P L D 1960 Dacca 274 (PLP)

18. This is the decision of a Full Bench of the Lahore High Court in the case of Ravi Paint Colour and Varnish Works, Ltd. v. Federation of Pakistan (P L D 1954 Lah. 551). The proceedings in that case arose out of certain petitions filed by the Official Liquidator of the Company seeking orders for directing the income‑tax authorities to prove their claim to income‑tax before the liquidating Court and to prohibit the said authorities from taking any proceedings against the Official Liquidator. It is to be noted that in that case, as pointed by Munir, C. J., it was conceded that the Income‑tax Officer had jurisdiction to assess to income‑tax a Company in liquidation, and furthermore it does not appear from the report of that case that there was any dispute as to the assessability of the income concerned, but that the only question there was whether a winding up order had the effect of taking a Company out of the operation of the Income‑tax Act notwithstanding that it would otherwise be assessable to the tax, Soofi, J., who delivered the leading judgment in that case, after considering the decisions in the cases of Raleigh Investment Company Ltd. v. Governor‑General‑in‑Council; Commissioner of Income‑tax Punjab, North‑West Frontier and Delhi Provinces, Lahore v. Tribune Trust Lahore (P L D 1947 P C 247), Janda Rubber Works, Lid. v. The Income‑tax Officer, Salaries Section and another (A I R 1950 East Pb. 210), and Messrs Dinshaw & Co. v. Income‑tax Officer, Lucknow (A I R 1941 Oudh 260), came to the conclusion that: "Although section 67, expressly bars the jurisdiction of the Civil Courts in respect of suit only, on principle, miscellaneous proceedings, if their object be to determine any question relating to assessment in one connection or another, would also be barred." Thereafter the learned Judge proceeded to discuss and distinguish the case of the Governor‑General‑in‑Council through the Commis sioner of Income‑tax, Punjab, N.‑W. F. and Delhi Provinces, Lahore v. Sargodha Trading Company Limited, (in liquidation) through Khawja Nazir Ahmed, Official Liquidator, Lahore (I L R 24 Lah. 706), and after doing so, went on to observe that: "It should be taken as a settled proposition that where an Act of the Legislature sets up a Special Tribunal and prescribes a special procedure for the determination of rights and liabilities created by the Act, the jurisdiction of other Courts in respect of those rights and liabilities is impliedly barred, even if there be no express provision to that effect." The above observation was, in our view, obiter, for having held that the principle of section 67, also applied to proceedings other than suits it was not necessary to decide the wider question as to whether the presence of an alternative machinery would by itself be sufficient, even in the absence of any express provision to that effect in the Statute, to oust the jurisdiction of the Civil Courts. It is indeed significant that Munir, C. J., did not base his decision on this principle but rather on the concession that the taxing authorities had jurisdiction to assess a Company in liquidation, for he observed at page 568: "Once it is conceded, as it was in the course of arguments in this case, that an Income‑tax Officer has jurisdiction to assess to income‑tax a Company in liquidation, it must follow that the Company, if it is aggrieved by the assessment, must pursue the same remedies as are open to any other assessee. The mere fact that a winding up order has been made in respect of a Company does not, in the absence of an express provision to that effect, take it out of the operation of Income‑tax Statutes, and neither the Liquidation Judge nor the Liquidator acquires any right to question the correctness of the assessment otherwise than in the manner provided by the Statute under which the Income‑tax Officer has acted."

19. Having regard to the observations in the cases reported in The Colonial Bank of Australasia and John Turner, the Official Agent of the Golden Gate Gold Mining Company, Registered v. Robert Willan, a share‑holder in the said Mining Company; The Queen v. The Commissioner for Special Purposes of the Income‑tax; Secretary of State, represented by the Collector of South Arcot v. Mask & Company and Raleigh Investment Company, Limited v. Governor‑General‑in‑Council, we are inclined rather to the view that not only is the mere presence of an alternative machinery not by itself sufficient to oust the jurisdiction of the Civil Courts, but that even the existence of express provision in that behalf coupled with the alternative machinery may not always have the effect of com pletely ousting the said jurisdiction in all cases, e.g., in cases where the Statutory Tribunal or authority set up to give effect to the said alternative machinery acts manifestly in excess of the jurisdiction given to it by the Statute or purports to do that which is expressly prohibited by the Statute itself or is clearly outside the scope of the Statute.

20. This narrow or restricted view was adopted and the suit was held to be maintainable in the case of Haji Rahemtulla‑Haji Tar Mahomed and another v. Secretary of State (A I R 1926 Born. 50), where MacLeod, C. J., and Coyajee, J. of the Bombay High Court held that where the income‑tax authorities sought to levy income‑tax on the income earned by the shops, situated in the Baroda State, of a plaintiff who himself resided in Gondal State in Kathiawar, outside British India, suits for declarations that such income was not liable to be taxed in British India were not barred under the provisions of section 39 of the Income‑tax Act of 1886, because if the assessment was clearly ultra vires, the provisions of the Act would not apply.

21. Again in the case of Raja of Ramnad v. Secretary of State for India (I L R 52 Mad. 12), Debadoss and Mackay, JJ., although they held that the suit filed in that case for the recovery of certain taxes paid by the assessee under a mistake of law could not succeed, they never theless repelled the contention that a civil suit for such a relief was barred under section 52 of the Income‑tax Act of 1918, which was in the same terms as the present section 67, and observed at page 17: "If the tax was levied under the Act, no doubt, a suit would be barred, but if the assessment was made in respect of an item of income which is not assessable under the Act, a civil suit would lie to recover it, inasmuch as the officer making the assessment had no jurisdiction to make it. In cases in which the Income‑tax Officer has to decide whether a certain item of income is assessable or not, his decision cannot be said to be ultra vires even if it is illegal. But, where a certain income is outside the scope of the Act such as agricultural income not earned in or brought into British India,, any assessment in respect of such income would be outside the scope of the Act and a civil suit to recover it would not be barred by reason of section 52."

22. In this High Court also, the narrow or restricted view of the scope of section 67 of the Income‑tax Act appears to have found favour in the case of Bejoy Krishna Swarnakar and others v. Governor‑General of Pakistan, Karachi and others (P L R 4 Dacca 79), a decision to which my Lord, the Acting Chief Justice, was a party, and where it was held that a suit for "a declaration that the income derived by the plaintiffs from fish as set forth in the plait from lands described in the Schedule is agricultural income" and thus "outside the purview of the Pakistan Income‑tax Act" does not come within the mischief of section 67 as it is "neither a suit for setting aside or modifying an assessment nor is it a suit for a declaration that any of the provisions of the Act is ultra vires".

23. After a careful consideration, therefore, of the authorities referred to, we find ourselves unable to accept even the second contention of the learned Senior Government Pleader, for, in our view, the bar created by either section 67, of the Income‑tax Act or section 65 of the Agricultural Income‑tax Act, which are in identical terms, will be operative only when the subject‑matter of the suit is also a matter which falls strictly within the competence of the taxing authorities to determine, and that too only if no ques tion of fraud or abuse of the machinery provided by the Statute is involved.

24. Having come to this conclusion, it has become necessary for us now to consider the third and the last argument of the learned Senior Government Pleader which is to the effect that even adopting the above narrow construction of section 65 of the Bengal Agricultural Income‑tax Act, the present suit is barred for three good reasons. Firstly, because the suit as framed is clearly a suit for setting aside or modifying an assessment ; secondly, because the question as to whether a particular income is or is not to be included in assessing the total agricultural income of an assessee is a question which, upon the terms of the Statute, is exclusively for the taxing authorities to determine, and thirdly, because the assessee having actually preferred an appeal to the Appellate Assistant Commissioner against the said assessment had made his election to follow the special machinery provided by the Statute and should not now be allowed to re‑agitate the same matter in a Civil Court.

25. It seems to us that there is a great deal of force in this last argument of the learned advocate for the appellant. An examination of the plaint reveals that the declaratory relief claimed is in the following terms: "(a) That it may be declared that the wakf estate, being a public one, the assessment for the year 1947‑48 made on 5‑9‑50 jointly upon the income of the wakf estate and on that of the personal estate of the plaintiff is illegal, ultra vires, without jurisdiction and, as such, null and void and of no effect." This read with paragraph 15 of the plaint which is as follows: "That in view of the fact that a joint assessment including the income of the wakf estate has been illegally made, it has been necessary to seek a declaration that the same is ultra vires, without jurisdiction and unenforceable against the plaintiff and also to seek permanent injunction that the assessment may not be enforced in any way against the plaintiff "; makes it more than clear that the real grievance of the plaintiff is against the joint assessment, and hence he does not seek a specific declaration that the wakf is a public one, but the declaration that he does seek is that the assessment is illegal and ultra vires. It is, we think, rightly contended by the appellant, that the direct result of granting the declaration as prayed for in this case would be to set aside the assessment, and, as such, the suit is not only in sub stance but in form also one which is clearly hit by the provisions of section 65.

26. Mr. De, the learned advocate for the respondent, sought to distinguish the present case from those in which section 67 of the Income‑tax Act had been held to be a bar by pointing out that in all those cases there was a prayer for the refund of the tax paid. It is true that in the present case there is no prayer for the refund, but that does not, in our opinion, make any difference because on a plain reading of the plaint it is abundantly clear that the modifi cation of the assessment is the real relief sought in this suit.

27. As regards the contention that the taxing authorities were under the statute duly vested with the jurisdiction to determine whether a particular income was income derived from property wholly dedicated for religious or charitable purposes, it is pointed out to us that the language of the exemption used in the statute does not indicate that the jurisdiction of the taxing authorities has been made to depend upon the non existence of a wakf wholly for religious or charitable purposes.

28. The relevant provision of the statute creating the exemp tion is as follows: "(4) Subject to the provisions of this Act, the total agricultural income of any previous year of any person comprises all agri cultural income derived from land situated within Bengal and received by him within or without Bengal . . . . . : but does not include‑ (a) .............................. (b) any agricultural income derived from property held under trust or other legal obligation wholly for religious or charitable purposes . . . . .

29. It is argued from this that the scheme of the statute is that in assessing the total agricultural income it is the Taxing Officer who has to determine what income should be included in or excluded from such income, because unless he can do that he cannot assess the total agricultural income of the assessee. The scheme of this Act is the same as the scheme of the Income‑tax Act which the Judicial Committee held in Raleigh Investment Company Limited v. Governor‑General‑in‑Council to be "to set up a particular machinery by the use of which alone total income assessable for income tax is to be ascertained. The income‑tax exigible is determined by reference to the total income so ascer tained and only by reference to such total income." There can be no doubt that the power to ascertain the total income belongs exclusively to the taxing authorities and, as such, if in ascertaining that total income the authorities have incidentally to determine other questions upon which will depend what items of income are to be excluded therefrom, it cannot, in our opinion, be said that the determination of such questions is not within the com petence of the authorities.

30. It appears that a similar question, viz., as to whether the income of the Tribune Trust, Lahore, taxed by the Income‑tax Officer, was or was not exempt from income‑tax under clause (i) of subsection (3) of section 4 of the Income‑tax Act, 1922, arose in the case of Trustees of the Tribune Press, Lahore v. Commissioner of Income‑tax, Punjab, Lahore (66 I A 241), which came up before the Judicial Committee under the procedure of the special machinery provided by the said Act itself. The Judicial Committee ultimately decided that the Tribune Trust was a trust wholly for religious and charitable purposes and, therefore, the income of such a trust was exempt from taxation. The provisions of section 4 (3) of the Income‑tax Act, and of clause (i) thereof, relevant for our present purposes, are as follows: "4(3) Any income, profits or gains falling within the following clauses shall not be included in the total income of the person receiving them. (i) Any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes . . . . . ."

31. After the above decision of the Judicial Committee, the Trustees of the Tribune Trust who had in the meantime been also assessed for subsequent years applied to the taxing authorities for the cancellation of the said assessments which, they contended, had, in view of the decision of the Judicial Committee, become `nullities' as being without jurisdiction and outside the scope of the Income‑tax Act. The taxing authorities, although they granted a refund of the tax in respect of the year the assessment for which formed the subject‑matter of the above cited decision, declined to reopen the assessments for the subsequent years as the assessee had not taken appropriate steps in accordance with the procedure provided by the special machinery set up by the statute to keep these assessments alive and as the time for taking such steps had now long expired. This question again went up ultimately before the Judicial Committee in Commissioner of Income‑tax Punjab, North‑West Frontier and Delhi Provinces, Lahore v. The Tribune Trust, Lahore, where their Lordships repelled the conten tion that the assessment was a nullity, and observed as follows: "The first, and, perhaps, the most important question is whether the assessments were a `nullity'. This is the word ultimately chosen to express the legal conception on which the respondent founded its claim to relief. Their Lordships find some difficulty in understanding what is meant by the word in its present context. The assessments were duly made, as they were bound to be made, by the Income‑tax Officer in the proper exercise of his duty. If this Board had otherwise decided the appeal which came before it in 1939, they would have stood unquestionable and unquestioned. It does not appear to their Lordships that they were a `nullity' in any other sense than that if they had been challenged in due time they might have been set aside. But the same thing is true of every assessment which is open to successful challenge, and it is just because convenience of administration demands that the validity of an assessment shall be tested in a particular way, that the Income‑tax Act provides that way, and at the same time enacts by section 67, that it shall be tested in no other way. Their Lordships, in the course of reviewing the Act, observed upon the language of the section conferring the exemption now in question. They would repeat that they do not find in it any justification for the view that an assessment, which may ultimately be held to be invalid in that it does not give effect to the provision for exemption, is thereby rendered a `nullity'."

32. It will be observed that the above‑mentioned provisions of the Income‑tax Act, 1922, are more or less the same as those of clause (b) of section 4 of the Bengal Agricultural Income‑tax Act set out earlier in this judgment, and, as such, a decision on a con struction of the above provisions will be equally applicable to the case of the statute under consideration. In view, therefore, of the clear expression of opinion by the Judicial Committee that "the assessments", which their Lordships had themselves earlier declared to be illegal, "were duly made, as they were bound to be made, by the Income‑tax Officer in the proper exercise of his duty", we feel that this contention of the appellant must also be given effect to, and we must hold that in determining, whether a particular income is to be included in the total income or not, the taxing authorities are also competent to determine all questions necessary for coming to that decision.

33. The learned advocate for the respondent made no attempt whatsoever to distinguish the cases relied upon by the appellant but he nevertheless sought to contend that the Agricultural Income‑tax authorities had no jurisdiction to determine the nature of the wakf, not because of any of the provisions of the Agricultural Income- tax Act, but because of the provisions of the Bengal Wakf Act (XIII of 1934). According to him, since the wakfs in question had been duly recognised, controlled and registered at the office of the Commissioner of Wakfs Bast Bengal, as public wakfs there had, in accordance with the terms of section 46 of the Bengal Wakfs Act, been a decision of the question as to whether the wakfs in question are wakfs‑ala‑aulad or not, and such decision having been made final by the said section, subject only to revocation or modification by a competent Court, the taxing authorities set up under another law of the same provincial Legislature cannot have any jurisdiction to decide the said question over again. When we enquired from the learned advocate, if it was necessary that the decision under the said section 46‑A should be a judicial one, and whether it should also be upon the particular points mentioned in the section before any finality could be said to attach to it, the learned advocate drew our attention to subsection (5) of section 44 and clause (a) of sub section (1) of section 27 of the said Act, and argued that these provisions indicated that the scheme of the Bengal Wakf Act was that there should first be a preliminary survey of the wakf properties in Bengal, then a proper determination of the nature and extent of such wakfs after investigation, and that for the purposes of determining the annual contribution payable under section 59 of the said Act, there must in each case, before the enrolment of the wakf, be made an enquiry into and a decision arrived at as to the nature of the wakf, for, upon that would depend the rate of the contribution. As such, he maintained that even an administrative order for the enrolment of a wakf involved a decision as to whether the wakf was a wakf‑ala‑aulad or not, which under section 46‑A, had been made final.

34. In support of this contention, the learned advocate referred us to the case of Sahebzada Hafiz Syed Mohammad Hashmi v. The Commissioner of Wakfs, Bengal (51 C W N 267), and relied on the following observation of Khundkar, J., at page 270: "The words of the section show that the decision of the Commissioner is nothing more or less than formation of an opinion by him regarding any question, whether a particular property is wakf property or not, or whether a wakf is a wakf alai‑aulad or not. The section enacts that such an opinion once formed by the Commissioner shall have final effect unless revoked or modified by a competent Court." The question that fell to be decided in that case was whether the procedure by way of an originating summons, available on the original side of the Calcutta High Court, to, amongst some other specified class of persons, trustees and beneficiaries under turst instruments to have questions arising in the administration of the trust determined, sufficient for the purposes of having a decision of the Commissioner under the said section 46‑A revoked. Khundkar, J. held that the Court answering a question under an originating summons was a competent Court for the purposes of the said section and if the question, whether the wakf is a wakf alai‑aulad falls within the scope of the question raised in the summons, then the opinion of the Court upon it will have the effect of revoking or modifying the opinion of the Commissioner of Wakfs. The observation relied upon by the learned advocate is, therefore, only in the nature of an obiter dictum. Furthermore, it also seems to run counter to an earlier decision of the same High Court in the case of The Commissioner of Wakfs, Bengai v Sahebzada Md. Jahangir Shah (48CWN 157), which does not appear to have been placed before Khundkar, J. In that case, Mukherjee and Pal, JJ., held that the decision contemplated in section 46‑A of the Wakf Act must be a quasi‑judicial decision, and that an ex‑parte order for the enrolment of a wakf was not such a decision.

35. Be that as it may, this contention of the learned advocate, even if accepted, does not help him, for a decision under section 46‑A, that a wakf is not a wakf‑alai‑aulad merely amounts to this that less than 75 per cent. of the net income of the wakf concerned is available to the wakif and the members of his family, for, under clause (ii) of section 6 of the Wakf Act, a ' wakf‑alal- aulad has been defined as a wakf under which not less than 75 per cent. of the net income is so available to the wakif and the members of his family. Such a decision can by no means amount to a decision as to whether the income derived from the wakf is held wholly for religious or charitable purposes so as to be entitled to the exemption granted by clause (b) of section 4 of the Bengal Agricultural Income‑tax Act. The finality, if any, attaches, in our opinion, to a decision under the said section 46‑A, of the Wakf Act which is confined to a decision upon the specific issues mentioned in the said section itself and since the subject‑matter of the enquiry contemplated under section 4 (b) of the Bengal Agricultural Income‑tax Act is not the same as of a decision on the said issues, it cannot be said that the taxing authorities by enquiring into the latter question could in any way be affecting the finality of the question decided under section 46‑A by the Commis sioner of Wakfs. In these circumstances, we do not consider this contention of the learned advocate for the respondent to be of any substance whatsoever and hold that neither the decision of the Commissioner of Wakfs that the wakf is not a wakf‑alal‑aulad nor the enrolment nor registration of the wakf as a public wakf in the office of the Commissioner of Wakfs in any way affects the juris diction of the taxing authorities under the Bengal Agricultural Income‑tax Act.

36. Having come to the conclusion, therefore, that the Agricultural Income‑tax authorities were, in making the assessment, also competent to enquire into the question as to whether the income derived from the wakfs in question was held wholly for religious or charitable purposes or not in order to find out the total income liable to taxation, we are also of the opinion that the present case falls within the second category mentioned by Lord Esher in the case of The Queen v. The Commissioner for Special Purposes of the Income‑tax, and, therefore, since the taxing authorities have in the present case made an assessment under the said Act, a suit to have such an assessment declared illegal is clearly barred by section 65 thereof. Since we have also held that the present suit as framed is a suit in substance for setting aside an assessment, our conclusion must also be that the present suit is barred by reason of the provisions of section 65 of the Bengal Agricultural Income‑tax Act.

37. There remains now one other question which needs to be noticed. The appellant has also urged, as a last ground for not allowing the plaintiff to maintain this present suit, the fact that after the assessment for the year 1947‑48, the assessment under dispute in this suit, had been made, the plaintiff on the 30th October 1950, actually preferred an appeal against the said assess ment before the Appellate Assistant Commissioner in accordance with the procedure provided by the Statute. The appellant contends that, by doing so, the plaintiff elected his remedy and, having done so, he could not again institute this suit during the pendency of that appeal. It is argued that where two alternative remedies are available to a party, he must elect to seek one or the other, and if he makes his choice and takes steps to seek one of the remedies, viz., that given by the special procedure laid down in the Statute, he should not again be allowed a further opportunity to litigate the same matter in the ordinary Courts vide: Bhandi Singh v. Ramadhin Roy (10 C W N 991). In the present case, however, since we have on other grounds already come to the conclusion that the plaintiff's suit is barred by section 65, we do not consider it necessary to enter upon an examination of this question.

38. Before, however, we part with this case, we would like to point out that, curiously enough although in the plaint there were no reliefs claimed for the recovery of any money, the decree ran as follows: " "It is ordered and decreed that the suit be decreed after contest with costs. It is hereby declared that the endowments in question are public wakfs wholly for religious or charitable purposes, and that the assessment made by the Agricultural Income‑tax Officer for the year 1947‑48 was ultra vires and with out jurisdiction. The defendant is permanently restrained from enforcing the assessment against the plaintiff by any illegal process. Decretal amount to be paid within 3 (three) months from the date of drawing up of the decree and that the sum of Rs. 895 (Rupees eight hundred and ninety five only) be paid by the defendant to the plaintiff on account of the costs of this suit." We were at a loss to understand to what decretal amount this decree referred and we enquired from the learned advocates for the parties appearing as to what it could be. We are informed today by the learned Senior Government Pleader that possibly it refers to the recovery of the amount of the tax assessed which was paid in accordance with the provisions of the Bengal Agricultural Income‑tax Act before the appeal under the said Act was preferred. The learned Senior Government Pleader sought to use this also as an argument for saying that there was no difference between this suit and the suit under consideration in the case of Raleigh Invest ment Company, Limited v. Governor‑ General‑ in‑Council, which had been characterised by the learned advocate for the respondent as a suit for the refund or recovery of the tax already paid. We, however, must point out that the nature of a suit cannot depend upon the decree actually made in the suit or the result of the suit itself. We have discussed what, in our opinion, is the nature of the suit earlier in this judgment, basing our decision on the allegations contained in the plaint. We do not consider it necessary now to go into the question as to whether this suit was a suit for the refund of the tax already paid, for this question would not, in our opinion, make any difference in the decision to which we have already arrived.

39. In the result, therefore, this appeal succeeds and is allowed with costs. The judgment and decree of the trial Court are set aside and the suit is dismissed. The appellant will get his costs throughout. AMIN AHMAD, A. C. J.‑I agree. K. B. A. Appeal allowed.