1971 (4) TMI 18 - HC - Income Tax

Revenue Divisional Commissioner allowed the appeal of assessee holding that the tax was not recoverable by summary certificate procedure during the pendency of the appeal by the assessee before the Tribunal - impugned application by the UOI under article 227 of the Constitution of India against an order of the Divisional Commissioner reversing the order of the Tax Recovery Officer - order of the Divisional Commissioner is set aside

Summary

Issues Involved:
1. Jurisdiction of the Revenue Divisional Commissioner
2. Recoverability of tax during the pendency of appeals
3. Interpretation of Section 265 of the Income-tax Act, 1961
4. Applicability of the legal maxim "expressio unius est exclusio alterius"

Detailed Analysis:

1. Jurisdiction of the Revenue Divisional Commissioner
The Union of India filed an application under Article 227 of the Constitution challenging the jurisdiction of the Revenue Divisional Commissioner, who reversed the Tax Recovery Officer's order. The Tax Recovery Officer had rejected the assessee's petition to postpone proceedings or withdraw the sale proclamation notice. The Revenue Divisional Commissioner allowed the appeal, holding that tax was not recoverable by summary certificate procedure during the pendency of the appeal before the Income-tax Appellate Tribunal. The High Court found that the Revenue Divisional Commissioner exceeded his jurisdiction by making this order, as the assessment remains final even during the pendency of an appeal.

2. Recoverability of Tax During the Pendency of Appeals
The High Court emphasized that once income-tax is assessed and determined as payable, it becomes recoverable if the assessee defaults. The Tax Recovery Officer can proceed with recovery unless there is a stay or cancellation of the certificate. The court rejected the contention that an assessment loses its finality or becomes irrecoverable during the pendency of an appeal. The Act provides that the assessment remains final even during appeals, and there is no provision for revival of the assessment post-appeal. The court cited Supreme Court decisions affirming the appellate authorities' power to stay recovery proceedings but clarified that the mere filing of an appeal does not affect the recoverability of the assessed tax.

3. Interpretation of Section 265 of the Income-tax Act, 1961
The High Court addressed the interpretation of Section 265, which states that tax shall be payable despite a reference or appeal to the Supreme Court. The Revenue Divisional Commissioner interpreted this to mean that tax is not payable during the pendency of earlier appeals. The High Court disagreed, stating that Section 265 does not imply that tax is unpayable before reaching the stage of reference or Supreme Court appeal. The court clarified that tax becomes payable and recoverable from the time of default in payment after the notice of demand, unless stayed by appropriate orders.

4. Applicability of the Legal Maxim "expressio unius est exclusio alterius"
The High Court rejected the Revenue Divisional Commissioner's application of the maxim "expressio unius est exclusio alterius." The Commissioner had used this maxim to argue that because Section 265 explicitly mentions tax payable during references or Supreme Court appeals, it excludes earlier stages. The High Court found this reasoning flawed, noting that the maxim is not universally applicable and should not be used to defeat the apparent legislative intent. The court cited authoritative texts and previous judgments to support its stance that the maxim should be applied cautiously and only when it aligns with legislative intent.

Conclusion:
The High Court set aside the Revenue Divisional Commissioner's order and restored the Tax Recovery Officer's decision. The court reaffirmed that assessed tax remains recoverable during the pendency of appeals unless explicitly stayed by competent authorities. The interpretation of Section 265 does not preclude recoverability at earlier stages, and the legal maxim "expressio unius est exclusio alterius" was misapplied in this context. The court's decision underscores the finality and enforceability of tax assessments even during ongoing appeals, provided no stay order is in place.