Case: Rai Bahadur Seth Teomal Vs. The Commissioner Of Income Tax Andthe Commissioner Of Exc

1. These two appeals pursuant to special leave are brought against two orders of the Income-tax Appellate Tribunal (Calcutta Bench) dated November 28, 1952, passed in appeal No. I. T. A. 4067 of 1951-52 in respect of income-tax assessment for the assessment year ending 31.3.1944 and in appeal No. E. P. T. A. 391 of 1951-52 in respect of Excess Profits tax assessment of the appellant for the chargeable accounting period ending March 31, 1943. The original assesssee was R. B. Seth Teomal who was the manager of a Hindu Undivided Family. On Seth Teomals death on 30-5-l944, Seth Ottanmal became the manager. He is now the appellant representing the Hindu Undivided Family. He will termed as the appellant in these appeals. Seth Teomal was carrying on the business of a railway contractor at Lalmonirhat in the district of Rangpur which is now in Pakistan. In April 1943 a notice was served on him under S. 22(2) of the Income-tax Act (hereinafter called the Act). He filed the return on 28-2-1942. According to an affidavit which has now been filed in this Court the Central Board of Revenue by an order passed under sub-s. (2) of S. 5 of the Act assigned appellants case along with some other assessment cases to the Commissioner of Income-tax (Central) Calcutta. The order contains the following endorsements which give an indication of the reason for the case being assigned to the Commissioner of Income-tax (Central):"Copy forwarded to:(1).......... ............. ............... ...........(2) Commissioner of Income-tax, Central Calcutta. These cases are reported to have E. P. T. liabilities."Thus the appellants case which was before an Income-tax Officer within the area in charge of the Commissioner of Income-tax Bengal (Mofussil) was withdrawn from him and was assigned to the Commissioner of Income-tax, (Central) Calcutta. On 11-2-1943, the Income-tax Officer, District N-C (I. T. cum. E. P. T.) to whom it appears the appellants assessment case was assigned issued notice again under Ss. 22(4) and 23(2) of the Act. That officer after making the usual enquiries made the assessment order on 15-3l943. Against these orders two appeals were taken to the Appellate Assistant Commissioner on 30-4-1948. In the appeal against income-tax assessment the appellant inter alia raised the following two grounds in regard to the jurisdiction of the Income-tax Officer Calcutta:2. For that the appellants challenge the jurisdiction as there was no proper order of transfer and the business was carried on outside Calcutta and assessments had never before been made in Calcutta.But no such ground was taken in the appeal against Excess Profits Tax assessment. The Appellate Assistant Commissioner dismissed both these appeals. In regard to jurisdiction he held:"It however appeals from records on hand that the principal place of business of the concern was at Rangpur and as the income attracted E. P. T. liability the case was transferred to Calcutta under Orders of C. B. R. Hence there is no substance in the contention of the learned Advocate which fails."The appellant then took two appeals to the Income-tax Appellate Tribunal. In the appeal against income-tax assessment he took two objections in regard to jurisdiction4. In the Excess Profits Tax appeal also this time an objection was taken as to jurisdiction:"For that the assessment is bad in law having been made without jurisdiction." The Appellate Tribunal held against the appellant in a short paragraph:"So far as the first objection is concerned, in our opinion, it is not within our diction to go into this matter. The objection relates to the place of assessment. As held in Wallace Brothers and Co. Ltd. v. Commissioner of Income-tax, Bombay, Sind and Baluchistan, 1945-13 ITR 39: (AIR 1945 FC 9) the question as to the proper place of assessment is not one for adjudication by a Court or by any Appellate Authority. Consequently we overrule the first contention of the Assessee."The Tribunal thus held that as the objection related to the place of assessment the tribunal was not competent to go into that question. Upon this the appellant applied for a reference to be made S.66(1) of the Act and prayed for five question to be referred. The two questions relating to jurisdiction were:(1) "Had the Income-tax Officer (Non-Companies) Income-tax cum Excess Profits Tax District, Calcutta jurisdiction to make the assessment?(2) Was the Income-lax Appellate Tribunal correct in the circumstances in holding that it has no jurisdiction to determine the competence of the Income-tax Officer in making the assessment? "In the "facts of the case" attached to the grounds of Appeal it was stated that the accounts were produced before the Income-tax Officer Calcutta under protest because the jurisdiction of that officer was being challenged. In reply to this the Commissioner after referring to Wallace Brothers case, 1945 FCR 65 (AIR 1945 FC 9) stated that it did not appear from the assessment record that the assessee ever raised any objection to the jurisdiction of the Income-tax Officer and if it had been taken the matter would have been referred by the Income-lax Officer to the Commissioner as required by law. This application under S. 66(1) was dismissed on the ground that the question of jurisdiction could not arise out of the order of Tribunal and reliance was placed on Wallace Brothers case, 1945 FCR 65: (AIR 1945 FC 9) (supra) and Kanhaiyalal v. Commissioner of Income-tax, 1937-5 ITR 739   (All). The appellant applied to the High Court under S. 66 of the Act and prayed for the following two questions and some others to be referred:(i) "Had the Income-tax Officer (N. C. I. T. Cum E. P. T. District Calcutta) jurisdiction to make the assessment?(ii) Was the Income-tax Appellate Tribunal correct in the circumstances in holding that it had no jurisdiction to determine the competence of the Income-tax Officer in making the assessment?"The High Court dismissed this application on 23-7-1954. No appeal has been filed in this Court against the order of the High Court but an appeal has been filed against the order passed by the Income-tax Appellate Tribunal5. On behalf of the Revenue a preliminary objection was taken that as no appeal had been filed against the order of the High Court that order had become final and this Court therefore, should not entertain the appeal against the order of the Tribunal and reliance was placed on the observations of Venkatarama Aiyar J., in Govinda Rajulu Mudaliar v. Commissioner of Income-tax. 1958-34 ITR 807  : (AlR 1959 SC 248)  . At p. 810 (of ITR): (at p. 249 of AIR) it was observed:"The present appeal is against the decision of the Tribunal itself. It is no doubt true that this Court has decided in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income-tax, West Bengal, 1955-1 SCR 941   at p. 949: ( (S) AIR 1955 SC 65   at p. 69) that an appeal lies under Art. 136 of the Constitution of India to this court against a decision of the Appellate Tribunal under the Indian Income-tax Act. But seeing that in this case the appellant had moved the High Court and a decision has been pronounced adverse to him and this has become final, obviously it would not be open to him to question the correctness of the decision of the Tribunal on grounds which might have been taken in an appeal against the judgment of the High Court. All the points urged before us were taken in the reference under S. 66(2) of the Indian Income-tax Act. It would therefore follow that these grounds are not open to the appellantBut counsel for the appellant relied on 1955-1 SCR 941  : ((S) AIR 1955 SC 65  ) where the scope of appeals under Art. 136 was set out by the learned Chief Justice. In this case however it is not necessary to go into this question because in our opinion there is little substance in the appeal itself.

Court's reasoning:
In the present case there are more than one Commissioner of Income-tax in Bengal and the Central Board of Revenue assigned certain cases including the case of the appellant to the Commissioner of Income-tax (Central) at Calcutta for the exercise of his functions as Commissioner. Now this is a power which the Central Board of Revenue did possess under sub-s- (2) of S. 5. As to which Income-tax Officer was to deal with that case was for the Commissioner of Income-tax to designateIn our opinion it could not be. The scheme of the Act shows that no appeal in regard to the objection to the place of assessment is contemplated under the Act. Under proviso (iii) of S. 64(3) of the Act a question as to the place of assessment, when it arises, is determined by the Commissioner. Any such order cannot be made a ground of appeal to the Appellate Assistant Commissioner under S. 30 of the Act which provides for appeals against orders of assessment and other orders enumerated in S.30 but no appeal is there provided against orders made under S. 64(3). Similarly appeals to the Appellate Tribunal which lie under S. 33 of the Act also do not provide for any appeal on the question of the place of assessment.In Wallace Brothers case 1945 FCR 65: (AIR 1945 FC 9) (supra) at p. 79 (of FCR): (at p. 14 of AIR), Spens C. J., after referring to S. 64(3) and the proviso thereto said:"These provisions clearly indicate that the matter is more one of administrative convenience than of jurisdiction and in any event it is not one for adjudication by the Court . . . This confirms us in the view that the scheme of the Act does not contemplate an objection as to the place of assessment being raised on an appeal against the assessment after the assessment has been made. As we have already pointed out, the objection was not raised in the present case even before the Appellate Income-tax Officer but only before the Appellate Tribunal."There is nothing in the Bidi Supply case, 1956 SCR 267  : (AIR 1956 SC 479  ) (supra) which in any way detracts from the efficacy of the decision of the Federal Court in Wallace Brothers case, 1945 FCR 65: (AIR 1945 FC 9) (supra). We have already said that Bidi Supply case, 1956 SCR 267  : (AIR 1956 SC 479  ) deals with the vires of S. 5(7A)17. In this view of the matter the question as to the place of assessment does not arise out of the order of the Income-tax Appellate Tribunal and therefore no question of law could be referred nor could the High Court make such order under S. 66(2). In our opinion, the High Court rightly dismissed the appellants application for directing the case to be state under S. 66(2) of the Act.