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Amarendra Narayan Roy Vs. Commr. of Income-tax, West Bengal and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberCivil Revn. Case No. 3049 of 1952
Reported inAIR1954Cal271
ActsConstitution of India - Articles 226 and 265; ;Income-tax Act, 1922 - Section 34
AppellantAmarendra Narayan Roy
RespondentCommr. of Income-tax, West Bengal and ors.
Appellant AdvocateNirmal Chandra Chakravarty and ;Samarendra Nath Dutt, Advs.
Respondent AdvocateMayer & Balai Lal Pal (for Nos. 1 to 3) and ;Hemendra Kr. Das and ;Smriti Kr. Rai Choudhury, Advs. (for No. 4)
Cases ReferredCommr. of Agricultural Income Tax v. Sultan All Gharami
- ordersinha, j. 1. this is a rule issued upon the opposite parties, the commissioner of income tax, west bengal, the inspecting assistant commissioner of income tax, range v, calcutta, and the income tax officer, west dinajpur and malda, to show cause why a writ in the nature of certiorari should not issue directing them to bring up to this court the entire proceedings relating to disclosure mentioned in the petition so that the same may be quashed or otherwise dealt with or why a writ in the nature of mandamus should not issue directing them to rescind the said disclosure proceedings or why such other appropriate writs should not be issued or orders made as to this court may seem fit and proper. 2. the facts of the case are shortly as follows: the petitioner amarendra narayan roy, is a.....

Sinha, J.

1. This is a Rule issued upon the opposite parties, the Commissioner of Income Tax, West Bengal, the Inspecting Assistant Commissioner of Income Tax, Range V, Calcutta, and the Income Tax Officer, West Dinajpur and Malda, to show cause why a writ in the nature of certiorari should not issue directing them to bring up to this Court the entire proceedings relating to disclosure mentioned in the petition so that the same may be quashed or otherwise dealt with or why a writ in the nature of mandamus should not issue directing them to rescind the said disclosure proceedings or why such other appropriate writs should not be issued or orders made as to this Court may seem fit and proper.

2. The facts of the case are shortly as follows: The petitioner Amarendra Narayan Roy, is a zemindar of Bulbulchandi in the district of Malda, He is the 'karta' of a Mitakshara Hindu undivided family and is assessed as such to income-tax. In due course the assessee filed a return of income-tax for the assessment year 1947-48. It was then discovered by the Income Tax Officer that in or about January 1946 (which was within the accounting period) the petitioner had exchanged high denomination notes of the value of Rs. 1,21,000/-. It is well known that an Act was passed abolishing high denomination notes of Rs. 1000/- and upwards as legal tender. It was this enactment that compelled the petitioner to have the notes exchanged. The Income Tax Officer considered this amount to represent concealed income and proposed to treat it as income received during the assessment year. Before I proceed further, I might mention that in the declaration in the prescribed form (as submitted by the petitioner on 22-1-1946) for exchange of high denomination notes, entry No. 16 required the declarant to state the source from which the declarant came to possess the Bank notes and the time when he did so. The answer given by the petitioner was:

'The exact time cannot be ascertained, we have received in exchange.'

3. On or about 14-5-1948, the petitioner filedthe statement (Annexure 'A' to the petition) showing an amount of Rs. 2,29,274/1/9 pies as accumulation in the 'Home Chest' account between 1300 B.B. and 1351 B.S. On 5-8-1951, the petitioner filed a petition before the Income Tax Officer, Malda, in which he gave a history of how monies were accumulated in the 'Home Chest' account, how a portion was taken out arid lent to the Maharaja of Cossimbazar, how monies were realised from the Cossimbazar Estate and how monies were put back into the 'Home Chest' account, partly through the petitioner's separate business. In that petition the petitioner stated as follows:

'In the circumstances, your Honour will be pleased to treat the H/D notes exchanged as savings of the estate and not income.'

On or about 19-5-1951, the Government of India introduced what is known as the 'Voluntary Disclosure System.' This is not based on any legislative measure. The Government of India intimated to the public that if persons made voluntary or quasi-voluntary disclosure before the specified data of their concealed income, they would be allowed certain advantages including immunity from prosecution. In imposing penalities, the Income Tax Department would take into account as mitigating circumstances the speed with which disclosures were made and the extent of co-operation received from the assessee. In such an event, the Department was also willing to consider the assessee's capacity to pay in the matter of fixing instalments or allowing time for payment. Although this was published in the Press on or about 15-6-1951, and the time limit given was 31-8-1951, it appears that the time limit imposed for disclosure was extended from time to time.

4. On 8-3-1952 the petitioner filed a disclosure petition (Annexure 'C' to the petition). In this petition the petitioner stated that he wanted to take advantage of the scheme. The petitioner proceeded to say as follows:

'That the petitioners hereby disclose that high denomination notes amounting to Rs. 1,21,000/-(Rupees one lac twenty one thousand) exchanged on demonetisation in January, 1946, represent income earned from their family money-lending business carried on originally under the name of Rajendra Narayan Roy and later after his death in the name of his heirs Amarendra Narayan Roy and others. The family had been carrying on money-lending business at Malda for the last 25 years and the income of Rs, 1,21,000/-as disclosed above represents undisclosed portion of the above family money-lending business income from year to year extending over a minimum period of 20 years.

There is no account to prove as to how and when the income accrued. The family has or had no other business save and except the present family money-lending business.' The petitioner then proceeds to give a list of income spreading the sum of Rs. 1,21,000/- over 20 years commencing from 1333 B.S. to 1353 B.S., each year showing an income of precisely Rs. 6000/- save and ' except the last year when the income is shown as Rs. 7000/-. The petitioner then proceeds to state as follows: 'In the circumstances, the petitioners pray that you will be pleased to assess the disclosed income earned during the minimum period of last 20 years under the disclosure scheme of the Government of India.'

5. On 14-3-1952, there appears to have been a hearing before, the I.A.C., Range V, Calcutta, The minutes recorded by the officer, are extremely important and are set out below:

'Discussed with the assessee's Pleader. The disclosure petition is accepted and Rs. 1,21,000/- is to be spread over as below:

1940-41.Rs. 15,000/-1941-42.Rs. 15,000/-1942-43.Rs. 10,000/-1943-44.Rs. 20,000/-1944-45.Rs. 20,000/-1945-46.Rs. 15,000/-1946-47.Rs. 1,000/-1947-48.Rs. 25,000/-

Rs. 1,21,000/-

The assessee will be charged 18-A-interest for relevant years and a penalty of 50 per cent, should be imposed on the tax payable on above sums. Return the records to I.T.O. at once with above order as assessment for 1947-48 is yet pending.

The draft assessment order is approved subject to inclusion of Rs. 25,000/- in place of Rs. 1,21,000/- proposed in the draft order in the light of acceptance of the disclosure petition.'

6. It will appear from the above minutes that the sum of Rs. 1,21,000/- was allowed to be spread over a period of 8 years. In the counter affidavit (Affidavit of Saradindu Nath Mitra, para 18) it is definitely stated that the petitioner was present on the occasion. There is no specific denial of this fact in the affidavit in reply.

7. On 17-3-1952, the petitioner filed a petition before the Commissioner of Income Tax, West Bengal. In that petition it was stated that the high denomination notes came out of this 'Home Chest' account but the Income Tax Officer gave the petitioner to understand that the best course was to come out with a disclosure statement and a disclosure statement was accordingly submitted in which Rs. 1,21,000/- was shown distributed over 20 years. It is further stated that the same Officer gave him to understand that the petitioner would have to pay about Rs. 25000/- including all penalties, but it transpired that the ' petitioner would have to pay Rs. 58,332/- approximately, together with penalty and compound interest. (Annexure 'D' to the petition). The petitioner also informed the Income Tax Officer that he had moved the Commissioner of Income Tax (Annexure 'E' to the petition). On 18-3-1952, the Income Tax Officer assessed the petitioner to income-tax. The minutes of the Income Tax Officer run as follows:

'Seen I.A.C., R-V's order dated 14-3-52, communicated with his Memo No. 9I63/I-H/M-7-a/50-51 dt. 14-3-52.

Spread over the amount disclosed as per I.A.C.S instructions and calculate tax accordingly. Issue D.N. and challan for payment.'

8. As far as the assessment order for 1947-1948 was concerned, it included Rs. 25000/- as the amount disclosed for that year. On 25-3-1952, the petitioner got his reply to the petition made by him to the Commissioner of Income Tax, West Bengal. This letter is of great importance and must be set out:

'Dear Sir,

Please refer to your petition to the Commissioner of Income Tax, West Bengal, regarding settlement of your disclosure petition. In this connection I have been directed by the Commissioner of Income Tax, West Bengal, to offer you the undermentioned two alternatives for settlement of the matter under dispute: (1) You should agree to the settlement proposed by me in this case and give in writing that you will not appeal and that you will pay the demand promptly. If so, the Commissioner is prepared to allow you the concession of not charging the 3 per cent, compound interest (Rs. 4, 450/-) in view of the fact that there will already be an imposition of penalty Under Section 28(1)(c).'

(2) The full amount of Rs. 1,21,000/- will be added in the assessment for 1947-48 and penalty proceedings Under Section 28 will also be started. You win have your right of appeal and also the right to move Under Section 45.

You are requested to please intimate your choice to the I. T. O. to whom I am also sending a copy of this letter, latest by 28th of this month, endorsing a copy of the same to me.

Yours faithfully,

Sd/- B, Sen,

Inspecting Asstt.

Commissioner of Income

Tax, Range V.'

9. On 28-3-1952, the petitioner replied to this letter in which he said that he had been given to understand that if he came out with a disclosure he would have to pay a nominal tax of 10 per cent, on the disclosed amount. He then proceeds to say as follows:

'..... if I now withdraw myself fromthe position, your suspicion will always be there and I may not get full justice even if I go higher up.

I am sure that the penalty imposed in my case is abnormally high specially because of the fact that the merits of my case have not beenproperly represented or sympathetically considered by you.

In any way under the present circumstances, as I find no other alternative but to surrender I agree to Clause (1) of your letter.'

10. It appears that the petitioner also sent a wire of acceptance to the Income Tax Officer. On 31-3-1952, the minute of the Income Tax Officer is as follows:

'In. view of my above order the question of orderUnder Section 33-B does not arise .....The 'A' is personally present and wants tomake payment of Rs. 1000/- now. Issue Challanfor the same.'

11. The oraer-sheet contains the signature of the petitioner regarding the issue of this challan and it is not denied that he made a part payment of Rs. 1000/-. It appears further that the petitioner later on applied for two years' time to mate payment which was not allowed. Two months' time was granted but the petitioner failed to make payment and on 1-5-1952 an order was made for initiating certificate proceedings.

12. As far as the certificate proceedings are concerned, no grounds have been made in the petition to establish that there is any inherent defect in taking certificate proceedings. The petitioner in this application challenges the validity of the disclosure proceeding. I have, therefore, not dealt with this aspect of the case, and although in the argument references were made to the fact that such proceedings were taken without formal assessment orders or demand notices having been served', I am not called upon to decide the validity of the certificate proceedings on any such ground which have not been taken in the petition. Mr. Chakravarty appearing on behalf of the petitioner concedes that such grounds do not form the subject-matter of this application.

13. In this application, the substantial point put forward is that the entire system of disclosure proceedings is invalid in law. Mr. Chskravarty frames his argument thus: Under Article 265 of the Constitution, no tax is to be levied or collected from a citizen of India except by authority of law. It is argued that before a citizen can be assessed to tax he must be proceeded against under the Income Tax Act, the requisite notices are to be served upon him, and after he has been formally assessed, the tax is to be realised in compliance with the procedure indicated in the Income Tax Act. It is further argued that the so-called 'disclosure proceedings' are not based on any law and infringe Article 265 of the Constitution.

His next argument is that assuming that it is permissible for the assessee and the authorities to proceed on an agreed basis, there has been on the facts of this case no such agreement. He argues that his client did not agree to anything but surrendered himself to the demands of the Income Tax authorities and this cannot be, by any stretch of imagination, called an agreed basis. Finally, he argues that if the amount demanded as tax is neither warranted by. law nor by contract then it cannot be realised at all and this Court should interfere and stop the attempts of the authorities to realise the tax.

14. In my opinion, this argument is based on several misconceptions. Article 265 of the Constitution lays down that no tax was to be levied of collected except by authority of law. That of course is a fundamental thing which cannot be allowed to be infringed, but the whole question is whether what has been done in this case is contrary to law and whether any attempt was being made to levy or collect a tax except by authority of law.

15. The real nature of the liability to pay income-tax has been pointed out in -- 'Chatturam v. Commr. of Income Tax, Bihar' AIR 1947 PC 32 . In that case, the question arose as to whether income-tax can be realised from the assessee when notices under Section 22(1) as also under Section 22(2), Income Tax Act were issued, even before the Indian Finance Act 1940 was extended to Chota Nagpur where the assessee resided. It was argued that these notices were the foundation of jurisdiction of the Income Tax Officer and since the Finance Act of 1940 was not operative in the area in question when they were issued, they were ineffective to charge the assessee with liability to comply with the same. Kania J. (as he then was) said as follows:

'This contention is founded on a misunderstanding of the Income Tax Officer and the operation of the Income-tax Act. The Income tax assessment proceedings commence with the issue of a notice. The issue or receipt of a notice is not, however, the foundation of the jurisdiction of the Income-tax Officer to make the assessment or of the liability of the assessees to pay the tax.....The jurisdiction toassess and the liability to pay the tax, however,. are not conditional on the validity of the notice. Suppose a person, even before a notice is published in the papers under Section 22(1), or before he receives a notice under Section 22(2) of the Income-tax Act, gets a form of return from the Income-tax Office and submits his return, it will be futile to contend that the Income-tax Officer is not authorised to assess the party or that the party is not liable to pay any tax because a notice had not been issued to him. The liability to pay the tax is founded on Sections 3 and 4 of the Income-tax Act which are the charging sections. Section 22 etc. are the machinery sections to determine the amount of tax.

'Lord Dunedin in Whitney v. Commrs. of Inland Revenue' (1926) AC 37 (B), stated as follows: 'Now there are three stages in the imposition of a tax : there is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, 'ex hypothesi', has already been fixed. But assessment particularizes the exact sum which a person liable has to pay. Lastly, come the methods of recovery, if the person taxed does not voluntarily pay.' In -- 'W. H., Cockerline and Co. v. Commrs. of Inland Revenue' (1930) 16 Tax Cas 1 , Lord Hanworth M. R. after accepting the passage from Lord Dunedin's judgment quoted above observed as follows: 'Lord Dunedin, speaking of course with accuracy as to these taxes, was not unmindful of the fact that it is the duty of the subject to whom a notice is given to render a return in order to enable the Crown to make an assessment upon him; but the charge is made in consequence of the Act, upon the subject; the assessment is only for the purpose of quantifying it.'

He quoted with approval the following passage from the judgment of Sargent L. J. in the case of -- 'Williams v. Henry Williams Ltd. (D)' (not reported): 'I cannot see that the non-assessment prevents the incidence of the liability, though the amount of the deduction is not ascertained until assessment. The liability is imposed by the charging section, namely, Section 38 (of the English Act) the words of which are Clear, the subsequent provisions as to assessment and so on are machinery only. They enable the liability to be quantified, and when quantified to be enforced against the subject, but the liability is definitely and finally created by the charging section and all the materials for ascertaining it are available immediately.' In -- 'Attorney-General v. Aramayo', (1925) 9 Tax Cas 445 , it was held by the whole Court that there may be a waiver as to the machinery of taxation which inures against the subject. In India these well-considered pronouncements are accepted Without reservation as laying down the true principles of taxation under the Income-tax Act. This contention of the appellants therefore fails.'

16. The principles above adumbrated may be summarised as follows; (1) the liability to pay Income-tax depends upon the charging sections and not upon those parts of the Act which relate to the machinery of realising the tax; and (2) that so far as the machinery portion is concerned, it is open to the subject to waive the same.

17. As far as the amount of Rs. 1,21,000/- is concerned, it is now admitted that the petitioner did not disclose it in his returns for the years when he should have disclosed the same. What then are his liabilities in respect of this concealed sum? It will be observed that a faint effort was made to call it 'saving' and not 'income' or; in other words, a part of the corpus. At the hearing before me, however, Mr. Chakravarty has based his case on the footing that this was income which had been concealed during a period of 20 years. His client's grievance is as follows: it is said that with regard to the major part of the sum involved there exists clear evidence in the account books or 'Sumars', as they are called, which are in the possession of the petitioner to show that these sums were received and transferred to the 'Home Chest' account, during the last 20 years.

It is said that during the hearing the lawyers who represented the petitioner before the Income Tax Officer misguided the petitioner into thinking that the explanation offered will not be accepted and that it was better to come out with a disclosure statement. It is said that the petitioner being confronted with the possibility of his explanation being rejected, and being faced with the risk of penalties, was induced to file this disclosure petition upon the representation of his lawyers that he would have to pay no more than Rs. 25000/- including all penalties. It is further alleged that the petitioner surrendered to the proposed settlement because of the pressure given by the income-tax authorities.

18. I do not think, however, that I am concerned with what transpired between the petitioner and his lawyers. The result of any advice that the petitioner might have received from his lawyers was that he took advantage of the disclosure scheme introduced by the Government and made a disclosure petition. But Mr. Chakravarty is instructed to say that the figures given therein are correct and the petitioner is willing to stand by his disclosure petition. It is argued, however, that the whole system of basing liability on a disclosure petition is invalid in law. In any event, the final liability is not even based upon the disclosure petition but a modification thereof. We have therefore 'to travel a little further than the principles referred to above. It being settled that the assessee can waive the machinery portion, it next falls to be considered as to whether it is open to him to agree to the quantum of the liability without an assessment.

Reference has already been made to the case of -- 'W.H. Cockerline & Co. v. Commrs. of Inland Revenue (C)' (supra). The facts of that case are shortly as follows: Sir Walter Cockerline carried on the business of shipbrokers and shipowners under the name and style of W. H. Cockerline and Co. In 1925 the question arose as to whether he had made accurate returns in respect of Income-tax, Super-tax and 'Excess Profits 'Duty. The matter was gone into by two chartered accountants and it was found that there was an underpayment of 107,106, Os. 2d. Sir Walter paid this sum as well as 300,000 as penalties and these sums were accepted in full discharge of his liability. It was later on alleged that these payments without) assessment being actually made were invalid. Lord Hanworth M. R. said as follows:

'Another point is taken by Mr. Wilfrid Greene. He says that this right under Section 39 remained open to Sir Walter, that no effect ought to be attached to this payment of 107,106 because it was paid without an assessment actually being made upon Sir Walter, and that there can be no payment without an assessment, in language which was, perhaps, coloured by a warmth of feeling about it, he suggested that it was entirely wrong, and, indeed, made an inroad upon the rights of the subject that there should be any sum ever accepted from the subject in discharge of a liability in respect of which there had not been any assessment, or paper imposing the assessment, served upon him. In my view that argument is unsound. I do not think it is necessary in all cases, in order to enable the Crown to receive money, that there should be an assessment actually served of that sum, which is ultimately paid.......... I should besorry to think that one was, in any way, taking away any of the liberties of the subject, but it is to be noted that it would be unfortunate if the subject were not able to make an agreement unless and until some assessment had been made.'

19. Since the citizen has an existing liability to pay taxes there seems to be no law preventing him from paying the taxes on an agreed basis, and for this purpose the existence of an assessment order is not essential. Mr. Chakravarty, however, seeks to distinguish this case on two grounds. Firstly, he says that in the English case, the amount that was payable was arrived at by the careful scrutiny of two chartered accountants and had therefore a relation to what was actually due. Secondly, he says that the amount had already been paid.

20. In my opinion, these distinctions are not material. It is true that in the case mentioned above the amount was arrived at by careful deliberation of two experts, but that does not seem to be an essential prerequisite to the tax being ascertained on an agreed basis. That is a matter which is entirely one between the person who is liable to pay the tax, namely, the assessee, and the authorities who are concerned with the realisation thereof. One might conceive of a case where the authorities would be prepared to accept the figure stated by the assessee without any further enquiry because there existed difficulties in ascertaining the real amount.

As will appear from the disclosure petition in this case, it was clearly stated that no account books existed by which the assessee could support his disclosure. It is now said that the statement was untrue. This appears to me to be a special characteristic of this case. The petitioner goes on making statements and then complains that they are untrue. At one stage he stated that the sum in question was saving and not income and that there were no books. Now he says that it was income and there existed a complete chain of books and documents which would have established the real nature of the sum involved. These conflicting statements have some bearing on the question as to whether the petitioner is entitled in a Court of equity to obtain relief. - However, that is a fact to which I shall revert later on. In my opinion, there is nothing illegal in the proceedings introduced by the Government of India variously known as 'Concessional Scheme' or 'Disclosure Proceeding'. The difficulties inherent in following concealed income in this country are well-known. If at any given point of time the authorities tempt the assessee with concessions and induce him to come out with a voluntary disclosure of concealed income and agree to pay the proper taxes upon them, I do not see how such proceedings are contrary to law or how they offend any provision of law. The fact that in the 'Cockerline case (C)' (Supra) the amount had been already, paid seems irrelevant. The case was not decided upon that ground.

21. Finally, Mr. Chakravarty argues that even assuming that it was permissible for the authorities to proceed upon a voluntary disclosure and to assess taxes on an agreed basis, there was not, on the facts of this case, any concluded agreement at all. Mr. Chakravarty argued with some warmth of feeling that in this particular case the citizen was induced by threats to surrender to the illegal demands of the authorities.

22. The position appears to be as follows: During the course of the assessment proceedings for the year 1947-1948, the Income Tax Officer discovered that the petitioner in January 1946 had exchanged high denomination notes for a sum of Rs. 1,21,000/-, and this he proposed to treat as income in that year. The assessee stated, that he had no books of account to support his statement that the sum in question was accumulation during the last 20 years. If the books of account were not forthcoming, the Income Tax Officer would have been justified in treating it as income accruing in the year 1947-1948. The assessee however naturally wished to avoid this. The authorities were unwilling to spread this amount between 20 years but they were willing to do so between the last 8 years.

Mr. Meyer appearing on behalf of the respondents argues that this has no reference to Section 34, Income Tax Act. I am, however, doubtful on this point. It is obvious to me that the authorities considered that 8 years would be about the limit to which they could re-open the assessment under Section 34 and therefore they were not willing to go beyond it. The authorities accordingly confronted the assessee with two alternatives, (1), that he should be assessed as if he had received the sum in question during the assessment year 1947-1948 or (2) alternatively that it should be spread over 8 years. It is not alleged that the letter of the Inspecting Assistant Commissioner dated 25-3-1952 was ambiguous on this point or that the petitioner did not understand the terms thereof. It was also a part of the offer that the petitioner was not to appeal against the agreed assessment. I am not called upon to consider whether the last part of the offer is enforceable, because no such point has been made in this application.

23. The petitioner accepted the second alternative mentioned above. It is now said that he did so through pressure and that it was rather a surrender than agreement.

24. I regret that I cannot give any effect to this complaint of the petitioner. He is an adult person and must be taken to have realised the consequences of his agreeing to one of the alternatives put forward by the authorities. He might have refused to accept the offer and appealed against any assessment made or might have come at that point of time to' this Court. But what he did was to accept the offer of the Income Tax authorities, and not only he has accepted it but the agreement was part-performed inasmuch as he has paid Rs. 1000/- in part payment.

25. An application under Article 226 of the Constitution cannot be lightly granted. The effect of my setting aside the assessment at this stage and directing the respondents to proceed with the assessment 'denovo' will mean that they will be confined to the restricted course of assessing the petitioner for the entire amount in 1947-1948 or to re-open the assessment under Section 34, only for a few years and not eight years, because several years will have become barred under the provisions of the Income Tax Act. This would be clearly inequitable. If the petitioner wished to go back on his disclosure petition or upon the course which he chose to adopt in his letter dated 28-3-1952, he should have taken proper proceedings at once. He has chosen to wait for the best part of a year and come up to this Court for relief. By his representation to the authorities that he was prepared to accept the settlement mentioned in the letter of the Inspecting Assistant Commissioner dated 25-3-1952, he has induced the respondents to alter their position and it is no longer possible now to get rid of that settlement and put the parties into their original position.

Besides, the Court has to consider as to whether it is called upon to grant relief to a person who has admittedly transgressed the law by concealing his income and submitting false returns and then upon his own admission continuously prevaricated with the authorities with the result that even now it is not possible for this Court to find out with absolute certainty as to what is true and what is false. The petitioner has constantly gone back on his own statement and there is nothing to show that his present story is the final one or necessarily the true one. If he was in possession of books and documents at all material times such as would explain to the hilt the nature of the sum involved, it is incomprehensible why he made the declaration that it was not possible to state as to when and from whom the high denomination notes were received or that he did not possess any books of account and why he should not insist that the matter be fully thrashed out before the Income Tax Officer. After all, he ought to have known that the authorities could re-open only upto the extent of 8 years.

If he was confident of being able to prove that he could establish that the disputed sum was spread over twenty years instead of eight, I do not see why he did agree and why his lawyers allowed him to agree that the amount should be spread over a period of eight years. On the other hand, if one accepts his own testimony contained in the disclosure petition and in the declaration mentioned above, namely, that he had no means of proving the identity of this disputed sum, then it is quite understandable why he chose to adopt the course that he did.

Mr. Chakravarty says that assessees when confronted by Income Tax authorities, specially whenthey are guilty of commission and omissions, are scarcely expected to be in their proper minds and might be expected to do anything. While being aware that assessment of taxes and impositions is not a pleasant affair, it would be a dangerous principle to extend the benefits of Article 226 of the Constitution to those who have transgressed the law and yet are too faint-hearted to speak out the truth and confront the consequences. Under such circumstances, if the authorities and the assesses have come to a working arrangement it is not for this Court to interfere and re-open the same. A writ of mandamus or certiorari would be appropriate if the authorities had done something which fringe the law, but within the boundaries of the law, this Court is not called upon to disturb Arrangements which parties may have come to with their eyes open and fully cognizant of the consequences of their acts.

Mr. Chakravarty has argued that the assessment cannot be said to have taken place on an agreed basis', because the qualified acceptance of the disclosure petition on 14-3-1952 was not considered final, since on 25-3-1952, the petitioner was being given the option to accept any of two alternatives. There is no substance in this contention. According to the respondents, the petitioner and his lawyers had agreed to the proposed settlement on 14-3-1952, but as he tried to resile from it, the authorities put him to elect one of two courses-- One the acceptance of the proposed settlement or alternatively facing an assessment in 1947-48 for the full amount of Rs. 1,21,000/-. The petitioner chose to accept the proposed settlement. It is upon his acceptance thereof that the basis of assessment finally came to be an agreed basis. There is no question of a formal contract having been entered into. There was a dispute as to the assessment, and the matter was settled at a figure between the assessee and the income-tax authorities.

26. Mr. Chakravarty has referred me to the case of -- Commr. of Agricultural Income Tax v. Sultan All Gharami : [1951]20ITR432(Cal) . In that case, Chakravartti J. (as he then was) held that the decision of the Federal Court in AIR 1947 FC 32 ', does not cover an omission of a step which the statute regards as a condition precedent to the commencement of proceedings in exercise of jurisdiction. The point there was that notice was served under Section 24(2) and the assessment was re-opened without serving any notice under Section 34, and as such the proceedings were held to be not valid. I do not think that it throws any light on the facts of this case where there was no formal re-opening of the assessment under Section 34 at all. What was re-opened was done on an agreed basis on the strength of a disclosure petition.

27. For the reasons above stated, the application cannot be allowed and should be dismissed. The Rule is discharged. The interim orders are vacated. There will, however, be no order as to costs.

28. As the petitioner intends to prefer anappeal against this order, let the interim orderstaying all further proceedings in the matter before the Collector of Malda continue till a fortnight after the X'mas Holidays, as prayed for.

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