TMI Blog1955 (5) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) Jagannath. Harnarayan, (3) Ganpatirai Jorawarmal, (4) Seth Laduram Taparia, and (5) Seth Laduram Taparia Co. According to the Income Tax Officer, these were not bona fide firms but were benarni businesses carried on for the purpose of depriving the Government of Income Tax. It was found that the total income was ₹ 10,23,388/- and the Income Tax payable was ₹ 8,67,239/10/0. These 5 firms were also assessed separately by way of what is known as protective assessment . On or about the 30th of March, 1950 notice under Section 29, Income Tax Act, was issued upon the petitioner calling upon it to make payment of tax amounting to ₹ 8,67,239/10/0, on or before 28-4-1959. The petitioner firm, as well as the said 5 firms, preferred appeals against their respective assessments, as also against the respective orders refusing registration under Section 26A, Income Tax Act. On or about 26-3-1951 the Income Tax Officer forwarded to the Certificate Officer, 24 Parganas a certificate within the meaning of Section 46(2), Income Tax Act, requesting the latter, to commence proceedings for recovery of the sum of ₹ 8, 67, 239/10/0 from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d above that the assessment was reduced by an order of the Appellate Assistant Commissioner of Income Tax. As against his order, second appeal was taken before the Income Tax Appellate Tribunal. By its order dated 284-1954 the Appellate Tribunal found that the profits of two of the firms, namely, Seth Laduram Taparia and Seth Laduram Taparia Co. were wrongly included in the said assessment and the total income was reduced by ₹ 1,39,538/-. On 14-3-1954, the Income Tax Office wrote to the Certicate Officer, 24 Parganas as follows :-- Sir. This is to inform you that the assessment (for the year 1945-46) in respect of the above certificate case has been revised as per orders of the Appellate Tribunal. The reduced demands now recoverable from the above assessee are noted below for your information. The revised demands may now kindly be substituted for the original certificate demands and necessary steps may be taken to realise these amounts from the assessee concerned. 3. The total demand was mentioned as ₹ 7,23,990/10/0. 4. On 12-7-1954 the Certificate -was accordingly amended. Respondent 1 then proceeded to hear the objection alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loped by Mr. Mitra in the following manner. He first of all refers to the definition of a Certificate Officer, as laid down in Section 3(3) of the P. D. R. Act. It is as follows :-- Certificate Officer means a Collector, a Sub-divisional Officer, and any officer, appointed by a Collector, with the sanction of the Commissioner, to perform the functions of a Certificate Officer under this Act. 7. Reference is also made to Section 3(3a), which is as follows: Collector means the Chief Officer in charge of the Revenue administration of a district and includes an Additional District Magistrate appointed under Sub-section (2) of S, 10 of the Code of Criminal Procedure. 8. We next come to Section 10(2) of the Criminal Procedure Code, which in as follows : The State Government may appoint any Magistrate of the First Class to be an Additional District Magistrate; and such Additional District Magistrate shall have all or any of the powers of a District Magistrate under this Code or under any other law for the time being in force, as the State Government may direct. 9. According to the Bengal General Clauses Act, Section 3(8) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointed as an Additional District) Magistrate he comes within the definition of a Collector as laid down in the P.D.R. Act. which in turn validates his appointment as a Certificate Officer. Learned counsel argued that these notifications (Ex. 'A') do not appoint the respondent as a First Class Magistrate, but merely vest him with the power of a Magistrate of the First Class. I however fail to see the difference. It is also said that even if the appointment of the said respondent as an Additional District Magistrate is valid, his appointment as a Certificate Officer, prior to his appointment as a Collector cannot be valid and there is no fresh appointment as a Certificate Officer. I cannot say that this is a ground entirely devoid of substance, and the notifications might have been more carefully worded. There is, however, a clear confirmation of his appointment as a Certificate Officer and as there is no particular procedure laid down for such appointment, I think that this argument cannot be given effect to, and that there is a valid appointment of respondent 1 as a Certificate Officer. 12. It is obvious however, that the appointment of respondent 1 was only va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with law, a second notice cannot be issued. All that the petitioner can say is that upon the service of a second notice, it should have a second chance of making an objection under Section 9. But this is precisely what it had done, upon the second notice under Section 7 having been served. It has made a fresh objection under Section 9 of the P. D. R. Act, and this objection is now pending. Lastly, Mr. Mitra argued that there is no provision, in the P. D. R. Act or any rules framed thereunder, whereby a proceeding can be transferred from one Certificate Officer to another. I think this is a purely administrative matter and there is no law or rule which prevents it being done. 13. A point was made that the copy of the certificate that was served on the petitioners together with the notice under Section 7, has not been signed by the Certificate Officer but there is a rubber stamped signature. There is, however, no point in this because the original certificate as amended on 12-7-1934, has been signed, and a copy which is served with the notice under Section 7 need not be signed. This point accordingly fails. 14. The second point has been argued with gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the excess sum there is in existence no demand under Section 29, and as such, a fresh demand notice must be issued for the excess sum. But where the amount of the original assessment has been upheld, or is reduced, then no fresh demand need be issued, but the original demand as modified will be deemed to be a demand under Section 29. He says that otherwise the most surprising results will happen. Even if the appeal is dismissed, it will be contended that the order of the Appellate Tribunal had superseded the original order and therefore a fresh demand has to be made and the amount of tax never became due until the new demand was served. In the meanwhile, suppose certain proceedings had been taken and the properties of the assessee attached, and suppose in defiance of the attachment he had dealt with these properties, -- then it will be argued that since the tax never became due until the fresh demand notice has been served, such dealings were perfectly valid. This, Mr. Meyer says, is an absurd position. 15. Mr. Meyer has cited upon this point a decision of the Allahabad High Court : Municipal Board, Agra v. Commissioner of Income Tax U. P. Lucknow, [1951]19ITR21(All) (O) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46(2) of the Income Tax which are as follows:-- The Income Tax Officer may forward to the Collector a Certificate under his signature specifying the amount of arrears due from an assessee and the Collector on receipt of such certificate, shall proceed to recover from such assessee the amounts specified therein as if it were an arrear of land revenue. 19. Reference is made to the case of Commissioner of Income Tax, Bombay v. Tajaji Parasram', [1953]23ITR412(Bom) (D), where it was held that once an appeal was preferred from the order of the Income Tax Officer and an order was passed in that appeal, the order of the Income Tax Officer became merged in the order of the Appellate Assistant Commissioner. This was a case where it had to be considered as to whether after such an order had been made, it was any longer open to the Commissioner to take proceedings under Section 33 (B) of the Income Tax Act. It was held that the power of revision vested in the Commissioner under Section 33(B), was against an order of the Income Tax Officer. Therefore, once an order was made by the Appellate Assistant Commissioner, the order of the Income-lax Officer had merged in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est that Section 29 as amended enables a notice of demand to be given in respect of every order made under the Act. He argues however that in a case where there has been an assessment order passed by the Income Tax officer and this amount has been reduced by an appellate authority, it can never be said that the amount that is payable has at any time ceased to be payable. The liability to pay income tax arises as soon as income has been made and the rate has been fixed by the annual Finance Act. It becomes due as soon as notice under Section 29 has been served. When an appeal has been preferred, there is no automatic stay of proceedings and the Income Tax Officer is not bound to stay proceedings for the recovery of the tax unless there is a stay order. It is true that) in a sense the appellate order unsettles the original order which merges in the appellate court but this does not mean that it is an order for payment of a sum entirely unconnected with the original assessment, where the amount payable has been enhanced, then for the amount which is not covered by the original assessment order the only order that makes it payable is the appellate order. But where the amount is scaled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual amount due, as communicated, is not stated to be tinder orders of the Income Tax Officer, but under orders of the Appellate Tribunal. In this view of the matter, the assessee had no difficulty in finding out, as to where he was to pay the sum, to Whom and within what time. So far as the place of payment is concerned, that had already been mentioned in the original notice of demand, the reduced amount payable was duly communicated to the assessee, and the time within which it was payable was laid down by Section 45 of the Act. It was only in the event of the amount of tax payable being enhanced that the whole process of serving notice under Section 29, would have had to be repeated for the enhanced sum. In my opinion, inasmuch as the present case is concerned with a reduction in the assessment, it was not necessary to serve a new notice of demand under Section 29, and the procedure adopted was in accordance with law. 21. I now come to point No. 3. Section 51 of the Public Demands Recovery Act is challenged as being ultra vires, as offending the provision of Article 14 of the Constitution. The way that this point has been argued is as follows : It is said that under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Act, an Income Tax Officer may at any time, by a notice in writing, require any person from whom money is due or may become due to the assessee, to pay to the Income Tax Officer the same, to the extent that any tax or other moneys were due. In this particular case, notices have been served upon banks and other persons from whom moneys are due to the petitioner, requesting them not to pay the same to the petitioner but to pay the same to the Income Tax Officer in liquidation of the amount payable by the petitioner to the Income Tax Officer. Mr. Mitra argues that Income Tax authorities cannot take recourse simultaneously to certificate proceedings and to proceedings under Section 46(5A). He argues that these are two alternative rights, and it is only open to the Income Tax Officer to proceed under the one or the other. It is argued that once the Income Tax Officer has taken action under Section 46(2) of the Income Tax Act, and forwarded to the Collector a certificate, he has lost seisin over the matter and can no longer proceed under the provisions of Section 46 (5A). It is said that even if the seisin be an administrative one, still, once the matter is sent to the Collector f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings, moneys which had become due might possibly be attached under Section 14, Public Demands Recovery Act, but net moneys which may become due. Since such a power has been given to the Income Tax Officer, but not under the Public Demands Recovery Act, it seems to me that it was clearly intended that the exercise of power under the one Act does not exclude the exercise of power under the other. I do not question the soundness of the general principle enunciated by Dr. Pal that proceedings should not be taken against assessee which are oppressive. Where, however, moneys are or may become due to a defaulting assessee and express provision is made in the Statute granting power to the Income Tax Officer to proceed against the same, the exercise of such power cannot be said to be oppressive. Mr. Mitra has argued, that a taxing statute should be construed in such a manner as will work the least possible hardship to the assessee. This statement of the law is quite correct, but where an express power is conferred by statute it is not open to the Courts to interpret it in such a manner as to take away that power. I am unable, therefore, to hold that because of the pendency of the certifica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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