Tarak Nath Bagchi v. Commissioner Of Income Tax — 1946 DIGILAW 1 (CAL)

JUDGMENT GENTLE, J. 1. THE applicant is the receiver appointed by this Court in respect of the assets of a business which was conducted in the name of M/s P.M. Bagchi and Co. THEre are several branches of this business at various places in Calcutta including one at No. 19 and 19/1, Gulu Ostagar Lane, and another at No. 14, Clive Street, Calcutta ; the former is within the area of the ITO of District No. 1 (2) and the latter within the area of the ITO of District No. 5. It is said that the principal place of business was at Gulu Ostagar Lane, Calcutta. Proceedings having been taken with respect to this business of which, at one time, a man named Panchanan Bagchi was the sole proprietor and the applicant having been appointed receiver, he entered upon his duties and took possession of the assets on the 18th July, 1935. 2. IN this matter before us, the CIT, Calcutta, is showing cause against a rule nisi granted by this Court on the 12th Jan., 1944, requiring the Tribunal to refer to this Court certain questions which the applicant alleges arose out of its decision with regard to the assessment of the profits of the business for the year 1935-36. The questions with which the rule nisi is concerned relate to the notice given under ss. 34/22(2) of the INdian IT Act and to the assessment made upon the notice. There also arises, in connection with those questions, consideration of the transfer by one ITO to another officer of the file relating to the assessment of the profits of the business. Originally, the ITO of District No. 1(2) had in his jurisdiction the assessment of the profits of the business. This, it is stated was because the business premises in that District were the principal place of business. In October, 1935, after the present applicant became receiver, the ITO of District No. 1(2) was requested by Mr. J.R. Roy, a pleader, to transfer the income-tax matters relating to the business to District No. 5. Mr. J.R. Roy at that time was instructed by Mr. Panchanan Bagchi who at one period was in control of the business. In October, 1935, after the present applicant became receiver, the ITO of District No. 1(2) was requested by Mr. J.R. Roy, a pleader, to transfer the income-tax matters relating to the business to District No. 5. Mr. J.R. Roy at that time was instructed by Mr. Panchanan Bagchi who at one period was in control of the business. On the 23rd July, 1936, the officer of the District No. 5 issued a notice under s. 34/22(2) in respect of the profits of the business; it was, in fact, issued upon the HUF known as P.M. Bagchi and Co. This notice required a return to be made in respect of the profits of the business which should have been assessed during the year 1935-36. Nothing seems to have been done, although apparently reminders or notices were sent by the ITO until the 20th Jan., 1937, when the applicant wrote to the ITO of District No. 5 acknowledging a post-card and stating that his office was at No. 19 and 19/1, Gulu Ostagar Lane, Calcutta, where all the accounts were kept and books of account were being produced to the ITO of District No. 1 (2). In view of those circumstances, the applicant requested a transfer of the pending case to District No. 1(2) for his convenience. This transfer was effected and the file was sent to District No. 1(2). On the 22nd June, 1939, the Addl. ITO of that District made an assessment against which the applicant appealed to the Tribunal and in respect of which the present matter arises. 3. IT was contended that the two transfers, firstly, from District No. 1(2) to District No. 5 and, later, from District No. 5 back to District No. 1(2), were without authority and invalid; consequently, the notice given under ss. 34/22(2) by the ITO of District No. 5 was bad and invalid, and further that the assessment subsequently made by the Addl. ITO of District No. 1(2) could not stand, since it was made, firstly, upon an invalid notices, secondly, without any notice having been given, and thirdly, by an officer who had no jurisdiction to make the assessment, and it was also faintly suggested that the notice issued by the officer of District No. 5 was a bad notice as it was addressed to an HUF. 4. 4. THE principal argument arises upon the provisions of s. 64 of the Indian IT Act. THEse are as follows : "(1) Where an assessee carries on a business,.......at any place, he shall be assessed by the ITO of the area in which that place is situate or, where the business......is carried on in more places than one, by the ITO of the area in which the principal place of his business,............is situate. (3) Where any question arises under this section as to the place of assessment, such question shall be determined by the Commissioner....... (4) Notwithstanding anything contained in this section, every ITO shall have all the powers conferred by or under this Act on an ITO in respect of any income, profits or gains accruing, or arising or received within the area for which he is appointed." It was argued that since the principal place of business was at the address within the area of District No. 1(2), the ITO of that District alone had jurisdiction to give notice under s. 34 of the IT Act and also that s. 64 in no way allows a transfer of the file from one officer to another, save when such transfer is made by the Commissioner. The effect of s. 64 and its sub-sections has been considered in In re, Bisheshwar Nath and Co. (1942) 10 ITR 108 (All), a decision by the Allahabad High Court. It was there held that the effect of sub-ss. (1) and (4) of s. 64 is that, where two or more ITOs have territorial jurisdiction in respect of the same income, they exercise concurrent jurisdiction in the matter of issuing notices to the assessee and where notices have been issued by one officer it is unnecessary for the other officer to issue the same notices again. Sub-s. (3) of s. 64 applies only when a question arises as to the place of assessment and when there is no dispute between the assessee and the ITO as to the proper place of assessment the point need not be referred to the Commissioner under that sub-section. 5. WITH respect, I agree with that decision. In the present case there was no question of dispute at any time between the assessee and the IT authorities as to the proper place of assessment. 5. WITH respect, I agree with that decision. In the present case there was no question of dispute at any time between the assessee and the IT authorities as to the proper place of assessment. Originally, a request was made by a pleader acting for the person at one time in charge of the business, for the income-tax file to be transferred from District No. 1(2) to District No. 5. Later, in reply to a request by the applicant the file was transferred from District No. 5 back to District No. 1 (2). In my view, a request by the assessee for transfer is not a question arising as to the place of assessment. Sub-s. (3) refers to a position when a contest exists as to the correct assessment area; it does not apply when there is an express request, as it was made here for the assessee's own convenience, that a particular ITO should take charge of the matter of the income-tax assessment. the transfer from District No. 1(2) to District No. 5 was a proper transfer, the officers in each District having concurrent jurisdiction, and that thereafter the ITO of the latter District had jurisdiction to issue the notice which in fact he did under s. 34 of the Act. There is no doubt that that notice was served upon the applicant. Although it was in the name of the undivided family of P.M. Bagchi and Co., it related to the business of which the applicant was a receiver. No exception whatever was taken to the notice or to its form. Indeed, the applicant in his letter of the 20th Jan., 1937, makes it quite clear that he had accepted the notice and the matters with regard to assessment were acceptable to him and in that letter he merely asked that the case should be transferred to District No. 1(2) for his own convenience, inasmuch as, the books of the business were kept at the place of business in that area and were then being shown to and examined by the ITO of District No. 1(2). There is no substance whatever in the objection raised to the name by which the assessee was indicated in that notice. The Addl. There is no substance whatever in the objection raised to the name by which the assessee was indicated in that notice. The Addl. ITO of District No. 1(2) merely continued the assessment which had been initiated by the officer in District No. 5 and he assessed the profits of the business pursuant to the notice given by the ITO of District No. 5. There was jurisdiction in the ITOs of each of those Districts to deal with the profits and income-tax to be assessed upon those profits, inasmuch as, there was a business carried on at addresses in those two Districts and, therefore, under sub-s. (4) of s. 64 each ITO had authority to deal with the profits of the business in their respective areas. That being so, each would have concurrent jurisdiction, as indicated in the Allahabad case, to issue a notice and when one of those officers issued a notice the other officer could act upon it without giving a fresh notice. 6. IT was contended that, assuming the correctness of the transfer, and that the matters of assessment could have been dealt with in the area of District No. 1(2), since the Addl. ITO has made the assessment, the assessment must be bad. I am unable to appreciate that argument. There is an Addl. ITO in District No. 1(2). He is properly authorised to deal with income-tax matters within that district and in doing what he did he acted clearly within the authority and jurisdiction which he is entitled to exercise. This application is made under s. 66(2) of the IT Act, inasmuch as, the Tribunal was asked to state a case for the opinion of this Court on questions which are now being considered and the Tribunal refused to state the case. This sub-section, so far as it is material, provides as follows : "If on any application being made under sub-s. (1) the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be, may, within six months from the date on which he is served with notice of the refusal, apply to the High Court, and the High Court may, if it is not satisfied of the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case and to refer it..." 7. IT is only when this Court is not satisfied of the correctness of the decision of the Tribunal that it should be required to state a case. I am of opinion that the decision of the Tribunal was correct. Even if any point of law arose upon which the Tribunal refused to state the case nevertheless the Tribunal's decision being correct, no direction should be given for stating a case. That is the position, in my view, which arises here. 8. BEFORE I conclude, I desire to make reference to the petition which applicant solemnly affirmed on the 3rd Feb., 1943. It was on the contents of that petition that the rule nisi was issued by this Court. The petition contains more than one, what I would describe as gross mis-statement of facts. In paragraph 11, it is stated that by a letter written by the petitioner on the 20th Jan., 1937, he intimated to the ITO of Distt. No. 5 that the business in question was, at all material times, carried on at No. 19 and 19/1, Gulu Ostagar Lane, within the jurisdiction of District No. 1(2). The paragraph continues: "It was pointed out that the statement made by Mr. J.R. Roy, pleader, to the effect that the business was carried on at 14, Clive Street, was not only unauthorized but totally untrue and without any foundation." This letter, or copy of it, was not exhibited to the petition. It has been exhibited to the letter of the CIT regarding the rule nisi. I have already referred to that letter but will do so again. In that letter the applicant wrote as follows: ".........my office being at No. 19 and 19/1, Gulu Ostagar Lane, Calcutta, and all the accounts are kept at the said address and moreover the books of accounts of 1339 B. S. are to be produced to the ITO, District No. 1(2), as per his notice. In view of the above circumstances, I ask you to transfer the pending case of this company to the District No. 1(2) for my convenience. Hope to be favoured with the same and oblige." In that letter there is no reference whatever to the principal place of business being at No. 19 and 19/1, Gulu Ostagar Lane, Calcutta, nor to any statement by Mr. J.R. Roy regarding the place where the business was carried on being untrue and without foundation. Hope to be favoured with the same and oblige." In that letter there is no reference whatever to the principal place of business being at No. 19 and 19/1, Gulu Ostagar Lane, Calcutta, nor to any statement by Mr. J.R. Roy regarding the place where the business was carried on being untrue and without foundation. The letter is quite clear. The applicant was informing the ITO that his own office, that is to say, the receiver's office, was at the address given and where all the books were kept and that is why he wished the file to be transferred to the District Officer having jurisdiction over the place where the books were kept. It is unfortunate that this solemnly affirmed petition should contain such gross mis-statements. 12. In conclusion, it is desirable to emphasise that the transfer which followed the applicant's letter to the ITO of the 20th Jan., 1937, was made solely to suit his convenience and at his request. Nevertheless it has been argued that what was done was without any authority or right. In my view, this application is devoid of all merits and should be dismissed.