M.M. Ismail, J.
1. The plaintiff in O.S. No. 792 of 1972 on the file of the Court of the District Munsif, Tiruvannamalai, who lost before the Court's below is the appellant herein. He instituted the suit for a declaration that the levy of the profession tax by the Municipality was illegal and for an injunction against the Municipality from recovering the said tax, as his case was that for the half year ending 30th September, 1970 he was levied a profession tax of Rs. 4 only, but for the half year ending 31st March, 1971 and 30th September, 1971, he was levied a profession tax at Rs. 75/-assessing his income at Rs. 9,100 and this was done illegally, mala fide contrary to the provisions contained in the District Municipalities Act and the rules framed thereunder and also in violation of the principles of natural justice. Though the Municipality in its written statement denied the averments contained in the plaint that the plaintiff had sent a return as contemplated by the relevant rules for the half year ending 31st March, 1971 in the latter part of the written statement itself it was admitted that the plaintiff sent such a return and in evidence also the same was admitted. Notwithstanding this admission, namely, that the plaintiff had sent a return showing the half yearly income at Rs. 600 for the half year ending with 31st March, 1971 the claim of the executive authority of the Municipality was that he did not accept the return and he estimated the income of the plaintiff at Rs. 9,100 for that half year and levied the tax ON that basis. The Municipality took up the plea that the plaintiff-appellant had not preferred any appeal to the higher authorities. Both the Courts below dismissed the suit and hence the present second appeal.
2. I am clearly of the opinion that the Courts below missed the point in controversy between the parties. It is Rule 19 in Schedule IV of the Madras District Municipalities Act, that covers the controversy between the parties. Rule 19 reads as follows:
19. (1) If, in the opinion of the (executive authority), profession tax is (or will be) due from any company or person for any half-year he shall serve a notice on such company or person either in that half-year or in the succeeding half-year requiring the company or person to furnish within such period, not being less than thirty days as may be specified in the notice, a return in the prescribed form showing the income on the basis of which, according to such company or person, it or he is liable to be assessed to profession tax for the half-year in question. Thereupon it shall be open to such company or person to submit a return showing the income derived by it or him during the half-year for which profession tax is claimed or for the corresponding half-year of the previous year and produce any evidence on which the company or person may rely in support of the return made.
Explanation: Where, in pursuance of Section 97, a statement regarding the income of a company or the salary or income of as employed person has been furnished to the executive authority, nothing in this Sub-rule shall be deemed to require that authority to serve a notice on such company or person.
(2) If a return is made as required under Sub-rule (i) (or a statement regarding the income or salary is furnished under Section 97) and the executive authority is satisfied that it is correct and complete he shall levy the profession tax from such company or person on the basis of (such return or statement).
Explanation: In cases not falling under Clause (b) of Sub-rule (1) or under Sub-rule (2) of Rule 18, if the company or person produces the notice of demand of income-tax served on it or him under Section 29 of the Indian Income-tax Act, 1922, for the year comprising the half-year in question, the executive authority shall be bound to take one-half of the income mentioned in such notice of demand as the income derived from the sources on which profession tax is leviable under this Act, as the income on the said sources for the purpose of levying profession tax.
(3) If no return is made as required under Sub-rule (1) or if no statement is furnished under Section 97 or if the executive authority is satisfied that any return so made or any statement so furnished is incorrect or incomplete, the executive authority shall assign to the company or person the class in the scale appropriate to the half-yearly income of such company or person as estimated by him.
(4) The executive authority may, when classifying any company or person under Sub-rule (3), do so on general consideration with reference to the nature and reputed value of the business transacted, the size and rental of residential and business premises the quantity and number of articles dealt with, the number of persons employed and the income-tax paid to Government.
(5) The executive authority shall not be entitled to call for the accounts of any company or person.
3. Thus, Rule 19(1) enables a person like the plaintiff to submit a return and Rule 19(3) enables the executive authority of the Municipality to deal with the matter. It contemplates two contingencies. The first contingency contemplated is the case where no return is made as required under Sub-rule (1) and the second contingency contemplated is the case where even if such a return has been made, the executive authority is not satisfied with the correctness or completeness of the return. If either of the two contingencies arises, then Rule 19(3) empowers the executive authority to assign to the person concerned the class in the scale appropriate to the half-yearly income of such person as estimated by him. Rule 19(4) indicates the factors that may be taken into account by the executive authority when he estimates the income under Rule 19(3). In this particular case, as I pointed out already, a return was sent by the appellant under Rule 19(1). Therefore, it is only the second contingency contemplated by Rule 19(3) that arises. If the executive authority was not satisfied about the correctness or completeness of the return, he had the right to estimate the income, but that estimate cannot be arbitrary. As a matter of fact, before rejecting the return as incorrect or incomplete, the executive authority should have given an opportunity to the appellant herein to substantiate the return made by him. Only when the appellant failed to substantiate the correctness or completeness of the return and thereby the executive authority comes to the conclusion that the return is either incorrect or incomplete, his right to estimate the income under Rule 19(3) arises. Even while so estimating, he will have to take into account all the relevant circumstances some of which are mentioned in Rule 19(4). One of the allegations of the appellant-plaintiff in the present case is that though he was not assessed to sales-tax, he was submitting his books to the Commercial Tax Authorities who had verified about the correctness of the said accounts. But in the written statement, the Municipality took the attitude that the Municipality was not bound to take into account the view entertained by the Commercial Tax Authorities or their view with reference to the correctness or completeness of the accounts of the appellant. In my view, that is a sweeping stand to take on behalf of the Municipality and when the executive authority of the Municipality is estimating the income, certainly he will have to proceed with reference to some materials and he cannot merely by the spin of the coin, as if it were, assign the class referred to in Rule 19(3) and cannot determine the income at his whims and fancies. In this particular case, there has been a total failure on the part of the executive authority of the Municipality to conduct a proper enquiry as to the correctness and completeness of the return filed by the appellant and as a result of such enquiry, having come to the conclusion that the return was incomplete or incorrect, to estimate the income, having regard to the relevant circumstances including the factors mentioned in Rule 19(4). As a matter of fact, D.W.1. who was the Commissioner of the Municipality at the time when the suit was tried stated that he could not say on what basis the income of the appellant was estimated at Rs. 9,100 per half-year because the same was done by his predecessor. In view of this evidence no other conclusion is possible except to hold that the income of the appellant at Rs. 9,100 was arbitrarily fixed by the executive authority of the Municipality and therefore cannot be allowed to stand. The result is, the second appeal is allowed and the judgments and decrees of the Courts below are set aside and the suit instituted by the appellant-plaintiff will stand decreed as prayed for. The parties will bear their respective costs throughout. Certainly it is open to the respondent-Municipality to proceed afresh in accordance with the law.