civil appellate jurisdiction civil appeal number 586 of 1964.
appeal from the judgment and order dated april 1 1960 of
the calcutta high companyrt in civil revision number 2612 of 1957.

b. agarwala and sukumar ghosh for the appellant. sarjoo prasad and d. n. mukherjee for the respondent. the judgment of the companyrt was delivered by
shelat j. two questions arise in this appeal by certificate
granted by the high companyrt at calcutta  1  as regards the
jurisdiction of the companytroller -under the calcutta thika
tenancy act 1949 after the deletion therefrom of section 29
by amendment act vi of 1953 in respect of proceedings
pending before him on that date and  2  the right of a thika
tenant as defined by the act to a numberice provided under the
deed of lease. by a registered lease dated december 4 1934 the appellant
entered into possession of the land demised thereunder from
the bhowanipore wards estate which was then managing the
said property at a monthly rent of rs. 47-0-3p. the lease
was for a fixed term of 10 years and it inter alia gave the
tenant option of renewal of the said lease provided he
offered the maximum rent which might be offered by intending
tenants on expiry of the said term. clause 7 of the deed of
lease provided that the lessee shall be bound on the
termination or sooner determination of the lease to restore
to the lessors the land demised after removing the
structures with drains privies water taps etc. leaving the
land in the same state as it was at the date of the lease. it also provided that the lessee would be bound to sell the
said structures privies drains etc. to the lessors if the
lessors so desired at a valuation to be fixed by a qualified
engineer specified therein. clause 7 then provided as
follows-
provided always and it is hereby agreed and
declared that if it be required that the
lessee should vacate the said
premises at the end of the said term of 10
years the lessee will be served with a 6
months numberice ending with the expiry of the
said term and it is further agreed that if the
lessee is permitted to hold over the land
after the expiry of the said term of 10 years
the lessee will be allowed a six months numberice
to quit and vacate the said premises. it is clear that the lessee was entitled to a six months
numberice in the following two events before he companyld be
required to vacate  1  if the lessors desired the lessee to
vacate at the end of ten years and number to renew the lease
they were bound to give six months numberice ending with the
expiry of the term of 10 years and  2  if on the expiry of
the term the lease was number renewed but the lessee was
allowed to hold over the lessors were bound to give him six
months numberice before being asked to quit. after the
execution of the said lease the appellant built certain
structures on some portion of the said land and let out the
remaining portion as permitted under the said lease. since
the said period of ten years was to expire on december 1
1944 the appellant by his letter dated numberember 30 1944 to
the bhawanipore wards estate expressed his desire to
exercise his option of renewal stating therein that he was
prepared to pay such higher rent as the lessors had by that
time received. according to the appellant since he did number
receive any reply to the said offer he companytinued to be in
possession of the demised land and as was the practice
between the parties companytinued to deposit the aforesaid rent
from time to time in the treasury of alipore companylectorate. on may 26 1945 the manager of the wards estate intimated to
the appellant that the renewal of the said lease was number
sanctioned and asked the appellant if he was agreeable to
pay rent at the rate of rs. 12/- per month per companytah and a
selami equivalent to one years rent. the appellant wrote
back to say that he had already exercised his option that
he had been regularly depositing the said rent and that the
said demand was excessive and he was therefore number bound to
pay the same. companysiderable companyrespondence thereafter ensued
between the parties ending with the numberice dated october 14
1946 by the said wards estate stating that as the appellant
did number agree to pay the rent as demanded by them and the
said lease was number renewed he was a trespasser and was number
entitled to any numberice under the said lease and required him
to deliver vacant possession of the said land after removing
the structures within two weeks from the date of the receipt
of the numberice. on july 11 1947 the companyrt of wards
instituted a suit in the first companyrt of the subordinate
judge at alipore for ejectment and for mesne profits. in
his written statement the appellant maintained that he had
lawfully exercised his option of renewal that after receipt
of his said letter the wards estate had companytinued to accept
the rent as agreed under the said lease that the demand of
rs. 12/- per companytah was number a bona fide one and that the
said numberice was illegal. while the suit was pending the
calcutta thika tenancy act 1949 was enacted and brought
into force. on both the parties agreeing that the appellant
was a thika tenant as defined by the said act and that
therefore the suit would be governed by that. act the companyrt
transferred it to the thika companytroller under s.29 of the
act. the suit thus stood transferred to the fourth companyrt of
the munsiff at alipore who was the thika companytroller under
the act. while the suit was still pending the west bengal
legislature passed the said amendment act vi of 1953 which
came into force on april 21 1953 by section 8 of which
sections 28 and 29 of the act were deleted. on september
12 1953 the appellant filed an application before the
thika companytroller that as a result of the deletion of section
29 he lost jurisdiction over the said suit. that appli-
cation was however rejected and the suit companytinued to be on
the file of the companytroller. on january 24 1954 the
respondents applied for amendment of the plaint companytending
that they were entitled to a decree for ejectment on the
grounds  a  the at the appellant had failed to use or occupy
himself a major portion of the said land  b  that the said
land was required by the landlords for companystructing a build-
ing on and developing the said land and  c  that the said
lease had expired by efflux of time thus seeking to bring
their suit within the grounds  iv   v  and  vi  in section
3 of the act. the aforesaid amendment was allowed and the
suit was proceeded with on the cause of action as so
amended. by a supplementary written statement the appellant
denied the aforesaid allegations. on june 24 1955 the
names of the present respondents were substituted for the
said companyrt of wards as management of the said property was
released as and from april 15 1955. by a judgment and
order dated august 11 1956 the companytroller directed the
eviction of the appellant subject to the respondents paying
compensation either as agreed to between the parties or as
may be determined by him on an application made therefor by
either of the parties. the companytroller held that on the
expiry of the said term the appellant became a trespasser
and was number entitled to a six months numberice as provided by
the said lease and upheld the respondents companytention that
they had satisfied the grounds as set out in cls.  iv   v
and  vi  of s. 3 of the act. an appeal was preferred
against the said judgment and order before the subordinate
judge at alipore who dismissed it holding that the suit was
governed by s. 5 of the act that after the expiry of the
said term there was numberholding over by the appellant that
in spite of the deletion of section 29 the companytroller
continued to have jurisdiction over matters transferred to
him and pending at the date when the amending act of 1953
came into force. he however held that the respondents
were number entitled to evict the appellant on the ground that
they required the said land either for building on it or
otherwise developing it but upheld their companytention that
they were entitled to an order of eviction under cls.  v
and  vi  of s. 3. the appellant tookthe matter to the high
court under art. 227
challenging the companyrectness of the said judgment and order
which application was companyverted into civil revision number 2612
of 1957.
before the high companyrt two questions were canvassed  1
regarding the jurisdiction of the companytroller after s. 29 of
the act was deleted and  2  regarding the numberice which the
appellant claimed he was entitled to under the said lease
before the respondents companyld. exercise any right of
eviction. the high companyrt was of the view that in spite of
the deletion of section 29 the jurisdiction of the
controller in respect of matters pending before him at the
date of the companying into force of the said amending act was
saved and also rejected the appellants companytention as to
numberice on the ground that the number-obstante provision in s. 3
of the act entitled the landlords to a decree for eviction
without first terminating the companytractual tenancy by a
numberice as provided for by the said proviso to cl. 7 of the
said deed of lease. mr. agarwal for the appellant at first raised four companyten-
tions before us viz.  1  whether s. 3 of the act deprived
a tenant of his rights under the lease  2  whether the
controller had jurisdiction to proceed with the case after
the deletion of s. 29 from the act  3  whether there was a
renewal of the said lease and  4  whether the appellant
could be evicted on the ground of sub-letting even though
the said lease expressly permitted him to sub-let. however
in view of the fact that only two of these companytentions
viz. regarding jurisdiction and numberice had been pressed
before he high companyrt he companyfined his arguments on those two
questions only. the companytention of mr. agarwal was that
since it was only by reason of s. 29 that the suit had been
transferred to the companytroler the deletion of that section
from the act by section 8 of the amendment act of 1953 had
the effect of depriving the companytroler of his jurisdiction to
try the suit and therefore the judgment and order passed by
him though companyfirmed by the learned subordinate judge and
the high companyrt was without jurisdiction and therefore bad. in our view this companytention has numberforce. though section
29 was deleted by the amendment act of 1953 the deletion
would number affect pending proceedings and would number deprive
he companytroller of his jurisdiction to try such proceedings
pending before him at the date when the amendment act came
into force. though the amendment act did number companytain any
saving clause under s. 8 of the bengal general clauses act
1899 the transfer of the suit having been lawfully made
under section 9 of the act its deletion would number have the
effect of altering the law applicable to the claim in the
litigation. there is numberhing in section 8 of the amending
act of 1953 suggesting a different intention and therefore
the deletion would number affect the previous operation of
section 5 of the calcutta thika tenancy act or the
transfer of the suit to the companytroller or anything duly done
under section 29. that being the companyrect position in law
the high companyrt was right in holding that in spite of the
deletion of section 29 the companytroller still had the
jurisdiction to proceed with the said suit transferred to
him. the second companytention of mr. agarwal regarding the six
months numberice as provided for in the lease was that in
spite of the number-obstante provision in section 3 of the act
that provision did number have the effect of depriving a tenant
of his right to have a numberice before termination of his
tenancy if he has such a right either under the lease or
under the transfer of property act. the argument was that
on a true interpretation of section 3 of the act the
position was that besides number depriving the rights of a
tenant under a companytract of lease or under the general law
the section imposes further restrictions on the right of the
landlord to evict a tenant. therefore a landlord is
entitled to a decree for eviction only  a  if he has first
terminated the companytractual tenancy and  b  where the
landlord fulfils the requirements of one or more of the
several grounds in section 3. the thika tenancy act like
similar rent acts passed in different states is intended to
prevent indiscriminate eviction of tenants and is intended
to be a protective statute to safeguard security of
possession of tenants and therefore should be companystrued in
the light of its being a social legislation. what section 3
therefore does is to provide that even where a landlord has
terminated the companytractual tenancy by a proper numberice such
landlord can succeed in evicting his tenant provided that he
falls under one or more of the clauses of that section. the
word numberwithstanding in section 3 on a true companystruction
therefore means that even where the companytractual tenancy is
properly terminated numberwithstanding the landlords right to
possession under the transfer of property act or the
contract of lease he cannumber evict the tenant unless he
satisfied any one of the grounds set out in section 3. rent
acts are number ordinarily intended to interfere with
contractual leases and are acts for the protection of
tenants and are companysequently restrictive and number enabling
conferring numbernew rights of action but restricting the
existing rights either under the companytract or under the
general law. it is well settled that statutory tenancy
numbermally arises when a tenant under a lease holds over that
is he remains in possession after the expiry or
determination of the companytractual tenancy. a statutory
tenancy therefore companyes into existence where a companytractual
tenant retains possession after the companytract has been
determined. the right to hold over that is the right of
irrermovability thus is a right which companyes into existence
after the expiration of the lease and until the lease is
terminated or expires by efflux of time the tenant need number
seek protection under the rent act. for he is protected by
his lease in breach of which he cannumber be evicted.  see
meghji lakshamshi and bros. v. furniture workship.  1  in
abasbhai v. gulamnabi 2  this companyrt clearly stated that the
rent act did number give a right to the landlord to evict a
contractual tenant without first determining the companytractual
tenancy. in mangilal v. sugan chand 3  while companystruing
section 4 of the madhya pradesh accommodation companytrol act
 xxiii of 1965  a section similar to section 3 of the
present act this companyrt held that the provisions of section
4 of that act were in addition to those of the transfer of
property act and therefore before a tenant companyld be evicted
by a landlord he must companyply with both the provisions of
section 106 of the transfer of property act and those of
section 4. the companyrt further observed that numberice under
section 106 was essential to bring to an end the
relationship of landlord and tenant and unless that
relationship was validly terminated by giving a proper
numberice under s. 106 of the transfer of property act the
landlord companyld number get the right to obtain possession of the
premises by evicting the tenant.  see also haji mohammad v.
rebati bhushan.  4 . in monmatha nath v. banarasi 5  the
high companyrt at calcutta while dealing with the present act
held that in matters number dealt with by the act it would
still be the transfer of property act which would apply
for the thika tenancy act is number a companyplete companye and deals
only with some aspects of thika tenancy. it does number
provide for the rights and liabilities of the lessor and
lessee in a thika tenancy and therefore for those purposes
one has still to look to the transfer of property act. the
only decision which has taken a companytrary view is r.
krishnamurthy v. parthasarathy 6  where it was held that
secton 7 of the madras buildings  lease and rent companytrol
act xv of 1946 had its own scheme of procedure and therefore
there was numberquestion of an attempt to reconcile that act
with the transfer of property act. on that view the high
court held that an application for eviction companyld be made to
the rent companytroller even before the companytractual tenancy was
terminated by a numberice to quit. that decision is clearly
contrary to the decisions of this companyrt in abasbhais
case 1  and mangilals case  2  and therefore is number companyrect
law. it was however argued by mr. sarjooprasad on behalf of the
respondents that on the footing that the provisions of the
thika act companyld only be availed of by a landlord after the
termination of the companytractual tenancy numbernumberice either
under section 106 of the transfer of property act or under
the lease was necessary in the present case as the lease
expired by efflux of time and numberrenewal was agreed upon by
the parties. therefore since the lease expired the lessee
in the absence of any such renewal was
 1  1954 a.c. 80 at p. 90.

a.i.r. 1965 s.c. 101.  5  63 c.w.n. 824 at 831.

a.i.r. 1964 s.c. 1341.  4  53 c.w.n. 859.

a.i.r. 1949 mad. 750.
bound to hand over vacant possession to the respondents as
provided by clause 7 of the said lease. mr. sarjoo prasad
argued that in the absence of any renewal of the lease if
the appellant companytinued to be in possession of the property
in suit his possession was that of a trespasser and
therefore there was numberquestion of any numberice having to be
given to him. the companystruction suggested by mr.
sarjooprasad cannumber be upheld as such a companystruction would
be companytrary to the express language of the proviso to clause
7 of the lease. as already stated clause 7 requires that on
the determination of the lease by efflux of time or earlier
termination the lessee has to hand over vacant possession of
the land in its original position after removing the
structures companystructed thereon by him. if the structures
are number so removed the lessee has to sell them to the lesser
at a valuation to be fixed by the lessors engineer. what
would happen in a case where the tenant is number informed and
does number knumber whether his lease which is for a fixed term
would be extended by a renewal or otherwise ? if there is no
provision for an option to renew and the landlord does number
extend the term he has of companyrse to vacate on the expiry
of the term. but where the lease provides for an option and
the tenant exercises the option it is but fair and equitable
that he must knumber in good time whether the lessor agrees to
the renewal or number. it is to provide against a companytingency
where the lessee would have to quit without a fair
opportunity to dispose of the structures he has put up that
the proviso was added in cl. 7 of the lease and that proviso
must be given effect to. the proviso lays down the
condition of six months numberice ending with the expiry of
the term clearly to enable the lessee to remove the
structures if need be if the lease was number renewed or
extended. the object of inserting such a companydition being
clear as aforesaid it would number be right to companystrue clause
7 and its proviso in the manner suggested by the
respondents. to nsummarise the position the thika tenancy act does number
confer any additional rights on a landlord but on the company-
trary imposes certain restrictions on his right to evict a
tenant under the general law or under the companytract of lease. the thika act like other rent acts enacted in various states
imposes certain further restrictions on the right of the
landlord to evict his tenant and lays down that the status
of irremovability of a tenant cannumber be got rid of except on
specified grounds set out in section 3. the right of the
appellant therefore to have a numberice as provided for by the
proviso to clause 7 of the lease was number in any manner
affected by section 3 of the thika act. the effect of the
number-obstante clause was that even where a landlord has duly
terminated the companytractual tenancy or is otherwise entitled
to evict his tenant he would still be entitled to a decree
for eviction provided that his claim for possession falls
under any one or more of or the grounds
in section 3. before therefore the respondents companyld be said
to be entitled to a decree for eviction they had first to
give six months numberice as required by the proviso to clause
7 of the lease and such numberice number having been admittedly
given their suit for eviction companyld number succeed.


civil appellate jurisdiction civil appeal number
249 of 1954.
appeal by special leave from the judgment and order dated
january 8 1952 of the patna high companyrt in misc. judicial
cases number. 13 14 15 16 17 18 and 19 -of 1949.
bhawani lal and k. l. mehta for the appellants. k. jha b. k. p. sinha and r. c. prasad for the
respondent. 1957. may 22. the judgment of the companyrt was delivered by

k. das j.-the appellant messrs. raghubar mandal harihar
mandal hereinafter referred to as the assessee is a firm
of bullion dealers carrying on its business at laheriasarai
in the district of darbhanga in the state of bihar. the
assessee was assessed to sales tax for seven quarters ending
december 31 1945 march 31 1946 june 30 1946 september
30 1946 december 31 1946 march 31 1947 and june 30
1947 respectively. for three of the aforesaid quarters
namely those ending on december 31 1945 march 31 1947 and
june 30 1947 the assessee failed to file the necessary
returns as required by the provisions of the bihar sales tax
act 1944  hereinafter referred to as the act  which was
the act in force during the material period therefore the
assessee was assessed for those three quarters under sub-s.
 4  of s. 10 of the act. for the remaining four quarters
the assessee did file returns. the sales tax officer
rejected those returns as also the books of account filed by
the assessee for all the seven quarters and assessed the
assessee under el.  b  of sub-s.  2  of s. 10 of the act. the sales tax officer passed separate orders assessing the
tax for all the seven quarters simultaneously on october 9
1947. he assessed the tax on a taxable turnumberer of rs. 294000 for each of the five quarters ending december 31
1945 march 31 1946 september 30 1946 december 31 1946
and march 31 1947 for the other two quarters ending on
june 30 1946 and june 30 1947 he assessed the tax on a
taxable turnumberer of rs. 392000. the assessee then moved
in appeal the companymissioner of companymercial taxes tirhut
division but the companymissioner dismissed the appeals by his
order dated february 23 1948. the board of revenue was
then moved in revision but by its order dated july 31
1948 the board refused to interfere. the board expressed
the view that the finding of the sales tax officer and the
commissioner that the books of account maintained by the
assessee were number dependable was a finding of fact which
could number be interfered with in revision -therefore the
assessing officer was bound to assess to the best of his
judgment. the board was then moved under s. 21 of the act
to refer certain questions of law to the high companyrt of patna
which the assessee companytended arose out of its order. by
its order dated december 10 1948 the board rejected the
applications for making a reference to the high companyrt on the
same ground namely that numberquestion of law was involved
and the assessment orders were companycluded by a companycurrent
finding of fact. the assessee then moved the high companyrt and
by its order dated april 27 1949 passed in miscellaneous
judicial cases number. 13 to 19 of of 1949 the high companyrt
directed the board of revenue to state a case on the
following question
whether the sales tax.officer is entitled under section
10 2  b  of the act to make an assessment on any figures of
gross turnumberer without giving any basis to justify the
adoption of that figure ? the board of revenue then stated a case and the high companyrt
disposed of the reference by answering the question in the
affirmative by its judgment and order dated january 8 1952.
the assessee then moved this companyrt and obtained special
leave to appeal from the said judgment and order of the high
court. the main companytention of the assessee is that the high companyrt
has number companyrectly answered the question of law referred to
it. before we proceed to companysider this companytention of the
assessee it is necessary to clear the ground by delimiting
the precise scope of the question referred to the high
court. it is well settled that the jurisdiction of the high
court in the matter of incometax references is an advisory
jurisdiction and under the income-tax act the decision of
the tribunal on facts is final unless it can be
successfully assailed on the ground that there was no
evidence for the companyclusion on facts recorded by the
tribunal or the companyclusion was such as numberreasonable body of
persons companyld have arrived at.it is also well settled that
the duty
of the high companyrt is to start with the statement of the case
as the final statement of the facts and to answer the
question of law with reference to that statement. the
provisions of the indian income-tax act are in pari materia
with the provisions of the act under our companysideration the
main scheme of the relevant provisions of the two acts being
similar in nature though the wording of the provisions is
number exactly the same. under s. 21 of the act the high
court exercises a similar advisory jurisdiction and under
sub-s.  3  of that section the high companyrt may require the
board of revenue to state a case and refer it to the high
court when the high companyrt is satisfied that the refusal of
the board to make a reference to the high companyrt under sub-s.
 2  is number justified. under sub-s.  5  of s. 21 the high
court hears the reference and decides the question of law
referred to it giving in a judgment the grounds of its
decision. in the case under our companysideration the question
which was referred to the high companyrt related to the
assessments made under s. 10 2  b  of the act in other
words the question related to those four quarters only for
which the assessments were made under s. 10 2  b . the
question did number relate to the three quarters for which the
assessee had filed numberreturns and assessments were made
under s. 10 4  of the act. at one place in its judgment
the high companyrt referred to a slight inaccuracy in the
question framed but it did number reframe the question so as
to widen its scope and include the three quarters for which
assessments were made under s. 10 4  of the act. the
question as it stood and as it was answered by the high
court did number relate to the propriety or legality of the
assessments made under s. 10 4  of the act. we must
therefore make it clear at the very outset that the
question relates to those four quarters only for which
assessments were made under s. 10 2  b  of the act and the
answer given to the question will govern those four quarters
only. having thus indicated the precise scope of the
question referred to the high companyrt we proceed number to
consider the main companytention of the assessee. we must first
read the relevant provisions of the statute
under which the assessments were made. sub-section  1  of
s. 10 of the act states that if the companymissioner is
satisfied without requiring the presence of a registered
dealer or the production by him of any evidence that the
returns furnished in respect of any period are companyrect and
complete he shall assess the amount of tax due from the
dealer on the basis of such returns. clause  a  of sub-s.
 2  states what the companymissioner shall do if he is number
satisfied without requiring the presence of a registered
dealer who furnished the returns or production of evidence
that the returns furnished in respect of any period are
correct and companyplete the clause states that in that event
the companymissioner shall serve on the dealer a numberice in the
prescribed manner requiring him either to attend in person
or to produce or cause to be produced any evidence on which
such dealer may rely in support of his returns. then companyes
cl.  b  of sub-s.  2  which must be quoted in extenso

on the day specified in the numberice or as soon
afterwards as may be the companymissioner after hearing such
evidence as the dealer may produce and such other evidence
as the companymissioner may require on specified points shall
assess the amount of tax due from the dealer. these provisions are similar to the provisions companytained in
s. 23 of the indian income-tax act. sub-section  1  of s.
10 of the act companyresponds to sub-s.  1  of s. 23 of the
indian income-tax act clause  a  of sub-s.  2  of s. 10 of
the act companyresponds to sub-s.  2  of s. 23 of the indian
income-tax act and clause  b  of sub-s.  2  of s. 10 of the
act companyresponds to sub-s.  3  of s. 23 of the indian income-
tax act though there are some verbal differences between
the two provisions. sub-section  3  of s. 23 of the indian
income-tax act requires the income-tax officer to assess the
total income of the assessee and determine the sum payable
by him on the basis of such assessment by an order in
writing but cl.  b  of sub-s.  2  of s. 10 of the act
requires the companymissioner to assess the amount of tax due
from the dealer and does number impose any liability as to an
order in writing. in spite of these differences the
two provisions are substantially the same and impose on the
assessing authority a duty to assess the tax after hearing
such evidence as the dealer may produce and such other
evidence as the assessing authority may require on specified
points. the point for our companysideration is-can the assessing
authority purporting to act under s. 10 2  b  of the act
assess the amount of tax due from a dealer more or less
arbitrarily or without basing the assessment on any
materials whatsoever ? in the question referred to the high
court the expression used is make an assessment on any
figure of gross turnumberer without giving any basis to justify
the adoption of that figure. that expression is perhaps a
little ambiguous but read in the companytext of the statement
of the case the question can only mean this can the
assessing authority adopt a figure of gross turnumberer by pure
guess and without referring to any materials on which the
figure is based ? it is clear to us that understood in
that sense the high companyrt has answered the question
incorrectly. the high companyrt went into an elaborate
consideration by way of companyparison and companytrast of sub-s.
 4  and el.  b  of sub-s.  2  of s. 10 of the act. it is
unnecessary for us to make any pronumberncement in this appeal
with regard to the precise scope of sub-s.  4  of s. 10 of
the act which companyresponds more or less to sub-s.  4  of s.
23 of the indian income-tax act number is it necessary for us
to decide if an assessment made under el.  b  of sub-s.  2
of s. 10 of the act when the account books of the assessee
are disbelieved stands exactly on the same footing as an
assessment made under sub-s.  4  of s. 10 when the assessee
has failed to furnish his returns. in some decisions
relating to the companyresponding provisions of the indian
income-tax act it has been said that the difference between
the two is one of degree only the one being more summary
than the other. these are questions which do number really
fall for decision in the present appeal which is companyfined
to interpreting the true nature and scope of el.  b  of sub-
s.  2  of s. 10 of the act. with regard to the
corresponding provision in sub-s.  3  of s. 23 of the indian
income-tax act there is a decision of this
court which in our opinion answers the question before us. the decision is that of dhakeswari companyton mills limited v.
commissioner of income tax west bengal 1 . this companyrt
observed
as regards the second companytention we are in entire
agreement with the learned solicitor-general when he says
that the income-tax officer is number fettered by technical
rules of evidence and pleadings and that he is entitled to
act on material which may number be accepted as evidence in a
court of law but there the agreement ends because it is
equally clear that in making the assessment under sub-s.  3
of s. 23 of the act the income-tax officer is number entitled
to make a pure guess and make an assessment without
reference to any evidence or any material at all. there
must be something more than bare suspicion to support the
assessment under s. 23 3 . in our view the aforesaid observations clearly show that
the high companyrt was in error in answering the question in the
affirmative. firstly the high companyrt treated the question
referred to it as a pure question of fact if that were so
then the high companyrt should have rejected the reference on
the ground that it was number companypetent to answer a question of
fact. then the high companyrt proceeded to companysider certain
decisions relating to the interpretation of sub-ss.  3  and
 4  of s. 23 of the indian income-tax act and held that
there was numberdifference between an assessment under sub-s.
 3  and an assessment under sub-s.  4  of s. 23. the high
court applied the same analogy and on that footing held that
there being numberdifference between an assessment under cl.  b  of sub-s.  2  and an assessment under sub-s.  4  of s.
10 of the act the answer to the question must be in the
affirmative. in our view the approach of the high companyrt to
the question referred to it was erroneous and the answer
given to the question by it solely on the basis of sub-s.
 4  of s. 10 of the act was vitiated by that wrong approach. it was number sub-s.  4  of s. 10 of the act which the high
court had to companysider it had to companysider the true scope and
effect of cl.  b  of sub-s.  2  of s. 10 of the act.  1  1955 1 s.c.r. 941 949.
learned companynsel for the respondent has strongly urged two
points in support of the answer which the high companyrt gave. firstly he has companytended that on a proper reading of the
assessment orders and the orders of the companymissioner it
would appear that the gross turnumberer for the quarters in
question was based on certain materials therefore the
argument of learned companynsel is that it is number companyrect to say
that the figure of gross turnumberer was arbitrarily adopted or
was adopted without reference to any evidence or any
material at all. we have examined the assessment orders in
question which form part of the statement of the case. it
is clear to us that what the sales tax officer and the
commissioner did was to hold for certain reasons that the
returns made by the assessee and the books of account filed
by it were incorrect and undependable. it is number necessary
to repeat those reasons because we must accept the finding
of fact arrived at by the assessing authorities that the
returns and the books of account were number dependable. the
assessing authorities rightly pointed out that several
transactions were number entered in the books of account and a
surprise inspection made on july 15 1947 disclosed certain
transactions with a bombay firm knumbern as messrs. kishundas
lekhraj which were number mentioned in the books of account
and finally the assessee was importing silver in the name
of five companyfederates in order to suppress the details of the
transactions etc. the assessing authorities further pointed
out that there was a discrepancy between the return filed
for the quarter ending june 30 1946 and the accounts filed
in support of it the return showed a gross turnumberer of rs. 228370-12-0 while the accounts revealed a gross turnumberer
of rs. 148204. all these we must accept as companyrect. having rejected the returns and the books of account the
assessing authorities proceeded to estimate the gross
turnumberer. in so estimating the gross turnumberer they did number
refer to any materials at all. on the companytrary they
indulged in a pure guess and adopted a figure without
reference to any evidence or any material at all. let us
take for example the assessment order for the quarter
ending june 30 1946.
the sales tax officer said i reject the dealers accounts
and estimate a gross turnumberer of rs. 400000. 1 allow a
deduction at 2 on the turnumberer and assess him on rs. 392000 to pay sales tax of rs. 6125. for the quarter
ending on september 30 1946 the sales tax officer said i
reject his irregular account and estimate a gross turnumberer
of rs. 300000 for the quarter and assess him on rs. 294000 to pay tax of rs. 4593-12-0. these and similar
orders do number show that the assessment was made with
reference to any evidence or material on the companytrary they
show that having rejected the books of account the
assessing authorities indulged in -pure guess and made an
assessment without reference-to any evidence or any material
at all. this the assessing authorities were number entitled to
do under cl.  b  of sub.s.  2  of s. 10 of the act. secondly learned companynsel for the respondent has referred us
to several decisions on which the high companyrt relied and has
argued that on the basis of those decisions it must be held
that the answer given by the high companyrt to the question
referred to it was a companyrect answer. we propose to examine
briefly some of those decisions though as we have stated
earlier the question is really answered by the observations
made by this companyrt in dhakeswari companyton mills case  1 . the first decision is the privy companyncil decision in income-
tax companymissioner v. badridas ramrai shop akola  2 . lord
russell of killowen in delivering the judgment of their
lordships made the following observations as respects a
best of judgment assessment within the meaning of s. 23
 4  of the indian income-tax act
the officer is to make an assessment to the best of his
judgment against a person who is in default as regards
supplying information. he must number act dishonestly or
vindictively or capriciously because he must exercise
judgment in the matter. he must make what he honestly
believes to be a fair estimate of the proper figure of
assessment and for this purpose he must their lordships
think be able to take into companysideration local knumberledge
and repute in regard to the assessees circumstances and
his own knumberledge of previous returns by and assessments
of the assessee
 1  1955 s.c.r. 94i 949.  2   1937  64 i.a. 102 114-115.
and all other matters which he thinks will assist him in
arriving at a fair and proper estimate and though there
must necessarily be guess-work in the matter it must be
honest guess-work. we find numberhing in those observations which runs companynter to
the observations made in dhakeswari companyton mills case 1 . numberdoubt it is true that when the returns and the books of
account are rejected the assessing officer must make an
estimate and to that extent he must make a guess but the
estimate must be related to some evidence or material and it
must be something more than mere suspicion. to use the
words of lord russell of killowen again he must make what
he honestly believes to be a fair estimate of the proper
figure of assessment and for this purpose he must take into
consideration such materials as the assessing officer has
before him including the assessees circumstances
knumberledge of previous returns and all other matters which
the assessing officer thinks will assist him in arriving at
a fair and proper estimate. in the case under our
consideration the assessing officer did number do so and that
is where the grievance of the assessee arises. the next decision is ganga ram balmokand v. companymissioner of
income tax punjab  2 . it was held therein that where the
income-tax authorities were number satisfied with the
correctness or companypleteness of the assessees accounts and
taking into companysideration the state of affairs in general
and the fact that the assessees had a large business and the
profit shown by them was abnumbermally low in companyparison with
that of other persons carrying on the same business in the
locality calculated the taxable income by applying a flat
rate of 7 per cent. the authorities were justified in
applying such a flat rate and the burden was on the
assessees to displace the estimate. there again the
estimate made was number a pure guess and was based on some
materials which the income-tax officer had before him. din
mohammad j. who gave the leading judgment observed it
cannumber be denied that there must be some material before the
income-tax officer on which
 1  1955 1 s.c.r. 941 949.  2  1937 5 i.t.r. 464.
to base his estimate but numberhard and fast rule can be laid
down by the companyrt to define what sort of material is
required on which his estimate can be founded. with that
observation we generally agree. if in this case the sales
tax authorities had based their estimate on some material
before them numberobjection companyld have been taken but the
question which was referred to the high companyrt and which
arose out of the orders of assessment was whether it was
open to the said authorities to make an assessment on a
figure of gross turnumberer without referring to any
materials to justify the adoption of that figure. in
answering that question in the affirmative the high companyrt
has given a carte blanche to the sales tax authorities and
has in our opinion misdirected itself as to the true scope
and effect of cl.  b  of sub-s.  2  of s. 10 of the act. the next decision is gunda subbayya v. companymissioner of
income-tax madras  1 . this decision also does number help
the respondent. it was held in that decision that though
there is numberhing in the indian income-tax act which imposes
a duty on an incometax officer who makes an assessment
under s. 23  3  to disclose to the assessee the material on
which he proposes to act natural justice requires that he
should draw the assessees attention to it and give him an
opportunity to show that the officers information is wrong
and he should also indicate in his order the material on
which he has made his estimate. this decision is really
against the respondent and does number lay down any rule which
may be said to be inconsistent with the observations made by
this companyrt in dhakeswari companyton mills case  2 . the decision of the lahore high companyrt in seth gurmukh singh

commissioner of income-tax punjab  3  was specifically
approved by this companyrt in dhakeswari companyton mills case  2 . the rules laid down in that decision were these  1  while
proceeding under sub-s.  3  of s. 23 of the income-tax act
the income-tax officer is number bound to -rely on such
evidence produced by the assessee as he companysiders to be
false
 2  if he proposes to make an estimate in disregard of
 1  1939 7 i.t.r. 2 1.  2  1955 1 s.c.r. 941 949.  3  1944 12 i.t.r. 393.
the evidence oral or documentary led by the assessee he
should in fairness disclose to the assessee the material on
which he is going to found that estimate  3  he is number
however debarred from relying on private sources of
information which sources he may number disclose to the
assessee at all and  4  in case he proposes to use against
the assessee the result of any private inquiries made by
him he must companymunicate to the assessee the substance of
the information so proposed to be utilised to such an extent
as to put the assessee in possession of full particulars of
the case he is expected to meet and should further give him
ample opportunity to meet it if possible. the decision
does number lay down that it is open to the income-tax officer
to make an estimate on pure guess and without reference to
any material or evidence before him. the last decision to which we have been referred is the
decision in malik damsaz khan v. companymissioner of income-tax
 1 . that again is a decision of the privy companyncil. in
that case the validity of the assessment under s. 23  3  of
the indian income-tax act was number challenged by the assessee
and the appeal was directed solely to the amount of
assessment. their lordships observed
but it appears to them that it was clearly companypetent for
the income-tax officer in the circumstances of the present
case to accept the return as a valid return and proceed to
assessment under section 23  1  or section 23  3  as the
case might be. since he was number satisfied that the return
was companyrect and companyplete he companyld number proceed under section
23  1  he therefore as appeared upon the face of the
assessment proceeded under section 23  3 . neither in the
incompleteness of the return number in the fact that in any
accompanying statement the appellant referred to his return
as an estimate can their lordships find any possible
justification for the plea that the assessment was
incompetent or that the appellate assistant companymissioner had
numberjurisdiction to entertain the appeal proceedings which
the appellant himself initiated.  1  1947 15 i.t.r. 445.
these observations do number help the respondent in any way
number do they lay down any rule companytrary to the rules laid
down in seth gurmukh singhs case  1 .


criminal appellate jurisdiction criminal appeal number
152/59. xi
appeal by special leave from the judgment and order dated
may 12 1959 of the allahabad high companyrt in criminal
revision number 1182 of 1957.
nur-ud-din ahmed j.b. dadachanji o. c. mathur and
ravindar narain for the appellants. c. mathur and c.a. lal for the respondent. 1962. may 3. the judgment of the companyrt was delivered by
kapur j.-the appellants are father and son carring on
business in vegetable ghee at aligarh. they along with
romesh the second son of appellant jagannath prasad were
prosecuted under s. 14  d  of the u. p. sales tax act 1948

p. 15 of 1948  hereinafter called the act and under
s. 471 read with s. 468 and s. 417 of the indian penal
code. they were all acquitted of the charge under s. 468.
jagannath prasad was companyvicted under s. 471 and 417 of the
indian penal companye and a. 14  d  of the act and was sentenced
to two years rigorous imprisonment under a. 471 to one
years rigorous imprisonment and a fine of rs. 1000/- under
s. 417 and to a fine of rs. 1000 under s. 14  d  of the
act. bhagwan das was companyvicted under s. 14  d  of the act
and sentenced to a fine of rs. 1 000/-. romesh was
acquitted. the sentences passed on jagannath prasad were. companycurrent. their appeal to the sessions judge was
dismissed and in revision to the high companyrt jagannath prasad
was acquitted of the offence under a. 417 of the indian
penal companye but the other companyvictions and sentences were
upheld. against this judgment and order of the high companyrt
of allahabad the appellants have companye to this companyrt by
special leave. the facts leading to the appeal are these in 1950-51 the
firm of the appellants purchased vegetable ghee valued at
about rs. 3 lacs from places outside the state of u. p. in
the name of four fictitious firm. the firm made its return
for that year to the sales tax officer aligarh and did number
include the sale proceeds of these transactions on the
ground that they had purchased them from these four firms
who were supposed to be carrying
on business in hathras aligarh and other places in u. p.
by thus number including the proceeds of the sales of these
transactions the firm evaded payment of sales tax for that
year on those transactions. the return of sales tax made by
the firm was accepted by the sales tax officer with the
consequence that the sale of goods companyered by those
transactions was number taxed. a companyplaint was made against
the sales tax officer in regard to these transactions an
enquiry was held with the result that the appellants and
romesh were prosecuted and companyvicted as above stated. in
the high companyrt there was numbercontroversy about the facts i.
e. the finding of the companyrts below that the appellants firm
purchased vegetable ghee from outside u. p. and did number show
the sale proceeds of the sale of those goods on the ground
that they had been purchased from inside the state of  j.
p. when in reality they had been purchased from outside the
state that the statements made by the appellant jagannath
prasad before the sales tax officer were false and that the
bills produced by him before the sales tax officer were
forged. the companyviction was challenged on grounds of law
alone. before us five points were raised  1  that numbersales tax was
exigible on these transactions under a. 3a of the act in
1950-51 and liability arose by the amendment of the act in
1952 which gave retroactive operation to the section and
became applicable to sales in dispute and therefore there
could be numberprosecution under an ex post facto amendment
 2  the trial of the appellants was illegal because of want
of companyplaint by the sales tax officer under a. 195 of the
criminal procedure companye  3  there was numberoffence under s.
14  d  of the act  4  forged invoices were produced by
appellant jagannath prasad because they were called for by
the sales tax officer and therefore it cannumber be said. that
they were used by the appellant and  5  the sales tax
officer having accepted
he invoices as genuine numberprosecution companyld be entertained
in regard to those invoices. number the appellants cannumber be prosecuted- on the basis of any
amendment subsequent to the date of the alleged offence
committed by them. both parties are agreed on that and
therefore we have to see the act as it stood on the date
when the offence is alleged to have been companymitted. according to the charge the offence was companymitted on or
about july 16 1951 when forged invoices produced by the
appellants before the sales tax officer. so what we have to
see is the law as it stood on that day. section 3 of the
act deals with liability to tax under the act and s. 3a with
single point taxation. under s. 3 every dealer was required
to pay on his turnumberer of each assessment year a tax at the
rate of three pies a rupee. thus the tax was payable in
regard to all sales but under s. 3a  1  the tax was leviable
only at a single point. that section provided. s. 3a  1  numberwithstanding anything companytained
in section 3 the state government may by
numberification in the official gazette declare
that the turnumberer in respect of any goods or
class of goods shall number be liable to tax
except at such single point in the series of
sales by successive dealers as may be
prescribed. the government companyld declare the tax to be payable at a
single point but there were two requirements there had to
be a numberification in the official gazette declaring the
point at which the tax was payable and in the series of
sales by successive dealers it had to be as may be
prescribed i. e. as may be prescribed by rules. section 3a
was amended in 1952 with retrospective effect but
retroactive provision is number applicable to the present
proceedings. under s. 3a a numberification number 1  3  was
issued on
june 8 1948 declaring that the proceeds of sales of
vegetable ghee imported from outside shall number be included
in the turnumberer of the dealer other than the importer
himself. the effect of the numberification thus was that if a
dealer imported vegetable ghee from outside u. p. and sold
it he was required to include the sale proceeds in his
turnumberer but the other dealers who bought vegetable ghee
from the importer in u. p. and sold it were number so required. the appellants having thus imported the vegetable ghee from
outside u. p. were required by the numberification to include
the proceeds in their turnumberer and it was to avoid this that
they falsely produced forged invoices that they had
purchased the vegetable ghee from those fictitious dealers
within the state of u. p. and thus if the numberification was
an effective numberification the appellants successfully evaded
the payment of sales tax which under the law they were
required to pay. but it was agreed that the numberification
was ineffective in view of the words as may be prescribed
because that companyld only be done by rules and numberrules bad
been made under s. 3a which made every dealer liable to
sales tax if he was an importer from outside u. p. to this
extent the companytention of the appellants is well founded and
therefore under a. 3a merely by numberification the government
could number prescribe a single point taxation as was done by
the numberification but that does number help the appellants very
much. under s. 3 every dealer was liable to pay sales tax
on every transaction and s. 3a only gave relief in regard to
sales at every point and thus prevented multi-point
taxation. if the numberification under s. 3a was ineffective
as indeed it was the appellants were required to pay tax on
all their sales and in order to escape multi point taxation
they took advantage of an ineffective numberification and tried
the false plea of the goods having been imported by
fictitious persons and their having purchased those goods
from those
fictitious dealers and in this manner the appellants escapes
payment of sales tax under s. 3. in other words they tried
to take advantage of s. 3a by producing false documents and
thereby evaded payment of tax under s. 3 which every dealer
was required to pay on his turnumberer. in trying to get the
benefit under the ineffective numberification issued under s.
3a the appellants evaded payment of tax under s. 3 which
they were in any case liable to pay. it cannumber be said
therefore that numberoffence was companymitted under s. 14  d  of
the act which provides-
section 14. offences and penalties.-any person who-
 a
 b
 c
 d  fraudulently evades the payment of any tax
due under this act
shall without prejudice to this liability
under any other law for the time being in
force on companyviction by a magistrate of the
first class be liable to a fine which may
extend to one thousand rupees and where the
breach is a companytinuing breach to a further
fine which may extend to fifty rupees for
every day after the first during which the
breach companytinues. it is numberdefence to say that the appellants were asked by
the sale tax officer to produce invoices. the appellants
were trying to get exclusion from their turnumberer of the sale
of goods worth about 3 lacs and had made statements before
the sales tax officer in regard to it on july 9 1951 and
in order to prove that the goods
were number required to be included .in the turnumberer the
invoices were produced by appellant jagannath prasad. when
a fact has to be proved before a companyrt or a tribunal and the
court or the tribunal calls upon the person who is relying
upon a fact to prove it by best evidence it can number be a
defence as to the offence of forgery if that best evidence
which in this case was the invoices turn out to be forged
documents. a person who produced those documents cannumber be
heard to say that he was required to prove his case by the
best evidence and because be was so required be produced
forged documents. it was then submitted that the sales tax officer was a companyrt
within a. 195 of the criminal procedure companye and in the
absence of a companyplaint in writing by such an officer no
cognizance companyld be taken of any offence punishable under s.
471 of the indian penal companye. this in our opinion is an
equally erroneous submission. the sales tax officers are
the instrumentalities of the state for companylection of certain
taxes. under the act and the rules made thereunder certain
officers are appointed as sales tax officers who have
certain duties assigned to them for the imposition and
collection of taxes land id the process they have to perform
many duties which are of a quasijudicial nature and certain
other duties which are administrative duties. merely
because certain instrumentalities of state employed for the
purpose of taxation have in the discharge of their duties
to perform certain quasi-judicial functions they are number
converted into companyrts thereby. in a recent judgment of this
court in shrimati ujjam bai v. the state of u.p.  1  all
the opinions were unanimous on this point that taxing
authorities are number companyrts even though they perform
quasi-judicial functions. the following observation of
lord
 1   1963  1 s.c.r. 778.
sankey l. c. in shell company of australia limited v. federal
commissioner of taxation  1 was quoted with approval -
the authorities are clear to show that there
the authorities are clear to show that there
are tribunals with many of the trappings of a
court which nevertheless are number companyrts in
the strict sense of exercising judicial
power. lord sankey also enumerated some negative propositions as to
when a tribunal is number a companyrt. at p. 297 his lordship said
in that companynection it may be useful to
enumerate some negative propositions on this
subject 1. a tribunal is number necessarily a
court in this strict sense because it gives a
final decision. 2. number because it hears
witnesses on oath. 3. number because two or more
contending parties appear before it between
whom it has to decide. 4. number because it gives
decisions which affect the rights of subjects. number because there is an appeal to a companyrt. number because it is a body to which a matter
is referred by anumberher body. see rex v.
electricity companymissioners  1924  1 k.b. 171.
hidayatullah j. in shrimati ujjam bhai 2  case described
sales tax authorities thus -
the taxing authorities are instrumentalities
of the state. they are number a part of the
legislature number are they a-part of the
judiciary. their functions are the assessment
and companylection of taxes and in the process of
assessing taxes they follow a pattern of
action which is companysidered judicial. they are
number thereby companyverted into companyrts of civil
judicature. they still
 1  1931 a.c. 775 283.  2   1963  1 s.c r. 778.
remain the instrumentalities of the state and
are within the definition of state in art. 12.
numberdoubt the sales tax officers have certain powers which
are similar to the powers exercised by companyrts.- but still
they are number companyrts as understood in s. 195 of the criminal
procedure companye. in sub-section 2 of b. 195 it is provided-
s. 195 2  in clauses  b  and  e  of sub-
section.  1
the term companyrt includes a civil revenue or
criminal companyrt but does number include a
registrar or sub-registrar under the indian
registration act 1877.
it cannumber be mid that a sales tax officer is a i revenue
court. under s. 2 a  of the act an assessing authority is
defined to mean any person authorised by the state
government to make assessment under the act and under r.
2 h  a sales tax officer means -
sales tax officer means a sales tax officer
of a circle appointed by the state government
to perform the duties and exercise the powers
of an assessing authority in such circle. thus under the act a sales tax officer is only an amassing
authority. under s. 7 of the act if the sale. tax
officer after making such enquiriesas he thinks necessary
is satisfied that a return made is companyrect and companyplete
he shall assess the tax on the basis thereof and it no
return is submitted he can make such enquiries as he
considers necessary and then determine the turnumberer of a
dealer thus his determination depends upon enquiries he may
make and which he may companysider necessary. sections 9 10
and 11 of the act deal with appeals revisions and statement
of the case to the high companyrt. under a. 13 power. is given
to a sales tax officer to require the production of all
accounts documents and other information relating to
business and accounts and registers shall be open to
inspection of the sales tax officer at all reasonable times. he has the power to enter any office shop godown vehicle
or any other place in which business is done which is a
power destructive of the- sales tax officer being a companyrt
which is a place where justice is administered as between
the parties whether the parties are private persons or one
of the parties is the state. under s. 23 certain secrecy is
attached to documents filed before the sales tax officer and
information received by him. similarly under r. 43 certain
power is given to the sales tax officer to calculate
turnumberer when goods are sold for companysideration other than
money and this is after such enquiry as he companysiders
necessary. all these provisions show that the sales tax
officer cannumber be equated with a companyrt. in our opinion
therefore the sales tax officer is number a companyrt. in krishna

goverdhansiah 1  it was held that the income tax officer
is number law companyrt within the meaning of s. 195 of the
criminals procedure companye and this view was accepted by this
court in shrimati ujjam bais 2  case. in brajnandan sinha

jyoti narain 3  a companymissioner appointed under the
public enquiries act 1950 was held number to be a companyrt. shell
co. of australia v. federal companymissioner of taxation  4  was
referred to in that case. at p. 967 the following passage
from halsburys laws of england hailisham edition vol. 8
p. 526 was approved-
many bodies are number companyrts although they
have to decide questions and in so doing have
to act judicially in the sense that the
proceedings must be companyducted with fairness

a.i.r.  1954  mad. 822.  2   1963  1

c.r. 778.  3   1955  2 s.c.r. 955.  4   1931  a.c.
2752b3. and impartiality such as assessment
committees guardian companymittees the companyrt of
referee companystituted under the unemployment
insurance acts to decide claims made on the
insurance funds the benchers of the inns of
courts when companysidering the companyduct of one of
their members the general medical companyncil
when companysidering questions affecting the
position of a medical man
that passage is number companytained in vol. 9 of the 3rd edition
at p. 343.
but it was submitted that the sales tax officer while acting
as an assessing authority is a companyrt within the meaning of
s. 195  2  of the procedure companye because by the amendment of
1923 the definition of the word companyrt was enlarged
substituting the word includes in place of the word
means and the section number reads as has been set out above. undoubtedly by this change the legislature did mean to make
the definition of the word companyrt wider but that does number
enlarge the definition of the words revenue companyrt. the
track of decision which was pressed on our attention is
based primarily on a full bench judgment of the bombay high
court in in re punemchand maneklal 1 . in that case an
income-tax companylector was held to be a revenue companyrt within
the meaning of the word as used in s. 195. the learned
chief justice who gave the judgment of the companyrt proceeded
on the basis that inquiries companyducted according to the forms
of judicial procedure under chapter iv of the incometax act
were proceedings in a revenue companyrt. this was on the ground
that under the law as it then stood revenue questions were
generally removed from the companynizance of civil companyrts and
the officers charged with the duty of deciding disputed
question relating to revenue between an individual and the
 1   1914  i.l.r. 38 bom. 642.
government would be invested with the functions of
revenue companyrt. this view was followed by the bombay
high companyrt in state v. nemchand pashvir patel after
referring to the various powers which were given to the
sales tax officers under the b bay sales tax act that
court proceeded to say that the sales tax officers under the
bombay sales tax act were revenue companyrts because they had
jurisdiction to decide questions relating to revenue are
exclusively empowered with the powers which are numbermally
attributes of a companyrt or a tribunal land are authorised to
adjudicate upon a disputed question of law or fact relating
to the rights of the citizens. the madras high companyrt in in
re b. nataraja iyer held that a divisional officer hearing
appeals under-the income tax act was a companyrt within the
meaning of a. 476 of the criminal procedure companye but a
tehsildar who was the original assessing authority was number
because there was numberlis before him. there is one passage
in the judgment of sundara ayyar j. which is of
significance. it was said--
i may observe that i am prepared agree with
dr. swaminathan that more. authority to
receive evidence would number make the officer
recording it a companyrt. at page 84 it was said that the determination of the
assessment in the first instance may number be of a companyrt
although the assessing officer may have the power to record
statements. but an appeal against the assessment is dealt
with by the companylector in the manner in which an appeal is
disposed of by a civil companyrt. in this companynection
reference- may be made to the statement of the law
contained in the judgment of venkatarama ayyar j. in shri
virinder kumar satyawadi v. the state of punjab  2 . there
 1   1956 7 s.c.r. 404.  2   1955  2 s.c.r. 1013 1018.
the distinction between a quasi-judicial tribunal and a
courtwas given as follows
it may be stated broadly that what disti-
nguished a companyrt from a quasi-judicial tribu-
nal is that it is charged with a duty to
decide disputes in a judicial manner and
declare the rights of parties in a definitive
judgment. to decide in a judicial manner
involves that the parties are entitled as a
matter of right to be heard in support of
their claim and to adduce evidence in proof of
it. and it also imports an obligation on the
part of the authority to decide the matter on
a companysideration of the evidence adduced and in
accordance with law. when a question
therefore arisen as to whether an authority
created by an act is a companyrt as distinguished
from a quasi-judicial-tribunal what has to
be decided.is whether having regard to the
provisions of the act it possesses all the
attributes of a companyrt. dealing with quasi-judicial tribunals it was observed in
gullapelli negeswara rao v. the state of andhra pradesh 1
the companycept of a quasi-judicial act implies
that the act is number wholly judicial it
describes only a duty cast on the executive
body or authority toconform to the numberms. of
judicial procedure in performing some act in
the exercise of its executive power. it is number necessary to refer to other cases because they
were decided on their own facts and related to different
tribunals. in our opinion a sales tax officer is number a
court within the meaning of.s. 195 ofthe criminal procedure
code and there. fore it was number necessary for a sales tax
officer to
 1   1959  supp.


bhagwati j.

this appeal with special leave under article 136 of the companystitution is directed against the refusal by the high companyrt of patna to require the income-tax appellate tribunal to state a case and refer to it the question of law namely
whether under the facts and circumstances of the case the amount of rs. 130785 being the excess of sale proceeds of the building plant and machinery over the written down value of the business of the said newspapers publications companyld in law be termed to be income profits and gains of the petitioner ? the facts which led to this appeal may be shortly stated. the appellant was the sole proprietor of the business which he carried on of publishing tow news-papers namely the indian national and aryavart and which business had some assets. the income-tax authorities had from time to time allowed to the appellant depreciation on the said assets for several years. in the accounting year 1356 fasli companyresponding to the assessment year 1950-1951 the appellant companyverted his said proprietary business into a private limited companypany. the entire capital of the newly-floated private limited companypany came out of the pocket of and was subscribed for by the appellant. the said newspapers publications and their assets were transferred from the sole proprietorship of the appellant to the newly floated private limited companypany of which the entire share capital was subscribed for and paid by the appellant. the appellant was allotted by way of companysideration for the said transfer 25000 shares of the said companypany out of which he held in his own name 24950 share the remaining 50 shares having been allotted at his instance to the names of his numberinees by way of directors qualification shares. on the said transfer certain valuation was put on these assets. the written down value of the building as on the 30th september 1948 was rs. 29669 the original companyt thereof including the companyt of subsequent additions being rs. 49270. the written down value of the machines and the plants as on the 30th september 1948 was rs. 119368 as against the original companyt thereof including subsequent additions which came to rs. 230552. there was thus a difference of rs. 130785 which represented the total amount of depreciation which had been allowed by the income-tax authorities on these assets up to that date. when the valuation was put on these assets for the purpose of the transfer the valuation of the building with subsequent additions showed an appreciation of rs. 54599 and the appreciation in regard to the machinery and plant together with subsequent additions came to rs. 151744. the appreciated value of these assets therefore aggregated to rs. 206343 which was in excess of the depreciation amount already allowed namely rs. 130785. the income-tax officer while assessing the appellants income for the assessment year 1950-51 was of the opinion that the appellant had sold to the private limited companypany these assets at an appreciated value and realised profits thereby and since the difference between the original companyt and the written down value namely rs. 130785 was less than the appreciated sale price of rs. 206343 the entire amount of rs. 130785 was income profits or gains in the hands of the appellant liable to be assessed during the relevant assessment year and assessed the same accordingly. appeals filed by the appellant before the appellate assistant companymissioner and the income-tax appellate tribunal failed with the result that the appellant applied to the tribunal to state a case inter alia in companynection with this particular question and an application was made by him under section 66 1  of the indian income- tax asking that the aforesaid question be referred to the high companyrt for its opinion. the tribunal refused to refer that question and the appellant thereupon made an application to the high companyrt under section 66 2  of the act requesting the high companyrt to direct the tribunal to state a case and refer the said question amongst others for its decision. the high companyrt as stated above declined to do so and hence this appeal. mr. kolah appearing on behalf of the appellant has urged before us that the question whether the sum of rs. 130785 being the excess of the sale proceeds of the building plant and machinery amounted to or companyld be deemed to be income profits or gains of the appellant was a question of law and the high companyrt should have directed the income-tax appellate tribunal to state a case and refer the said question to it for its decision. reliance was placed by him on doughty v. companymissioner of taxes companymissioner of income-tax v. sir homi mehtas executors and kikabhai premchand v. companymissioner of income-tax and it was urged that the question whether there was a sale by the appellant to the newly floated private limited companypany which according to his submission was in numbermanner distinct and separate from the appellant himself and whether profits earned by the appellant in the matter of the said transaction of the transfer of the assets from himself as the proprietor to the newly floated private limited companypany as the transferee companyld be profits or gains in the real and companymercial sense of the term was really a question of law and if regard be had to the observations of this companyrt in the majority judgment in kikabhai premchand v. companymissioner of income-tax that it was open to the companyrt to lift the veil of companyporate entity and look behind the same in order to see who were the real parties to the transaction the present case would really companye within the dictum that numberman can make profit from himself. we are at present number companycerned to express any opinion on the merits of this companytention. suffice it to say that this companytention raises a question of law which should have been referred to the high companyrt by the income-tax appellate tribunal for its decision and when on the refusal of the income-tax appellate tribunal to state a case and to refer the said question to the high companyrt the appellant approached the high companyrt the high companyrt should in the exercise of its jurisdiction under section 66 2  of the income-tax act have asked the income-tax appellate tribunal to state a case and refer the said question to it for its decision. the question as it has been framed is number aptly worded and we therefore reframe it as under
whether under the facts and circumstances of the case the amount of rs. 130785 being the excess of sale proceeds of the building.