Civil Appeal No 254 of 1954
Appeal by special leave from the judgment and order dated February 19 1952 of the Patna High Court in Misc
Case No 244 of 1949
B Sen section K Majumdar and I N Shrojj for the appellant
M C Setalvad Attorney General for India B K Saran and R C Prasad for the respondent
May 15
The Judgment of the Court was delivered by HIDAYATULLAH J
This appeal with the special leave of this Court has been filed by Maharajadhiraja 334 Sir Kameshwar Singh of Darbhanga hereinafter referred to as the assessee against the judgment of the High Court of Patna dated February 19 1952 by which the High Court answered in the affirmative the following two questions referred to it under section 251 of the Bihar Agricultural  1  Whether in view of the circumstances of the case and particularly the manner in which after due consideration the learned Agricultural Incometax Officer in his first judgment dated the 5th January 1946 had held that the assessee was not liable to be assessed for the receipt on account of the zarpeshgi lease the learned Agricultural Incometax Officer has jurisdiction to revise his own order under section 26 of the Act and 2 Whether if he had the jurisdiction to revise his own order under section 26 of the Act the income from the zarpeshgi lease of the assessee was taxable under the Act
 The facts of the case lie within a very narrow com
For the assessment year 1944 45 which corresponded to the year of account 1351 Fasli the assessee returned Rs 3743520 as his agricultural income
He claimed a deduction of Rs 942137 3 10 12 on account of land revenue rent etc including a sum of Rs 282192 shown to have been paid to the Tekari Raj from which two leasehold properties were taken on zarpeshgi lease by indentures dated August 15 1931 and January 31 1936 respectively
The amount was sought to be deducted as a capital receipt
The Agricultural Income tax Officer of Darbhanga by his order dated December 28 1945 accepted this contention and exempted the amount from payment of agricultural income tax
He observed  Out of Rs 942137 3 10 12 claimed on account of Land Revenue and rent Rs 282192 is shown as payment to Tekari Raj and then taken towards the realisation of Zarpeshgi Loan to self
I have gone through the bond of Gaya Zarpeshgi Lease
This payment is allowed to the assessee as it is a capital income according to the terms of the bond
At the 335 same time I think this amount of Rs 282192 should be treated as income to Tekari Raj and assessed in Gaya Circle along with other income of Tekari Raj as it is credited to that Raj by the assessee and then set off against the Zarpeshgi loan advanced to Tekari Raj
 The assessment was approved by the Assistant Commissioner of Agricultural Income tax on January 4 1946 and on the day following the Income tax Officer passed his formal order and issued a demand notice
The assessee paid two instalments out of three when on March 22 1946 the Agricultural Income tax Officer recorded the following order   It appears that some agricultural income from Gaya Zarpeshgi lease which should have been taxed for the year 1944 45 1351 Fasli has escaped assessment
Issue notice under section 26 fixing the 20th May 1947
 After the assessee appeared a supplementary assessment order was passed and Rs 39512 6 0 were assessed as tax on Rs 252879
In deciding the matter the Agricultural Income tax Officer gave the following reasons According to the terms of the lease the assessee is to remain in possession and enjoy the usufruct of the lands given in lease for a fixed number of years on payment of an annual thica rent of Rs 1000 to the lessor and thus satisfy himself for the entire amount of consideration money of the zarpeshgi lease in question
In fact by this zarpeshgi lease the assessee has been given the grant of lands for a fixed term on a fixed rent
Whatever income is derived from these lands during the tenure of this lease is the income of the assessee and as such it should be taxed in the hands of the assessee and not in the hands of the lessor The Agricultural Income tax Officer purported to act under section 26 of the Bihar Agricultural hereinafter referred to as the Act
The assessee appealed
The Commissioner of Agricultural Income tax reversed the decision
He pointed 336 out that the agricultural income from Tekari Raj property was returned by the assessee but was held to be exempt and thus could not be said  to have escaped assessment so as to bring the case within section 26 of the Act
The Province of Bihar as it was then called moved the Board of Revenue Bihar which by a resolution dated February 7 1948 referred the two questions to the High Court of Patna
The Board did not express any opinion on the two questions
In the High Court both the questions were answered in favour of the State of Bihar
Leave having been refused by the High Court the assessee applied for and obtained special leave from this Court
Section 26 of the Act under which the Agricultural Income tax Officer purported to act is substantially the same as section 34 of the Indian  prior to its amendment
Necessarily therefore the rulings on the interpretation of the latter section were freely cited by the contending parties
Section 26 of the Act reads as follows  If for any reason any agricultural income chargeable to agricultural income tax has escaped assessment for any financial year or has been assessed at too low a rate the Agricultural Income tax Officer may at any time within one year of the end of that financial year serve on the person liable to pay agricultural income tax on such agricultural income or in the case of a company on the principal officer thereof  a notice containing all or any of the requirements which may be included in a notice under subsection 2 of section 17 and may proceed to assess or re assess such income and the provisions of this Act shall so far as may be apply accordingly as if the notice were a notice issued under that subsection Provided that the tax shall be charged at the rate at which it would have been charged if such income had not escaped assessment or full assessment as the case may be  For facility of reference the previous section 34 before the amendment in 1948 of the Indian may likewise be quoted here
It read 337 If in consequence of definite information which has come into his possession the Income tax Officer discovers that income profits or gains chargeable to income tax have escaped assessment in any year or have been under assessed or have been assessed at too low a rate or have been the subject of excessive relief under this Act the Income tax Officer may in any case in which he has reason to believe that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof at any time within eight years and in any other case at any time within four years of the end of that year serve on the person liable to pay tax on such income profits or gains or in the case of a company on the principal officer thereof a notice containing all or any of the requirements which may be included in a notice under sub section 2 of section 22 and may proceed to assess or re assess such income profits or gains and the provisions of this Act shall so far as may be apply accordingly as if the notice were a notice issued under that sub section Provided that the tax shall be charged at the rate at which it would have been charged had the income profits or gains not escaped assessment or full assessment as the case may be 
The short question is whether income which was returned but was held to be exempt from tax could be said to have  escaped assessment  so that the Agricultural Income tax Officer could exercise his powers under section 26 of the Act to tax it
This question arising under section 34 of the Indian has been considered on many an occasion by the High Courts and also by the Privy Council and this Court
The Patna High Court has correctly pointed out that the preponderance of opinion is in favour of holding that such income can be said to have escaped assessment
The High Court in deciding that the Agricultural Income tax Officer had jurisdiction to revise his earlier assessment referred to the opening words of section 26 namely  for any reason  and observed that it was 43 338 not necessary to give a restricted meaning to the word escaped  and that if an item of income was not charged to tax due to a mistake or oversight on the part of the taxing authorities that item could well come within the term  escaped 
According to the High Court the phrase  escaped assessment  was not confined to cases where there had been an inadvertent omission but in view of the later part of the section where income  has been assessed at too low a rate included a case where there was a deliberate action
Learned counsel for the assessee contends that the generality of the words  any reasonhas no bearing upon the construction of the wordsescaped assessment  that the word  assessment does not connote the final determination to tax income but the entire process by which the result is reached and that inasmuch as the income was actually returned and held to be exempt there was no question of an escaped assessment  because it passed through the processing of income
He also contends that the later part of the section which deals with assessment at too low a rate cannot be called in aid to decide when income can be said to have escaped assessment
He submits that the section has no application to cases where income is returned but is held to be not liable to tax and relied upon the following cases Maharaja Bikram Kishore vs Province of Assam 1 Commissioner of Income tax vs Day Brothers 2 Madan Mohan Lal vs Commissioner of Income tax 3 per Dalip Singh J and Chimanram Motilal Gold and Silver Bombay vs Commissioner Of Income tax Central Bombay 4 per Kania J as he then was
The learned Attorney General drew the attention of the Court to other cases in which the view has been taken that even if income is returned and deliberately not charged to tax the condition required for the application of the section is fulfilled
He cited the following cases in support of his contention AngloPersian Oil Co India Ltd vs Commissioner of IncometaX 5 P C Mullick and D 0
Aich In re  The 11949 21936 319351 4 BOM
5 1933  ITR 129
6 339 Commissioner of Income tax vs Raja of Parlakimedi 1 Chimanram Moti Lal Gold and Silver Bombay vs Commissioner of Income tax Central Bombay 2 and Madan Mohan Lal vs Commissioner of Income tax 3
The learned Attorney General also relied strongly upon a recent decision of this Court in Kamal Singh vs Commissioner of Income tax Bihar and Orissa 4 where Gajendragadkar J after a review of all the authorities held that section 34 of the Indian Income tax Act was applicable to a case where an item of income was returned but deliberately and after consideration was held to be not liable to tax
Learned counsel for the assessee contends that the point was left open in that case and refers to Messrs Chatturam Horilram Ltd vs Commissioner of Income  tax Bihar and Orissa5 as having held the contrary
Before referring to the other authorities of the High Courts it will be proper to see if the two cases of the Supreme Court are in point or not and if so which of them
In Kamal Singh s case 4 the point arose under the following circumstances
The father of the appellant in that case was assessed to income tax for the year 1945 46
The total income assessed to incometax was Rs 100000 which included a sum of RE
93604 received by him on account of interest on arrears of rent due to him after deduction of collection charges
It was urged before the Income tax Officer that this interest was not assessable to income tax being agricultural income in view of the decision of the Patna High Court in Kamakshya Narain Singh vs Commissioner of Income tax6
The Income tax Officer did not accept this contention on the ground that an appeal was pending against the Patna High Court s decision before the Privy Council
On appeal the Appellate Assistant Commissioner held that the Income tax Officer was bound to follow the decision of the High Court and he set aside the order and directed the Income tax Officer to make a fresh assessment
The Income tax Officer thereupon deducted the amount 1 Mad
2 Bom
3 4  5 1955 2 S CR 290
6 I946 340 and brought only the remaining income after some minor adjustments to tax
His order was passed on August 20 1946
In the year 1948 the Privy Council reversed the Patna High Court s decision
The judgment of the Privy Council is reported in Commissioner of Income tax vs Kamakshya Narain Singh 
The Income tax Officer then issued a notice under section 34 of the Indian  and after hearing the party assessed the sum of Rs 93604
After sundry procedure which it is not necessary to detail the matter reached this Court and the question which was before it was  whether in the circumstances of the case the assessment order under section 34 of the Act of the interest on arrears of rent is legal
 Two questions were involved
The first was whether the word  information  was wide enough to include knowledge about the state of the law or about a decision on a point of law
With that point we are
 not concerned in this case
The second was when income could be said to have escaped assessment
Emphasis was laid on the word  assessment  in the arguments and it was contended that it denoted not merely the order of assessment but included  all steps taken for the purpose of levying of tax and during the process of taxation
 It was also contended that  escaped  meant that the income must have eluded observation search etc or in other words eluded the notice of the Income tax Officer
Gajendragadkar J however did not confine the phrase to such a narrow meaning
He observed  Even if the assesse has submitted a return of his income cases may well occur where the whole of the income has not been assessed and such part of the income as has not been assessed can well be regarded as having escaped assessment
In the present case the rents received by the assessee from his agricultural lands were brought to the notice of the Income tax Officer the question as to whether the said amount can be assessed in law was considered and it was ultimately held that the relevant decision of the Patna High Court Which was binding on 11948 341 the department justified the assessee s claim that the said income was not liable to be assessed to tax
There is no doubt that a part of the assessee s income had not been assessed and in that sense it has clearly escaped assessment
Can it be said that because the matter was considered and decided on  the merits in the light of the binding authority of the decision of the Patna High Court no income has escaped assessment when the said Patna High Court decision has been subsequently reversed by the Privy Council We see no justification for holding that cases of income escaping assessment must always be cases where income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted
In our opinion even in a case where a return has been submitted if the Income tax Officer erroneously fails to tax a part of assessable income it is a case where the said part of the income has escaped assessment
The appellant s attempt to put a very narrow and artificial limitation on the meaning of the word escape  in section 341b cannot therefore succeed
 The assessee seeks to distinguish that case on the ground that this Courtlaid down the law in the special circumstances where  a new interpretation to the law was given and that it was not a case of the Incometax Officer changing his mind
He contends that there was at least some information which had come to the Income tax Officer on which his subsequent action could be rested
The learned counsel argued that Gajendragadkar J had expressly left the question open where there was no information but the Incometax Officer merely changed his mind without any information from an external source
Reference in this connection is made to the following observations in the judgment  It appears that in construing the scope and effect of the provisions of section 34 the High Courts have had occasion to decide whether it would be open to the Income tax Officer to take action under a 34 on the ground that he thinks that his original decision in making the order of assessment was 342 wrong without any fresh information from an external source or whether the successor of the Income tax Officer can act under section 34 on the ground that the order of assessment passed by his predecessor was erroneous and divergent views have been expressed on this point
Mr Rajagopala Sastri for the respondent suggested that under the provisions of section 34 as amended in 1948 it would be open to the Income tax Officer to act under the said section even if he merely changed his mind without any information from an external source and came to the conclusion that in a particular case he had erroneously allowed an assessee s income to escape assessment
We do not propose to express any opinion on this point in the present appeal
 We may say at once that the words of section 26 of the Act do not involve possessing of or coming by some fresh information
The section says  If for any reason any agricultural income chargeable to agricultural income tax has escaped assessment for any financial year the Agricultural Income tax Officer may proceed to assess such income The use of the words any reason which are of wide import dispenses with those conditions by which section 34 of the Indian is circumscribed
The point which was thus left over by Gajendragadkar J cannot arise in the context of the Act we are dealing with
In view of this clear opinion it is hardly necessary for us to consider again the cases which Preceded the decision of this Court
The most important of them are considered in the judgment of Gajendragadkar J Most of the cases are also considered in the judgment of Harries C J and Mukherjea J as he then was in Maharaja Bikram Kishore vs Province of Assam 1
In all the cases where a contrary view was taken reliance was placed upon the decision of the Privy Council in Rajendra Nath Mukerjee vs Income tax Commissioner  particularly a passage wherein it was observed 1  2 1933 LR 61 IA 10 16
343 The fact that section 34 requires a notice to be served calling for a return of income which had escaped assessment strongly suggests that income which has already been duly returned for assessment cannot be said to have escaped  assessment within the statutory meaning
 The facts of the case were entirely different
The income was returned and was not yet processed when the notice under section 34 was issued
The key to the case is furnished by the approval by their Lordships of the observations of Rankin CJ in In re Lachhiram Basantlal 1 that  Income has not escaped assessment if there are pending at the time proceedings for the assessment of the assessees  income which have not yet terminated in a final assessment thereof
 Their Lordships held that the expression has escaped assessment should not be read as equivalent to has not been assessed because so to do gives too arrow a meaning to the word assessment  and too wide a meaning to the word escaped  That those observations were related to the facts then before their Lordships is clear from the following passage  To say that the income of Burn  Co which in January 1928 was returned for assessment and which was accepted as correctly returned though it was erroneously included in the assessment of Martin  Co  has escaped  assessment in 1927 28 seems to their Lordships an inadmissible reading 
Their Lordships find it sufficient for the disposal of the appeal to hold as they do that the income of Burn  Co did not escape assessment  in the year 1927 28 within the meaning of section 34
 It was in the context of the pendency of assessment proceedings that the remarks were made and the matter is decisively cleared of any doubt by the following passage  It may be that if no notice calling for a return under section 22 is issued within the tax year then section Cal
909 912
344 provides the only means available to the Crown of remedying the omission but that is a different matter
 In our opinion the error in the cases relied upon by the assessee arises in using the dicta in the above case shorn of the context in which they were made and applying them to facts where they cannot
The judgment of Gajendragadkar J has dealt with the matter if we may say so respectfully very adequately and we do not consider it necessary to cover the same ground again
The preponderance of opinion in the High Courts is also to accept the contrary view and we think rightly
The learned counsel for the assessee argued that the decision of this Court in Messrs Chatturam Horilram Ltd vs Commissioner of Income tax Bihar Orissa 1 discloses a different view and that we should follow it in preference to the later view of Gajendragadkar J
We do not think that in the case last cited the point was the same
The same case was relied upon before the Bench of Venkatarama Aiyar Gajendragadkar and Sarkar JJ and Gajondragadkar J distinguished it This is what he observed Mr Sastri has also relied on the decision of this Court in Messrs Chatturam Horilram Ltd vs Commissioner of Income tax Bihar  Orissa 1 in support of his construction of section 34
In Chatturam s case 1 the assessee had been assessed to income tax which was reduced on appeal and was set aside by the Income Tax Appellate Tribunal on the ground that the Indian Finance Act of 1939 was not in force during the assessment year in Chota Nagpur
On a reference the decision of the tribunal was upheld by the High Court
Subsequently the Governor of Bihar promulgated the Bihar Regulation IV of 1942 and thereby brought into force the Indian Finance Act of 1939 in Chota Nagpur retrospectively as from March 30 1939
This ordinance was assented to by the Governor General
On February 8 1944 the Income Tax Officer passed an order in pursuance of which proceedings were taken against 11955 2 SCR 290
345 the assessee under the provisions of section 34 and they resulted in the assessment of the assessee to incometax
The contention which was raised by the assessee in his appeal to this Court was that the notice issued against him under section 34 was invalid
This Court held that the income profits or gains sought to be assessed were chargeable to income tax and that it was a case of chargeable income escaping assessment within the meaning of section 34 and was not a case of mere non assessment of income tax
So far as the decision is concerned it is in substance inconsistent with the argument raised by Mr Sastri
He however relies on the observations made by Jagannadhadas J that the contention of the learned counsel for the appellant that the escapement from assessment is not to be equated to non assessment simpliciter is not without force  and he points out that the reason given by the learned Judge in support of the final decisions was that though earlier assessment proceedings had been taken they had failed to result in a valid assessment owing to some lacuna other than that attributable to the assessing authorities notwithstanding the chargeability of income to the tax
Mr Sastri says that it is only in cases where income can be shown to have escaped assessment owing to some lacuna other than that attributable to the assessing authorities that section 34 can be invoked
We do not think that a fair reading of the judgment can lead to this conclusion
The observations on which reliance is placed by Mr Sastri have naturally been made in reference to the facts with which the Court was dealing and they must obviously be read in the context of those facts
It would be unreasonable to suggest that these observations were intended to confine the application of section 34 only to cases where income escapes assessment owing to reasons other than those attributable to the assessing authorities
Indeed Jagannadbadas J has taken the precaution of adding that it was unnecessary to lay down what exactly constitutes escapment from assessment and that it would be sufficient to place their decision on 44 346 the narrow ground to which we have just referred
We are satisfied that this decision is of no assistance to the appellant s case
 For the reasons we have given we are of opinion that the Agricultural Income tax Officer was competent under section 26 of the Act to assess an item of income which he had omitted to tax earlier even though in the return that income was included and the Agricultural Income tax Officer then thought that it was exempt
The answer given by the High Court was therefore correct
This brings us to the second question
The income was received from the leasehold properties and was agricultural income
The contention of the assessee is that it may be agricultural income in the hands of the Tekari Raj but in his hands it was capital receipt and in repayment of the loan of about Rs 1700000 paid to Ram Bhuwaneshwari Kuer
The State of Bihar however denies that there was a loan or a mortgage at all
The assessee it is contended was placed in possession for a number of years on a rent of Rs 1000 per year and the amount paid was premium and not a loan
The documents in question are two
They are plainly indentures of lease between the Rani and the
assessee
From these documents it is clear that in consideration of a payment of Rs 1716000 the lessee was placed in possession of the leasehold property for 28 years
There is no express term which makes the sum a loan returnable either by repayment or by the enjoyment of the usufruct
There is no interest fixed or right of redemption granted
There is no provision for any Personal liability in case any amount remained outstanding at the end of the term of 28 years
These are the tests to apply to find out whether the transaction was one of zarpeshgi lease or a lease with a mortgage
See Mulla s  Transfer of Property Act 4th Edition page 352
The learned counsel for the assessee in his careful argument took us through the two documents and endeavoured to prove that the relation of debtor and creditor subsisted between the parties
He referred 347 us to cl 4 which embodies a provision entitling the lessee to deduct 12 12 per cent
of the gross aggregate amount payable by the mokarraridars as expenses of collection and other charges incidental thereto after payment of rent reserved to the I lessor  and to appropriate to himself the remainder
He submitted that the payment to the lessor was not a premium but a loan and the intention was that the lessee or creditor would be thus repaid
The clause by itself may admit of diverse constructions and possibly one such construction may be the one suggested but that is not the true purport of the clause read in the context of the rest of the instrument
To interpret this clause the instrument must be read as a whole and when so viewed it is found that it provides for an exemption of the lessor from the liability for collection charges
It places beyond doubt that the collection charges were not to be debited to the lessor but were to be borne by the lessee
Unless such a provision was included in the instrument it might have been a matter of some dispute as to who was to be responsible for this expenditure
The learned counsel for the assessee next drew our attention to the last clause of the instrument of January 31 1936
That however was a special covenant and the provision therein was in relation to matters not covered by the instrument
That the income from this leasehold property which was land would fall within the definition of  agricultural income  was not seriously contested before us
The case of the assessee rests upon the claim that this was a money lending transaction and the receipts represented a capital return
If however the payment to the lessor was premium and not a loan the income being agricultural from these leasehold properties was assessable under the Act
We are of opinion that it was so and that the Agricultural Income tax Officer was right when he assessed it to agricultural income tax
The income was not the income of money lending and this does not depend upon the character of the recipient
The Thika 348 profits were clearly agricultural income being actually derived from land
The answer to the question by the High Court was thus correct
The result is that the appeal must fail and it is accordingly dismissed with costs
Appeal dismissed


Summary:
The relations between one G and his wife were strained and she went to live with her father B and her brother V the appellant
G with three others went to the quarter of B and he went inside and came out dragging his reluctant wife behind him
She caught hold of the door and G started pulling her
At this the appellant shouted to his father that G was adamant and thereupon B replied that he should be beaten
The appellant took out a knife from his pocket and stabbed G once
The knife penetrated the heart of G and he died
B and the appellant were 647 tried for the murder of G B was acquitted and the appellant was convicted under section 304 Part II Indian Penal Code and sentenced to three years rigorous imprisonment
The appellant contended that he had acted in the right of private defence of person under section 100 fifthly Indian Penal Code which extended to the causing of death as G had assaulted his wife with the intention of abducting her
The respondent urged that section 100 fifthly applied only when the abduction was of such a nature as was punishable under the Penal Code
Held that the appellant had the right of private defence of the body of his sister which extended to the causing of death of G
The extended right under section 100 arose when there was the offence of assault of one of the types mentioned in the six clauses of that section
It was not necessary that the intention with which the assault was committed must always bean offence itself
The word  abduction  used
in the fifth clause of section 100 meant nothing more than what was defined as  abduction  in section 362 and it was not necessary to get the protection of this clause that the abduction must be of a type punishable under the Penal Code
Further the appellant had not inflicted more harm than was necessary and was not guilty of any offence
Emperor vs Ram Saiya ILR 1948 All
i65 overruled
jagat Singh vs King Emperor AIR 1923 Lah
155 Daroga Lohar vs Emperor AIR 1930 Pat
347 Sakha vs The State ILR and Dayaram Laxman vs State AIR I953 Madhya Bharat 52 referred to