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PETITIONER: INCOME TAX OFFICER ’A’ WARD, CALCUTTA

       Vs.

RESPONDENT: RAMNARAYAN BHOJNAGARWALA

DATE OF JUDGMENT26/09/1975

BENCH: KRISHNAIYER, V.R. BENCH: KRISHNAIYER, V.R. GUPTA, A.C.

CITATION:  1976 AIR 2076            1976 SCR  (1)1014  1976 SCC  (1) 814

ACT:      Income-tax -Disputed  ownership of bank account-Income- tax Officer  if bound to determine the question of ownership before proceeding against respondent.      Income-tax Act, Section 148.

HEADNOTE:      There was  a Bank  account in which a huge sum was seen as lying  in deposit.  The assessing  authority proceeded on the footing  that the  amount represented  the Income of one Madan  Lal,  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 in this appeal. His contention  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 ownership of the bank deposit. This order was made  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 jurisdiction to start proceedings under Section  148 on  the score  that he had no ’reasonable belief’, which  is the  sine qua  non for  the initiation of such proceedings.      Allowing the appeal by special leave, ^      HELD :  Either the  uncle or  nephew must  pay the  tax under normal  circumstances 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 of certain assumptions and  representations, the  foundational fact  of reasonable belief  has  not  been  decided.  Therefore,  the judgement of the High Court has to be set aside and remanded to  the   High  Court  for  a  fresh  hearing  on  this  the foundational fact. But the Income-tax Officer must determine the ownership  of the bank deposits within six months. [1015 E-H]

JUDGMENT:

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    CIVIL APPELLATE  JURISDICTION : Civil Appeal No. 318 of 1971.      Appeal by  Special Leave  from the  Judgment and  Order dated the  3rd June,  1969 of  the Calcutta  High  Court  in Appeal No. 233 of 1968.      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 Madanlal. 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 1015 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 contention 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 ownership of the bank  deposit. This  was done  in September  1970. It is admitted before us that although we are in October 1975, the Income Tax Officer has not yet determined the real ownership of the deposit as between the uncle and the nephew. There is no valid  reason why  the Income  Tax  Officer  should  have delayed so  long  and  indeed  administrative  officers  and tribunals are  taking much  longer time  than is  necessary, thereby   defeating    the   whole   purpose   of   creating quasijudicial  tribunals   calculated   to   produce   quick decisions, especially in fiscal matter. Five years to dawdle over the decision of a small matter directed by an appellate authority amounts  to indiscipline subversive of the rule of law. We  hope that  the Administration, takes serious notice of delays  caused  by  tax  officers  lethargy,  under  some pretext or  other, in speeding up enquiries into incomes and finalizing assessments.  The mere  fact that a Writ Petition was pending  in the 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 Income Tax Officer had fixed  the ownership 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  Department itself would not have had to proceed against him.      We have  no doubt  that either the uncle or nephew must pay the  tax under normal circumstances and they cannot play off one  against the  another to  defeat the  claims of  the Revenue. Even  so, High  Court has  disposed of this case in appeal before  the Division Bench on certain assumptions and representations,  for   which  counsel  for  the  Income-tax Department was largely responsible. 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  no  jurisdiction  to  start  proceedings  under

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Section 148  on  the  scorce  that  he  had  no  ’reasonable belief’, which  is the  sine qua  non 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 remand  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.      However, if  the Income  Tax Officer  at least  at this late stage  will  bestir  himself  to  adjudicate  upon  the ownership of  the bank  deposit 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 1016 available to Madanlal. We direct that the Income Tax Officer determine the  ownership of  the bank  deposits  within  six months from today, and thereafter only the Appeal before the High Court  need be considered. We may observe 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. V.M.K.                                       Appeal allowed. 1017