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Judgment
Horwill, J.—The Corporation of Madras made demands for the property tax due by the respondent for the second half year of 1945-46
and the first half year of 1946-47 on 22-12-1945 and 4-7-1946 respectively. The amounts demanded were paid on 28-2-1946 and 7-8-1946
respectively. On 6-9-1946 the Corporation issued a notice to the respondent purporting to be u/s 137-B and Rules 35-3-A, Part 1-A, Schedule
IV demanding an enhanced assessment not only from the date of the notice, but also retrospectively for the two half years mentioned above. The
respondent raised various objections, the principal one of which was that he was entitled to the benefit of the proviso to Rule 3, Part I.A. of
Schedule IV. The new assessment could have effect only from the half year succeeding the half years in question, and as he had paid the
assessment for the succeeding half years, nothing further was due by him. He exhausted the various remedies act out in Schedule IV, including a
reference to the High Court under Rule 17 of Schedule iv. Although he failed in all these Courts he failed to pay the assessment demanded of him
by the Corporation for those two half years. The Corporation was thereupon constrained to file O. S. No. 1011 of 1948 in the City Civil Court,
Madras. The respondent raised the same objection as he had done in earlier proceedings, i.e., that Section 137-B had no application. The learned
City Civil Judge framed two issues only. The first was:
Is the suit claim legal and is the plaintiff entitled to demand or collect the suit amount?
The second was:
Is the suit maintainable pending the Referred Case No. 19 of 1948 on the file of ""the High Court of Judicature at Madras?
The second issue became of no consequence, in view of the fact that before the matter came on for hearing, the High Court of Judicature had
returned the reference deciding the matter before it against the respondent. So the only questions considered by the learned Additional Judge of the
City Civil Court were whether Section 137-B of the Act had any application and whether the respondent was entitled to the benefit of the proviso
to Rule 3 of Schedule IV. The learned Judge held that Section 137-B did not apply to this case. He then went on to say;
Further, under Rule 19 the assessment or demand of any tax when no application or appeal is made becomes final and inasmuch as the
assessment for the two half years had become final the plaintiff is not entitled to enhance or revise the same.
He, therefore, held that the enhancement of the tax was ultra vires and dismissed the suit.
Section 137-B enables the Corporation to assess a person to any taxes or fees leviable under that Chapter who had escaped assessment. The
question is whether it can be said that the respondent escaped assessment. It seems to me that a person can be said to escape assessment or tax if
some portion of his property has not been taxed at all. If, as is the case here, the Corporation merely thought that the assessment was too low and
ought to be raised, the words ""escaped assessment"" would be totally inapplicable Dr. John on behalf of the Corporation cited a number of cases in
support of the contention of the Corporation, such as the Commr. of Income Tax, Burma v. Dey Bros, 14 Hang 228 : A. I. b. 1996 Bang. 219 ,
Commissioner of Income Tax v. N.N. Burjorjee, 9 Rang, 161: A. i. b. 1931 Bang. 101 , Amir Singh Sher Singh v. Commr of Income Tax,
Punjab, A. i. b. 1935 Lah. 361: 158 I. C, 349, Madan Mohan Lal v. Commr. of Income Tax, Punjab, A. I. R. 1936 Lah. 7421 16 Lah. 937
These cases, far from supporting the contention of the Corporation, seem to me to be directly against it. In Commr. of Income Tax v. N.N.
Burjorjee, 9 Bang. 161; A I. R. 1931 Rang. 101 a case which has been followed in other decisions, the learned Judges say that Section 34,
Income Tax Act, applies to income which has escaped assessment, which means that a person has not been assessed at all during the year or
some portion of his income has not been included in his assessment. In the Lahore cases, especially in Amir Singh Sher Singh v. Commr. of
Income Tax, Punjab, A. I. R. 1935 Lab. 361: 158 I. C. 349, the learned Judges gave a very wide application to the meaning of the words
escaped assessment""; but in all the cases cited it was found that some portion of the income which should have been assessed was in facts not
assessed. If we apply the principle laid down in those cases to the question of property in the City, one could say that property had escaped,
assessment if the Corporation had not assessed it at all or it is had not taken into account some additions made to the property. It could not be said
that the property had escaped assessment merely because the Corporation came to the conclusion that the assessment was too low.
Dr. John for the Corporation has argued that even though it be held that the Corporation were wrong in making any reference in the notice to
Section 137-B yet it was not open to the respondent to canvass the findings of the various tribunals referred to in Schedule IV of the Act; because
it is clear from Section 410, as well as from general principles, that where the nature of the remedy is set out in the statute itself, a person aggrieved
cannot have recourse to a civil Court. It has however always been held that where the provisions of a statute have not been complied with, then the
rules laid down for remedying a wrong done in applying the rules would have no application. It is argued here that under the proviso to Rule 3 of
Part I-A of Schedule IV, since it is illegal to demand an assessment for any particular half year if the assessment is raised after demand under the
old rate has been issued, then it is open to an aggrieved party to approach a civil Court and have it declared that the Corporation acted ultra vires.
In a case like the present, where, the Corporation has filed a suit, the aggrieved tax-payer would also have a right to put forward in defence that
the Corporation had exceeded its powers. If the Corporation did not act u/s 137-B, then it had powers to enhance the tax only under Rules 3 and
3-A.
The question remains, therefore, whether any remedy has been provided in the Act when the Corporation does an act which is not warranted
under the Act. Rule 3 refers to an amendment of the register, the remedy of a party if it is not to his satisfaction being to apply under Rule 4. Rule
3-A, which deals with an increase in assessment provides within itself a remedy by way of answer to the notice of the Commissioner. His order on
an application under Rule 3-A or Rule A would be passed under Rule 13-A; and the party has further remedy under Rule 14 and then again to the
Small Cause Court; and to the High Court. If the party had objected to the new assessment, then his only remedy was to follow the procedure laid
down in Schedule IV. Rules 3 and 4 do not justify at all the giving of retrospective effect to assessment. No remedy is provided under the Rules
with regard to an illegal order giving retrospective effect to an enhancement of assessment accepted by the assessee as correct.
In my opinion, therefore, the respondent had a right of recourse to a civil Court. It is not contended that he was estopped because of the
remedies that he had pursued from putting forward his case in a civil Court.
The appeal is dismissed with costs.