1936 (5) TMI 32 - HC - Income Tax

Court upholds tax assessment jurisdiction over plaintiff's residence and income, dismissing suit. Appeal denied.

Secretary of State for India Versus V.M. Meyyappa Chettiar

The High Court dismissed the plaintiff's suit, holding that the Income-tax Officer had jurisdiction to determine the plaintiff's residence and assess ... - Issues Involved:1. Whether the suit was barred by Section 67 of the Income-tax Act, XI of 1922.2. Whether the assessment was ultra vires or made without jurisdiction.3. Whether the plaintiff was permanently residing in French Territory and had no assessable income in British India.4. Whether the assessment was made without giving the plaintiff an opportunity to prove his contentions.5. Whether the income received by the plaintiff from the Saigon business was assessable under the Act.Issue-wise Detailed Analysis:1. Whether the suit was barred by Section 67 of the Income-tax Act, XI of 1922:The District Munsif dismissed the suit as barred by Section 67, which states, 'No suit shall be brought in any Civil Court to set aside or modify any assessment made under this Act.' The lower Appellate Court, however, opined that the suit would be maintainable if the assessment was ultra vires or made without jurisdiction. The High Court emphasized that the bar enacted by Section 67 is absolute and unqualified, meaning that civil courts cannot examine the correctness of the conclusions arrived at by the Income-tax authorities.2. Whether the assessment was ultra vires or made without jurisdiction:The High Court discussed that if a statutory authority purports to exercise powers on what is not according to law the subject-matter of these powers, the court will interfere. However, in this case, the Income-tax Officer made an enquiry and there was no reason to think he did not honestly conclude that the plaintiff was a resident of British India. The court held that the Income-tax Officer had jurisdiction to decide the question of the plaintiff's residence and the consequent receipt of the profits in British India.3. Whether the plaintiff was permanently residing in French Territory and had no assessable income in British India:The plaintiff claimed to be permanently residing in Pondicherry in French territory since 1926 and had no business or assets in British India post-1928. The Income-tax Officer, however, found that the plaintiff's residence out of British India was only temporary, and his wife was living in Chettinad, indicating a connection to British India. The court concluded that the Income-tax Officer had jurisdiction to make this factual determination.4. Whether the assessment was made without giving the plaintiff an opportunity to prove his contentions:The plaintiff's vakil conceded that this issue could not be tried by the civil court. The High Court reiterated that the Income-tax Officer had conducted an enquiry and made a determination based on available materials. Therefore, this issue was not pursued further.5. Whether the income received by the plaintiff from the Saigon business was assessable under the Act:The Income-tax Officer assessed the plaintiff under Section 23(4) of the Act on a sum of Rs. 8,100, being the amount disclosed by the accounts of the partnership to have been remitted to him. The court held that the assessment was made following the provisions of the Act and that the plaintiff's suit to challenge this assessment was barred by Section 67.Conclusion:The High Court allowed the appeal, dismissing the plaintiff's suit with costs throughout. It was held that the Income-tax Officer had jurisdiction to decide on the plaintiff's residence and the consequent receipt of income in British India. The assessment was made under the Act, and thus, the plaintiff's suit was barred by Section 67 of the Income-tax Act, XI of 1922.