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Commissioner of Income-tax, Central, Bombay Vs. Govindram Seksaria - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Reference No. 36 of 1954
Judge
Reported in[1955]27ITR653(Bom)
ActsIncome Tax Act, 1922 - Sections 5(2), 5(5), 64(1) and 64(5)
AppellantCommissioner of Income-tax, Central, Bombay
RespondentGovindram Seksaria
Appellant AdvocateG.N. Joshi, Adv.
Respondent AdvocateR.J. Kolah, Adv.
Excerpt:
.....assessment only exists where there is no assignment of particular case of assessee to specific income tax officer - notification applies to specific case to assessee irrespective of his residence, country of which he is citizen and where he may be carrying on his business - notification is in personam and not territorial - it is difficult to understand what possible effect merger of madhya bharat with india can have on notifications by specific income tax officer appointed - such officer has jurisdiction to deal with case by reason of same provisions of law which were not effected by merger of madhya bharat with india. - maharashtra scheduled castes, scheduled tribes, de-notified tribes (vimukta jatis), nomadic tribes, other backward classes and special backward category..........was assessed to income-tax for the assessment year 1950-51 and earlier years by the additional income-tax officer, section vi (central) bombay. the jurisdiction of this officer to assess the assessee is not in the question. the head officer of the assessee was at indore and the income-tax act did not apply to indore which was prior to 1950 an indian state. section 3 of the finance act of 1950 made the income-tax act applicable to the whole of india excepting kashmir which included madhya bharat and indore. the assessee was assessed by the same officer for the assessment year 1951-52, and the contention put forward by the assessee was that by reason of the application of the indian income-tax act to indore the jurisdiction which was rightly vested in the income-tax officer became.....
Judgment:

Chagla, C.J.

1. The assessee was assessed to income-tax for the assessment year 1950-51 and earlier years by the Additional Income-tax Officer, Section VI (Central) Bombay. The jurisdiction of this Officer to assess the assessee is not in the question. The head officer of the assessee was at Indore and the Income-tax Act did not apply to Indore which was prior to 1950 an Indian State. Section 3 of the Finance Act of 1950 made the Income-tax Act applicable to the whole of India excepting Kashmir which included Madhya Bharat and Indore. The assessee was assessed by the same officer for the assessment year 1951-52, and the contention put forward by the assessee was that by reason of the application of the Indian Income-tax Act to Indore the jurisdiction which was rightly vested in the Income-tax Officer became divested. This contention of the assessee has been accepted by the Tribunal and we have now to examine whether the Tribunal was correct in the view that it took.

2. Now, on the 18th April, 1939, under sub-section (2) of section 5 the Central Broad of Revenue appointed the Commissioner of Income-tax certain specific cases and one of the cases assigned to this Commissioner of the assessee. Under section 5 (2) the Central Government may appoint a Commissioner of Income-tax for a specified area or it may appoint a Commissioner to discharge, without reference to area, the functions of a Commissioner in respect of any class or classes of cases assigned to him by the Central Board of Revenue, and in this case the Central Board of Revenue has directed the Commissioner of Income-tax (Central) to discharge the functions in respect of certain specific cases without reference to area. On the 27th April, 1939, the Commissioner of Income-tax (Central), by reason of the powers vested in him under section 5 (5) of the Act allotted the case of the assessee to Section I (Central), and on the 4th May, 1945, by reason of the powers vested in him under sub-section (7A) of section 5 he transferred the case of the assessee from the Income-tax Officer, Section I (Central), to the Income-tax Officer, Section VI (Central), and it is this officer who has assessed the assessee.

3. Now, what is urged by Mr. Kolah is that as soon as the Income-tax Act became applicable to Indore, the assessee was entitled to the right conferred upon him by section 64 (1) and that section provides :

'(1) Where an assessee carries on a business, profession or vocation at any place, at any place he shall be assessed by the Income-tax Officer of the area in which that place is situate, or where the business, profession or vocation is carried on in more places than one, by the Income-tax Officer of the area in which the principal place of his business, profession or vocation is situate.'

Sub-section (2) provides : '(2) In all other cases, an assessee shall be assessed by the Income-tax Officer of the area in which he resides.'

4. The contention is that inasmuch as the assessee has his principal business in Indore, by reason of sub-section (1) of the section 64 he is entitled to be assessed by the Income-tax Officer of that area. It is said that before the Income-tax Act was made applicable to Indore the assessee could not claim his right under section 64 (1), but as soon as this section applied, whatever the jurisdiction of the Income-tax Officer, Bombay, was that jurisdiction ceased and the only officer who had jurisdiction was the Income-tax Officer of the area in question, viz., Indore. In putting forward this argument Mr. Kolah completely ignores and overlooks the provisions of sub-section (5) of section 64 and the provisions of that sub-section are :

'The provisions of sub-section (1) sub-section (2) shall not apply and shall be deemed never at any time to have applied to any assessee - (a) on whom an assessment or re-assessment for the purposes of this Act has been, is being or is to be made in the course of any case in respect of which a Commissioner of Income-tax appointed without reference to area under sub-section (2) of section 5 is exercising the functions of a Commissioner of Income-tax..'

5. The scheme of this sub-section is clear that the right, if one may so put it, to territorial assessment is taken away where a specific case is assigned to an Income-tax Officer. The right to territorial assessment only exists where there is no assignment of the particular case of the assessee to a specific Income-tax Officer. In this case, as we have already pointed out, the specific case of the assessee was assigned first to the Commissioner of Income-tax (Central) to the Income-tax Officer, Section I (Central), under section 5 (5), and ultimately it was transferred by the Commissioner of the Income-tax Officer, Section VI (Central), Bombay. Therefore it is clear that section 64 (5) overrides section 64 (1) and the assessee cannot claim the right of territorial assessment conferred upon him by section 64 (1).

6. The next contention of Mr. Kolah is that, even assuming section 64 (5) applies, the force of the notification issued under the various sections exhausted itself as soon as Madhya Bharat was merged in India and the Income-tax Act applied to Indore. Mr. Kolah says that the Income-tax Act has only a territorial application and it applied to British India and the notifications issued under that Act could only apply to British India, but as soon as Indore Became part of India and the Income-tax Act applied to that part, it was necessary to issue a fresh notification so that it should apply to Indore and to the residents of Indore. This contention would have had considerable force if the notification was a notification with a territorial operation. But it is clear that the notification applies to the specific case to the assessee irrespective of his residence, irrespective of the country of which he is a citizen, and irrespective of where he may be carrying on his business. The notification is, as it were, in personam and not territorial. Therefore it is difficult to understand what possible effect the merger of Madhya Bharat with India can have on the notifications by the specific Income-tax Officer appointed, that Income-tax Officer still had the jurisdiction to deal with that case by reason of the same provisions of the law which provisions were in no way effected by the merger of Madhya Bharat with India or the application of the Income-tax Act of Madhya Bharat.

7. The last argument of Mr. Kolah is that the notification deals not with the case of assessee but with a particular area because the address of the assessee is mentioned in the notification, and it is suggested that inasmuch as the assessee is not carrying on his business at the address mentioned in this notification the jurisdiction of the Income-tax Officer to deal with this case has ceased. It is indeed a rather surprised argument that if an assessee whose case has been specifically referred to an Income-tax Officer changes his address he thereby divests the Income-tax Officer of his jurisdiction. If that were the true position, most assessees would be doing nothing else except trying to alter their addresses so as to deprive the Income-tax Officer of the jurisdiction under the Act. Unfortunately, in the order of the Tribunal there is no reference whatever to section 64 (5). In our opinion that is the only section which is relevant and material in order to consider the jurisdiction of the Income-tax Officer concerned. We have had therefore no assistance from the order of the Tribunal as to why they have taken the view that the jurisdiction which was vested in the Income-tax Officer, Section VI (Central), was divested by reason of the Indian Income-tax Act being extended to the whole of India.

We must therefore answer the question raised :

(1) In the negative. (2) Does not arise. The assessee to pay the costs.

8. Reference answered accordingly.


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