OM PARKASH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) OM Prakash is one of the proprietors of the firm Hans Raj and Company. This firm was during 1943-44 carrying on its business at Phagwara (Kapurthala State). An income-tax amounting to Rs. 33,750 was imposed on the firm for the assessment year 1943-44 by order dated the 30th of April, 1945. A demand notice was served on the assessee firm on the 12th of November, 1945, but admittedly no tax was realized by the Kapurthala state Income-tax authorities. On the 15th of May, 1951, the Income-tax Department of the Kapurthala State was abolished. In July, 1951, the Tahsildar, Phagwara, called upon OM Prakash to pay Rs. 33,750, and this notice was sent to him at the instance of the Income-tax Officer, Jullundur. The Tahsildar, having proceeded to take proceedings under section 46 of the Indian Income-tax Act, OM Prakash has filed the present petition under article 226 of the Constitution to get these proceedings quashed. A single Judge of this Court has referred the case for decision by a Division Bench.

(2.) THE learned counsel has urged before us that the Indian Income-tax authorities have no power to realize the tax imposed by the Kapurthala authorities, and it is argued that the Indian Finance Act, 1950, does not empower the Indian Income tax authorities to realise such a tax. Construing section 13 of the Indian Finance Act, 1950, however, the Supreme Court has held in Union of India v. Madan Gopal Kabra, that section preserves the operation of the state laws for the purpose of levy, assessment and collection of tax in respect of the income of previous years relevant to assessment years prior to 1950-51. Thus the law of the Kapurthala state is applicable to the collection of the tax imposed on the firm by order dated the 30th April, 1945. THE first proviso to section 13 of the Indian Finance Act lays down that any reference in the state law to an officer or authority shall be construed as reference to the corresponding officer or authority appointed or constituted under the Indian Act. THErefore after the Income-tax authorities of Kapurthala State had been abolished the corresponding authorities under the Indian Act got the power to collect the tax imposed by the state law, i.e., by the Kapurthala authorities. It is conceded by the learned counsel for the petitioner that the Income-tax Officer, Jullundur, is such a corresponding officer. Consequently, the Income-tax Officer, Jullundur, has the authority to collect the tax imposed by the Kapurthala authorities, and the argument of the learned counsel for the petitioner to the contrary has no force.