TMI Blog1985 (12) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act of 1922 ") and section 256 of the Income-tax Act, 1961 (hereinafter the Act of 1961 "). These appeals are by special leave from the judgments of the High Courts. The main judgment is the judgment of the Delhi High Court ([1978] 111 ITR 330) in the case of L. Bansi Dhar and Sons v. CIT (C.A. No. 1668 of 1978). The question arose in applications filed by the assessee under section 151 of the Code of Civil Procedure in two Income-tax References Nos. 82 and 83 of 1973 relating to the assessment years 1960-61 and 1962-63, respectively, praying that the High Court might be pleased to grant an order of injunction for restraining the Commissioner of Income-tax (1), Central Revenue Building, and/or his subordinate officers including the Income-tax Officer, Company Circle (III), from enforcing and/or realising the demand raised in the aforesaid assessment years 1960-61 and 1962-63, and from taking any steps for the recovery thereof till the disposal of the references pending in the High Court. The assessee is a Hindu undivided family. The karta of the Hindu undivided family is Lala Bansi Dhar. His father, Lala Murlidhar, died in the year 1949 in an air crash. On the death of the fath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the High Court. It was stated in the application for stay that for the subsequent assessment years 1963-64 and 1964-65, similar appeals had been filed by the Revenue before the Tribunal and the same were pending, that for the assessment years 1965-66 to 1969-70, however, the orders of the Appellate Assistant Commissioner were against the assessee, and the assessee-Hindu undivided family had preferred appeals to the Tribunal which were also pending, that in the said appeals preferred by the assessee-Hindu undivided family on application by the assessee, the Tribunal had granted stay of recovery of the tax demanded on the condition that the assessee should furnish adequate security to the satisfaction of the Income-tax Officer, that since the matter relating to the two assessment years (1960-61 and 1962-63) was before the High Court in references under section 66(1) of the Indian Income-tax Act, 1922/section 256(1) of the Income-tax Act, 1961, similar order of stay should be granted by the High Court and prejudice would be caused to the assessee, if in spite of full tax being paid by its karta in his personal assessment, the Hindu undivided family is asked to pay tax over aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the High Courts that pending references in income-tax matters to the courts either under section 66 of the Act of 1922 or under section 256 of the Act of 1961, the High Courts or the Supreme Court, as the case may be, have inherent powers or jurisdiction to pass any order granting stay or granting injunction staying the realisation of the amount pending disposal of the references. Incidentally, it may be pointed out that at the bar at the time of hearing of the appeals, it was stated by counsel on behalf of the assessee that in the decision of the Delhi High Court, ultimately the reference has been answered in favour of the assessee. So as far as the assessee in that matter is concerned, the question has become academic. The High Court of Delhi in its judgment had discussed all the relevant authorities. The references were pending under section 66(1) of the Act of 1922 for the first two years, in respect of similar appeals for the assessment years 1965-66 and 1969-70, the references were pending under section 256(1) of the Act of 1961. The scheme of section 66(1) of the Act of 1922 as well as section 256(1) of the Act of 1961 are well-known. The High Court note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case ". It is provided that if the amount of an assessment is reduced as a result of such reference, the amount overpaid shall be refunded with such interest as the Commissioner may allow unless the High Court, on intimation given by the Commissioner within thirty days of the receipt of the result of such reference that he intends to ask for leave to appeal to the Supreme Court, makes an order authorising the Commissioner to postpone payment of such refund until the disposal of the appeal to the Supreme Court. Section 66A provides for reference to be heard by Benches of the High Courts and appeals in certain cases to this court The provisions of the Code of Civil Procedure relating to appeals to the Supreme Court, as far as might be applied in case of appeals under the section in like manner as in the case of appeals by the High Court provided that nothing in sub-section (3) shall be deemed to have effect on sub-section (5) or sub-section (7) of section 66. Sub-section (4) of section 66A provides that where the judgment of the High Court is varied or reversed in appeal under the section, effect shall be given to the order of the Supreme Court in the manner provided in sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal. In Tata Iron Steel Co. Ltd. v. Chief Revenue Authority of Bombay [1923] 50 IA 212 (PC), the judicial Committee had to consider the question whether the function of, the High 'Court under these provisions was advisory or not. The judicial Committee decided that such advice was not a judgment within the meaning of clause 39 of the Letters Patent of the High Court of Bombay. The use of the expression " determination " was not decisive as to whether the decision was merely advisory or not. The decision or order made by the court under section 51 was merely advisory. This view was reaffirmed in CIT v. Bombay Trust Corporation [1936] 4 ITR 323 (PC). It is for this reason that section 66A of the 1922 Act expressly provided for an appeal from a decision of the High Court under section 66 of the said Act. The High Court noted that neither the 1922 Act nor the 1961 Act contained any express provision empowering the High Court or the Supreme Court to grant stay of recovery of tax pending disposal of the reference before it. The High Court in the decision under appeal held that it had inherent jurisdiction under section 66 of the 1922 Act or under section 256 of the 1961 Act to gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Code of Civil Procedure bound the courts so far as it went. The Code was not exhaustive and did not affect the previously existing powers unless it took these away; in matters with which it did not deal, the court could exercise an inherent jurisdiction to do that justice between the parties which was warranted under the circumstances and which the necessities of the case required. There was difference of opinion between Woodroffe J. and Mookerjee J. on the scope of applicability of section 546 of the Code of Civil Procedure Justice Woodroffe at page 931 of the report observed: " The court has, therefore, in many cases, where the circumstances require it, acted upon the assumption of the possession of an inherent power to act ex debito justitiae and to do that real and substantial justice for the administration, for which it alone exists." Similarly, Justice Mookerjee observed at page 941 of the report as follows "It may be added that the exercise by courts, of what are called their inherent powers' or 'incidental powers' is familiar in other systems of law, and such exercise is justified on the ground that it is necessary to make its ordinary exercise of jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, incidental powers to discharge that authority were implied in the grant of that power. This court noted that the Income-tax Appellate Tribunal was not a court but exercised judicial powers. The court noted that there were certain decisions in which difficulties were felt that the Appellate Tribunal did not possess the power to stay of recovery during the pendency of an appeal. Reference was made to a decision of the Andhra Pradesh High Court in the case of Vetcha Sreeramamurthy v. ITO [1956] 30 ITR 252 (AP), where Viswanatha Sastri J. observed that there was no conferment of an express power of granting stay of realisation of the tax, nor was there any power allowing the tax to be paid in instalments. The learned judge observed that neither the Appellate Assistant Commissioner nor the Appellate Tribunal was given the power to stay the collection of tax. Therefore, according to the learned judge, whether the law should not be made more liberal so as to enable an assessee who has preferred an appeal, to obtain from the appellate forum, a stay of collection of tax, either in whole or in part, on furnishing suitable security, was matter for the Legislature to consider. Referring to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only questions which were referred to it and not any other questions. This court was, however, of the view that the power of the court to issue a direction to the Tribunal under section 66(2) of the Act of 1922 was in the nature of a mandamus and it was well settled that no mandamus would be issued unless the applicant had made a distinct demand on the appropriate authorities for the very reliefs which he sought to enforce by mandamus and that had been refused. This question was again considered by this court in Petlad Turkey Red Dye Works Co. Ltd. v. CIT [1963] 48 ITR 92 (SC). This court observed at page 98 of the report that the jurisdiction of the High Court was confined to giving an opinion. It was purely advisory and the High Court had no jurisdiction to direct the Tribunal to take fresh evidence. In Sarathy Mudaliar v. CIT [1966] 62 ITR 576 (SC), this court noted that the High Court cannot set aside the order of the Tribunal and the High Court does not sit in appeal over the judgment of the Tribunal. If the High Court found that the material facts were not stated in the statement of case, or the Tribunal had not stated its conclusion on material facts, the High Court mig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment Syndicate v. CIT [1977] 106 ITR 653 (SC). But, as has been noticed before, the power that was exercised was for properly giving advice. The Allahabad High Court in Sridhar v. CWT [1985] 153 ITR 543, 547 (All) observed that the only power that High Court could exercise under section 27 of the Wealth-tax Act, 1957, was similar to that under section 66 of the 1922 Act, i.e., to give opinion about the questions referred to it in an advisory capacity by answering the questions in favour of the assessee or the Revenue, as the case might be. Even while hearing a reference under a taxing statute, the High Court has certain inherent powers. But the extent and scope of the inherent power which can be exercised by an appellate or revisional court cannot be the extent and the scope of the inherent power of the High Court while exercising an advisory jurisdiction such as is conferred by section 27 of the Act. The inherent power which the High Court can exercise while hearing a reference under section 27 must be confined to the procedure about the hearing of a reference and to passing such orders as are ancillary or incidental to the advice which the High Court proposes to give while ans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. The High, Court could exercise such power to grant stay, it was submitted, where the Legislature had not denied or excluded the same in unmistakable terms. But this was not clear because of the language. It was stated that pendency of a reference would not stay the realisation, indicating that reference has nothing to do with the stay of realisation. The realisation or non-realisation of tax is part of the appellate jurisdiction of the Tribunal it was, however, submitted that the inherent power of the High Court and also of the Supreme Court had not been excluded by the general provision in section 265 of the 1961 Act which stated that notwithstanding that a reference has been made to the High Court or the Supreme Court or an appeal has been preferred to the Supreme Court, tax shall be payable in accordance with the assessment made. This section, it was submitted, did not impose any embargo on the inherent power. It was submitted that section 265 of the 1961 Act, as regards reference made to the High Court, is in pari materia with section 66(7) which also related to reference to the High Court. Section 66(7) was interpreted by the Andhra Pradesh High Court in Polisetti Narayana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t did not act as court of appeal, as the Income-tax Appellate Tribunal does under section 254 of the Act. The High Court, in disposing of the reference, could only answer the questions actually referred and could not raise any question by itself. The findings of fact by the Tribunal were final so far as the High Court was concerned and only on limited grounds, such findings of fact could be challenged. After the judgment of the High Court is delivered, the Tribunal has to pass necessary orders to dispose of the case in conformity with the judgment under section 260 of the Act. The High Court exercised a very limited jurisdiction. It did not dispose of the entire matter but its decision was confined only to the questions of law as arise from the order of the Tribunal. Therefore, it could not be said that the High Court exercised its general jurisdiction under article 227 of the Constitution in dealing with a reference. If the High Court could, in such case, exercise its powers under equity jurisdiction and grant a temporary injunction or a stay, it would have to ascertain and to go into facts for which the Income-tax Act, 1961, did not make any provision. Moreover, issuance of order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without hearing or giving some additional time to file the paper book, such powers inhere to the jurisdiction conferred upon it. But such incidental powers cannot be so construed as to confer the power of stay of recovery of taxes pending a reference which lie in the domain of an appellate authority. Therefore, the concept of granting stay in a reference ex debito justitiae does not arise. That concept might arise in the case of the appellate authority exercising its power to grant stay where there is no express provision. Ex debito justitiae is to do justice between the parties. Rendering advice on the question of law referred to the courts has nothing to do with the recovery of taxes or granting stay in respect of the same. Therefore, in our opinion, it cannot be said that the High Court has inherent power or incidental power in the matter of a reference pending before it to grant stay of realisation or to grant injunction. That must remain within the jurisdiction of the appellate authority and pendency of a reference does not detract from that jurisdiction of the appellate authority. In our opinion, therefore, the High Court was in error in exercising its jurisdiction by pas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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