INCOME TAX OFFICER 'A' WARD, CALCUTTA vs. RAMNARAYAN BHOJNAGARWALA

1014 . ' INCOME TAX OFFICER 'A' WARD, CALCUTTA )'. RAMNARAYAN BHOJNAGARWALA September 26, 197 5 (V. R. KRISHNA IYER AND A. C. GUPTA, JJ.] income-tax - Disputed ownership of bank account - Income-tax Officer10 if bound td dete_rmine the question Gf ownership before proceeding against respondent. lncon1e-tax Act,: Section. 148. A There was a Bank account in which a h'uge sun11 was seen as lying in deposit. The- assessing authority proceeded on die footing that the amount represented the C income- of one Madan Lal, in whose name the Bank account stood. He contested his ownership and urged that really this sun1 belonged to his uncle who is the respondent in this appeal. His contention was over-lilled by the Income-tax Officer, bu4 in appeal, the Appellate AS>istant Commissioner set aside the order and directed that the Income·taxl Officer do determine the real ownership of the bank deposit. This or<!er was mad~ in September 1970. The respondent went up in litigation in High Court. He succeeded in the High Court, but there was no investigation into the basic question raised before the High Court by the respondent that the Income-tax Officer had no furisdiction to start proceedillll" D under Section 148 on the score that he had no 'reasonable belief', which is the sine qua nan for the initiation of such proceedings. Allowing the appeal by special leave, HIELD : Either the uncle or nephew must pay the tax under normal cir- cumstance-. and they cannot play off one against another to defeat the claims of the Revenue. In as much. as the High Court has disposed of this case on certain assumptions and representations, the foundational fact of reasonable belief has E ... 1 not been decided. Therefore, the judgment Qf the High Court has to bo set aside and remanded to the High Cpurt for a fresb bearing on this the· founda.. J.... tional fact. But the Incomer-tax Officer must determine the ownership of the bank deposits withi'n six months. [1015 E-H] CIVIL APPELLATE JURISDICTION: Civil Appeal No. 318 of 1971. Appeal by Special Leave from the Ju.dgment and Order dated the 3rd June, 1969 of the·€alcutta High Court in Appeal No. 233 of 191ill. . S. P. Nayar and B. B. Ahuja for the appellants. S .. T. Desai, H. S. Parihar and I. N. Shroff for the respondent. The Judgment of the Court was delivered by KRISHNA IYER, J. This is really a case where litigation would have been avoided, had the concerned Income-tax Officer carried out the directions issued by the Appellate Assistant Commissioner, with quick dispatch to determine the ownership of the, deposit in the Bank account as between the respondent before us and his nephew Madan- lal. · The Facts There was a Bank account in which a huge sum was seen as lying in deposit. The assessing authority proceeded on the footing that F G H • • T A I.T.Q. v. R, B. AGARWALA (Krishna Iyer, !.) I 0 15 the amount represented the income of one Madanlal, in whose name the Bank account stood. He contested his ownership and urged that really this sum _belonged :to his uncle who is the respondent before us. Any way his co!ltention was over-ruled by the Income-tax Officer, but, in appeal, the Appellate Assistant Commissioner set aside the order and directed that the Income-tax Officer do determine the real owner- ll · ship of the bank deposit. This was done in September 1970. It is admited before us that although we are in October 1975, the Income Tax Officer has not yet determined the real ownership of the deposit as betwe_en the uncle and the nephew. There is no valid reason why the Income Tax Officer should have delayed so long and indeed admi- . nistrative officers and tribunals are taking much longer time than is necessary, thereby defeating the whole purpose of creating quasi- {: judicial Jribunals calculated to produce quick decisions, especially in . fiscal matter. Flve years to dawdle over the decision of a small mat- ter directed by an appellate authority amounts to indiscipline subver- sive of the rule of Jaw. We hope that the Administration, takes serious notice of delays caused_ by tax officers lethargy, under some pretext or other, in speeding up eJ.!quiries into incomes and finalizing assessments. _ The mere f_act that a Writ Petition was pending in the o High Court, especially in the background of no stay having been granted, shows that the alibi of a High Court proceeding cannot be successfully put forward by the Income-tax Officer for his slow motion in settling the question directed by his Appellate Officer. Law must move quick not merely in the Courts but also before tribunals and officers charged with the duty of expeditious administrative justice. We emphasize this because if the fncome Tax Officer had fixed the owner- E ship of the deposit years ago, maybe the respondent before us might not have had to go up in litigation in High Court and the Income Tax Departmeqt itself would not have had to proceed against him. -G IH We have no doubt that either the uncle or nephew must pay the tax under normal circumstances and they cannot play oft' one against the another to defeat the claims of the Revenue. Even so, High Court has disposed of ~ case in appeal b~fore the Division Bench on certain assumptions and representations, for which counsel for the Income-tax Department was largely r!J§ponsible. The result is that there has been no investigation into the basic question raised before the High Court by the respondent that the Income Tax Officer had ne jurisdiction to start proceedings under Section 148 on the score that he had no 'reasonable belief', which is the sine qua non for the initiation of such proceedings. This question remains to be decided by the High Court.