Civil Appeal No 378 of 1992
From the Judgment dated 3171991 of the Karnataka High Court in Writ Appeal No 1224 of 1990
Santosh N Hegde and PMahale for the Appellants
AK Subbiah Ranji Thomas KV Mohan M Veerappa and KH Nobin Singh for the Respondents
290 The Judgment of the Court was delivered by AHMADI J
Special leave granted
This appeal is directed against the judgment of the High Court of Karnataka dated 31 st July 1991 whereby the Division Bench allowed the Writ Appeal setting aside the decision of the learned Single Judge and held relying on the judgment in Writ Appeal No 2564 of 1987 decided on 28th May 1991 that Section 4 2 of the Karnataka Zila Parishads Taluk Panchayat Samithis Mandal Panchayats and Nyaya Panchayats Act 1983 hereinafter referred to as the Act  does not confer any power in the Deputy Commissioner to change the headquarter of any Mandal
It is this view taken by the Division Bench of the High Court that is put in issue in the present appeal
For the purpose of disposal of this appeal we may notice a few relevant facts
The Act came into force wef 14 th August 1984
Thereafter on 16th January 1986 a notification was issued by the Deputy Commissioner in exercise of power conferred by Section 4 1 of the Act constituting a Mandal named Mudiyannur Mandal and located its headquarter at Mudiyannur
However the Divisional Commissioner changed the headquarter to Uthanpur while exercising power under Section 4 3 of the Act
Thereupon a writ petition was filed on 14th December 1987 being Writ Petition No 768586 challenging the said decision of the Divisional Commissioner
That Writ petition was dismissed by the High Court observing if the Mandal so desires it may pass a resolution to change the headquarter from the existing place to another place whereupon it will be open to the Deputy Commissioner to consider if he would like to exercise power under Section 4 2 of the Act
Pursuant thereto a fresh resolution was passed whereupon the Deputy Commissioner issued a notification under Section 4 2 of the Act for change of headquarter which was published in the Government Gazette of 20th January 1988
On the issuance of the said draft notification respondents Nos 1 to 10 filed a writ petition being Writ Petition No 188888 challenging the said draft notification
That writ petition was also dismissed by the High Court
The Deputy Commissioner after considering the resolution of the Mandal and the objections received in response to the draft notification from respondents Nos 1 to 10 passed an order declaring Mudiyannur as the headquarter of the Mandal
To give effect to his decision a notification under Section 4 2 of the Act was issued on 23rd July 1988 whereby the headquarter was changed from Uthanpur to Mudiyannur
Once again the respondent Nos 1 to 10 challenged that notification by a revision application filed under Section 4 3 291 of the Act
The Divisional Commissioner exercising power under the said provision dismissed the revision application whereupon a Writ Petition no 77 of 1989 was taken to the High Court
A learned Single Judge of the High Court dismissed the writ petition
An appeal was carried to the Division Bench of the High Court
the Division Bench allowed the appeal by the impugned judgment dated 31 st July 1991 following an earlier decision in Writ Appeal No 2564 of 1987 rendered on 28th May 1991
It is the correctness of this decision which we are called upon to examine
Section 4 1 as it stood before its amendment on 4th October 1985 empowered the Deputy Commissioner to declare any area comprising a village or group of village having the required population to be a Mandal for the purposes of the Act
That sub section did not carry a provision empowering the Deputy Commissioner to specify the headquarter of the Mandal
By the amendment brought about in that provision by Act 3 of 1986 wef 4th October 1985 this power was specifically conferred on the Deputy Commissioner
The amended Section 4 1 reads as under  1 Subject to the general or special orders of the Government the Deputy Commissioner if in his opinion it is expedient to declare any area comprising a village or group of village having a population of not less than eight thousand and not more than twelve thousand to be a Mandal may after previous publication declare such area as a Mandal for the purposes of this Act and also specify its headquarter
 On a plain reading of this provision it becomes obvious that the Deputy Commissioner was empowered not only to declare a village or group of villages as a Mandal but also to specify its headquarter
We then come to sub section 2 which empowers the Deputy Commissioner at the request of the Mandal concerned or otherwise to increase or decrease the area of any Mandal by including within or excluding from such Mandal any village or group of villages or alter the name of any Mandal or declare that any area shall cease to be a Mandal after previous publication of the proposal by a notification in the Gazette
This sub section confers power on the Deputy Commissioner to increase or diminish the area of any Mandal and to alter the name of any such Mandal but it does not in so many words confer power to specify the headquarter of such reconstituted Mandal
Sub section 3 of section 4 empowers the Commissioner either on an application made within thirty days from the date of the notification by an aggrieved party or in exercise of suo moto power after giving a reasonable opportunity of being heard to the applicant or the Mandals 292 concerned revise the orders of the Deputy Commissioner passed under sub section 1 or sub section 2 as the case may be and may also if he considers necessary modify it as provided in the third proviso to subsection 1 Every order so passed revising or modifying the order of the Deputy Commissioner shall be published in the Official Gazette
We are not concerned with the third proviso to sub section 4
Sub section 1 of Section 4 therefore empowers the Deputy Commissioner to declare any village or group of villages as a Mandal and to specify its headquarter
After the constitution of the Mandal and on the headquarter being specified under this sub section if any change is to be effected in the area of the Mandal either by increasing or reducing its size the power has to be exercised under sub section 2 of Section 4 of the Act
That sub section also empowers the Deputy Commissioner to alter the name of the Mandal
It was submitted by the counsels for the respondents that while this sub section in terms empowers the Deputy Commissioner to alter the name of the Mandal it does not empower him to alter the headquarter of the Mandal because the headquarter once specified under sub section 1 of Section 4 must remain unaltered since the Act designedly does not confer any power on any authority whatsoever to change the headquarter once specified under sub section 1 of Section 4
This submission was countered by the learned counsel for the appellant by inviting our attention to Section 14 of the Karnataka hereinafter called the 
that provision reads as under Where by any Mysore or Karnataka Act made after the commencement of this Act any power is conferred then that power may be exercised from time to time as occasion requires
 Counsel for the appellant submitted that once the power to specify the headquarter is conferred on the Deputy Commissioner by sub section 1 of Section 4 of the Act it can be exercised from time to time by virtue of the said Section 14 if the occasion so requires
He therefore submitted that this Court should construe the scheme of Section 4 of the Act with the aid of Section 14 in such a manner as not to leave a vacuum for the exercise of power if need arises for a change of headquarter
He submitted that if the view taken by the High Court is approved a situation may arise when even after a change takes place in the size of the Mandal area there would be no power vested in any authority whatsoever for changing of specifying the headquarter of the reconstituted Mandal which vacuum may lead to avoidable complications
He therefore submitted that once the legislature has invested the Deputy Commissioner with the power to 293 specify the headquarter under sub section 1 of Section 4 subject to the modification which the Commissioner may choose to make under sub section 3 of Section 4 the power to alter the headquarter of a Mandal from time to time if the occasion so requires must be read into it
We think there is a considerable force in this submission
As pointed out earlier Section 41 empowers the Deputy Commissioner to do two things namely i to declare an area as a Mandal and ii to specify its headquarter
The word also  preceding the words specify its headquarter  cannot be understood to convey that the power once exercised would stand exhausted
Such a construction sought to be placed by counsel for the respondent does not accord with the language of the provision
It merely conveys that when the Deputy Commissioner constitutes a Mandal for the first time it will be necessary for him to specify its headquarter also
This power to specify the headquarter conferred on the Deputy Commissioner can be exercised from time to time as occasion requires by virtue of Section 14 of the 
The attention of the High Court was not drawn to the provision in Section 14 when it disposed of the Writ Appeal No 2564 of 1987 and Writ Petition No 375 of 1989 on 28 th May 1991
It is true that the power conferred by sub section 2 of Section 4 can be exercised where there is a change in the area of the Mandal either by addition or reduction in the area
Under clause c of sub section 2 of Section 4 the Deputy Commissioner is also invested with the power to alter the name of any Mandal
The scheme of subsection 2 would therefore show that when there is any increase or decrease in the area of any Mandal the Deputy Commissioner may after the previous publication of the proposal by notification exercise that power and rename the Mandal if so required
The absence of the power in sub section 2 of section 4 to specify the headquarter afresh does not necessarily mean that once the initial constitution of the Mandal takes place and the headquarter is specified the power is exhausted notwithstanding section 14 of the 
If such an interpretation is placed on the scheme of section 4 of the Act neither the Deputy Commissioner nor any other authority will thereafter be able to alter and specify any other place as the Mandal s headquarter
Such a view would create a vacuum and even when a genuine need for specifying any other headquarter arises the authorities will not be able to exercise power for want of a specific provision in the Act and that may lead to avoidable hardship and complications
It is therefore essential that we read the provision of the Act in a manner so as to ensure that such a vacuum does not arise and the power is retained in the concerned authority which can be exercised should a genuine need arise
In JR Raghupathy  Ors
vs State of AP others  this Court observed that the ultimate decision as 294 to the place or location of Mandal headquarter is left to the Government to decide and conferment of discretion upon the concerned authority in that behalf must necessarily leave the choice to the discretion of the said authority and it would not be proper for the courts to interfere with the discretion so exercised
This is not to say that the discretion can be exercised in an arbitrary or whimsical manner without proper application of mind or for ulterior or malafide purpose
If it is shown that the discretion was so exercised it would certainly be open to the Courts to interfere with the discretion but not otherwise
We are therefore of the opinion that if the situation so demands and there is justification for altering the place of headquarter it would be open to the Deputy Commissioner to exercise power under Section 41 of the Act read with section 14 of the to meet the situation
We therefore allow this appeal set aside the impugned order of the Division Bench of the High court and restore the order of the learned Single Judge directing that the writ petition which gave rise to the writ appeal shall stand dismissed
However in the facts and circumstances of the case there will be no order as to costs
VPR Appeal allowed


Summary:
The appellant was carrying on the business of a railway contractor in a place in the district of R
In April 1943 the Income tax Officer of R which was under the charge of the Commissioner of Income tax Bengal Mufassil served a notice under section 222 of the Indian Income tax Act 1922 on the appellant who in pursuance of the notice filed the return on February 28 1944
The Income tax Officer then served notices on him under SS
224 and 232 Of the Act for the production of books etc but before the final assessment was made the Central Board of Revenue by an order passed under section 52 of the Act transferred the appellant s case along with some other assessment cases to the Commissioner of Income tax Central Calcutta
On February 11 1948 the Income tax Officer Calcutta to whom the appellant s case was assigned issued notices again under SS
224 and 232 of the Act and after making the usual enquiries made the assessment order on March 15 1948
The appellant s appeals to the Appellate Assistant Commissioner and then to the Appellate Tribunal raising objections to the legality of the transfer of his case to Calcutta and to the jurisdiction of the Income tax Officer Calcutta were dismissed
The Appellate Tribunal held that as the objection related to the place of assessment it was not competent for the Tribunal to go into that question
The appellant then made an application to the Commissioner of Income tax for reference under section 661 of the Act but this was dismissed on the ground that the assessee never raised any objection before the Income tax Officer to his jurisdiction and that in any case the question of jurisdiction could not arise out of the order of the Tribunal
An application filed by the appellant to the High Court under section 662 of the Act was dismissed and though the order of dismissal was not taken up on appeal the appellant filed an appeal to the Supreme Court against the order of the Appellate Tribunal
It was contended for the appellant that under section 641 and 2 of the Act he was entitled to be assessed by the Income tax Officer of the area within which the place of his business was situate that the 302 assessment by the Income tax Officer of Calcutta was illegal assumption of jurisdiction and that in any case the order of transfer by the Central Board of Revenue under section 52 of the Act was not valid because if it wanted to transfer the assessment proceedings from the file of one Income tax Officer to another it could be done only under section 57A and not under section 52
Held  1 Sub section 7A of section 5 which confers on the Central Board of Revenue the power to transfer any case from one Income tax Officer to another is not a provision which in any way modifies or cuts down the power given to the Central Board of Revenue under sub section 2 of section 5 which enables it to specify as to which of the Commissioners would perform functions in respect of different areas persons incomes or cases or classes thereof
The two sub sections are complementary and operate in two separate spheres
Pannalal Binjraj vs Union of India  and Bidi Supply Co vs Union of India   distinguished
In the present case the Central Board of Revenue directed the Commissioner of Income tax Central Calcutta to exercise his functions in respect of certain cases including the case of the appellant and that fell under section 52 and not under section 57A
The order of transfer was therefore valid
2The jurisdiction of the Income tax Officer Calcutta to make the assessment on the appellant cannot be challenged in view of sub section 5a of section 64 of the Act under which sub sections
1 and 2 of section 64 have no application to an assessee in respect of whom anorder has been made by the Central Board of Revenue under S52 of the Act
3 Objections as to the place of assessment cannot be raised in appeal either before the Appellate Assistant Commissioner or before the Appellate Tribunal
Wallace Brothers  Co Ltd vs Commissioner of Income tax Bombay Sind and Baluchistan and Seth Kanhaiyalal vs Commissioner of Income tax 1936 5 ITR 739 relied on
Dayaldas Kushiram vs Commissioner of Income tax Central and Dina Nath Hem Raj vs Commissioner of Income tax All 616 distinguished
Consequently as the question as to the place of assessment could not arise out of the order of the Appellate Tribunal no such question of law could be referred to the High Court