IN THE MATTER OF KESHARDEO CHAMRIA. Vs. STATE

JUDGEMENT

(1.) THIS matter comes before us on a reference by the Commissioner of Income Tax under Section 66(2) of the Indian Income Tax Act, 1922. The Commissioner says in the opening paragraph of the case which has been put before us that "At the request of the Assessee named above" (that is to say Kesardeo Chamria) "the question of law formulated in paragraph 8 of the statement of case is submitted to their Lordships the Judges of the Calcutta High Court for favour of their decision". The question therefore, upon which our opinion is sought is this : -2. "Whether in the circumstances of this case there were any materials on which the Income Tax Officer could base his finding that the assessee was not prevented by sufficient cause from filing the return called for under Section 22(2) or producing the amount called for under Section 22 (4) ?" In order to make it clear how this matter arises it is necessary that I should recite one or two facts in the history of the case. There were two Income tax matters proceeding against this assessee simultaneously - one in respect of the assessment for the year 1932 -33 under Section 23 of the Act and the other in respect of the assessment for 1931 -32 under that section read with Section 34 of the Act and in both cases notices were issued and orders passed on the same dates and there is one common order sheet. The assessee has filed an application for reference under Section 66(2) of the Act in respect of both assessments, but as the facts and circumstances are identical, the Commissioner of Income Tax has stated a case only in respect of the assessment for the year 1932 -33 and he proposes to decide the question at issue in the other assessment in accordance with the decision which we shall give in this matter. The chronology of the case is as follows : - On the 30th August, 1932 the Income Tax Officer issued a notice under Section 22(2) calling for a return of Income by the 18th of October, 1932; but instead of making that return the assessee of the 18th of October, 1932, filed a petition in which he said that he had been away on a change which had not improved his health and therefore he proposed to go away on another change to Bangalore. Accordingly on the same day the 18th of October, 1932, the Income Tax Officer made an order to the effect that return should be filed on the 30th October, 1932. Apparently no attention was paid to that order, for the next thing which happened was that the assessee put in another petition dated the 8th of November, 1932, in which he said that he was unable to do anything in the matter until the official Receiver, High Court, Calcutta, and Rai Ramprotap Chamria Bahadur arrived in Calcutta. He said that they were both away from the town on a change during the Pujah holidays. He also said that his estate was the subject matter of certain suits then pending in the High Court on its Original Side. He asked for two weeks time in which to do what was necessary in the matter. As a result of the receipt of that petition the Income Tax Officer made an order directing the assessee to prove his assertion by documents which he was to produce on the 23rd of November. No attention was paid to that order, but on the 23rd on November a third petition was put in by the assessee in which he stated that he had no independent source of income of his own but he was a co -share with other members of the firm of Messrs. Hardutrai Chamria and Company and the partnership and the connected joint estate were now being dealt with in suits. He therefore asked that his personal assessment might be deferred till after the disposal of the suits which were then pending. After receiving that petition the Income tax Officer made an order to the effect that he could not wait in definitely and he called for the accounts of 1931 -32 under the provisions of Section 22(4) of the Act and fixed the 21st December, 1932 for the production of those accounts. The accounts which he asked for were municipal bills of house property, counter -foils of rent receipts, deeds, lease paper and bank pass book. On the day when these accounts ought to have been produced, that is to say the 21st December, 1932 the assessee put in a fourth petition in which he said "the petitioner in compliance with notices under Section 22(4) enters appearance and submits that the documents of properties required to be produced are obtainable from Rai Bahadur Seth Ramprotap Chamria and from the Receiver appointed by the Hon'ble High Court, who is still in office. The petitioner therefore prays that his assessment file may be struck off in the circumstances." So that once more the assessee made no serious attempt to comply with the requirements of the Income Tax Officer. There upon the Income Tax officer directed compliance by means of a notice under Section 22(4) and that the compliance was to take place on the 12th January, 1933. On that date the assessee at last made an appearance before the Income Tax Officer together with a pleader but instead of producing all the accounts required by the Income Tax Officer he merely produced one solitary bank pass book containing entires for the period from the 15th January, 1929 to the 21st November, 1932 and no other accounts whatever. On the same day he put in another petition in which he said this : "By an order of the High Court dated 2nd April, 1931 in suit No. 183 of 1929 some of the properties in suit mentioned in Schedule there of were transferred from the Official Receiver appointed in the said suit by order dated 28th July 1930 to the joint management of the petitioner and Rai Bahadur Ramprotap Chamria and papers in respect of those properties are in joint custody of the petitioner and the said Rai Bahadur Ramprotap Chamria and return of income as well as evidences of those properties can only be submitted in such joint capacity inasmuch as by virtue of disagreement between the parties concerned, the petitioner moved the High Court before the last Puja vacation for reappointment of the Official Receiver for those properties and that matter is pending decision. In passing we observe that in that statement there is an admission for some period at any rate the assessee had control over the documents to which I have just referred. In the concluding paragraph of that petition the assessee said : "The petitioner herewith applies for "a notice under Section 37 in the joint name of the petitioner and the said Rai Bahadur Ramprotap Chamria for production of papers called for by notice under Section 22(4) and prays that such notice may be issued to enable the petitioner to comply." The Income Tax Officer declined to issue a notice or summons under Section 37 and on the 15th February, 1933 he made an assessment under the provisions of Section 23(4) on the basis of a total income of Rs. 45,600 made up as follows : income from property Rs. 43,200; income from business Rs. 2,400.

(2.) THEREUPON about a month later, that is to say, on the 6th March, 1933 the assessee made a petition under the provisions of Section 27 of the Indian Income Tax Act 1922. That petition is set out at page 17 of the paper book and in paragraph 3 thereof the petitioner set forth a number of grounds upon which he relied for having the assessment made under Section 23(4) set aside. It is to be observed that none of those grounds with the possible exception of that appearing under the letter (i) that is to say the last of the grounds set out in the petition are really grounds admissible for an application under Section 27. Section 27 provides as follows : - "Where an assessee or, in the case of a company, the principal officer thereof, within one month from the service of a notice of demand issued as hereinafter provided, satisfies the Income Tax Officer that he was prevented by sufficient cause from making the return required by Section 22, or that he did not receive the notice issued under Sub -Section (4) of Section 22, or Sub -Section (2) of Section 23, or that he had not a reasonable opportunity to comply, or was prevented by sufficient cause from complying, with the terms of the last mentioned notices the Income Tax Officer shall cancel the assessment and proceed to make a fresh assessment in accordance with the provisions of Section 23." That section therefore provides in essence that the only ground on which an assessment under Section 23(4) can be attacked is that the assessee for reasons outside his control was unable to comply with notices which are the preliminary stages and indeed the condition precedent to the making of an assessment under Section 23(4). Now the ground set out in the petition of the 6th March, 1933 under the letter (i) reads as follows : - "The petitioner does not yet know the details of his total income nor has he in his exclusive possession the documents not produced under Section 22(4)." He is there referring, of course, to the notices which had been served upon him under the provisions of that sub -section requiring him to produce the various accounts which I have enumerated and in fact he is saying once more that he was unable to produce the documents and the accounts called for because they were not under his own control but were under the joint control of himself and of Rai Ramprotap Chamria Bahadur. That petition was dealt with by the Income Tax Officer on the 10th of May, 1933 and the decision of the Income Tax Officer appears in the order sheet which is set out at pages 18 and 19 of the paper book and is in these terms : "I consider the grounds above and those submitted in the petition under Section 27 as below :

(3.) I am therefore not in a position to entertain the petition under Section 27. "The petition is therefore rejected." Then he added "the same reasons apply to petition under Section 27 regarding assessment under Sections 34 and 23(4). The said petition is therefore rejected." That decision, as I have stated, is dated the 10th May, 1933. About a month later - on the 8th of June, 1933 - the assessee made an appeal against that decision and set out a very large number of grounds on which that appeal purported to be based. The grounds of appeal are to be found at pages 20 and 21 of the paper book. With regard to that appeal and the proceedings against which it was preferred the Commissioner of Income tax in the statement of case that he has sent to us says on page 6 this : "The Income Tax Officer considered that he (the assessee) had reasonable opportunity to comply "with the terms of the notice and that there was no sufficient cause preventing him from complying with the notices or from making the return. He therefore rightly refused to re -open the assessment under Section 27. Against this order an appeal is given by Section 30 with this proviso that no appeal shall lie in respect of an assessment made under Section 23(4) or under that section read with Section 27. The result is that the only question that can be raised in an appeal against an order under Section 27 and in case of assessment under Section 23(4) are : -