GOPAL CHANDRA SEN Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) IN this application under Art. 226 the petitioner has obtained a rule for a writ of certiorari to quash the orders of the AAC and the CIT (respondents Nos. 2 and 3) dt. 5th June, 1957, and 3rd Feb., 1960, respectively. The case of the petitioner is that he is the Karta of a HUF, constituted by the heirs of one Manmatha Nath Sen and as such is liable to pay income-tax in respect of the income of the deceased Manmatha Nath to the extent of the estate inherited by the family from him. Manmatha Nath happened to be a partner of an unregistered firm called M/s Sen Bros. and Co. carrying on business at 15, College Square. The ITO (respondent No. 1) in assessing the income of Manmatha Nath for the asst. yrs. 1950-56 added to his personal income from house property, his 1/3 share of the income from the business of the said firm and charged tax accordingly. Since the business of the firm was in the hands of receivers, it was the receivers who were chargeable with the tax. The 1/3 share of the income of the firm could not be added to the personal income of Manmatha Nath, for the purposes of assessment, unless the business was assessed as an unregistered firm. The impugned order being, according to the petitioner, illegal and ultra vires the petitioner appealed to the AAC who dismissed the appeal on 5th June, 1957, and from his order the petitioner moved the CIT in revision, under s. 33A(2) of the IT Act, 1922, but the CIT rejected the application of the petitioner by order dt. 5th Feb., 1960, without giving the petitioner an opportunity of representing his case.

(2.) THE grounds taken in the affidavit filed on behalf of the respondents is that the application is vitiated by inordinate delay; that M/s Sen Bros. were in fact assessed as an AOP and that the alleged addition of the 1/3 share of the business income was made in pursuance of a request made by Manmatha Nath himself, in his letter of 1st June, 1954, to the ITO as follows : "Please realise my share of income-tax from my business, M/s Sen Bros. and Co., which is at present under the management of joint receivers, Sri Kanai Lal Sen and Sri Sisir Kumar Basu." As regards the contention of the petitioner that he was not given a hearing before rejecting his application for revision it is urged that no such hearing is required by s. 33A(2) of the Act. It has also been urged that the petitioner is not entitled to any remedy under Art. 226. THE points for decision are : (a) is the application liable to be refused on the ground of delay ? (b) is the application under Art. 226 maintainable ? (c) are the impugned orders without jurisdiction ? (d) have the principles of natural justice been violated by the impugned orders ? Point (a) : Annexure "B" is the assessment order of the ITO dt. 26th March, 1953. Annexure "D" is the order of the AAC dt. 5th June, 1957, and annexure "E" is the order of the CIT dt. 5th Feb., 1960. This application under Art. 226, impugning the orders of 5th June, 1957, and 5th Feb., 1960, was presented on 14th Sept., 1960. THE order of the CIT being the final order, there has been a delay of over seven months from that order. Nevertheless, I do not think that this application for certiorari can be rejected on this ground alone if the petitioner is able to establish on the merits that the impugned orders are in violation of the principles of natural justice. Point (b) : THE original order of assessment in annexure "B" is not and cannot be challenged in this application since the original order has merged in the appellate order in annexure "D" as held by the Supreme Court in CIT vs. Amritlal (1958) 34 ITR 130 (SC). Similar is the position in regard to the appellate order in annexure "D" in view of the recent pronouncement of the Supreme Court in Collector of Customs vs. East India Commercial Co. (1936) AIR SC 1124, reversing the decision of this Court (1960) AIR Cal 1 (FB), that even where the order of a subordinate authority is confirmed by an appellate or revising authority the order of the subordinate authority is merged in the final order of the appellate or revisional authority and that becomes the only operative order.

(3.) CONSIDERING all aspects of the question, it must be held that the order contemplated by s. 33A(2) is an administrative order of a discretionary nature and that the doctrine of natural justice cannot be imported because there is no obligation to hear, either expressly or impliedly (vide Radheshyam v. State of M. P. (1959) SCR 1440, and Virindar vs. State of Punjab (1956) AIR SC 153 (1955) 2 SCR 1031). Hence, even though admittedly, the CIT did not hear the petitioner, the petitioner cannot have any relief in this application on that ground. Point (c) : The case of the petitioner on this point is that the addition of his income from the share in the business of the firm, Sen Bros., which has been made for the purpose of s. 16(1)(a) is without jurisdiction because the assessment on the firm was not made in compliance with the requirements of s. 14(2)(a) so that the very basis for the application of s. 16(1)(a) was gone. Under s. 16(1)(a) any income which has been exempted from personal taxation, inter alia, under s. 14(2), can be added to the personal income to constitute the "total income" for the purpose of determining the rate of taxation. The relevant item of exemption is under s. 14(2)(a), which says : "The tax shall not be payable by an assessee--... if a partner of an unregistered firm, in respect of any portion of his share in the profits and gains of the firm computed in the manner laid down in cl. (b) of sub-s. (1) of s. 16 on which the tax has already been paid by the firm."