Full Judgment Text
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PETITIONER:
INCOME TAX OFFICER ’A’ WARD, CALCUTTA
Vs.
RESPONDENT:
RAMNARAYAN BHOJNAGARWALA
DATE OF JUDGMENT26/09/1975
BENCH:
KRISHNAIYER, V.R.
BENCH:
KRISHNAIYER, V.R.
GUPTA, A.C.
CITATION:
1976 AIR 2076 1976 SCR (1)1014
1976 SCC (1) 814
ACT:
Income-tax -Disputed ownership of bank account-Income-
tax Officer if bound to determine the question of ownership
before proceeding against respondent.
Income-tax Act, Section 148.
HEADNOTE:
There was a Bank account in which a huge sum was seen
as lying in deposit. The assessing authority proceeded on
the footing that the amount represented the Income of one
Madan Lal, 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 in this appeal.
His contention 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 ownership of the bank deposit. This order
was made 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 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.
Allowing the appeal by special leave,
^
HELD : Either the uncle or nephew must pay the tax
under normal circumstances 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 of certain
assumptions and representations, the foundational fact of
reasonable belief has not been decided. Therefore, the
judgement of the High Court has to be set aside and remanded
to the High Court for a fresh hearing on this the
foundational fact. But the Income-tax Officer must determine
the ownership of the bank deposits within six months. [1015
E-H]
JUDGMENT:
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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 318 of
1971.
Appeal by Special Leave from the Judgment and Order
dated the 3rd June, 1969 of the Calcutta High Court in
Appeal No. 233 of 1968.
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 Madanlal.
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
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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 contention 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 ownership of
the bank deposit. This was done in September 1970. It is
admitted before us that although we are in October 1975, the
Income Tax Officer has not yet determined the real ownership
of the deposit as between the uncle and the nephew. There is
no valid reason why the Income Tax Officer should have
delayed so long and indeed administrative officers and
tribunals are taking much longer time than is necessary,
thereby defeating the whole purpose of creating
quasijudicial tribunals calculated to produce quick
decisions, especially in fiscal matter. Five years to dawdle
over the decision of a small matter directed by an appellate
authority amounts to indiscipline subversive of the rule of
law. We hope that the Administration, takes serious notice
of delays caused by tax officers lethargy, under some
pretext or other, in speeding up enquiries into incomes and
finalizing assessments. The mere fact that a Writ Petition
was pending in the 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 Income Tax Officer
had fixed the ownership 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 Department
itself would not have had to proceed against him.
We have no doubt that either the uncle or nephew must
pay the tax under normal circumstances and they cannot play
off one against the another to defeat the claims of the
Revenue. Even so, High Court has disposed of this case in
appeal before the Division Bench on certain assumptions and
representations, for which counsel for the Income-tax
Department was largely responsible. 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 no jurisdiction to start proceedings under
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Section 148 on the scorce 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. We, therefore, set aside the judgment of the
High Court but remand that Appeal to the High Court for a
fresh hearing on the question as to whether the foundational
fact of reasonable belief is satisfied in this case or not.
However, if the Income Tax Officer at least at this
late stage will bestir himself to adjudicate upon the
ownership of the bank deposit and if he holds that the
nephew Madanlal is the owner of such deposit, the Writ
Appeal before the High Court may not have to be proceeded
with-of course, subject to appeals that may be
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available to Madanlal. We direct that the Income Tax Officer
determine the ownership of the bank deposits within six
months from today, and thereafter only the Appeal before the
High Court need be considered. We may observe in conclusion
that Shri S. T. Desai, counsel for the respondent has fairly
assured us that, so far as his client is concerned, all
cooperation will be available to enable the Income Tax
Officer to determine who the owner of the Bank deposit is.
Indeed he is interested in this subject matter and we hope
that such evidence as the Income Tax Officer requires from
him will be readily forthcoming. With this direction we
allow the Appeal and remand the case to the High Court for
fresh disposal in the light of our observations. No order as
to costs.
V.M.K. Appeal allowed.
1017