TaxTMI 
TaxTMI 
1953 (2) TMI 59
X X X X Extracts X X X X
X X X X Extracts X X X X
....at has arisen because of the allegations contained in the petition regarding the dissolution of the firm. The petition was signed and submitted by Mr. J.N. Kaushal who described himself as "Advocate for the Petitioner's firm Messrs Roller Flour Mills, Patiala". The power of attorney in favour of the counsel was signed by one H.R. Modi. It is common knowledge that only a natural or a juristic person can move a Court of Law. A partnership or a firm is neither a natural person nor a legal entity and Order 30, Rule 1, which enables any two or more persons claiming or being liable as partners and carrying on business in British India to sue or be sued in the name of the firm is an exception to the rule. This rule does not apply to petitions under Article 226 of the Constitution as they are not suits. Nor do I think it was open to the partners of the Petitioner firm to make the petition in the name of the firm after it had been dissolved on the analogy of Order 30, Rule 1. The perusal of the rule goes to show that persons who wish to take' advantage of it and bring a suit in the name of a dissolved firm must be partners on the day the cause of action accrued. This means that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the petition or evidence of the fact stated therein. In the circumstances I hold that the petition before us is not a proper petition and is liable to be dismissed for this reason. In view, however, of the fact that the respondent did not raise this objection and had he done this it is probable that the petition would have been amended, I would not like to throw out the petition merely because of, the technical defect but would proceed to deal with the point raised by the respondent regarding the maintainability of the petition. 4. The following is the operative part of the notice issued by the respondent which has given rise to this petition: Whereas I have reason to believe that your income assessable to Income Tax for the year ending Chet, 2004 Bikrami has escaped assessment; I, therefore, propose to assess the said income that has escaped assessment; I hereby require you to deliver to me not later than 35 days of the receipt of this notice, a return in the attached form of your total income, etc. It was mentioned in the notice that it was issued under Section 34 (Income-tax Act) but there way nothing to show which Act was meant. Both side....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, any income, profits or gains chargeable to Income Tax have escaped assessment for that year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or if excessive loss or depreciation allowance has been computed, or (b) notwithstanding that there has been no omission or failure as mentioned in Clause (a) on the part of the assessee the Income Tax Officer has in consequence of information in his possession reason to believe that income, profits or gains, chargeable to Income Tax have escaped assessment for any year, or, have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under this Act, or that excessive loss or depreciation allowance has been computed: He may in cases falling under Clause (a) at any time within eight years and in cases falling under Clause (b) at any time within four years of that year, serve on the assessee...a notice containing all or any of the requirements which may be included in a notice under Sub-section ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ala Act of 2001 Bk. had been amended by the Ordinance of 2006 but the Indian Income Tax Act as amended up to date had also been made applicable to the Union, all that was necessary to do for the respondent before the issue of the notice was to state in the words of amended Section 34 that he had reason to believe that the income assessable to Income Tax for a particular year had escaped assessment and this Act having boon clearly stated in the notice no question of want of jurisdiction or illegality of the proceedings arose. (2) The objection raised by the Petitioner did not affect the question of the respondent's jurisdiction to issue the notice and could be raised before the respondent who was quite competent to decide it. In the circumstances no writ could be issued quashing the notice or prohibiting further proceedings. (3) Should the respondent refuse to entertain the Petitioner's objection or should he decide It against the Petitioner it would be open to the latter to prefer an appeal from the respondent's order to the Assistant Commissioner, a second appeal to the appellate Tribunal and a revision to the Commissioner of Income Tax and in case, of necessity he can....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee to make a return of his income. It was argued by Mr. Achhru Ram that in a case where information of the kind required by Section 34, Patiala Act of 2001 is wanting there can be no discovery and consequently no notice can issue. It is not necessary to deal with this question at this stage and all that I wish to point out is that the operative part of both the sections being the same the question whether one section applied or the other does not affect the jurisdiction of the Income Tax Officer to issue notice and it will be within the power of the respondent to decide it if and when raised before him in the course of the proceedings that he intends to start. The material question that will have to be decided is whether any income, profits or gains made by the Petitioner-firm during the year in question has escaped notice and it cannot be denied that this is a question of fact which can only be decided by the respondent. Notice contemplated by Section 34 is merely a method of procuring the presence of the Petitioner before the respondent with a view to determining that question and I fail to see how any defect therein can be regarded as a defect of jurisdiction. 11. Let us as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is director's fees. The surveyor for South Kensington, bring of opinion from the size of the business of the firm that its profits up to date of transfer to the company could not have been ascertained at once, and that the Appellant was therefore still in receipt of profits from the firm, made five assessments to Income Tax upon the Appellant under Sch, D in respect of profits from foreign possessions for the years ending April 5, 1908, 1909, 1910 and 1911, which were confirmed by the General Commissioners for South Kensington. The Appellant having paid the first assessment under protest as the result of a distress, obtained a rule nisi from the Divisional Court to prohibit the Commissioners from proceeding upon these assessments upon the ground inter alia that the whole of such profits were profits arising from foreign possessions and were received in the City of London, and were by virtue of Section 108, Income Tax Act, 1842, assessable by the Commissioners acting for the City of London, and not elsewhere. Later on the Divisional Court discharged the rule. On appeal the decision of the Divisional Court was reversed and it was held that persons carrying on business partly in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as beyond his jurisdiction, I can find no case where it has been held that the Court would be justified in refusing to grant a prohibition.... Here an application was made by the respondent to exercise the powers with regard to issuing execution in respect of the very matters which the Act has excepted from its operation and which consequently the County Court Judge had no power to adjudicate upon. Under these circumstances, reluctant as I am to help the present Appellant, I am unable to resist the conclusion that the writ of prohibition must go so far as the matters which are outside the Agricultural Holdings Act, 1833, are concerned. 15. None of these cases can, therefore, help the present Petitioner, because neither it is a case of total want of jurisdiction nor the defect of jurisdiction, if any, is apparent on the face of the notice issued by the respondent. 16. The facts of - 'Channel Coaling Co. v. Ross' (1907) 76 LJKB 145 (G) in which a writ of prohibition was issued to a Subordinate Court prohibiting further proceedings, are somewhat analogous to those of 'Farquharson's case (F)'. In that case an order was made by a County Court Judge allowing ser....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iven, there is no appeal from such exercise of their jurisdiction, Mr. Sikri accepted the above dictum' of Lord Esher and conceded that it lays down the correct law applicable to cases of this kind, but he contended that the respondent, or for the matter of that all tribunals constituted under the different provisions of the Income Tax Act were tribunals of the second category and the respondent had the jurisdiction to decide the points in question. Mr. Achhru Ram cited particularly two cases to support his contention: - 'Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies District, 1 Calcutta' : AIR 1952 Cal 606 (I) and - 'Madan Gopal v. Union of India' : AIR 1951 Raj 94 (2)(J). In the first case the Petitioner applied for a writ under Article 226 quashing the notice issued to him by the Income Tax Officer under Section 34 Income Tax Act, 1922 as amended by the Income Tax Act of 1948 and for prohibiting him from proceeding with the, reassessment that he contemplated to make. The petition was allowed. As I am told that this decision is the subject-matter of a Letters Patent appeal, I do not consider it desirable to say anything about its merits. I may....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a restraining it from taking any action against the firm, on the ground (1) that Rajasthan became a taxable territory on 1-4-1950 and therefore, income accruing or arising before that day was' not assessable to Income Tax, and (2) that the Dominion Parliament did not make any law authorising taxation on income accruing prior to 1-4-1950 and had no jurisdiction to make any law relating to the imposition of Income Tax in Rajasthan prior to 26-1-1950, when the new Constitution came into force. The learned Judges found for the Petitioner on both these grounds and issued a writ to the respondent directing it not to levy any tax on the income of the Petitioner accruing, arising or received in Rajasthan, excluding the area of the former covenanting State of Bundi, prior to 1-4-1950, etc. An objection was raised on behalf of the respondent that because an alternative remedy was open to the Petitioner no writ of prohibition should issue. The learned Judges overruled this plea with the observation that since in this case we have come to the conclusion that there was no law according to which Income Tax could be imposed for the period prior to 1-4-1950 a proper case for the issue of a wri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rposes of the Income-tax', (H} which has been reproduced above and made the following remarks as regards the question, viz., within which class of tribunals should the case before him be placed. In my view an examination of the Income Tax Acts shows the scheme of the Legislature is to entrust the decision of the facts to a tribunal of persons specially selected for the locality, and who are often in a better position than the Courts to determine the questions of fact, sometimes very complicated, which may arise. The exigencies of the State require that there should be a tribunal to deal expeditiously and at comparatively little expense with all such questions and to decide them finally, reserving always to the individual the right to have the Commissioners' decisions on points of law reviewed by the Courts. The obligation is placed, for reasons of expediency upon the person assessed to appeal to the Commissioners if he wishes to rid himself of an assessment which is, in his view based upon wrong conclusions of fact, and this obligation rests equally upon a person who contends that he is not chargeable etc.... The concluding sentence of his judgment is: I am o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....own that no suit shall be brought in any Civil Court to set aside or modify any assessment made under this Act and no prosecution suit, or proceeding shall lie against any officer of the Crown for anything in good faith done or intended to be done under the Act. They further held that though in form the relief claimed in the suit did not profess to modify or set aside the assessment, in substance it did because the repayment could not be ordered so long as the assessment stood. It is true that the facts of the present case are different inasmuch as no assessment has so far been made and Section 67 in terms does not apply, but the observations that their Lordships made in the course of the judgment lay down the principles which are of great value. This is what they said: In construing the section (Section 67) it is pertinent in their Lordships opinion to ascertain, whether the Act contains machinery which enables an assessee effectively to raise in the Courts the question whether a particular provision of the Income Tax bearing on the assessment made is or is not ultra vires. The presence of such a machinery, though by no means conclusive marches with a construction of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....test. Then the Income Tax Officer called for the Petitioner's trading books for their accounting years 1987-88, 1985-86 and 1984-85. It was alleged on behalf of the Petitioners at the outset that the statement contained in the notice issued to the Petitioner by the Income Tax Officer that he had reason to believe that the assessees whole income had escaped Income Tax was without jurisdiction, Mc Nair J. while dismissing the application made the following observations: It is clear from the English decisions that the power, of exercising prohibition is discretionary, and that the Court should not be chary of exercising it, to control persons who are entrusted with the power of imposing any obligation upon individuals and who attempt to exercise those powers in excess of their jurisdiction. It has also been laid down that the fact that there is a right of appeal is not necessarily fatal to a claim by for prohibition, (While v. Steele approved in the King v. North Ex parte Cakey) but the guiding principle appears to be that the writ in such a case will not issue unless the want of jurisdiction complained of is based upon a breach of a fundamental principle of just....
X X X X Extracts X X X X
X X X X Extracts X X X X
....jab 55 (P). Kapur J. this time sitting with another colleague of his reexamined the entire case law on the point and affirmed what had been held in 'Rekhi's case (O)'. He remarked (page 64 of the printed report) that one of the questions that they had to determine was whether the only remedy open to the assessee was to proceed in accordance with the provisions of the Income Tax Act or the High Court should interfere at an intermediary state and put an end to the assessment proceedings, and on a discussion of a host of authorities answered the question in the following words: An examination of the scheme of the Act and the words used in Section 34 of the Act and the various cases that I have referred to above show that the Legislature has entrusted the determination of facts and of law to the Income Tax Officers. A particular machinery has been set up under the Act "by the use of which alone" total assessable income for the purpose of the Income Tax is to be ascertained and jurisdiction to question the assessment otherwise than by the use of this machinery is incompatible with the scheme of the Act. The challenge of the action of the Income Tax Officer by a writ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1953 Pepsu 53 (Q), in which we laid down certain principles that in our opinion must govern petitions under Article 226 for issue of writs. We held, inter alia, that the powers given to the High Court by Article 226 vast these Courts with an extraordinary jurisdiction of a summary but coercive nature, that the relief under the Article is discretionary with the Court, that even if the proceedings which give rise to an application for writ in some respects are not in accord with (sic), if no injustice has been done, no writ or direction should be issued, that the powers should be exercised very sparingly and only in cases where refusal to grant any relief would cause great hardship, and that where any specific and adequate legal remedy is open to the applicant, application for a writ should not be entertained. As regards the question whether the other remedy open to the applicant in a particular case is specific and adequate we observed that it should be decided upon the facts of each case. The petition must fail in view of these principles also because as the remedy provided to the Petitioner by the Income Tax Act is adequate as well as specific. 29. I wish also to refer to the ....