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income Tax Officer 'A' Ward, Calcutta and Anr. Vs. Ramnarayan Bhojnagarwala (26.09.1975 - SC) - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtSupreme Court of India
Decided On
Case NumberCivil Appeal No. 318 of 1971
Judge
Reported inAIR1976SC2076; [1976]103ITR797(SC); (1976)1SCC814; [1976]1SCR1014; 1975(7)LC830(SC)
ActsIncome Tax Act - Sections 148
Appellantincome Tax Officer 'A' Ward, Calcutta and Anr.
RespondentRamnarayan Bhojnagarwala
Appellant Advocate S.P. Nayar and; B.B. Ahuja,;Advs
Respondent Advocate S.T. Desai, ; H.S. Parihar, ; I.N Shroff, ; Advs.
Prior historyAppeal by special leave from the Judgment and Order dated June 3, 1969 of the Calcutta High Court in Appeal No 233 of 1968
Excerpt:
.....it was held, depreciation actually allowed is the depreciation actually taken into account and given effect to by assessing officer in earlier years. - we, therefore, set aside the judgment of the high court but remand the appeal to the high court for a fresh hearing on the question as to whether the foundational fact of reasonable belief is satisfied in this case or not......aside the order and directed that the income-tax officer do determine the real ownership of the bank deposit. this was done in september 1970. it is admitted before us that, although we are in october 1975, the income-tax officer has not yet determined the real ownership of the deposit as between the uncle and the nephew. there is no valid reason why the income-tax-officer should have delayed so long and indeed administrative officers and tribunals are taking much longer time than is necessary, thereby defeating the whole purpose of creating quasi-judicial tribunals calculated to produce decisions, especially in fiscal matter. five years to dawdle over the decision of a small matter directed by an appellate authority amounts to indiscipline subversive of the rule of law. we hope that.....
Judgment:

V.R. Krishna Iyer, J.

1. This is really a case where litigation would have been avoided, had the concerned Income-tax Officer carried out the directions issued by the Appellate Assistant Commissioner, with quick dispatch to determine the ownership of the deposit in the Bank account as between the-respondent before us and his nephew Madanlal.

The Facts

2. There was a bank account in which a huge sum as lying in deposit The assessing authority proceeded on the footing that the amount represented the income of one Madanlal, in whose name the Bank account stood. He contested his ownership and urged that really this sum belonged to his uncle who is the respondent before us. Any way his contention was over-ruled by the Income-tax Officer, but, in appeal, the Appellate Assistant Commissioner set aside the order and directed that the Income-tax Officer do determine the real ownership of the bank deposit. This was done in September 1970. It is admitted before us that, although we are in October 1975, the Income-Tax Officer has not yet determined the real ownership of the deposit as between the uncle and the nephew. There is no valid reason why the Income-Tax-Officer should have delayed so long and indeed administrative officers and tribunals are taking much longer time than is necessary, thereby defeating the whole purpose of creating quasi-judicial tribunals calculated to produce decisions, especially in fiscal matter. Five years to dawdle over the decision of a small matter directed by an appellate authority amounts to indiscipline subversive of the rule of law. We hope that the Administration, takes serious notice of delays caused by tax officers lethargy, under some pretext or other, in speeding up enquiries into incomes and finalizing assessments. The mere fact that a writ petition was pending in the High Court, especially in the background of no stay having been granted, shows that the alibi of a High Court proceeding cannot be successfully put forward by the Income-tax Officer for his slow motion in settling the question directed by his Appellate Officers. Law must move quick not merely in the Courts but also before tribunals and officers charged with the duty of expeditious administrative justice. We emphasize this because if the Income-tax-Officer had fixed the ownership of the deposit years ago, maybe the respondent before us might not have had to go up in litigation in High Court and the Income Tax Department itself would not have had to proceed against him.

3. We have no doubt that either the uncle or new hew must pay the tax under normal circumstances and they cannot play off one against the another to defeat the claims of the Revenue. Even so, High Court has disposed of this case in Appeal before the Division Bench on certain assumption and representations, for which counsel for the Income-tax Department was largely responsible. The result is that there has been no investigation into the basic question raised before the High Court by the respondent that the Income-Tax Officer had no jurisdiction to start proceedings under Section 148 on the score that he had no 'reasonable belief, which is the sine qua non for the initiation of such proceedings. This question remains to be decided by the High Court. We, therefore, set aside the judgment of the High Court but remand the Appeal to the High Court for a fresh hearing on the question as to whether the foundational fact of reasonable belief is satisfied in this case or not.

4. However, if the Income-tax Officer at least at this late stage will be stir himself to adjudicate upon the ownership of the bank deposit and if he holds that the nephew Madanlal is the owner of such deposit, the Writ Appeal before the High Court may not have to be proceeded with of course, subject to appeals that may be available to Madanlal. We direct that the Income-Tax Officer determine the ownership of the bank deposits within six months from today, and thereafter only the Appeal before the High Court need be considered. We may observe in conclusion that Shri S. T. Desai, counsel for the respondent has fairly assured us that, so far as his client is concerned, all cope-ration will be available to enable the Income-Tax Officer to determining who the owner of the Bank deposit is. Indeed he is interested in this subject matter and we hope that such evidence as the Income Tax Officer requires from him will be readily forthcoming. With this direction we allow the Appeal and remand the case to the High Court for fresh disposal in the light of our observations. No order as to costs.


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