1. The short point here is whether certain bungalows which belong to the Rajah of Parlakimedi are or are not assessable under Section 9 of the Indian Income-tax Act (XI of 1922). The sub-section material to this question is sub-section I (7):
In respect of vacancies such sum as the Income-tax Officer may determine, having regard to the circumstances of the case, is to be the tax payable by the assessee.
2. The question we have to determine is what the section means by 'vacancies'. The executive authorities have issued for the guidance of their officers a Manual and this case has been put forward in the form of asking us to say whether Section 32 of the Manual is in consonance with the words of the Act. Ordinarily we should not view the matter from that point of view because; the Manual, which is called notes of instructions, is obviously merely a document for the guidance of officials. All we have to determine is two short questions: first, whether these bungalows in the circumstances of the case can be described within the meaning of the section as being vacant. The second question which I shall deal with separately in a moment is whether the assessment in this case can be made retrospective for one year under the provisions of Section 34. To take the first question, the Manual says outright that the sub-section only applies to property which is usually let to a tenant. Without deciding whether that is correct or not and whether a man who had a house that he never let, but who dismantled it and locked it up for the year would or would not be assessable, it is clear that these houses are in fact never let. The description of the case stated by Mr. Strathie is quite clear. ' Bungalow No. 1 is kept by the Rajah as a guest-house for Government Officers and Ors. visiting Parlakimedi. Bungalow No. 2 is only used by the Rajah or his officers visiting Berham-pore. Bungalow No. 3 is occupied only about two months in the year when the Rajah visits Madras during the season. Bungalow No. 4 is occupied during the hot weather ' obviously by the Rajah. It is clear from the way in which the case is framed that the contention put forward was that, although these bungalows were ready for occupation and therefore must necessarily have been equipped with the furniture necessary for the occupation of the Rajah, they are not assessable if, in fact, it so happened in any one year that they were not lived in by the Rajah or the other persons in question, guests or officers of the Rajah's staff. In my opinion there is nothing in the section to warrant that construction and if a man owns a house ready for his own occupation, ready for him to live in when he chooses to do soand there is a statement here that not only was that the case but that servants of the Rajah were actually kept on the premises in order to get it ready for occupation whenever he wanted to go therehe is assessable. In these circumstances I think that the case falls within the exact words of Lush, J. in Queen v. The Assessment Committee of St. Pancras (1877) 2 Q.B.D. 581. The words are to be found at p. 588 where the learned Judge says this:
If, however, he (that is, the owner) furnishes it (that is, the vacant house) and keeps it ready for habitation whenever he pleases to go to it, he is an occupier, though he may not reside in it one day in the year.
3. That seems to me to be conclusive and I respectfully agree with that view and think that that is the proper construction of the statute. In my opinion, therefore, the assessee is liable for assessment in respect of all the bungalows referred to in the case.
4. The next point is whether the assessment can be made retrospective. It appears that in the previous year the Income-tax Officer had to consider the question and come to the conclusion that the Rajah was not assessable in respect of these bungalows. The section of the English Act of 1918,Section 125, is quite clear, because it provides expressly for the case where an allowance or exemption or abatement unauthorised by the Act has been deliberately made by the predecessor of the surveyor with whom the section is concerned. The Indian Act (Section 34) is not quite so explicit. What it says is this:
If, for any reason, income chargeable with income-tax has escaped assessment in any year or has been assessed at too low a rate, the Income-tax Officer may, within a year, serve a notice.
5. It is said that 'escaped assessment' must mean not that the question has been considered and decided in favour of the assessce, but that the Income-tax Officer has omitted to consider the question at all or was unaware of the existence of theproperty now sought to be taxed and therefore passed it over and that it does not apply to cases where the Income-tax Officer on consideration came to the conclusion, ex hypothesi, an erroneous conclusion, that the property in question was not assessable. It seems to me that construction is forbidden by the alternative case put in the section:
Where the income....has been assessed at too low a rate.
6. That cannot be a matter of mere inadvertence, that must refer to a deliberate assessment made by the Income-tax Officer in the preceding year with knowledge of the facts and circumstances. It appears to me that a similar view must be taken of the previous words ' escaped assessment ' and that it applies to cases where the jncome-tax Officer has deliberately adopted an erroneous construction of the Act just as much as to a case where the officer has not considered the matter at all, but simply omitted the assessable property from his view and from his assessment. in my opinion the questions referred to us must both be answered adversely to the assessee and it must be held that the property referred to us is not property describable as vacant during the year of assessment and that there is nothing in the statute to prevent the assessing officer from recovering income-tax for the previous year as allowed by Section 34.
Rs. 150 will be allowed for costs in each case.
7. I agree.