UNION OF INDIA & ORS. versus SETH R. DALMIA

Citation: [1975] 3 S.C.R. 735 · Decided: 27-02-1975 · Supreme Court of India · Bench: Y.V. CHANDRACHUD · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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B 
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UNION OF INDIA & ORS. 
v. 
SETH R. DALMIA 
Febrµary 27, 1975. 
7 35 
[Y. V. CHANDRACHUD, R. S. SARKARIA AND A. C. GUPTA, JJ .J 
Income Tax Act 1961-Sec. 148. 
C'ntral Board of Direct Taxes (Regulation of Tra11saction of Busi11ess) 
R111.ts 1964-Rule 4-Whctlrer approra/ by Ccnt;a/ Go\'ernme11t cf distrilmtion 
of the busi11ess of board by Chairman m11.1t be expressed in tire sl1ape of an 
oriu. 
6 notices were issued to the respondent under s. 148 of the Income Tax 
Act for reopening the assessments for 3 assessment years. 
The notices recited 
that they were issued after obtaining the neces·sary satisfaction of the Central 
Board of Direct Taxes. The respondent filed a writ petition in t!ie High Court 
challenging the said notices inter a/ia 011 the ground that sanctio11' of the Central 
Board of Direct Taxes was not taken before the notices were issued as required 
9y sec. 151 of the Ah:t. 
The High Court accepted the •said contention and 
did not decide the other grounds raised in the petition. The High Court held 
that on a reading of the affidavit made by J. P. Singh, Chairman of Central 
Board of Direct Taxes it wou.ld appear that the work which had been done 
by the Chairman of the Central Board was transferred to the Member of. the 
Board and the approval of th~ Secretary to the Government of India was ob-
t.aincd for this transfer or allocation of work. 
The High Court, however, found 
that the averments in the affidavit were not in line with the ofliec notes in the 
relevant file. 
The High Court also held that as no formal order was paS'>ed 
changing the allocation with the previous appmval of the Central Government, 
the sanction issued by Central Board of Direct Taxes was without jurisdiction 
and authority. 
On appeal by Special Leave it was contended before this Cot•rt that r. 4 of 
the Central Board of Direct Taxes (Regulation of Transaction of Business) Rules, 
1954 provides that the Chairman of the Central Board may with the previous 
approval of the Central Government distribu'e the business of the. Board 
between himself Mid the other members and may specif) the cases o; class of 
cases which shall be considered jointly by the Board. lt was contended that 
J. P. Singh in his affidavit cka.ly stated that on 30-3-1964 he suggested to 
]'firayan Rao a member of the Cen'.ra\ Board of Di;ect Taxes that he should 
take up the work of ac.:ording sanction of the Board unde: s. 151 ot the Act 
which was being done by the Chairman. It was further stated in that affidavit 
that on June 18, 1964 be personally discussed the proposal wi!h the Secretaiy to 
the Government of India in the Ministry of Finance and that the secretary 
approved the said propos~l and that a note was made by him on 18th June, 
1%4 to the effect that the matt·~r was discussed with the Secretary and that 
it is just a minor internal arrangement and no formal order was necessary. 
Allowing ihe appeal, 
HELD·. (1) The High Court erred in not taking not~ of the affidavit of 
P. G. Gandhi Under Secretary Central Board of Direct Taxes, in which it is 
stated that all assessment work of income tax was assigned to Narayan Rao 
with the approval of the Centrnl Government. 
In view of the statements in the 
spedfic affidavit of J. P. Singh and P. G. Gandhi it cannot be said that the 
offire notes were not in line with tbe averments in the 
affidavits. 
[739H; 
740C] 
(2) It wa~ not necessary to P-xpress the approval of the Central Government 
formally in the shape of an order. [741HJ 
Fonseca Private Limited and Others v. L. C. Gupta & Others, (1973) I S.C.C. 
4 18, distinguished. 
7 36 
SUPREME COURT REPORTS. 
[1975] 3 S.C.R. 
In that. case what was challenged was the order passed by an officer who 
A 
was not entitled to J>aSs it under the rules of business and the decision has 
no relevance on the question whether on the circumst:mces of the present case, 
approval of the Cen~ral Government ·should have been recorded in a formal 
order. [741C] 
(3) The distribut!on •of the business of the Board by the Chairman is not a 
sub-delegated leg1slat1on and need not be expressed in a formal document; that 
the allo=ation of the business a·nd approval are matters of internal arrangement 
B 
not affecting any one's rights at that ·stage. Since the appeals succeed on other 
grounds the Court diJ not go into the question whether the provisions of tile 
Central Board of Direct Taxes (Validation of Proceedings) Act 1971 afforded 
prot
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