1966 PLP 657 (PTD)

Section 64 of the Income-tax Act which deals with the place of assessment inter alia provides where an assessee carries on a `business', `profession' or `vocation' at any place assessment shall be made by the Income-tax Officer of the area in which that place is situated and where any question arises as to the place of assessment the Commissioner shall determine the question provided that "before any such question is determined the assessee shall have had an opportunity of representing his views." The section had no application as the place of assessment had not been changed in the case, but its provisions were taken into consideration as indicative of the intent of the Legislature that assessment was to be made at the place most convenient to the assessee and that in transferring a case from one jurisdiction to another the assessee should in obedience to the rule of natural justice be given an opportunity of representing, his views. Section 5 (2) was therefore to be construed against the background of section 64. The question whether the order dated the 12th December 1961, which was signed by Mr. H. U. Beg for Secretary, Central Board of Revenue, was duly made by the Board of Revenue was disposed of by the learned Judges with the remarks that the counsel for the Department had produced "a substantial mass of papers from the Income-tax Department long after the case was finally heard by us and asked us to find for ourselves whether Mr. Beg had been empowered to sign on behalf of the Board of Revenue. We, however, do not like to give any final decision on this point in view of the fact that we have already held that the impugned orders were without lawful authority". As will be seen below in the ultimate analysis this very question became determinative of the subject-matter of the appeal in this Court. Section 3 of the Central Board of Revenue Act IV of 1924, provides that the Central Government may make rules for the purposes of regulating the transaction of business by the Central Board of Revenue. In pursuance to this power the Governor-General-in-Council framed "RULES TO REGULATE THE TRANSACTION OF BUSINESS BY THE CENTRAL .BOARD OF REVENUE" published in Gazette Notification No. 756 dated the 29th March 1924, which provide as under: "(1) Save in so far as may be otherwise provided in pursuance of the power conferred by these rules, the business of the Central Board of Revenue, hereinafter referred to as the Board, shall be transacted jointly by the Members of the Board. (2) The Members of the Board may, with the previous approval of the Governor-General-in-Council, distribute among themselves the business of the Board: provided that .Member to whom any business has been allotted .under such distribution may refer any such business, other than an appeal made in accordance with the provisions of any law, for the opinion of the other Member of the Board, and that if, upon such reference being made, the opinions of the Members differ, the subject shall be referred for the decision of the Governor General in Council. (3) The orders and decisions of the Board may be issued or notified over the signature of a Member of the Board or of the Secretary to the Board." The first important feature of these rules to be noticed is that they have a statutory force and "every act done or order made in accordance with such rules shall be deemed to be the act or order as the case may be of the Central Board of Revenue". Next the text of the rules brings out that the Board acting jointly or the Member Taxation to whom it was said this particular business had been allotted could under section 5 (2) of the Income-tax Act assign the respondent's case to the Commissioner of Income-tax (Investigation), Karachi. Further the order made by the Board ' in this behalf could be issued or notified over the signature of a Member of the Board or of the Secretary to the ` Board and not by Mr. H. U. Beg who at the relevant time was as Section Officer in the Board. File No. 55(18)-ITP/61, Volume I and the notes portion produced by the learned counsel for the Department disclosed that in fact l there was no order or decision by the Board or Member Taxation in transferring cases including the case of the respondent from the jurisdiction of the Commissioner, Income-tax, East Pakistan, to the jurisdiction of the Commissioner, Income-tax (Investigation), Karachi. The sequence of relevant orders, which appear ate pages 19 to 24 of the file is as follows. On the 1st of December 1961, the Commissioner of Income-tax (Investigation), Karachi, as enclosure to his letter No. 1. T. (INV)/61 sent a list of thirty-eight cases from the charge of Commissioner of Income-tax, East Pakistan, "considered fit for allotment to the Investigation charge" and requested that necessary orders be passed assigning the jurisdiction of these cases to Commissioner of Income-tax (Investigation). Other lists of similar cases from the Central Zone, North: Zone and South Zone were, already pending with the Board for orders. On the 5th December 1961, Mr. H. U. Beg in connection with these cases recorded the following note: "M (T) wanted that we should consult C. I. T., Central, regarding the assignment of cases belonging to his charge. O. S. D. is of the view that we should send a formal letter. Please issue steno-typed letter. Please put up the file after issue." The case was marked to a Mr. Usmani, who on the 11th December 1961, "as per verbal orders" put up three draft assignment orders before Mr. H. U. Beg. On the following day the latter made a note on the file to the effect: ??????????? "C. I. T. Central has already given his consent. I have consulted Mr. K. A. Majeed, C. I. T., North Zone, on trunk telephone. He agrees to the transfer of the cases recommended by the C. I. T. Investigation. The list relating to East Pakistan has been approved by the C. I. T. East Pakistan. As regards the additional cases recommended by the C. I. T. Central we may consult the C. I. T. (Investigation). ??????????? Please issue orders and letters." ??????????? The file was sent back to Mr. Usmani who on the 12th December 1961, issued orders of assignment of cases from different Zones including East Pakistan appearing at PP. 35-43 of the file over the signature of Mr. H. U. Beg "for Secretary, Central Board of Revenue". On the 13th December 1961, the file was again put up by Mr. Usmani before Mr. H. U. Beg with the note: "As per verbal orders a draft letter is put up for favour of approval." The draft letter was addressed to the C. I. T. Central Zone, seeking his consent to the assignment of additional cases from his charge to the Commissioner, Income-tax (Investigation) as directed by Mr. H. U. Beg in his note dated the 12th December 1961. Thereafter the file loses contact with the assignment of cases from the jurisdiction of the Commissioner, Income-tax, East Pakistan, to the jurisdiction of the. Commissioner, Income-tax (Investigation), Karachi. There is no mention of the assignment lists mentioned in the note of Mr. Usmani dated the 11th December 1961, (sic') is that of the Commissioner of Income-tax (Central) and the approval relating to the East Pakistan list is by the Commissioner of Income-tax; East Pakistan. It is feasible that an order passed verbally by a competent officer is recorded by his subordinate, but in order to bear evidence of the, order having been made by him the file is put up to him for signatures. In matters, which are judicial or quasi-judicial in nature the order must, however appear in the hand and under the signature of the officer who has made it. However, in the instant case not only do the notes in the file not indicate that the impugned order was made by the Member (Taxation) but even his signatures do not appear on the margin or beneath the note of Mr. Beg dated the 12th December 1961, reproduced above. It may therefore be safely presumed that the function of the Board in this behalf was exercised by Mr. H. U. Beg in his own discretion. Further the issuance of the order dated the 12th Decembers 1961, by Mr. H. U. Beg is in breach of the mode oil authentication contained in rule 3. The order made by the Board jointly or by the Member (Taxation) should have been issued or notified under the signature of a Member or the Secretary of the Board. In the event of non-compliance with this requirement the impugned order could not be deemed to be the order of the Board. The above analysis leads to the irresistible conclusion that the order dated the 12th December 1961, transferring from ordinary jurisdiction the case of the respondent to the jurisdiction of the Commissioner of Income-tax (Investigation), Karachi, and the consequential orders by which the case was entrusted to the Income-tax Officer (Investigation), Circle III, Dacca, were without, lawful authority and of no legal effect. The finding on the supposedly subsidiary question renders it unnecessary to examine the main question raised in the order granting leave to appeal, namely, the true construction of section 5(2) of the Income-tax Act enabling the Central Board of Revenue to assign assessment cases to a Special Commissioner of Income-tax and also because since the High Court decision was given, the Legislature has by Act XVI of 1963 (Section 5) after subsection (7-A) of section 5 added an explanation that: "In this section the word "case" in relation to any person whose name is specified in any order or direction issued thereunder means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year." and added the words "any person or class of persons" in section 5 (2). Moreover, after the High Court order was made the Central Board of Revenue by Notification No. 55(18)ITP/61, dated the 28th March 1963, in pursuance to subsection (7-A) of section 5 and "in supersession of all previous orders" has transferred the respondent's case to the Income-tax Officer. (Investigation), Circle III, Dacca, and we were informed by Mr. Asrarul Hossain, learned counsel for- the respondent, that since then' the assessment for the years 1958-59 to 1960-61. (those in question before the High Court) have finalized and the demand raised in respect of the last two years paid in full. In regard to the year 1958-59 an appeal has been filed before the Appellate Assistant Commissioner, Dacca, and undisputed portion of the tax paid. The appeal had, in the circumstances, become wholly infructuous. For the foregoing reasons we find no substance in this appeal and dismiss it with costs. A. H.??????????????????????????????????????????????????????????????????????????????????????? Appeal dismissed.