TMI Blog1957 (4) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... ly made. The first assessment, which was for the assessment year 1942-43 was made on the basis that the firm was a registered firm and the assessments for the two subsequent years were also made on the same basis. On the 9th of July, 1947, the firm submitted its return for the assessment year 1945-46 and the total income shown by that return was ₹ 33,105. By an amended return filed on the 26th of January, 1948, the income was raised to ₹ 33,308. The Income-tax Officer made his assessment on the 29th of March, 1950, but in doing so, he refused renewal of registration and determined the assessable income at ₹ 10,23,888 as against the returned income of ₹ 33,308. The tax payable on the income, so determined, was ₹ 8,67,239-10-0. By a notice dated the 30th of March, 1950, issued under section 29 of the Income-tax Act, the firm was called upon to pay the tax assessed on or before the 20th of April, 1950. The firm preferred an appeal, both against the order of assessment and the order refusing renewal of registration, but it did not remain content with pursuing those remedies provided for by the Act itself. On the 20th of July, 1950, it moved this court u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m on the 1st of August, 1952. On being served with the notice under section 7, the firm filed its objection under section 9 of the Public Demands Recovery Act on the 19th of August, 1952, and denied liability for the tax debt claimed. While that objection was pending, the firm's appeals against the assessment and the refusal of registration were disposed of by the Appellate Assistant Commissioner by an order passed on the 29th of November, 1952. The refusal of registration was upheld, but the assessment was reduced by ₹ 10,756. By a letter dated the 10th of April, 1953, the Income-tax Officer informed the certificate officer of the reduction of the assessment from ₹ 8,67,239-10-0 to ₹ 8,56,987-13-0. The proceeding was so long in the hands of Mr. S.C. Das Gupta. On the 9th of October, 1953, one Mr. D. Ghosh, a retired member of the Indian Administrative Service, was appointed certificate officer and Additional District Magistrate (ex-officio) , 24-Parganas, in connection with the disposal of pending income-tax certificate cases in the said district, with effect from the date on which he takes over charge. In due course, Mr. Ghosh assumed charge of this off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile a copy of the Tribunal's order and the order recorded by the certificate officer on the 12th of July, 1954, shows that a copy had been filed as directed. It was thus not merely the Income-tax Officer, but the firm also who was asking the certificate officer to take note of the reduction of the demand. On hearing the parties, the certificate officer directed that the certificate should be amended so as to show the total demand as ₹ 7,23,990-10-0 and the composition of that amount as indicated by the certificate officer was also to be shown. At the hearing on the 12th of July, 1954, the lawyer for the firm also pointed out that the notice under section 7, already served on his. client, was not a proper notice, because the signature of the certificate officer was in rubber stamp and, therefore, the position in law was that his client had never been served with a proper notice under section 7 at all. The certificate officer accepted that contention and directed the issue of a fresh notice. In pursuance of that direction, a fresh notice under section 7 was issued on the following day. It was signed by Mr. D.K. Ghosh. The fresh notice under section 7 together with a copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistrate, he was appointed an Additional District Magistrate without having been previously appointed a magistrate of the first class. His appointment as Additional District Magistrate was thus invalid, in view of the provisions of section 10(2) of the Criminal Procedure Code and consequently if he never became an Additional District Magistrate, he could not properly be vested with the powers of a certificate officer. Sinha, J., accepted that contention and held that the first appointment of Mr. D.K. Ghosh was invalid, as contended by the appellant, and consequently all that he had done with respect to the proceedings before the date of his second appointment was void and of no effect. Mr. Meyer, who appeared for the respondents, contended before us, though somewhat faintly, that even the first appointment of Mr. D.K. Ghosh was a valid appointment, because his appointment as an Additional District Magistrate implied and carried with it an appointment as a magistrate of the first class. That contention, in my view, is not tenable, because under section 10(2) of the Criminal Procedure Code, the State Government can only appoint any magistrate of the first class to be an Additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor under the provisions of section 3(3a) by virtue of his appointment as an Additional District Magistrate, Mr. Ghosh thus became a certificate officer under the provisions of section 3(3). It can, therefore, by no means be said that even after his second appointment as an Additional District Magistrate, Mr. Ghosh never acquired the status of a certificate officer and was never validly appointed as such. Indeed, in view of the provisions of the Public Demands Recovery Act, no special appointment as certificate officer was required to make Mr. Ghosh a certificate officer after he had been appointed an Additional District Magistrate. Before the learned trial Judge, some reference seems to have been made to the definition of Collector in the Bengal General Clauses Act. It is not easy to see for what purpose the definition in the General Clauses Act was invoked. The Public Demands Recovery Act now gives its own definition of Collector and if it does, it is not only inappropriate but altogether wrong to import the definition given in the Bengal General Clauses Act. The definitions in the General Clauses Act are, as the prefatory words of the definition section make it clear, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in the Indian General Clauses Act which, it appears, is the same as that given in the Bengal General Clauses Act. In the petition under article 226, filed on behalf of the firm, it seems to have been suggested that the certificate under section 46(2) was never sent to any Collector, because, by reason of the definition given in the Indian General Clauses Act, the Collector would have to be the Collector of Calcutta, but there was, in the first place, no Collector of Calcutta and, secondly, the certificate had in fact been sent to the Collector of 24-Parganas. That objection is completely met by the notification of the 31st of May, 1875. I do not know whether any point was raised before Sinha, J., as regards the status of the officer to whom the certificate under section 46(2) had been sent, but his judgment gives no indication that any such point was raised. If the sole point raised was about the status of the officer who was dealing with the certificate under the Public Demands Recovery Act, the reference to the definition given in the Bengal General Clauses Act was, as I have already pointed out, unnecessary and inappropriate. The provisions of the Public Demands Recovery Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken as a ground of objection that even a Collector, validly appointed to his office, could not withdraw a certificate case from another certificate officer, the respondents might have made the necessary enquiries and shown that there was some rule or administrative order or some other reason by or for which the withdrawal was justified, if there was a withdrawal. It will be remembered that the original order of appointment purported to appoint Mr. Ghosh a certificate officer in connection with the disposal of pending income-tax certificate cases in 24-Parganas. Mr. Meyer contended that although those words were not repeated in the second order of appointment, there might have been a similar allotment of duty or powers by a separate order even on the second occasion or it might have been shown, if such was the fact, that after he had been appointed a second time, there was no other certificate officer at the station and being the sole certificate officer, the case naturally went to him. In my view, the objection taken by Mr. Meyer is a proper objection and must be upheld. The argument before us assumed that there had been a second order of withdrawal and it was said that eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the certificate should be filed under section 4 of the Public Demands Recovery Act and not under section 6. It is, therefore, possible to say, in view of the provisions of section 46(2) of the Income-tax Act, that the Collector retains his jurisdiction up to the last to recover the amount of the tax from the debtor and that he has always the jurisdiction to withdraw a certificate proceeding relating to such a debt to his own file, even if he may not have a general jurisdiction. If the question had been a pure question of law, it might have been allowed to be raised even in appeal, but, as I have pointed out, various possibilities as to the factual position are conceivable and, in my view, it would be altogether wrong to proceed to decide a question which was never raised in the pleadings and in regard to which the actual facts have neither been investigated nor been found. There appears to have been a casual reference before the learned Judge to the power of the Collector to transfer a case which he did not seriously entertain and which he disposed of by saying that it was a matter of administrative arrangement. That casual reference does not obviate the difficulty in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant was that where an assessment was reduced in appeal, but the appellate order did not contain any of the particulars mentioned in section 45, a fresh notice of demand under section 29 was required to be issued in order to make the tax assessed due and payable and where no such notice was issued, no default justifying the signing of a certificate under section 46(2) could in law be said to have been committed. In my view, this contention of the appellant is not tenable. It is true that by reason of the failure to adjust section 45 to the amendment of section 29, the position with regard to a notice of demand is in a somewhat confused state, but that confusion does not affect the question which calls for decision in the present case. Before its amendment, section 29 required the Income-tax Officer to serve a notice of demand only when a certain sum had been determined to be payable under section 23 or when an order had been passed under sub-section (2) of section 25 or section 28. In other words, the application of section 29 was limited to the amount payable under an assessment order or under an order of penalty. The appellate orders passed when section 29 was expressed in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The next reduction was to a sum of ₹ 8,56,987-13-0. The last reduction was to a sum of ₹ 7,23,990-10-0 and that is the sum which is now being sought to be realised by means of the certificate proceeding. The demand for ₹ 8,67,239-10-0 comprised within it a demand for ₹ 7,23,990-10-0 and so far as the liability to pay that sum within the 20th of April, 1950, is concerned, it was in no way affected by the subsequent orders of the appellate authorities. In any event, even according to the order of the last Appellate Tribunal, the appellant firm was always liable to pay a sum of ₹ 7,23,990-10-0 and that sum it had been required to pay by a proper notice of demand within a certain time. That amount, therefore, became payable upon the service of the notice of demand and not having been paid within the time given, a default in respect of it arose. It is true that the certificate signed by the Income-tax Officer is in respect of a larger sum, but so far as it is a certificate in respect of ₹ 7,23,990-10-0, it remains valid and the only effect of the reduction is that the demand in respect of the difference between ₹ 8,67,239-10-0 and the sum now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of demand under section 29 and recovery proceedings had to be initiated within the time limited by section 46(7), as computed by reference to the date of that notice. The Income-tax Officer, it was further contended, had no jurisdiction to grant himself successive extensions of time by issuing successive notices of demand as soon as a fresh order was made by one appellate authority or another. In those circumstances, the court had to decide whether the second and the third notices issued by the Income-tax Officer were unwarranted by law and the answer given was that they were not unwarranted. The real point, however, is I observed, whether a second or a third notice of demand is at all permissible under section 29, even when an assessment is altered in a first or second appeal. The question, therefore, was not whether a second or a third notice was compulsorily required by law, but whether a second or a third notice was permissible. It was contended that there was no necessity to issue a second or third notice even when the income, as assessed by the Income-tax Officer, was reduced by an appellate authority and it was with reference to that contention that I observed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of the amount by which the original assessment is enhanced is necessary. That is because unless a second notice with respect to that amount is given there will not be any demand in respect of that amount at all. But far different is the case where the amount of the original assessment is reduced on appeal. In such a case, by being asked to pay the larger amount mentioned in the notice of demand issued in accordance with the assessment order, the assessee has also been asked to pay the smaller amount to which the assessment is subsequently reduced in appeal, because the latter is included in the former. As soon as the notice of demand was served upon him, a liability arose to pay every pice of the demand so long as the demand stood. If subsequently the demand is modified on appeal and the amount of the tax payable is reduced, all that happens is, the liability sought to be imposed by the notice of demand, in respect of the amount by which the assessment is reduced, is found to have never been a liability at all, but the liability in respect of the remainder which stands unaffected by the appellate order remains. It is perfectly true, as was contended on behalf of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view taken by him, even if the matter fell to be judged by the terms of section 46 alone, because it seems to me that the scope of section 46(2) and the powers of the Collector or a certificate officer with respect to a certificate forwarded under that section are not co-extensive with the scope and the powers contemplated by section 46(5A). The utmost that the Collector or a certificate officer can do under section 46(2), read with the Public Demands Recovery Act, with respect to persons from whom money is due to the certificate debtor, is to prevent them making any payment to him. If they pay to the Collector or the certificate officer, he may also grant them a valid acquittance, but there does not seem to be any power to compel such persons to pay the money owing by them to the certificate debtor and it is that power which is conferred on the Income-tax Officer by section 46(5A). It is, however, not necessary in the facts of the present case to define the notices issued under section 46(5A) by reference to the scope of the section, because the explanation to sub-section (7) of the section furnishes a complete answer to the contention of the appellant firm. That explanation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to recover the taxes through certificate officer expeditiously. Issue notice under section 46(5A) to the liquidator, B.T.A., 35, Chittaranjan Avenue, with copy to the assessee. I shall direct issue of some other 46(5A) notices very shortly. It will thus appear that the Income-tax Officer applied his mind to the question and when he found that the original notice issued under section 7 was defective and, therefore, a great deal of delay would occur in recovering the tax through the certificate proceedings, he decided that a special reason existed for which it would be expedient and indeed necessary to pursue other modes of recovery and to proceed under section 46(5A) of the Act. In those circumstances it appears to me it is altogether unarguable that the action taken by the Income-tax Officer under section 46(5A) was irregular or not warranted by law. The last contention was that sections 51 and 53 of the Public Demands Recovery Act were ultra vires the Constitution, because as respects the right of appeal, they introduced a classification amongst the certificate debtors and such classification did not rest on any reasonable basis. I think what the learned counsel me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is advanced by establishing that sections 51 and 53 of the Act are void. If they are void, the result would be that the Act would contain no provision for any appeal or revision at all, but how the establishment of that position would assist the appellant firm is not clear to me. It does not seem to have been contended on behalf of the respondents that the appellant firm had rights of appeal and revision under the Public Demands Recovery Act itself and, therefore, its application under article 226 ought not to be entertained. If that objection had been raised and it was said in reply that the so-called rights of appeal or revision under the Act were illusory, the relevant provisions being repugnant to the Constitution and, therefore, void, an intelligible meaning could have been found for the contention. No such objection was, however, raised and the appellant firm does not seem to have raised its fourth point in answer to any such objection. It, therefore, appears to me that the point does not require to be considered in this case, as it is altogether irrelevant. Even if it be relevant, I do not see how the two impugned sections can be said to be repugnant to article 14 of the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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