Income Tax Officer 'a' Ward, Calcutta versus Ramnarayan Bhojnagarwala

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INCOME TAX OFFICER 'A' WARD, CALCUTTA

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.' )'. RAMNARAYAN BHOJNAGARWALA _September_26,1975
(V.R.KRISHNAIYERANDA.C.GUPTA,JJ.]
income-tax- Disputedownershipofbankaccount- _Income-taxOfficer10 _ *ifboundtddete_rminethe questionGfownership before* *proceeding* *against* *respondent.*		... 1
_lncon1e-tax Act,: Section._148.
Therewasa Bankaccountinwhich ah'ugesun11wasseenas lyingindeposit. The- assessing authority proceeded on die footing thattheamount represented the income- ofone Madan Lal, in whose name theBankaccount stood. Hecontested his ownership and urged that really thissun1belonged to his uncle who is the respondentinthisappeal. Hiscontentionwasover-lilledbytheIncome-tax Officer, bu4 in appeal, the AppellateAS>istantCommissioner set aside the order and directed that the Income·taxl Officer do determine the real ownershipofthe bank deposit. Thisor<!erwasmad~in September1970. The respondent went upinlitigation in High Court. He succeededinthe High Court, but therewas no investigation into the basic question raised before the High Courtbythe respondent that the Income-taxOfficerhad no furisdiction to start proceedillll" under Section148onthescore that he had no 'reasonable belief', which is the _sinequanan_for the initiationofsuch proceedings.	C D
Allowing the appeal by special leave,
HIELD: Either the uncle or nephew must pay thetaxunder normal cir- cumstance-.andthey cannot play off one against another to defeat the claimsof the Revenue.Inasmuch.asthe High Courthasdisposedofthis case oncertain assumptionsandrepresentations,thefoundationalfact ofreasonablebeliefhas not been decided. Therefore, the judgmentQfthe High Court has_to_bo set aside and remandedtothe High Cpurt for a fresb bearing on thisthe·founda.. tional fact. But theIncomer-taxOfficermust determine the ownershipofthe bank depositswithi'nsixmonths. [1015E-H]	E	J....
CIVILAPPELLATEJURISDICTION:Civil Appeal No. 318 of 1971.
Appeal by Special Leave from the Ju.dgment and Order dated the 3rd June, 1969 of the·€alcutta High CourtinAppeal No. 233 of 191ill. .	F
_S.P.Nayar_and_B.B.Ahuja_forthe appellants.
_S..T. Desai,H.S.Parihar_and_I.N. Shroff_forthe respondent.
The Judgment of the Court was delivered by KRISHNAIYER,J.Thisisreally a case where litigation would have been avoided, had the concerned Income-taxOfficercarriedoutthe directions issued by the Appellate Assistant Commissioner, with quick dispatch to determine the ownership of the, deposit in the Bank accountasbetween the respondentbeforeus and his nephew Madan- lal. · The Facts	G H
There was a Bank accountinwhich a huge sum was seen as lying indeposit. The assessing authority proceeded on the footing that

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I.T.Q. v. R, B. AGARWALA (Krishna Iyer, !.) I 0 15

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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 co!ltention 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 owner-

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ll · ship of the bank deposit. This was done in September 1970. It is admited before us that although we are in October 1975, the Income Tax Officer has not yet determined the real ownership of the deposit as betwe_en the uncle and the nephew. There is no valid reason why the Income Tax Officer should have delayed so long and indeed admi-

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. nistrative officers and tribunals are taking much longer time than is necessary, thereby defeating the whole purpose of creating quasi-

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{: judicial Jribunals calculated to produce quick decisions, especially in . fiscal matter. Flve years to dawdle over the decision of a small matter directed by an appellate authority amounts to indiscipline subversive of the rule of Jaw. We hope that the Administration, takes serious notice of delays caused_ by tax officers lethargy, under some pretext or other, in speeding up eJ.!quiries into incomes and finalizing assessments. _ The mere f_act that a Writ Petition was pending in the

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o 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 fncome Tax Officer had fixed the owner-

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E ship 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 Departmeqt itself would not have had to proceed against him.

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We have no doubt that either the uncle or nephew must pay the tax under normal circumstances and they cannot play oft' one against the another to defeat the claims of the Revenue. Even so, High Court has disposed of ~ case in appeal b~fore the Division Bench on certain assumptions and representations, for which counsel for the Income-tax Department was largely r!J§ponsible. 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 ne jurisdiction to start proceedings under Section 148 on the score that he had no 'reasonable belief', which is the sine qua non -G 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 remantl 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.

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However, if the Income Tax Officer at least at this late stage IH will bestir himself to adjudicate upon the ownership of the bank de'posit 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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1016 SUPREME COURT REPORTS [1976] 1 S.C.R.

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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, anU thereafter only the Appeal before the High Court need be considered. We may obsjlrve 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.

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V.M.K. Appeal allowed;

Income Tax Officer 'a' Ward, Calcutta v. Ramnarayan Bhojnagarwala

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Income Tax Officer 'a' Ward, Calcutta v. Ramnarayan Bhojnagarwala

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