RAI BAHADUR SETH TEOMAL vs. THE COMMISSIONER OF INCOME TAX AND THE COMMISSIONER OF EXCESS PROFITS TAX

CIVIL APPEAL No. 384/1957Supreme Court1959 INSC 1802 March 1959Bench: 3 JudgesAuthor: BHUVNESHWAR PRASAD SINHA, J.L. KAPUR, M. HIDAYATULLAH S.C.R. SUPREME COURT REPORTS15 pages
AI SummaryDismissed

What were the facts?

The assessee, Rai Bahadur Seth Teomal, a railway contractor, was initially assessed in Rangpur. In April 1943, he received a notice under Section 22(2) of the Indian Income-tax Act, 1922, and filed his return. Before the assessment was finalized, the Central Board of Revenue, under Section 5(2) of the Act, transferred his case to the Commissioner of Income-tax (Central), Calcutta, citing potential Excess Profits Tax liabilities. An Income-tax Officer in Calcutta subsequently issued notices and made the assessment order on March 15, 1948. Appeals to the Appellate Assistant Commissioner and the Appellate Tribunal, challenging the transfer and jurisdiction, were dismissed. The Tribunal held it could not adjudicate on the place of assessment. The Commissioner rejected a reference application, and the High Court dismissed a petition under Section 66(2). The assessee appealed to the Supreme Court.

What did the Supreme Court hold?

The Supreme Court held that Section 5(2) and Section 5(7A) of the Act operate in separate spheres and are complementary. Section 5(2) empowers the Central Board of Revenue to specify which Commissioner would perform functions in respect of different areas, persons, incomes, or cases. The transfer in this case, directing the Commissioner of Income-tax (Central), Calcutta, to exercise functions in respect of certain cases including the appellant's, fell under Section 5(2) and was therefore valid. Regarding jurisdiction, the Court found that Section 64(5) of the Act rendered Sections 64(1) and (2) inapplicable to an assessee in respect of whom an order had been made by the Central Board of Revenue under Section 5(2). Consequently, the jurisdiction of the Income-tax Officer, Calcutta, was not challengeable on this ground. Furthermore, the Court held that objections concerning the place of assessment cannot be raised in appeals before the Appellate Assistant Commissioner or the Appellate Tribunal, as the scheme of the Act does not contemplate such appeals. The order of a Commissioner under Section 64(3) is not appealable under Section 30, nor are appeals to the Appellate Tribunal under Section 33 provided for such questions. Therefore, the question of the place of assessment did not arise out of the Tribunal's order, and no question of law could be referred to the High Court. The High Court's dismissal of the appellant's application was upheld.

What were the issues?

1. Whether the transfer of the assessee's case to the Commissioner of Income-tax (Central), Calcutta, by the Central Board of Revenue under Section 5(2) of the Indian Income-tax Act, 1922, was valid, or if it should have been done under Section 5(7A). Assessee's contention: The transfer order was invalid as it should have been made under Section 5(7A) for transferring assessment proceedings between Income-tax Officers, not Section 5(2). Revenue's contention: Not explicitly recorded, but impliedly that the transfer was valid under Section 5(2). 2. Whether the Income-tax Officer, Calcutta, had the jurisdiction to assess the appellant, considering Section 64 of the Act. Assessee's contention: The assessment by the Income-tax Officer of Calcutta was an illegal assumption of jurisdiction, as he was entitled to be assessed by the Income-tax Officer of the area where his business was situated under Section 64(1) and (2). Revenue's contention: Not explicitly recorded, but impliedly that the jurisdiction was valid. 3. Whether objections relating to the place of assessment could be raised before the Appellate Assistant Commissioner and the Appellate Tribunal. Assessee's contention: The objections were raised before the appellate authorities. Revenue's contention: Not explicitly recorded, but impliedly that such objections were not entertainable.

Which sections of the Income-tax Act were involved?

Section 5(2),Section 5(7A),Section 64,Section 64(1),Section 64(2),Section 64(3),Section 64(5),Section 22(2),Section 22(4),Section 23(2),Section 30,Section 33,Section 66(1),Section 66(2)

AI-generated summary — verify with the full judgment below

(2) S.C.R. SUPREME COURT REPORTS 301 RAI BAHADUR SETH TEOMAL v. THE COMMISSIONER OF INCOME TAX AND THE COMMISSIONER OF EXCESS PROFITS TAX (B. P. SINHA, J. L. KAPUR and M. HIDAYATULLAH, JJ.)

Income Tax-Place of Assessment-Transfer of assessee's case to a different Commissioner of Income-tax-Assessment by Income- tax Officer-Juri iction-Indian Income-tax Act, r922 (XI of I922), SS. 5, 64. 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 Com- missioner of Income-tax, Bengal (Mufassil), served a notice under s. 22(2) of the Indian Income-tax Act, 1922, on the appel- lant who in pursuance of the notice filed the return on February 28, 1944. The Income-tax Officer then served notices on him under ss. 22(4) and 23(2) 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 s. 5(2) of the Act, trans- ferred 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 O

The order continues below.

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