KUNWAR BISHWANATH SINGH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 66 (2) of the Indian Income-tax Act and has been made by the Commissioner and United Provinces, at the instance of Kunwar Bishwanath Singh, the Assessee in the present case. It appears that the income-tax authorities hold the view that the income of His Highness the Maharaja of Benares who is "a person residing out of British India, if it has any connection, direct or indirect, with any business or property in British India, can be chargeable to income-tax on the ground that it shall be deemed to be income accruing or arising within British India and they, therefore, started certain proceeding for the assessment year 1934-35. The Income-tax Officer of Benares issued a notice directly on His Highness the late Maharaja and on a return being filed made an assessment.

(2.) AFTER an appeal, which was unsuccessful, to the Assistant Commissioner there was a reference to this Court and this very Bench decided the reference, which is reported as Maharaja of Benares v. Commissioner of Income-tax. The contention advanced then on behalf of His Highness was that the entire proceeding taken by the income-tax authorities in the case were direct violation of the mandatory procedure prescribed by the act inasmuch as the income-tax authorities had not, before proceeding to assessment, fixed upon an agent of the non-resident principal under Section 42 of the Act. We acceded to the contention advanced on behalf of His Higness and held that granting that the assessee was a non-resident, the Income-tax Officer was precluded by certain provisions of the Indian Income-tax Act from serving a notice on him without appointing an agent within the meaning of Section 43 of the Act.

(3.) AN appeal agianst this order was preferred before the Assistant Commissioner of Income-tax, who dismissed it on the 22nd of September 1938. The assessee Kunwar Bishwanath Singh then applied to the Commissioner for reference to this Court under Section 66 (2) of the ACt. Five questions of law were formulated in the applicati0n which are mentioned at page 11 of the printed statement of the case.