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D.P. Wadia and Sons Vs. Commissioner of Income-tax, Poona - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Application No. 38 of 1962
Judge
Reported in[1963]50ITR761(Bom)
ActsIncome Tax Act, 1922 - Sections 22(2) and 23(2); Bombay Court Fees Act, 1959
AppellantD.P. Wadia and Sons
RespondentCommissioner of Income-tax, Poona
Appellant AdvocateYogendra Trivedi, Adv.
Respondent AdvocateV.S. Deshpande, Adv.
Excerpt:
.....with the correctness of the return, requires the presence of the assessee before him or requires him to produce..........under section 66(2) and section 66(3) of the income-tax act, 1922, which were made in respect of assessment proceedings which were initiated before the said provision came into force and those applications continued to be governed by the old court fees act. a question has now arisen as to when the assessment proceedings could be said to have been initiated for the purpose of determining whether the provisions of the old court fees act or the new court fees act applied to the applications under section 66(2) and section 66(3) arising out of the said proceedings. 2. it is urged on behalf of the assessee that the assessment proceedings are initiated when the public notice under section 22(1) is given by the income-tax officer or at any rate when the time given in the said notice for the.....
Judgment:

Desai, J.

1. In Central Provinces Syndicate (Private) Ltd. v. Commissioner of Income-tax we held that the provisions of article 16 of the Bombay Court Fees Act of 1959 were not applicable to applications under section 66(2) and section 66(3) of the Income-tax Act, 1922, which were made in respect of assessment proceedings which were initiated before the said provision came into force and those applications continued to be governed by the old Court Fees Act. A question has now arisen as to when the assessment proceedings could be said to have been initiated for the purpose of determining whether the provisions of the old Court Fees Act or the new Court Fees Act applied to the applications under section 66(2) and section 66(3) arising out of the said proceedings.

2. It is urged on behalf of the assessee that the assessment proceedings are initiated when the public notice under section 22(1) is given by the Income-tax Officer or at any rate when the time given in the said notice for the filing of the return expires. It is argued on the other hand by the Advocate-General who has placed the view of the department before us and with whom the learned Assistant Government Pleader who appears for the State agrees that the assessment proceedings could be said to have commenced when the lis could be said to have arisen and that would be when the Income-tax Officer, not having been satisfied with the return submitted by the assessee, calls upon him to produce evidence and material to satisfy him about the correctness of the return or at the most when a notice under section 23(2) requiring the assessee to produce such evidence is given by the Income-tax Officer to the assessee.

3. In our opinion the proceedings could be said to be initiated when either a return is filed by the assessee or an individual notice under section 22(2) calling upon him to submit a return is issued to him by the Income-tax Officer whichever is earlier. In Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh, their Lordships of the Supreme Court observed :

'For the purposes of the accrual of the right of appeal the critical and relevant date is the date of initiation of the proceedings and not the decision itself.'

4. In that case it was argued before the Supreme Court that unless and until there was an actual assessment there was no lis and, therefore, no right of appeal could be said to have accrued before that event. In negative that argument, their Lordships gave a two-fold answer. In the first place they pointed out that for the lis to arise it was not necessary to wait until the assessment order was passed because a lis arose as soon as there was an assertion by one party and an opposition by the other, and although a lis could not necessarily be said to have arisen as soon as the return was filed, that, at any rate, invariably arose as soon as the Income-tax Officer did not accept the return submitted and wanted to enquire into the matter by requiring evidence to be produced before him as to the correctness or otherwise of the return submitted by the assessee. This was a stage before the assessment order was actually passed and, therefore, for the lis to be in existence, the passing of the assessment order was not necessary. This was one of the answers given by their Lordships of the Supreme Court to the argument advanced before them. The second answer was that even if the lis could be taken to be arising only on the passing of the assessment order, there was a possibility of the lis arising as soon as proceedings started with the filing of the return or, at any rate, as soon as the authority called upon the assessee to produce evidence and started the hearing and the right of appeal must be taken to have been in existence on either of these dates. Having thus disposed of the argument, which was advanced before them, viz., that there could be no lis until the assessment order was passed, their Lordships expressed their view that for the purposes of the accrual of the right of appeal the critical and relevant date was the date of initiation of the proceedings and not the decision itself.

5. In our opinion a proceeding can be said to be initiated when a party goes with its cause before the appropriate Tribunal for the purpose of getting it adjudicated or when the Tribunal empowered to inquire into and adjudicate upon any matter relating to any person calls upon such person to appear before it for the purpose of inquiring into and deciding such matter. These events occur when the assessee either submits a voluntary return to the Income-tax Officer or the Income-tax Officer having jurisdiction over the assessee issues a notice to him under section 22(2) to submit a return of his income before him for the purpose of making an assessment thereon. The contention of the assessee that the initiation of the proceedings should be taken to have commenced when the public notice under section 22(1) is given or at any rate when the time given in that notice to furnish a return of the total income expires cannot be accepted. No doubt the said public notice is the first step which sets in motion the machinery provided in the Act for inquiring into, determining, levying and recovering the tax, which is charged under the charging sections of the Act, but it does not start the assessment proceedings against any individual assessee as such. If after the publication of the notice nothing further happens, that is, neither the assessee files a return nor the Income-tax Officer calls upon him to submit a return by an individual notice, no proceeding can be said to have commenced against him. The public notice opens the arena as it were for the proceedings to commence or take place. They commence when the individual assessee steps in with his return or the Income-tax Officer calls upon the individual assessee to step in by submitting a return. The date of the public notice under section 22(1) is, therefore, anterior to the commencement of the assessment proceedings against any individual assessee. Similarly, the point of time suggested by the learned Advocate-General is after the commencement of the proceedings. The stage of the notice under section 23(2) is reached when, after the return has been submitted by the assessee, the Income-tax Officer, not being satisfied with the correctness of the return, requires the presence of the assessee before him or requires him to produce evidence. That, obviously, is in the course of the proceedings, which have already commenced. The advocate-General has argued that that is the stage when a controversy or a lis can be said to have come into existence between the Income-tax Officer and the assessee and since the right of appeal is dependent upon the existence of the lis, the point of time when the controversy or the lis arises should be taken as the point of time when the right of appeal is determined. We cannot accept the argument in view of the observation of the Supreme Court to which we have already made reference. It appears to us clear from the view expressed by their Lordships of the Supreme Court that the accrual of the right of appeal is determined on the date of the initiation of the proceedings in which a possibility of a lis arising exists even though the lis may actually arise at a stage subsequent to the initiation or even at the end of the proceeding, when the order thereon is passed.

6. In the case before us, the notice under section 22(2), calling upon the assessee to submit a return, has been issued on the 11th of June, 1956, which is long before the new Court Fees Act came into operation. Proceedings in the case of the present assessee, therefore, could be said to have been initiated before the provisions of the new Act came into force and, therefore, the reference will be governed by the old Court Fees Act.


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