; the petitions for prohibition are dismissed (against the assessee on this issue).

Final Conclusion: The Court quashed the Income-tax Officer's premature/order adopting the Board's opinion (certiorari allowed) but refused to restrain the assessing officer from conducting statutory enquiries and assessments (prohibition dismissed); the assessing officer is free to decide the exemption issue in the assessment proceedings after calling for and considering relevant evidence.

Ratio Decidendi: An assessing officer's order is vitiated where it merely records and gives effect to an extraneous administrative opinion without independent application of statutory jurisdiction; however, the assessing officer retains jurisdiction to inquire into and determine exemption claims under section 4(3)(i) of the Income-tax Act, 1961, in the course of assessment based on factual inquiry into the application of income.

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