L. HAZARI MAL KUTHIALA versus THE INCOME-TAX OFFICER, SPECIAL CIRCLE, AMBALA CANTT.

Citation: [1961] 1 S.C.R. 892 · Decided: 27-09-1960 · Supreme Court of India · Bench: S.K. DAS · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

892 
SUPREME COURT REPORTS 
(1961] 
L. HAZARI MAL KUTHIALA 
v. 
THE IXCOME-TAX OFFICER, 8PECIAL 
CIRCLE, AMBALA CANTT. 
(S. K. DAS, Ill. HIDAYATULLAil, K. c. DAS GUP'l'A, 
J.C. SHAH a.n<l N. RAJAGOPALA AYYANOAR, ,J,J.) 
/ncomt-tax--Co1111nissionrr's power of transfer-Sfalulor.Y pro-
tJision for consulting the Central Board of Reve1u1e-/j mandatOT)'-
1·ransftr of pending and 
non~pendi1zg cases-Pati~la Inconze-tax 
Act of Samvat 2oor s. 5, sub-ss. (5). (7A). s. 34-Indtan Jncume-ta.t 
Act, r922 (II of r922), s. 64(r).- -lndia11 Finance Act, r950 (26 of 
r950), S. IJ. 
The appellant firm which carried on business as forest 
lessees and timber merchants in tl1e former Kapnrthala State 
\\·as assessed to, and paid, income tax, for the accoqnt year 
1945-46 under the Income-tax law which was th•n in force in 
the said State. Subsequently Kapurthala State integrated into 
what was known as Pepsu and the l'atiala Income-tax Act, 2001, 
was made applicable and came into force in the integrated State. 
Lat•" still the Indian Finance Act, 1950 (i6 of 1c.i50), applied 
the Indian Income-tax Act to Part B States which had emerged 
as a result of political changes ands. 13 of the Indian Finance 
Act repealed the Income-tax laws obtaining in Part B States 
except for the purposes of levy assessment and collection of 
income-tax and Super-tax relating to the period mentioned 
therein. On November 4, 1953, the Commissioner of Income-
tax, Punjab (r) etc. purporting to act under s. 5, sub-ss. (5) and 
(7A) of the Indian Income-tax Act ordered theassessment of the 
appellant firm to be don• by the Income-tax Officer. Special Cir-
cle, Ambala and not by the Income-tax Officer. B-Ward, Patiala, 
who would ordinarily be the competent assessing authority for 
the firm under s. 64 of the Indian Income-tax Act. On ~larch 
12, 1953, the Income-tax Officer. Special Circle, Ambala, issued a 
notice purporting to be under the Patiala Income-tax Act of 
Samvat 2001 to the appellant firm for filing a return of its in-
come and total world income as he believed that the income 
had been underassessed. 
The appellant then filed an applica-
tion under Art. 226 of the Constitution in the High Court for 
writs of prohibition, certiorari, quo warranto etc. against the 
Income-tax Officer, Special Circle, Ambala, and the Commission-
er of Income-tax, Punjab (r) etc. regarding the reassessment of 
the income of the firm for the account year 1945-46. The High 
Court dismissed the said petition and this appeal was filed on a 
certificate granted by the High ~ourt. The contentions of the 
appellant inter alia, were that the Income-tax Officer, Special 
Circle, Ambala, had no jurisdiction to issue a notice under s. 34 
1 S.C.R. SUPREME COURT REPORTS 
893 
of the Patiala Income-tax Act of Samvat 2001, and that only the 
Income-tax Officer, B-Ward, Patiala,•was the competent autho-
rity as he was the locally situated Income-tax Officer and would 
have jurisdiction under s. 64(1) of the Income-tax Act. The 
transftr of the case by the Commissioner of Income-tax by his 
order of November 4, 1954. was characterised as ultra vires and 
incompetent. 
The argument that the words of s. 13 of the 
Indian Finance Act, 1950, did not include reassessment was 
abandoned in view of the decisions of this Court in Lakshmana 
Shenoy v. The Income-tax Officer, Ernakulam, [1959] S.C.R. 75r. 
It was further contended that the Commissioner in acting under 
s. 5(5) of the Patiala Income-tax Act was required to consult 
the Minister-in-Charge whose place was taken by the Central 
Board of Revenue under the Indian Finance Act, 1950. 
Held, that although the Commissioner of Income-tax was 
required to consult the Central Board of Revenue his failure to do 
so did not render his order ineffective however wrong it might 
be from the administrative point of view. The provision about 
consultation must be treated as directory and the Commissioner's 
power could not be questioned by the assessee on the ground of 
failure to consult the Central Board of Revenue. 
State of U.P. v. Manbo;J.han Lal Srivastava, [1958] S.C.R. 553, 
K. S. Srinivasan v. Union of India, [1958] S.C.R. 1295, Montreal 
Street Railway !Company v. Normandin, L.R. 1917 A. C. 170 
and Biswanath Khemka v. The King Emperor, (1945) F.C.R. 99, 
followed. 
The Commissioner while transferring the case may have 
referred to the Indian Income-tax Act and not to the Patiala 
Income-tax Act but the exercise of the power would be re

Excerpt shown. Read the full judgment & AI analysis in Lexace.