1939 (12) TMI 3 - HC - Income Tax

Court rules on jurisdiction issue, transfers assessments, upholds Income-tax Act

The court held that the Income-tax Officer, Section II (Central), lacked jurisdiction to assess the petitioner for certain years and should be assessed by ... - Issues Involved:1. Jurisdiction of the Income-tax Officer, Section II (Central), to assess the petitioner for the years 1937-38, 1938-39, and 1939-40.2. Transfer of pending assessments under the amended Income-tax Act of 1939.3. Preliminary objections under Section 226 of the Government of India Act, 1935, and Section 45 of the Specific Relief Act.Issue-wise Detailed Analysis:1. Jurisdiction of the Income-tax Officer, Section II (Central):The primary issue is whether the Income-tax Officer, Section II (Central), has jurisdiction to assess the petitioner for the years 1937-38, 1938-39, and 1939-40. The petitioner received notices and assessments were made under the pre-amended Income-tax Act. Post-amendment, a Commissioner of Income-tax, Central, was appointed, and the petitioner's case was assigned to him. The petitioner contends that the Income-tax Officer, Section II (Central), lacks jurisdiction under Section 64(1) of the Income-tax Act, which mandates that the assessee should be assessed by the Income-tax Officer of the area where the business is situated. The court held that the area comprising the Bombay Presidency, Sind, and Baluchistan is too broad and does not align with the place where the assessee carries on business. Therefore, the Income-tax Officer, Section II (Central), is not the appropriate authority, and the petitioner should be assessed by the Officer of Ward C, Section II.2. Transfer of Pending Assessments:The second issue concerns whether pending assessments can be transferred under Section 5(2) of the amended Income-tax Act. The court opined that pending assessments could be transferred but not completed assessments. The court stated that the right to transfer cases or classes of cases under Section 5(2) includes pending assessments but excludes completed assessments, as the latter grants certain rights to the assessee, such as appealing to a particular Assistant Commissioner and applying for review to a particular Commissioner. Thus, the assessment for 1938-39 and the proceedings under Section 34 for 1937-38 were properly transferred, but the completed assessment for 1937-38 must stand.3. Preliminary Objections:Two preliminary objections were raised: First, under Section 226 of the Government of India Act, 1935, which restricts the High Court's original jurisdiction in revenue matters. The court referenced the Privy Council decision in Alcock Ashdown & Co. v. Chief Revenue Authority, Bombay, stating that an order directing a revenue officer to do or forbear from doing his statutory duty does not fall within the prohibition of Section 226. Hence, the court has jurisdiction to entertain the matter.Second, under Section 45 of the Specific Relief Act, which requires the application to be made by someone whose property, franchise, or personal right would be injured and who has no other specific and adequate legal remedy. The court held that the petitioner has a right to be assessed by a particular officer, which is a personal right within Section 45. The petitioner lacks an alternative legal remedy, as proceeding under the Income-tax Act would require waiting until the assessment is made and then appealing against it. Therefore, the preliminary objections were overruled.Conclusion:The court ordered in terms of prayer (a) and (b) of the petition, directing the Commissioner of Income-tax, Central, and the Income-tax Officer, Central, Section II, to forbear from exercising jurisdiction and passing orders in the assessment of the petitioner for the specified years, except in compliance with Section 64 of the Income-tax Act. The petitioner was awarded costs taxed as a long cause on the original side scale.