Case: Union Of India &amp; Ors Vs. Seth R. Dalmia

is necessary" it could not possibly mean that approval of the Central Government was unnecessary, and we have no doubt that it meant that no formal order conveying the approval was necessary. Regarding the statements in the affidavits of Shri J. P. Singh and Shri P. G. Gandhi that all work relating to the reopening of assessments was assigned to Shri Narayana Row with the approval of the Central Government, Dr. Singhvi pointed out that these statements had been verified by Shri J. P. Singh as true to his knowledge "derived from records in the possession of the Central Board of Direct Taxes" and by Shri P. G. Gandhi as "based on the information derived from record in possession of the Board". It was argued that as the records did not disclose any order of approval by the Central Government, the said statements were of no value. It seems to us that the verification of the statements in Shri J. P. Singhs affidavit clearly suggests that the facts stated therein were true to his knowledge which the records also bear out. As stated already, the High Court did not question the truth of the facts stated in Shri Singhs affidavit nor do we find any reason to do so. We have no doubt that the office note made by Shri J. P. Singh on June 18. 1964 supports the statements made in his affidavit.7. The next question is whether the approval should have been formally expressed in the shape of an order. On this question Dr. Singhvi referred to the decision of this Court in Fonseca (P) Ltd. v. L. C. Gupta, (l973) 1 SCC 480 = (AIR 1973 SC 563 ). In that case an order made by the Deputy Secretary to the Government of India, Ministry of Works and Housing, who was not empowered to make such an order under the Rules of Business, was held to be illegal ineffective and void. We do not think this decision has any relevance. The authority of Mr. V. T. Dehejia, Secretary, Ministry of Finance (Department of Revenue and Expenditure) to approve the proposal for the Central Government was never questioned, nor the power of the Chairman to distribute the business of the Board between himself and the other Member with the previous approval of the Central Government. We have already held that upon the material on record such approval appears to have been given. Fonsecas case, (supra) is hardly of any assistance on the question whether in this case the approval of the Central Government should have been recorded in a formal order. Dr. Singhvi characterised the distribution of the business of the Board by the Chairman as sub-delegated legislation and referred to a number of authorities to show that the law required publication of such sub-delegated legislation which implied that it must be expressed in a formal document. It was submitted that this was necessary to enable the persons affected by such sub-delegated legislation to ascertain what the legislation was. We do not think that the distribution of work by the Chairman of the Board can be equated with legislation. The allocation of business and the approval are matters of internal arrangement not affecting anyones rights. Initially the Board consisting of the Chairman and the member had the jurisdiction to deal with the matter in question. Thereafter, in exercise of the power conferred by Rule 4 of the Central Board of Direct Taxes (Regulation of Transaction of Business) Rules, 1964 the Chairman with the approval of the Central Government distributed the business of the Board between himself and the member, keeping all assessment work of income-tax to himself. Then, again with the approval of the Central Government, he assigned this work to the member. Rule 4 of the Central Board of Direct Taxes (Regulation of Transaction of Business) Rules, 1964 does not prescribe any special or particular manner in which the approval is to be recorded. The approval given at that stage does not touch the rights of the assessees. The fact that approval was given must of course be proved and in our view, that has been done in this case; no question of publication of the order of allocation and the approval accorded to it by the Central Government can therefore arise. The office file does not also disclose any formal order approving the original distribution of work as between the Chairman and the member of the Board. It appears from the office note of January 1, 1964 that a draft showing the allocation of work was signed by Shri J. P. Singh and Shri V. T. Dehejia, Secretary of the Ministry of Finance (Department of Revenue and Expenditure) appended his signature below Shri Singhs. This shows clearly that a formal expression of the approval was not considered necessary. If there is no reason to doubt the truth of the statements made in Shri J. P. Singhs affidavit, and we think there is none, then the legality of the impugned notices under Section 148 of the Act cannot be challenged on the ground that they were issued upon the satisfaction of Shri Narayana Row.8. On behalf of the appellants our attention was also drawn to the Central Board of Direct Taxes (Validation of Proceedings) Act 1971 (No. 37 of 1971) which provides inter alia, that no action taken by the Chairman and other members of the Board, either singly or jointly, without having been validly entrusted with the powers or duties in that behalf in accordance with the provisions of the Central Board of Revenue Act, 1963 or the rules made thereunder shall be deemed to be invalid or ever to have been invalid on that ground. As in our opinion the impugned notices were issued in due compliance with the requirements of R. 4 of Central Board of Direct Taxes (Regulation of Transaction of Business) Rules, 1964, we do not find it necessary to consider the provisions of this Act for the purpose of these appeals.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]It is not quite clear whetherthe High Court was not satisfied that Shri J. P. Singhs proposal for a change in the allocation of work was at all approved by the Government or that in the absence of a formal order to that effect the approval was of no consequence.The High Court does not appear to have taken any note of the affidavit of Shri P. G. Gandhi in paragraph 5 in which it is stated that all assessment work of Income-tax was assigned to Shri Narayana Row with the approval of the Central Government. From the affidavit of Shri J. P. Singh, the-then Chairman of the Central Board of Direct Taxes, part of which we have extracted above, it appears that Shri Singh had referred to the Secretary, Ministry of Finance (Department of Revenue and Expenditure) the proposal for transfer of work relating to sanction under Section 151 (1) of the Act from the Chairman to the Member of the Board; that Shri Singh personally discussed the matter with Shri V. T. Dehejia who was then the Secretary, Ministry of Finance, and that Shri Dehejia approved the proposal. Shri J. P. Singhs affidavit adds that the note he made in the office file on June 18, 1964 - "Discussed with Secy. (R and E). It is just a minor internal arrangement. No formal order is necessary." - refers to these facts. In the face of the statements appearing in the affidavits of Shri J. P. Singh and Shri P. G. Gandhi that the work relating to the reopening of assessments was assigned to Shri Row with the previous approval of the Central Government, it is difficult to see how it can be said that the office notes were not in line with the averments in the affidavits. The High Court did not disbelieve the statement of Shri J. P. Singh that he had discussed the proposal with Shri V. T. Dehejia, who approved the proposal. Possibly, the absence of a formal order expressing the approval led to the observation that Shri Singhs affidavit was not in line with the office notes and also the ultimate finding that the notices issued upon the satisfaction of the member of the Board was "without jurisdiction andit seems to us, when the note said "no formal order is necessary" it could not possibly mean that approval of the Central Government was unnecessary, and we have no doubt that it meant that no formal order conveying the approval was necessary. Regarding the statements in the affidavits of Shri J. P. Singh and Shri P. G. Gandhi that all work relating to the reopening of assessments was assigned to Shri Narayana Row with the approval of the Centralstated already, the High Court did not question the truth of the facts stated in Shri Singhs affidavit nor do we find any reason to do so. We have no doubt that the office note made by Shri J. P. Singh on June 18. 1964 supports the statements made in hishave already held that upon the material on record such approval appears to have been given. Fonsecas case, (supra) is hardly of any assistance on the question whether in this case the approval of the Central Government should have been recorded in a formaldo not think that the distribution of work by the Chairman of the Board can be equated with legislation. The allocation of business and the approval are matters of internal arrangement not affecting anyones rights. Initially the Board consisting of the Chairman and the member had the jurisdiction to deal with the matter in question. Thereafter, in exercise of the power conferred by Rule 4 of the Central Board of Direct Taxes (Regulation of Transaction of Business) Rules, 1964 the Chairman with the approval of the Central Government distributed the business of the Board between himself and the member, keeping all assessment work of income-tax to himself. Then, again with the approval of the Central Government, he assigned this work to the member. Rule 4 of the Central Board of Direct Taxes (Regulation of Transaction of Business) Rules, 1964 does not prescribe any special or particular manner in which the approval is to be recorded. The approval given at that stage does not touch the rights of the assessees. The fact that approval was given must of course be proved and in our view, that has been done in this case; no question of publication of the order of allocation and the approval accorded to it by the Central Government can therefore arise. The office file does not also disclose any formal order approving the original distribution of work as between the Chairman and the member of the Board. It appears from the office note of January 1, 1964 that a draft showing the allocation of work was signed by Shri J. P. Singh and Shri V. T. Dehejia, Secretary of the Ministry of Finance (Department of Revenue and Expenditure) appended his signature below Shri Singhs. This shows clearly that a formal expression of the approval was not considered necessary. If there is no reason to doubt the truth of the statements made in Shri J. P. Singhs affidavit, and we think there is none, then the legality of the impugned notices under Section 148 of the Act cannot be challenged on the ground that they were issued upon the satisfaction of Shri Narayanain our opinion the impugned notices were issued in due compliance with the requirements of R. 4 of Central Board of Direct Taxes (Regulation of Transaction of Business) Rules, 1964, we do not find it necessary to consider the provisions of this Act for the purpose of these appeals.