Patna High Court
Chatturam And Others vs Commissioner Of Income-Tax, Bihar And ... on 27 August, 1946
Equivalent citations: [1946]14ITR695(PATNA)
JUDGMENT
M. J. C. No. 71 of 1944.
MANOHAR LALL, Ag. C.J. - The Appellate Tribunal at the instance of the assessee has referred to us the following question under Section 66(1) of the Indian Income-tax Act, 1922 :-
"Whether the Notification dated the 26th May, 1940, read with the Chota Nagpur Division and Santal Parganas District Validating Regulation, 1941, issued by the Governor of Bihar is competent in law to validate the proceedings initiated and completed for the assessment of the applicant under the Indian Income-tax Act, 1922, as amended by the Indian Income-tax (Amendment) Act, 1939, for the assessment year 1940-41."
The facts of this case are somewhat similar to the facts in Miscellaneous Judicial Case No. 130 of 1944 Since reported as Kamakshya Narain Singh v. Commissioner of Income-tax, Bihar and Orissa disposed of to day, but the relevant dates are different.
In this case the assessee has been assessed for the year 1940-41, his previous year being 1939-40.
On the 20th April, 1940, a notice under Section 22(2) of the Act was served upon the assessee requiring him to furnish a return in the prescribed form. On the 22nd April, 1940, a notice under Section 22(1) was published in the press requiring persons generally to submit return in the prescribed form. By that time the Indian Finance Act of 1940, which is applicable to this assessment, had not been extended to the excluded area concerning this assessment. On the 26th of May, 1940, the Governor of Bihar by Notification under Section 92(1) of the Government of India Act, 1935, enacted that the Indian Finance Act of 1940 and some other Income-tax Amendment Acts should be deemed to have been applied to the Santal Parganas and the Chota Nagpur Division with effect retrospectively from the date on which these Acts came into force in other parts of the Province of Bihar. To remove doubts as to the applicability retrospectively of the Indian Finance Act and other Acts mentioned therein the Governor of Bihar acting under Section 92(2) of the Government of India Act made Regulation I of 1941 for the peace and good government of the area in question directing that the Income-tax Law Amendment Act, 1940, the Excess Profits Tax Act, 1940, and the Indian Finance Act, 1940, should be deemed to have come into force in the area to which this Regulation extended on the 26th of March, 1940, the 13th April, 1940, and the 6th of April 1940, respectively. This was done with the consent of the Governor-General.
The assessment proceedings which had been started as a aforesaid were completed on the 9th March, 1941. The appeal of the assessee was dismissed by the Appellate Assistant Commissioner on the 30th December, 1942, and the further appeal to the Tribunal was dismissed on the 27th July, 1943.
We have heard most elaborate and learned arguments by the learned Advocate-General on behalf of the assessee. His contentions may be summarised as follows : (1) The notification and the Regulation cannot apply retrospectively to this assessment on a plain reading of the terms of the two enactments, and (2) even if the Act and the Regulation can be so interpreted, the Governor has no power to give a retrospective effect either acting under Section 92(1) or acting under Section 92(2) of the Government of India Act.
In our opinion these contentions are not fit to succeed in this case. It cannot be doubted that from the date of the notification under Section 92(1) the Indian Finance Act of 1940 must apply to these proceedings. The assessment, therefore, which was actually completed on the 9th March, 1941, was valid as on that date the Indian Finance Act of 1940 was in force in the area in question. It is, therefore, unnecessary to consider the question so ably raised in the argument of the learned Advocate-General except to the extent about to be noticed. The learned Advocate-General next contended that the notification in question is not expressed to be retrospective in the sense that it does not expressly declare that all assessment proceedings which have already begun (the proceedings in this case began on the 20th April, 1940) must be deemed to have validly begun, and draws attention as an illustration to Ordinance 45 of 1944 by which the Government of India expressly validated the notices which were issued under Section 22(2). This Ordinance was passed to obviate the difficulties created by the case of Ekbal (1945 Income Tax Reports, 154) which decided that such notices were invalid as they allowed be filled. But the short answer to this contention is that no liability to tax attached or attaches before the Finance Act of the relevant year is passed. Therefore, in the present case the liability to tax arose at least on the 26th May, 1940, and the proceedings thereafter were entirely valid. In these circumstances the question whether the notification issued on that date could not be legally made retrospective does not arise for consideration.
It was then argued that even if this was so, the proceedings which were taken before the 26th May, 1940, were invalid. This contention is dealt with below.
The alternative contention of the learned Advocate-General that the Governor acting under Section 92(2) could not validly pass the Regulation to apply the provisions of the Indian Finance Act retrospectively does not arise for decision in view of the opinion expressed above. But, if it was necessary to come to a decision, for the reasons given by us while disposing of Miscellaneous Judicial Case No. 130 of 1944 , we would have held that the Governor had power to pass Regulation I of 1941 for the peace and good government of this area, and therefore, the provision in that Regulation that the Indian Finance Act of 1940 shall be deemed to have come into force on the 6th April, 1940, would render the proceedings initiated in this case on the 20th April, 1940, also valid.
The learned Advocate-General also contended that there was no proper notice issued in this case under Section 22(1). But a proper notice was admittedly issued under Section 22(2) on the 20th April, 1940, and in pursuance of that notice the assessee appeared and filed a return. In our opinion the assessee cannot legitimately be allowed to raise the question of the invalidity of the notice under Section 22(1) when a valid notice under Section 22(2) has been issued and it is upon that notice that the was return by filed by him. The object of the notice under Section 22(1) is to give a general notice to the public so that they may be ready to file their returns within a certain time. The question may arise for consideration in those cases where no notice has ever been issued under Section 22(2) of the Act, and the assessee has not filed any return, but that question does not arise in the present case.
Lastly, it was argued that the notice under Section 22(2) itself must be taken to be invalid because on that date the Indian Finance Act of 1940 had not been applied to this area. Assuming that this argument is correct, the assessee having appeared and filed the return and the assessment having been completed after the Indian Finance Act of 1940 had been applied to this area, the argument of the assessee is wholly untenable on general principles. Take as illustration a case where an execution is taken out against the judgment-debtor without the issue and service of a notice under Order XXI, Rule 22, of the Code of Civil Procedure. It has been held that the consequent sale of his property is without jurisdiction. But where the judgment-debtor appeared before the sale and raised objections which had been overruled, it has been repeatedly held that the sale cannot be held to be without jurisdiction by reason of the fact that the notice under Order XXI, Rule 22, of the Code of Civil Procedure was not served upon him, the reason being that the object of the notice is to give an opportunity to the judgment-debtor to appear and contest that the decree cannot be put into execution against him on the ground of limitation or on the ground that he had paid off the decretal amount in full or in part or for other valid reasons.
For these reasons the answer to the question referred to us is in the affirmative.
In the circumstances each party will bear his own costs in this Court.
M. J. C. No. 82 of 1944.
It was agreed before us that the answer to the question in this case must be the same as the answer the Court will give in M. J. C. No. 71 of 1944. The facts are entirely similar.
For the reasons given while disposing of M. J. C. No. 71 of 1944, the answer to the question below is in the affirmative.
"Whether the Notification dated 26th May 1940, read with the Chota- nagpur Division and Santal Parganas District Validating Regulation, 1941, issued by the Governor of Bihar is competent in law to validate the proceedings initiated and completed for the assessment of the applicants under the Indian Income-tax Act, 1922, as amended by the Indian Income-tax (Amendment) Act 1939, for the assessment year 1940-41.
In the circumstances each party will bear his own costs in this Court.
SINHA, J. - I agree.
DAS, J. - I agree.
References answered in the affirmative.