# I.T.Q v. R, B. AGARWALA (Krishna Iyer, !.)

- **Citation:** [1976] 1 S.C.R. 1014
- **Court:** Supreme Court of India
- **Decided:** 1976
- **Case number:** Civil Appeal No. 318 of 1971
- **Bench:** V. R. Krishna Iyer, A. C. Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/i-t-q-v-r-b-agarwala-krishna-iyer-6463
- **Pages:** 3

## Headnote

income-tax -
Disputed ownership of bank account -
Income-tax Officer10
if bound td dete_rmine the question Gf ownership before
proceeding
against
respondent.
lncon1e-tax Act,: Section. 148.
A
There was a Bank account in which a h'uge sun11 was seen as lying in deposit.
The- assessing authority proceeded on die footing that the amount represented the
C
income- of one Madan Lal, in whose name the Bank account stood.
He contested
his ownership and urged that really this sun1 belonged to his uncle who is the
respondent in this appeal.
His contention was over-lilled by the Income-tax
Officer, bu4 in appeal, the Appellate AS>istant Commissioner set aside the order
and directed that the Income·taxl Officer do determine the real ownership of the
bank deposit.
This or<!er was mad~ in September 1970.
The respondent went
up in litigation in High Court. He succeeded in the High Court, but there was
no investigation into the basic question raised before the High Court by the
respondent that the Income-tax Officer had no furisdiction to start proceedillll"
D
under Section 148 on the score that he had no 'reasonable belief', which is the
sine qua nan for the initiation of such proceedings.
Allowing the appeal by special leave,
HIELD : Either the uncle or nephew must pay the tax under normal circumstance-. and they cannot play off one against another to defeat the claims of
the Revenue. In as much. as the High Court has disposed of this case on certain
assumptions and representations, the foundational fact of reasonable belief has
E
...
1
not been decided. Therefore, the judgment Qf the High Court has to bo set
aside and remanded to the High Cpurt for a fresb bearing on this the· founda..
J....
tional fact.
But the Incomer-tax Officer must determine the ownership of the
bank deposits withi'n six months.
[1015 E-H]

## Text

1014
. '
INCOME TAX OFFICER 'A' WARD, CALCUTTA
)'.
RAMNARAYAN BHOJNAGARWALA
September 26, 197 5
(V. R. KRISHNA IYER AND A. C. GUPTA, JJ.]
income-tax -
Disputed ownership of bank account -
Income-tax Officer10
if bound td dete_rmine the question Gf ownership before
proceeding
against
respondent.
lncon1e-tax Act,: Section. 148.
A
There was a Bank account in which a h'uge sun11 was seen as lying in deposit.
The- assessing authority proceeded on die footing that the amount represented the
C
income- of one Madan Lal, in whose name the Bank account stood.
He contested
his ownership and urged that really this sun1 belonged to his uncle who is the
respondent in this appeal.
His contention was over-lilled by the Income-tax
Officer, bu4 in appeal, the Appellate AS>istant Commissioner set aside the order
and directed that the Income·taxl Officer do determine the real ownership of the
bank deposit.
This or<!er was mad~ in September 1970.
The respondent went
up in litigation in High Court. He succeeded in the High Court, but there was
no investigation into the basic question raised before the High Court by the
respondent that the Income-tax Officer had no furisdiction to start proceedillll"
D
under Section 148 on the score that he had no 'reasonable belief', which is the
sine qua nan for the initiation of such proceedings.
Allowing the appeal by special leave,
HIELD : Either the uncle or nephew must pay the tax under normal circumstance-. and they cannot play off one against another to defeat the claims of
the Revenue. In as much. as the High Court has disposed of this case on certain
assumptions and representations, the foundational fact of reasonable belief has
E
...
1
not been decided. Therefore, the judgment Qf the High Court has to bo set
aside and remanded to the High Cpurt for a fresb bearing on this the· founda..
J....
tional fact.
But the Incomer-tax Officer must determine the ownership of the
bank deposits withi'n six months.
[1015 E-H]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 318 of 1971.
Appeal by Special Leave from the Ju.dgment and Order dated the
3rd June, 1969 of the·€alcutta High Court in Appeal No. 233 of
191ill.
.
S. P. Nayar and B. B. Ahuja for the appellants.
S .. T. Desai, H. S. Parihar and I. N. Shroff for the respondent.
The Judgment of the Court was delivered by
KRISHNA IYER, J. This is really a case where litigation would have
been avoided, had the concerned Income-tax Officer carried out the
directions issued by the Appellate Assistant Commissioner, with quick
dispatch to
determine the ownership of the, deposit in the Bank
account as between the respondent before us and his nephew Madanlal.
·
The Facts
There was a Bank account in which a huge sum was seen as lying
in deposit.
The assessing authority proceeded on the footing that
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A
I.T.Q. v. R, B. AGARWALA (Krishna Iyer, !.)
I 0 15
the amount represented the income of one Madanlal, in whose name
the Bank account stood.
He contested his ownership and urged that
really this sum _belonged :to his uncle who is the respondent before us.
Any way his co!ltention was over-ruled by the Income-tax Officer, but,
in appeal, the Appellate Assistant Commissioner set aside the order
and directed that the Income-tax Officer do determine the real ownerll · ship of the bank deposit.
This was done in September 1970. It is
admited before us that although we are in October 1975, the Income
Tax Officer has not yet determined the real ownership of the deposit
as betwe_en the uncle and the nephew.
There is no valid reason why
the Income Tax Officer should have delayed so long and indeed admi-
. nistrative officers and tribunals are taking much longer time than is
necessary, thereby defeating the whole purpose of creating
quasi-
{:
judicial Jribunals calculated to produce quick decisions, especially in
. fiscal matter. Flve years to dawdle over the decision of a small matter directed by an appellate authority amounts to indiscipline subversive of the rule of Jaw.
We hope that the Administration, takes
serious notice of delays caused_ by tax officers lethargy, under some
pretext or other, in speeding up eJ.!quiries into incomes and finalizing
assessments. _ The mere f_act that a Writ Petition was pending in the
o
High Court, especially in the background of no stay having been
granted, shows that the alibi of a High Court proceeding cannot be
successfully put forward by the Income-tax Officer for his slow motion
in settling the question directed by his Appellate Officer.
Law must
move quick not merely in the Courts but also before tribunals and
officers charged with the duty of expeditious administrative justice. We
emphasize this because if the fncome Tax Officer had fixed the ownerE
ship of the deposit years ago, maybe the respondent before us might
not have had to go up in litigation in High Court and the Income
Tax Departmeqt itself would not have had to proceed against him.
-G
IH
We have no doubt that either the uncle or nephew must pay
the tax under normal circumstances and they cannot play oft' one
against the another to defeat the claims of the Revenue.
Even so,
High Court has disposed of ~
case in appeal b~fore the Division
Bench on certain assumptions and representations, for which counsel
for the Income-tax Department was largely r!J§ponsible.
The result
is that there has been no investigation into the basic question raised
before the High Court by the respondent that the Income Tax Officer
had ne jurisdiction to start proceedings under Section 148 on the
score that he had no 'reasonable belief', which is the sine qua non
for the initiation of such proceedings.
This question remains to be
decided by the High Court.
We, therefore, set aside the judgment
of the High Court but remantl that Appeal to the High Court for
a fresh hearing on the question as to whether the foundational fact
of reasonable belief is satisfied in this case or not.
However, if the Income Tax Officer at least at this late stage
will bestir himself to adjudicate upon the ownership of the bank
de'posit and if he holds that the nephew Madanlal is the owner of
such deposit, the Writ Appeal before the High Court may not have
to be proceeded with-of course, subject to appeals that may be
1016
SUPREME COURT REPORTS
[1976] 1 S.C.R.
available to Madanlal. We direct that the Income Tax Officer determine the ownership of the bank deposits within six months from
today, anU thereafter only the Appeal before the High Court need
be considered. We may obsjlrve in conclusion that Shri S. T. Desai,
counsel for the respondent has fairly assured us that, so far as his
client is concerned, all cooperation will be available to enable the
Income Tax Officer to determine who the owner of the Bank deposit
is. Indeed he is interested in this subject matter and we hope that
such· evidence as the Income Tax Officer requires from him will be
readily forthcoming.
With this direction we allow the Appeal and
remand the case to the High Court for fresh disposal in the light
of our observations. No order as to costs.
V.M.K.
Appeal allowed;
•
'f