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Judgment
Ramaprasada Rao, J.—For the assessment year 1946-47, the petitioner was assessed as an individual by the Income Tax Officer,
Tiruchirapalli. It has not in dispute that this ended in no assessment, because there was no income. So time later, it was discovered that the
petitioner had dealings in combination with others as an association of persons under the name and style of ""V. Muthuswami Pillai & Co"" which
had its commercial activity within the jurisdiction of the Income Tax Officer, Dindigul. The said officer (at Dindigul) on information about the
association of writ-petitioner in the combine, as above, after assessing the association issued a notice u/s 29 of the Income Tax Act, 1922, calling
upon the petitioner to pay an ascertained sum towards the tax liability of ""V. Muthuswami Pillai & Co."", in which the petitioner was a member. In
the said notice dated September 29, 1950 the petitioner was informed that if intended to appeal against the assessment he was at liberty to do so
under sub-section (3) of section 30 of the India Income Tax Act, 1922. It is common ground that the petitioner did not file any such appeal, though
it would appear from the record that others similarly placed as the writ petitioner, challenged similar notice issued to them in relation to the above,
their commercial activity as members of an association of persons. The result was that the notice of demand which naturally followed an order of
assessment became final in the eye of law and became binding on the petitioner as well. The petitioner, however, took up the position that the he
was not a member of ""V. Muthuswami Pillai & Co."" and left it at that.
I have already referred to the original order of assessment made on the petitioner as an individual by the Income Tax Officer, Tiruchirapalli. This
about was dated December 30, 1946. This officer having had information about the income earned by the assessee as a member of the association
of persons, as above, sought to revise the assessment u/s 34 of the earlier Act following the prescribed procedure. It is not in dispute before me
that such notices were issued and due enquiry was held by the Income Tax Officer when he revised his original order dated December 30, 1946.
In the said enquiry, the other members of the quondam association of persons, such as Muthuswami Pillai and others, gave evidence before the
Income Tax Officer, Tiruchirapalli. The petitioner himself was cross-examined by the other members of the association of persons and in that it
was elicited that he had a share in the combine of the persons who made up the association of persons and that though an agreement was not
written up, yet, there was an understanding as between the members as to the shares in which they should enjoy the returns of the commercial
activity. Finally, the petitioner had admitted in the enquiry that he was a member of an abkari combine with one Manickam Pillai of Musiri, who
was another member. The Income Tax Officer, Tiruchirapalli, found that the account books disclosed before him in the enquiry u/s 34 that the
petitioner was a member of ""V. Muthuswami Pillai & Co."" In these circumstances, he reopened his original order dated December 30, 1946, and
passed a revised order on January 31, 1952, in and by which he determined the status of the petitioner as a ""member"" of the above combine. The
result was the assessee became liable to pay Income Tax on the revised share income as determined in the revised proceedings undertaken by the
Income Tax Officer Tiruchirapalli.
An appeal against this order preferred by the writ-petitioner was unsuccessful. Thereafter, the petitioner approached the Commissioner of
Income Tax with a petition u/s 33A of the Indian Income Tax Act. This petition dated June 9, 1953, which is found in the record, does not
disclose that the petitioner was challenging his status as a ""member"" of the association of persons; but, on the other hand, the petitioner invited the
attention of the Commissioner of Income Tax to certain decisions of the Tribunal which, according to the petitioner, were favourable to him; and in
that context, he requested the Commissioner to take pity on him and do the needful. It is said that further representations to the Commissioner of
Income Tax have been made; and the Commissioner is said to have informed the petitioner that he would ""consider"" the matter. This is beside the
point, and not relevant.
Ultimately, the impugned notice dated September 18, 1967, was issued by the Income Tax Officer, Dindigul. Obviously, this notice was issued,
based upon the earlier order of this officer as against the association of persons, of which the petitioner had notice, and which became final, since
the petitioner did not appeal against the notice u/s 29 of the Income Tax Act, served on him and admitted to have been served on him. The Income
Tax Officer, Dindigul, pursuant to his earlier assessment, which has become final in the eye of law as against ""V. Muthuswami Pillai & co."" called
upon Messrs. Modern Coffee works, Jawahar Bazaar, Karur, not to pay any amounts payable by the said coffee works to the petitioner, and
served on the coffee works the usual notice u/s 226(3) of the Income Tax Act, 1961. In the said notice, the Income Tax Officer, Dindigul, noted
that a sum of Rs. 74,287.63 is due from the petitioner for and on behalf of Messrs. V. Muthuswami Pillai & Co., Dindigul, and called upon the
coffee works not to pay to him any amount due by them to the writ-petitioner up to the amount of arrears shown above. The latter part of the
notice is the follow up of the usual form prescribed. The petitioner has come to this court, under article 226 of the Constitution, standing that the
first respondent had no jurisdiction to issue the said notice and, therefore, he should be interdicted at the threshold and further action injuncted.
Learned counsel for the petitioner says that, as the petitioner did not have an effective opportunity to canvass the propriety or legality of the
order of assessment against the association of persons the later notice u/s 29 of the still later order of the Income Tax Officer, Tiruchirapalli, in
1952, whereunder there was a determination as to the status of the petitioner as ""member"" of the association of persons, cannot be taken
advantage of, nor can form the basis of the garnishee order issued by the first respondent as against the coffee works. The second contention is
that, as the earlier proceeding is violative of the rules of adequate opportunity, the entire proceedings which followed are hit by the principles of
natural justice.
I shall come to the first point later. As regards the second point, it is settled law that the doctrine of natural cannot be approached in a
doctrinaire spirit, but is purely dependent upon established and proved facts. Violation of the principles of natural justice is never assumed; but has
to be traced to existing and acceptable material, and can never be sustained, nor can it exist, in the abstract. The argument of Mr. Kesava
Ayyangar is that, as the original assessment proceedings as against the association of persons was not made in his clients presence, there has been
a failure of natural justice. This argument, on the face of it, is certainly attractive. But the gravamen of his charge is that the principles of natural
justice have been violated because he ought to have been heard by the Income Tax Officer, Dindigul, when he passed the first order of assessment
against the association of persons and that opportunity not having been given to him, the original order from which sprang the notice u/s 29 dated
September 29, 1950, is a nullity and has to be ignored for every and all purposes. I am unable to agree.
As I have already stated, the principles of natural justice can never be understood or applied in the abstract. In the instant case, when the notice
u/s 29 was issued to the petitioner, he took it lying, never appealed against it and allowed the order to become final. This conduct on the part of the
petitioner which I characterise as the ""conduct"" in the first instance, made the order of assessment against the association of persons final, effective,
enforceable and legal. He had a second opportunity at the time when the Income Tax Officer, Tiruchirapalli, acted u/s 34 of the Act and wanted to
re-open the assessment. In fact, in the re-opening proceedings, he had a real full opportunity to state his case and to demolish the case of the
revenue that he was a member of the association of persons. He no doubt attempted to do so, but miserably failed. In cross-examination, in the
enquiry, he admitted that he was a member of the association and had an aliquot share therein, that Muthuswami Pillai and others were his
associates and that the account books produced and scrutinised by the Income Tax Officer, Tiruchirapalli, disclosed the correct state of affairs.
Therefore, for a second time when the petitioner had full opportunity to disprove the case of the revenue, it was found that he was a member of the
association of persons and that there is no escapement out of that finding. In this view of the matter, it cannot be said that the principles of natural
justice are in any way violated, or that there has not been any effective opportunity given to the petitioner to prove his case that he was not a
member of the association. Therefore, I am of the view that having regard to the facts of this case wherein the petitioner did have an ample
opportunity to prove that the revenues case was wrong and that he, having failed, at every such opportunity, to establish that he was not a member
of the association, there has not been a violation of the principles of natural justice. The rule of adequacy is satisfied in the instant case, and even
so, the rule of full opportunity.
The first point is that the notice in question is issued by his Dindigul officer and it contains a demand for the payment of a much larger sum than is
actually due by the petitioner. This is really going into the merits or the contents of the impugned notice. In a writ of prohibition, this court is
concerned mainly with the fact whether the authority who issues the challenged notice, has the requisite jurisdiction to do so or whether he is
patently acting in excess of jurisdiction vested in him. It is not said before me that the first respondent has no jurisdiction to issue the notice. But
what is canvassed is that the contents of the notice suffer from some material defects, to wit, the particulars contained therein. This is no ground for
the issue of a writ of prohibition at all. Once the authority has the jurisdiction to act and once the impugned notice flows from such jurisdiction
vested in a competent officer, this court cannot interdict him at the threshold and quash the proceedings on the assumption that they are totally
devoid of jurisdiction in the eye of law.
Both the points, therefore, fail. The rule nisi is discharged. The petition is dismissed with costs. Counsels fee Rs. 250 one set.