INCOME TAX OFFICER 'A' WARD, CALCUTTA versus RAMNARAYAN BHOJNAGARWALA

Citation: [1976] 1 S.C.R. 1014 · Decided: 26-09-1975 · Supreme Court of India · Bench: V.R. KRISHNA IYER · Disposal: Appeal(s) allowed

Judgment (excerpt)

1014 
. ' 
INCOME TAX OFFICER 'A' WARD, CALCUTTA 
)'. 
RAMNARAYAN BHOJNAGARWALA 
September 26, 197 5 
(V. R. KRISHNA IYER AND A. C. GUPTA, JJ.] 
income-tax -
Disputed ownership of bank account -
Income-tax Officer10 
if bound td dete_rmine the question Gf ownership before 
proceeding 
against 
respondent. 
lncon1e-tax Act,: Section. 148. 
A 
There was a Bank account in which a h'uge sun11 was seen as lying in deposit. 
The- assessing authority proceeded on die footing that the amount represented the 
C 
income- of one Madan Lal, in whose name the Bank account stood. 
He contested 
his ownership and urged that really this sun1 belonged to his uncle who is the 
respondent in this appeal. 
His contention was over-lilled by the Income-tax 
Officer, bu4 in appeal, the Appellate AS>istant Commissioner set aside the order 
and directed that the Income·taxl Officer do determine the real ownership of the 
bank deposit. 
This or<!er was mad~ in September 1970. 
The respondent went 
up in litigation in High Court. He succeeded in the High Court, but there was 
no investigation into the basic question raised before the High Court by the 
respondent that the Income-tax Officer had no furisdiction to start proceedillll" 
D 
under Section 148 on the score that he had no 'reasonable belief', which is the 
sine qua nan for the initiation of such proceedings. 
Allowing the appeal by special leave, 
HIELD : Either the uncle or nephew must pay the tax under normal cir-
cumstance-. and they cannot play off one against another to defeat the claims of 
the Revenue. In as much. as the High Court has disposed of this case on certain 
assumptions and representations, the foundational fact of reasonable belief has 
E 
... 
1 
not been decided. Therefore, the judgment Qf the High Court has to bo set 
aside and remanded to the High Cpurt for a fresb bearing on this the· founda.. 
J.... 
tional fact. 
But the Incomer-tax Officer must determine the ownership of the 
bank deposits withi'n six months. 
[1015 E-H] 
CIVIL APPELLATE JURISDICTION: 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 Court in Appeal No. 233 of 
191ill. 
. 
S. P. Nayar and B. B. Ahuja for the appellants. 
S .. T. Desai, H. S. Parihar and I. N. Shroff for the respondent. 
The Judgment of the Court was delivered by 
KRISHNA IYER, J. This is really a case where litigation would have 
been avoided, had the concerned Income-tax Officer carried out the 
directions issued by the Appellate Assistant Commissioner, with quick 
dispatch to 
determine the ownership of the, deposit in the Bank 
account as between the respondent before us and his nephew Madan-
lal. 
· 
The Facts 
There was a Bank account in which a huge sum was seen as lying 
in deposit. 
The assessing authority proceeded on the footing that 
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A 
I.T.Q. v. R, B. AGARWALA (Krishna Iyer, !.) 
I 0 15 
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-
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-
. nistrative officers and tribunals are taking much longer time than is 
necessary, thereby defeating the whole purpose of creating 
quasi-
{: 
judicial Jribunals calculated to produce quick decisions, especially in 
. fiscal matter. Flve years to dawdle over the decision of a small mat-
ter directed by an appellate authority amounts to indiscipline subver-
sive 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 
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 

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