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Issues: Whether a civil suit to set aside or modify an income-tax assessment is barred by Section 67 of the Indian Income-tax Act, 1922, where the assessment is alleged to have given effect to an ultra vires provision.
Analysis: The available statutory machinery permitted an assessee to challenge in appeal, and thereafter on a question of law, the validity of the taxing provision applied in the assessment. In that setting, the phrase "assessment made under this Act" was construed as referring to an assessment originating from the assessing officer acting under the Act, not to the correctness in law of every step taken in making it. The fact that the assessment may have been based on an allegedly ultra vires provision did not prevent it from being an assessment made under the Act. Allowing a civil suit would undermine the statutory scheme and make the bar depend on the merits of the assessment itself.
Conclusion: The civil suit was barred by Section 67 of the Indian Income-tax Act, 1922, and the challenge to the assessment could not be maintained in the civil court.
Ratio Decidendi: Where the Income-tax Act provides an effective appellate and reference mechanism for testing the legality of an assessment, a civil court cannot entertain a suit to set aside or modify an assessment made by the assessing officer under that Act, even if the assessment is alleged to rest on an ultra vires provision.
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