1980 (4) TMI 97 - HC - Income Tax

Issues Involved:
1. Propriety of the judgment making the rules nisi absolute.
2. Validity of the sale proclamation and subsequent objections.
3. Jurisdiction of the Certificate Officer and the Tax Recovery Officer (TRO).
4. Applicability of the Bengal Public Demands Recovery Act vs. the Income Tax Act, 1961.
5. Right of appeal under the Bengal Public Demands Recovery Act.
6. Effect of the repeal of the Indian Income-tax Act, 1922, by the Income Tax Act, 1961.

Detailed Analysis:

1. Propriety of the judgment making the rules nisi absolute:
The revenue challenged the judgment of Sabyasachi Mukharji J., which made the rules nisi obtained by the respondents absolute. The court upheld the judgment, affirming that the proceedings were correctly conducted under the Bengal Public Demands Recovery Act and not under the Income Tax Act, 1961.

2. Validity of the sale proclamation and subsequent objections:
The sale proclamation issued on September 2, 1960, for the recovery of income-tax arrears was contested by the respondents, claiming ownership of the properties. The Certificate Officer initially allowed the respondents' claim petitions, but the ITO later sought a review, which was rejected. The Presidency Divisional Commissioner subsequently directed a rehearing on the notice service issue. The court found that the proceedings under the Bengal Public Demands Recovery Act were valid and that the respondents' objections were appropriately handled.

3. Jurisdiction of the Certificate Officer and the Tax Recovery Officer (TRO):
The Certificate Officer, who was also the Additional District Magistrate and the TRO, had jurisdiction over the proceedings. The court noted that the TRO's dismissal of the respondents' claim petitions on January 9, 1970, did not transform the proceedings into those under the Income Tax Act, 1961. The TRO acted within his jurisdiction under the Bengal Public Demands Recovery Act.

4. Applicability of the Bengal Public Demands Recovery Act vs. the Income Tax Act, 1961:
The court examined whether the proceedings initiated under the Bengal Public Demands Recovery Act were transformed into proceedings under the Income Tax Act, 1961, after the latter came into force. It was determined that the new Act did not retrospectively apply to ongoing proceedings under the old Act. Section 297(2)(j) of the new Act allowed recovery under the new Act without prejudice to actions already taken under the old Act. The court concluded that the proceedings remained under the Bengal Public Demands Recovery Act.

5. Right of appeal under the Bengal Public Demands Recovery Act:
The respondents had a substantive right of appeal under the Bengal Public Demands Recovery Act, which was not taken away by the new Act. The court emphasized that a right of appeal, once accrued, subsists unless expressly or implicitly revoked by subsequent legislation. The Presidency Divisional Commissioner's dismissal of the respondents' appeals was incorrect, and the appeals were maintainable.

6. Effect of the repeal of the Indian Income-tax Act, 1922, by the Income Tax Act, 1961:
The court analyzed the effect of the repeal of the old Act by the new Act, particularly in light of Section 6 of the General Clauses Act. It was held that the repeal did not affect ongoing proceedings under the old Act. Section 297(2)(j) of the new Act did not manifest an intention to destroy old rights and liabilities, and the provisions of the old Act continued to apply to the recovery of tax dues initiated under it.

Conclusion:
The court affirmed the judgment of the learned judge, dismissing the appeal and maintaining that the proceedings were correctly conducted under the Bengal Public Demands Recovery Act. The respondents' right of appeal was upheld, and the transformation of proceedings under the old Act into those under the new Act was rejected. The appeal was dismissed with no order for costs.

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