MAHARAJADHIRAJ SIR KAMESHWAR SINGH versus THE STATE OF BIHAR

Citation: [1960] 1 S.C.R. 332 · Decided: 15-05-1959 · Supreme Court of India · Bench: SUDHI RANJAN DAS · Disposal: Dismissed

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Judgment (excerpt)

332 
SUPREME COURT REPORTS [1960(1)) 
r959 
having been appointed managing director because of 
Th C -. . 
his being a promoter of the company and having 
e ommissioner 
II 
k 
h 
f I 
· 
El 
· 
of Income-tax 
actua y ta en over t e concern o 
nd1a 
ectnc 
v. 
Works from Milkhi Ram and others. 
The finding in 
Kalu Babu Lal this case is that the promotion of the Company and 
Chand 
the taking over of the concern and the financing of it 
Das c. J. 
were all done with the help of the joint family funds 
and the said B. K. Rohatgi did not contribute anything 
out of his personal funds if any. In the circumstances, 
we are clearly of opinion that the managing director's 
remuneration received by B.K. Rohatgi was, as between 
him and the Hindu undivided family, the income of 
the latter and should be assessed in its hands. 
We, 
therefore, set aside the answer given by the High Court 
to the second question and answer the same by 
saying that the assessment of the whole of the sum of 
Rs. 61,282 should be on the assessee Hindu undivided 
family. 
The result is that this appeal is allowed with 
costs here and in the Court below. 
I959 
May IS· 
A ppeaJ, aJ,l,owed. 
MAHARAJADHIRAJ SIR KAMESHWAR SINGH 
v. 
THE STATE OF BIHAR 
(S. R. DAS, c .. J., N. H. BHAGWATI and 
M. HrDAYATULLAH, ,JJ.) 
Agricultural Income-tax-Power of Agricultural Income-tax 
Officer-If can revise his own order of exemption-Bihar Agricul-
tural Income-tax Act, I938 (Bihar VII of r938) s. 26. 
In his return of agricultural income for the assessment year 
1944-45, the appellant showed a sum of Rs. 2,82,192, which he 
had paid to the Tekari Raj for two lease-hold properties taken 
on Zarpeshgi lease, as one of the items of the total amount of 
dednction claimed by him as capital receipt. The Agricultural 
Income-tax Officer accepted his claim and exempted the amount 
from payment of agricultural income-tax. The Assistant Colljl-
missioner of Agricultural Income-tax affirmed the decision. 
A 
demand notice was issued and the assessee paid two instalments. 
Thereafter, the Agricultural Income-tax Officer served on the 
assessee a notice under s. 26 of the Bihar Agricultural Income-
tax Act, 1938, to the effect that income from the said Zarpeshgi 
lease had escaped assessment and after he appeared, passed a 
S.C.R. 
SUPREME COURT REPORTS 
333 
supplementary assessment order and assessed Rs. 39,512-6-0 as 
z959 
tax. The assessee appealed. The Commissioner of Agricultural 
Income-tax reversed the said decision. 
The Province of Bihar Maharajadhiraj 
moved the Board of Revenue and the two questions it referred to Sir Kameshwar 
the High Court under s. 25(1) of the Act were, (1) whether in the 
Singh 
facts and circumstan<;es of the case, the Agricultural Income-tax 
v. 
Officer had jurisdiction to revise his own order under s. 26 of the The· State of Bihar 
Act and (2) if so, whether the income from the Zarpeshgi lease 
was taxable under the Act. The High Court answered both the 
questions in favour of the State of Bihar. Hence this appeal by 
the assessee by special leave. 
Held, that under s. 26 of the Bihar Agricultural Income-tax 
Act, 1938, the Agricultural Income-tax Officer had the power to 
revise his own order and assess an item of income which, even 
though shown in the return, he had earlier omitted to tax under a. 
misapprehension th'at it was not taxable. 
The use of the words "any reason " in s. 26 of the Act 
made the section wider than s. 34 of the Indian Income-tax ·Act 
by dispensing with the conditions which circumscribed the latter 
section. 
Kamal Singh v. Commissioner of Income-tax, Bihar G Orissa, 
A.LR. 1959 S.C. 257, applied. 
Messrs. Chatturam H orilram Ltd. v. Commissioner of Income-
tax, Bihar and Orissa, [1955] 2 S.C.R. 290, distinguished. 
Case-law discussed. 
Since the appellant had failed to prove his case that the 
income in question was income from his money-lending business 
or that the payment made to the lessor was not by way of 
premium but as a loan, the income from the lease-hold property 
which was admittedly agricultural in character, must be held to 
be liable to tax under the Act, irrespective of the character of 
the recipient. 
Crv1L APPELLATE JuRrsmcTION: Civil Appeal No. 
254of1954. 
Appeal by special lea.ve from the judgment and 
order dated February 19, 1952, of the Patna High 
Court in Misc. J udl. Case No. 244 of 1949. 
B. Sen, S. K . .llfajumdar and I. N. Shroff, for the 
appellant. 
M. 0. Setalvad, Attorney-G

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