Uncertain recipient of taxable income may be pursued against both parties while revenue determines the true taxpayer.

Where the recipient of taxable income is uncertain between two persons, the income-tax authorities may proceed against both to ascertain the true liability, and an assessee cannot defeat the inquiry by characterising it as protective or precautionary. The challenge that the Bombay proceedings lacked jurisdiction also failed because the alleged invalid transfer was not established, and the papers having been sent from Jamnagar to Bombay without authority did not displace the proceedings already pending before the competent officer. The notice and assessment proceedings were therefore treated as valid and capable of continuing in accordance with law.

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Issues: (i) Whether the impugned notice and the consequent assessment proceedings were without jurisdiction on the ground that the transfer of the assessee's case to Bombay was invalid and the matter therefore remained pending before the original Income-tax Officer at Jamnagar. (ii) Whether the notice could be resisted on the ground that the proceedings were in the nature of a precautionary or protective assessment not warranted by the Act.

Issue (i): Whether the impugned notice and the consequent assessment proceedings were without jurisdiction on the ground that the transfer of the assessee's case to Bombay was invalid and the matter therefore remained pending before the original Income-tax Officer at Jamnagar.

Analysis: The transfer order relied upon by the assessee was not shown to be valid, and the subsequent assignment by the Commissioner at Bombay could derive no independent authority if the foundational transfer was invalid. On that footing, the Bombay officer would have lacked jurisdiction, and the proceedings would properly remain before the original officer who had jurisdiction under the Act. The Court also noted that the papers had in fact been sent from Jamnagar to Bombay without authority and in contravention of the statutory scheme.

Conclusion: The challenge on this ground failed, and the impugned notice was held to be valid because the proceedings were properly pending before the original Income-tax Officer.

Issue (ii): Whether the notice could be resisted on the ground that the proceedings were in the nature of a precautionary or protective assessment not warranted by the Act.

Analysis: The Court treated the notice as part of proceedings intended to determine, on proper inquiry, who was actually liable to bear tax on the income in question. It accepted that the revenue authorities could proceed against both possible recipients where the true recipient was uncertain, so that the income did not escape taxation altogether. In that setting, the assessee could not resist the enquiry merely by characterising it as protective or precautionary.

Conclusion: The objection failed, and the enquiry and notice could validly proceed.

Final Conclusion: The appeals failed because the jurisdictional challenge and the objection to the proposed enquiry were both rejected, leaving the revenue authorities free to continue the assessment proceedings in accordance with law.

Ratio Decidendi: Where the recipient of taxable income is uncertain between two persons, the income-tax authorities may proceed against both to ascertain the true liability, and an assessee cannot defeat the enquiry merely by labelling it protective or precautionary; a valid jurisdictional challenge must show that the statutory authority to proceed has truly failed.

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