1962 (7) TMI 63 - HC - Income Tax

High Court upholds tax assessment, rules in favor of department, emphasizing waiver of notice.

HABIB AND SONS Versus COMMISSIONER OF INCOME-TAX, BOMBAY CITY II.

The High Court upheld the validity of the assessment made on the assessee as agents to Messrs. Jamal Ramji & Co., ruling in favor of the department. ... - Issues:1. Validity of assessment made on the assessee as agents to Messrs. Jamal Ramji & Co.2. Waiver of notice under section 43 by the assessee.Comprehensive Analysis:The High Court of Bombay addressed the issue of the validity of the assessment on the assessee as agents to Messrs. Jamal Ramji & Co. The case involved the application of Section 43 of the Indian Income-tax Act, which deems any person employed by or on behalf of a non-resident person to be their agent for tax purposes upon notice by the Income-tax Officer. In this case, the Income-tax Officer had issued a notice to the assessee firm, declaring its status as agents of the non-resident firm. The assessee had been assessed accordingly for multiple years without a separate notice under Section 43 but in response to notices under Section 22(2) as agents. The assessee raised the contention of the assessment being invalid due to the absence of a notice under Section 43 for the assessment year 1947-48, which was dismissed by the Appellate Assistant Commissioner and the Tribunal.The main contention raised by the assessee was regarding the waiver of notice under Section 43. The Tribunal had held that the assessee had waived the notice based on their conduct of filing returns without protest and admitting their capacity as agents in previous years. The assessee argued that filing a return in response to a notice under Section 22(2) was not voluntary and did not amount to waiver. The High Court disagreed with the assessee's contentions, emphasizing that the conduct of the assessee over the years, including filing returns without protest and admitting their agency status, supported the inference of waiver. The Court highlighted that the assessee was aware of their right to a notice under Section 43, as evidenced by receiving such notices in earlier years.Additionally, the Court distinguished the case of Jadavji Narshidas & Co. v. Commissioner of Income-tax, where filing a voluntary return was considered as waiver, noting that the circumstances in the present case were different. The Court also differentiated another case where filing a return under protest indicated non-submission to jurisdiction, unlike the present case where returns were filed without protest and agency status was accepted. Ultimately, the Court upheld the Tribunal's decision, ruling in favor of the department and holding that the assessment made on the assessee as agents to Messrs. Jamal Ramji & Co. was valid.In conclusion, the High Court affirmed that the assessee had waived notice under Section 43 based on their conduct and upheld the validity of the assessment made on the assessee as agents to Messrs. Jamal Ramji & Co. The Court directed the assessee to pay the costs of the department, answering the question referred in the affirmative.