B.P. Beri, J.
1. This is a reference under Section 66(1) of the Indian Income-tax Act, 1922 (hereinafter called ' the Act'), made by the Income-tax Appellate Tribunal, Delhi Bench 'C ', at the instance of the assessee.
2. Facts relevant for answering the question referred to us are these:
Messrs. Udaipur Distillery Company (hereinafter called ' the assessee ') was a firm constituted by two partners, viz., (1) Sohan Lal Golcha, acting as 'karta ' of the Hindu undivided family, and (2) F.B. Elavia. The firm owned and operated a distillery at Udaipur. During the assessment year 1945-46, relevant to the previous year of the firm ending on October 16, 1944, it sold some of its products in areas then included in British India. In the relevant period in the erstwhile State of Mewar, of which Udaipur was the capital, there was no income-tax. The Income-tax Officer, Ajmer, issued a notice to the firm under Section 34 of the Act on January 27, 1953. The assessee received it on January 31, 1953. The Commissioner of Income-tax exercising his powers under Section 5(7A) of the Act transferred the case of the assessee to the Income-tax Officer, Central Circle III, Delhi, by his order, dated February 5, 1953. The assessee, however, addressed a letter, dated March 2, 1953, to the Income-tax Officer, Ajmer, challenging his jurisdiction and requested him to refer the question to the Income-tax Commissioner. The objection was overruled by the Commissioner by his order, dated May 18, 1953, on the ground that the Notification No. 44 had conferred jurisdiction on the Income-tax Officer, Ajmer. The assessee thereafter filed its return, in answer to the notice under Section 34, on June 20, 1953. By its letter, dated July 25, 1953, the assessee also challenged the jurisdiction of the Income-tax Officer, Delhi, who rejected it on the ground that the assessee was then debarred from raising such an objection. The return submitted by the assessee showed a profit of Rs. 61,275 in Section (E) of the return, thereby raising the contention that it was not liable to pay any income-tax. The assessee submittedan analysis of its transactions under five heads. The Income-tax Officer, Delhi, rejected the contention of the assessee and held that in all those transactions it was liable to tax as the sale proceeds in each one of them were received by the assessee in British India and he accordingly assessed the firm. An appeal was taken to the Appellate Assistant Commissioner of the aforesaid two points of jurisdiction and non-liability of tax for a nonresident firm, but without success. A further appeal was preferred before the Tribunal where the same points were reagitated. The Tribunal held that the Income-tax Commissioner alone was competent to decide the question of jurisdiction under Section 64(3) of the Act and his decision dated May 18, 1953, had become final and binding on the assessee and it could not be reopened in appeal before the Tribunal because it fell outside the scope of Section 30 or 33 of the Act. The second contention that the profit was not received in British India was also negatived by the Tribunal. The assessee requested the Tribunal to make a reference to the High Court and the Tribunal by its order, dated January 30, 1967, has referred two questions to us.
3. The first question is :
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal rightly held that the point regarding the jurisdiction raised by the assessee-firm was an objection regarding the place of assessment and that no appeal could lie to the Appellate Assistant Commissioner and the Tribunal on the point '
4. The letters which the assessee wrote to the Income-tax Officers, Ajmer and Delhi, have riot been included in the paper book. The precise order passed by the Commissioner of Income-tax has not been included either, but the purport of it has been incorporated in the order of the Tribunal.
5. Section 64 runs as follows :
' 64. Place of assessment.--(1) Where an assessee carries on a business, profession or vocation 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.
(2) In all other cases, an assessee shall be assessed by the Income-tax Officer of the area in which he resides.
(3) Where any question arises under this section as to the place of assessment, such question shall be determined by the Commissioner, or, where the question is between places in more States than one, by the Commissioners concerned, or, if they are not in agreement, by the Central Board of Revenue:
Provided that, before any such question is determined, the assessee shall have had an opportunity of representing his views :
Provided further that the place of assessment shall not be called in question by an assessee if he has made a return in response to the notice under Sub-section (1) of Section 22, and has stated therein the principal place wherein he carries on his business, profession or vocation, or if he has not made such a return shall not be called in question after the expiry of the time allowed by the notice under Sub-section (2) of Section 22 or under Section 34 for the making of a return:
Provided further that if the place of assessment is called in question by an assessee the Income-tax Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under this sub-section before assessment is made.
(4) Notwithstanding anything contained in this section, every Income-tax Officer shall have all the powers conferred by or under this Act on an Income-tax Officer in respect of any income, profits or gains accruing, or arising or received within the area for which he is appointed.
(5) The provisions of Sub-section (1) and 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 reassessment 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, or
(b) where by any direction given or any distribution or allocation of work made by the Commissioner of Income-tax under Sub-section (5) of Section 5, or in consequence of any transfer made under Sub-section (7A) of Section 5, a particular Income-tax Officer has been charged with the function of assessing that assessee, or
(c) who or whose income is included in a class of persons or a class of incomes specified in any notification issued under Sub-section (6) of Section 5,
but the assessment of such person, whether the proceedings for such assessment began before or after the 1st day of April, 1939, shall be made by the Income-tax Officer for the time being charged with the function of making such assessment by the Central Board of Revenue or by the Commissioner of Income-tax to whom he is subordinate, as the case may be.'
6. As the assessee carried on business at the time of issuing the notice under Section 34 at Udaipur, the Income-tax Officer, Udaipur, was the proper officer who should have issued notice under Section 34. Notice in this case was, however, issued by the Income-tax Officer, Ajmer, under themisapprehension that he had jurisdiction to do so. Under Notification No. 44 dated July 1, 1952, the Income-tax Officer, Ajmer, was empowered to deal with pending assessments for the period before the merger of Indian States. The assessment proceedings in the present case were, however, not pending when Notification No. 44 dated July 1, 1952, was issued. As such, the Income-tax Officer, Ajmer, had no jurisdiction to issue a notice under Section 34 to the assessee.
7. The assessee raised an objection that the Income-tax Officer, Ajmer, had no jurisdiction to issue notice to him. After this objection had been raised his case was transferred to the Income-tax Officer, Central Circle III, Delhi, by the Commissioner of Income-tax under Section 5(7A). This order, however, could not confer jurisdiction on the Officer to whom the case had been transferred from the file of the Income-tax Officer, Ajmer, as the latter officer had no jurisdiction to issue notice to the assessee. The question as to the place of assessment was referred to the Commissioner of Income-tax under Section 64(3) for decision. He held that the Income-tax Officer, Ajmer, had jurisdiction to issue notice by virtue of Notification No. 44 dated July 1, 1952. As we have pointed out above, that notification applied only to pending cases and did not empower the Income-tax Officer, Ajmer; to issue a fresh notice under Section 34 in a case which was not pending on the date of the notification.
8. The point regarding jurisdiction raised by the assessee was in essence an objection regarding the place of assessment. An assessee objecting to the place of assessment has, however, not been given any right of appeal against the decision on that objection either under Section 30 or under Section 33. Only a right to have the question decided by the Commissioner has been given. That right was availed of and the Commissioner decided that the Income-tax Officer, Ajmer, was competent to issue notice under Section 34 to the assessee. That decision, even though erroneous, became final as the Income-tax Act, 1922, does not provide for any appeal against it.
9. It will be enough in this context to quote the observations of theirLordships of the Federal Court in Wallace Brothers & Co. Ltd. v. Commissioner of Income-tax,  13 I.T.R. 39, 45 (F.C.)
' Clause (3) of Section 64 provides that any question as to the place of assessment shall be determined by the Commissioner or by the Central Board of Revenue. The third proviso to the clause enacts that if the place of assessment is called in question by the assessee, the Income-tax Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under this sub-section before assessment is made. These provisions clearly indicate that the matter is more one of administrative convenience than of jurisdiction and that in any event it is not one foradjudication by the court. The second proviso to Clause (3) further enacts that the place of assessment shall not be called in question by an assessee if he has made a return in response to the notice under Sub-section (1) of Section 22, or if he has not made such a return, it shall not be called in question after the expiry of the time allowed by the notice for the making of a return. This confirms us in the view that the scheme of the Act does not contemplate an objection as to the place of assessment being raised on an appeal against the assessment after the assessment has been made.........
10. The fact that the Tribunal nevertheless thought fit to allow the question to be raised and even included it in the reference to the High Court cannot alter the legal position.' Note.--the underlining is by us.
11. The above decision was approved by their Lordships of the Supreme Court in Rai Bahadur Teomal v. Commissioner of Income-tax,  36 I.T.R. 9, 17 ;  Supp. 2 S.C.R. 301 (S.C.) in which they observed as follows :
' The question then arises whether the objection as to the place of assessment, i.e., by the Income-tax Officer of Calcutta, could be challenged in appeal to the Appellate Assistant Commissioner and then before the Appellate Tribunal. In our opinion it could not be. The scheme of the Act shows that no appeal in regard to the objection to the place of assessment is contemplated under the Act. Under proviso (iii) of Section 64(3) of the Act a question as to the place of assessment, when it arises, is determined by the Commissioner. Any such order cannot be made a ground of appeal to the Appellate Assistant Commissioner under Section 30 of the Act which provides for appeals against orders of assessment and other orders enumerated in Section 30 but no appeal is, there provided against orders made under Section 64(3). Similarly, appeals to the Appellate Tribunal which lie under Section 33 of the Act also do not provide for any appeal on the question of the place of assessment. In Wallace Brothers' case, at page 79, Spens C.J., after referring to Section 64(3) and the proviso thereto, said:
' These provisions clearly indicate that the matter is more one of administrative convenience than of jurisdiction and that in any event it is not one for adjudication by the court......This confirms us in the viewthat the scheme of the Act does not contemplate an objection as to the place of assessment being raised on an appeal against the assessment after the assessment has been made. As we have already pointed out, the objection was not raised in the present case even before the Appellate Income-tax Officer, but only before the Appellate Tribunal.'
There is nothing in the Bidi Supply Co, v. Union of India,  29 I.T.R. 717 ; S.C.R. 267(S.C.) which in any way detracts from the efficacy of the decision of the Federal Court inWallace Brothers' case. We have already said that Bidi Supply case deals with the vires of Section 5(7A).
In this view of the matter the question as to the place of assessment does not arise out of the order of the Income-tax Appellate Tribunal and, therefore, no question of law could be referred nor could the High Court make such order under Section 66(2).'
12. Our answer to the question No. (1), therefore, is that on the facts and in the circumstances of the case the Tribunal was right in holding that the point regarding the jurisdiction of the Income-tax Officers, Ajmer and Delhi, raised by the assessee-firm was in essence an objection regarding the place of assessment and no appeal lay to the Appellate Assistant Commissioner and the Tribunal on this point.
13. The second question is :
' (2) Whether the Tribunal rightly held that the various sales referred to above were made in and the price of sales referred to above were received in the taxable territory '
14. According to the statement of case, in paragraph (4) there are 5 items which go to make the total of Rs. 3,11,297. This is incorrect. From the order of the Appellate Assistant Commissioner dated April 16, 1960, paragraph No. 2, as well as from the order of the learned , Tribunal, dated March 20, 1962, paragraphs 14, 15, 16 and 17, there are six items for the assessment year 1945-46 which require consideration. They are: (a) Rs. 35,615, (b) Rs. 9,000, (c) Rs. 2,000 and Rs. 1,000, (d) Rs. 14,919, (e) Rs. 2,55,313 and (f) Rs. 23,450. Their total comes to Rs. 3,41,297. We are dealing with these items separately.
(a) Rs. 35,615. The Tribunal has found it as a fact that this amount of money was deposited in cash by the buyers of the assessee's products in the assessee's accounts with a bank in British India.
(b) A sum of Rs. 9,000 was deposited by buyers in cash in the assessee's bank accounts with the National Bank at Bombay.
(c) The sum of Rs. 3,000 is composed of two items. A sum of Rs. 2,000, was paid in cash to Shri B. S. Elavia, father of the partner, F. B. Elavia at Bombay. Rs. 1,000 were received in cash by the other partner, Sohanlal Golcha, of the assessee-firm at Bombay.
Items (a), (b) and (c) Were received in cash on behalf of the assessee in Bombay, British India, towards the price of the goods supplied by the assessee to the buyers and are clearly covered by the language of Section 4(1)(a), which reads :
' 4. Application of Act.--(1) Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which--
(a) are received or are deemed to be received in the taxable territories in such year by or on behalf of such person, or... .'
The principle underlying the relevant part of Section 4(1) of the Act is to make the income liable to tax dependent upon the locality of accrual or receipt. Amongst the three, categories of the assessees envisaged under the Act 'the assessee before us is indisputably ' non-resident' because it ordinarily carried on business in Udaipur, a territory outside the taxable territory in the assessment year 1945-46. The transactions covered by items (a) and (b) are actually the deposits made in the assessee's accounts in British India and item (c) was received in cash at Bombay and are, therefore, incomes received within the taxable territory. Clause (a) of Sub-section 4(1) charges amongst others even the non-resident. Receipts in India attract tax regardless of the fact where the income accrued. Reference in this connection may be made to Commissioner of Income-tax v. Diwan Bahadur S. L. Mathias,  7 I.T.R. 48 (P.C.).
(d) Rs. 14,919.--The facts found by the Tribunal in regard to this sum of money are that the cheques were drawn by the buyers in British India on banks in British India and were collected by the assessee through its bankers in Indian States (non-taxable territory) and acting as assessee's agents. In the statement of the case under Section 66(1), in paragraph 10, the Tribunal says: ' That it was proper to assume that the cheques must have been sent to the assessee in pursuance of its implied request to sent them by post and held that these sale proceeds were also received in British India.'
15. Mr. Jain, learned counsel for the assessee, contended that there was noevidence to show that the cheques were, firstly, sent at the request of theassessee, and, secondly, that they were sent by post. The Tribunal itselfproceeded on assumption on these two important facts. Reliance wasplaced by the learned counsel on S. Zoraster & Co, v. Commissioner of Income-tax,  68 I.T.R. 770 (Delhi)
16. It will be useful to briefly examine the facts of Zoraster & Co's case. The assessee therein had his place of business in Jaipur at the relevant time, not being a taxable territory. The assessee despatched the goods to the Government of India from Jaipur. In the bills sent by the assessee it had requested payment by cheque drawn on the Reserve Bank of India at Bombay and the receipts were incorporated therein. After the receipts of the goods the Government of India made payment by cheques which were received by the assessee at Jaipur, and the assessee made them over to a Hindu undivided family at Jaipur and that firm sent them for collection to Bombay where they were realised. There was no material on record to show how these cheques were sent by the Government of India to theassessee and the place where the payments were to be made. Nor was there a finding that the Government of India was invariably sending the cheques to Jaipur through the post. The learned judges of the Delhi High Court held that:
' The assessee received the payments at Jaipur outside the taxable territories and the profits and gains in respect of the sales made to the Government of India must be deemed to have been received by the assessee outside the taxable territories.
The burden of proving that the assessee received any income, gain or profit within the taxable territories is on the revenue. The department cannot ask the court to presume facts and circumstances in its favour. The factum of the cheques towards payment for supplies having been sent through post must be proved and cannot be presumed.'
17. In Keshav Mills Ltd. v. Commissioner of Income-tax,  23 I.T.R. 230;  S.C.R. 950 (S.C.), Turner Morrison & Co., Ltd. v. Commissioner of Income-tax,  23 I.T.R. 152;  S.C.R. 520 (S.C.) and Zoraster & Co. v. Commissioner of Income-tax,  40 I.T.R. 552;  1 S.C.R. 210 (S.C.), it has been held that the realisation of the cheques in British India does not alter the fact regarding the receipt of the payment. The crucial test, however, is in regard to the place where the sale was made or the payment was received. The learned Tribunal on its own showing has proceeded on the assumption in regard to the request made by the assessee for sending the price of the products by means of cheques and about the cheques being sent from British India. We are in respectful agreement with the view taken by the learned judges of the Delhi High Court and are of the opinion that the Tribunal was in error when it included the sales represented by the sum of Rs. 14,919, as income received in taxable territory. Our attention was also invited to the Supreme Court case in Civil Appeals Nos. 2012 and 2013 of 1968-- Commissioner of Income-tax v. S. Zoraster & Company,  83 I.T.R. 729 (S.C.), decided on September 24, 1971, arising out of the case from the Delhi High Court. We need not refer to it because their Lordships found that in the Delhi case the certificate issued by the High Court was not proper and they did not examine the question on merits.
(e) Rs. 2,55,313.--This amount of money was received by ' Hundis' drawn by the assessee on buyers in British India. The ' hundis ' along with the relevant railway receipts were sent by the assessee's bankers at Udaipur to their branches in British India. The railway receipts were delivered to the buyers in British India against payment of the amounts of the 'hundis '. The assessee's bankers at Udaipur had, however, advancedmonies against the 'hundis' before their realisation. The freight and the bank charges were borne by the buyers.
(f) Rs. 23,450.--This sum of money was received by means of 'hundis' drawn by the buyers and discounted by the assessee's bankers Bharat Bank and Rajasthan Bank Ltd., at Udaipur.
Transactions (e) and (f) have common features. The argument of the learned counsel for the assessee was that when the bank purchased or discounted the 'hundi' from a customer and allowed the assessee to withdraw the amount before the bill was cleared, the bank was collecting money for itself in the taxable territory. The railway receipt having been handed over to the bank in the non-taxable territory and the bank in its turn having discounted and passed the price of it in Udaipur, a non-taxable territory, the price was received in non-taxable territory and the assessee was not liable. Reliance was placed on Commissioner of Income-tax v. Shivnarayan Harigopal,  70 I.T.R. 545 (M.P.).
18. On behalf of the revenue, Mr. Bhandari submitted that the negotiations of the ' hundis ' by the bank before the goods were delivered to the buyer was a part of the banking business and did not mean that the sales took place when the banks discounted the 'hundis' in the non-taxable territory. Reliance was placed on Seth Pushalal Mansinghka (P.) Ltd. v. Commissioner of Income-tax,  66 I.T.R. 159 ;  3 S.C.R. 961 (S.C.). and Commissioner of Income-tax v. Bhopal Textiles Ltd.,  41 I.T.R. 72 ,  2 S.C.R. 9 (S.C.)
19. Put in other words, the question is whether the amount of money, which the assassee's bankers credited to the assessee's accounts in the non-taxable territory could be called the price of the goods supplied by the buyer. The answer to this question, in our opinion, must be in the negative. In Seth Pushalal Mansinghka's case the facts were these. The assessee had its mica mines at Bhilwara in Part B State. It exported mica by rail to Kodarma and Giridih in Part A and Part C States respectively. The purchaser's agents before purchase visited Bhilwar, inspected the quality of the mica they wanted to purchase and thereafter entered into contracts, which were to be of Bhilwara godown delivery. The railway receipts were sent through the banks. Twenty-five per cent. of the price was paid in advance. The banking charges were to be borne by the buyers. On leaving Bhilwara the consignments were entirely at the buyer's risk. The assessee-firm of Bhilwara consigned the goods to self. The railway receipts and bills of exchange were given to the Rajasthan Bank for collection. The railway receipts were endorsed in favour of the bank which in its turn endorsed them in favour of its branches in Part A and Part C States.The price was paid by the buyers to the banks in Part A and C States and the goods were collected. Some of the bills were discounted by the bank. Their Lordships of the Supreme Court, in these circumstances observed, as follows:
' It is clear, therefore, that when the appellant negotiated the hundi with the banker, the latter did so only as a part of its banking business. Even if there was a purchase of the hundi by the banker it cannot mean that there was a sale of the goods to the banker. In the first place, there was no agreement between the banker and the seller for the sale of the goods. Secondly, the banker had only a security over the goods till the price was paid by the buyer. To hold otherwise would mean that the seller committed a breach of contract with the buyer and sold the goods to the banker. That is, however, not the case. The appellant only performed this contract with the buyer in accordance with the usual commercial practice. Therefore, if any money was paid by the bank to the appellant as price for the hundi, it was not the sale price of the goods in any sense and the bank was not acting as the agent of the buyer. On the other hand the purchase of the hundi by the bank was only a convenient arrangement between the bank and its own customer, the appellant, to avoid freezing of credit of the latter and it was done in the course of its usual banking transactions.'
20. In this view of the matter their Lordships of the Supreme Court held that the income accrued to the appellant, Seth Pushalal Mansinghka, the assessee, in Part A and Part C States and the appellant was not, therefore, entitled to any rebate under the Part B States (Taxation Concessions) Order, 1950.
21. The case of Commissioner of Income-tax v. Bhopal Textiles Ltd. is also relevant. Goods were supplied to the Government of India and its nominees from Bhopal, a non-taxable territory, to Agra, Allahabad and Delhi in British India. The railway receipts were in the name of the buyer. They were forwarded through banks to be delivered against payment. Their Lordships of the Supreme Court held that income must be deemed to have been received by the assessee in British India and the reason for the view was that the railway receipt was a document of title to goods, and, for all purposes, represented the goods. The railway receipt was given on payment in British India and the property in the goods was thus transferred. The bank acted as the assessee's agent and not that of the buyer because the bank was to obey the seller's instructions.
22. Commissioner of Income-tax v. Shivanarayan Harigopal no doubt supports the contention of the assessee. The facts of this case were that goods from Indore (non-taxable territory) were sent to the taxable territory.Proceeding on the ground that the bank, after purchasing and discounting an instrument from the customer, credited the customer with the amount of the instrument and allowed him to draw against the amount so credited before the bill of instrument was cleared, then the bank was collecting the money not for the customer but chiefly for itself. In such a case, the bank did not act as a mere conduit pipe for conveying the instrument to the person on whom it was drawn and received the money from him for its customer and the position of the bank as a holder for value of the instrument was not converted into one of agent for collection on behalf of the customer merely because, in the event of default in payment by the person in whose name the negotiable instrument was drawn, the bank was entitled to the statutory protection against the customer drawing the instrument. In taking this view the learned judges of the Madhya Pradesh High Court were following an earlier decision of their own court in Commissioner of Income-tax v. Laxmichand Muchhal,  61 I.T.R. 555 (M.P.). With great respect we are unable to agree with the reasoning adopted by the learned judges of the Madhya Pradesh High Court. Their attention was evidently not invited to Seth Pushalal Mansinghka's case, although it was decided on May 5, 1967, some five months before their decision. The bank, when it advanced money or credited on a hundi, was merely acting in accordance with the commercial practice without acquiring any property in the railway receipt, which was intended to be delivered to the buyer on receipt of price. We need not repeat all the arguments of their Lordships of the Supreme Court. The law laid down by their Lordships of the Supreme Court plainly runs counter to the opinion expressed in the Madhya Pradesh case.
23. Our answer, therefore, to the second question is that, excepting the item No. (d) representing a sum of Rs. 14,919, the Tribunal rightly held that the sales under items (a), (b), (c), (e) and (f) were made in and the price was received in the taxable territory and they were, therefore, liable to tax.
24. We answer this question accordingly.
25. In the circumstances of the case there will be no order as to costs.