TMI Blog1961 (3) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 29 of the Income-tax Act, dated 5th April, 1948, demanded ₹ 83,111-15-0 on account of income-tax and surcharge and super-tax and surcharge for the said year, the demand being payable by 30th April, 1948. Further, the Income-tax Officer by an order dated 30th June, 1948, imposed under section 28(1)(b) of the Income-tax Act a penalty of ₹ 81,527-10-0 on the firm, and served a notice of demand under section 29 of the Act, dated 9th July, 1948, making the amount payable by 25th July, 1948. Neither of the two amounts demanded having been paid, the Income-tax Officer on February 4, 1949, signed and forwarded a certificate under section 46(2) of the Income-tax Act to the Collector, 24-Parganas, and Certificate Case No. 300 I.T. of 1948-49 was started thereon, for recovery of the sum of ₹ 1,64,639-9-0, representing the sum of the two demands; the certificate under section 4 of the Public Demands Recovery Act being filed on 10th February, 1949, and notice under section 7 of the Act being issued on the same date. The petitioner in the meantime appealed against the assessment of tax and imposition of penalty on the defunct firm, Messrs. H. and A.K. Ganguli, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under section 46(2) of the Income-tax Act after modification of the original demands by the Appellate Tribunal, and failure to file a fresh certificate under section 4 of the Public Demands Recovery Act (the Certificate Officer erroneously summarised this ground as demand notice being in respect of different amounts), and (4) making of assessment on a discontinued unregistered firm in the firm name and not in the names of the partners. The Certificate Officer, 24-Parganas, heard the objections on the same date, and allowed only one objection, viz., that relating to the defect in the form of the notice; he held that notice as issued under a facsimile rubber-stamp signature of the Certificate Officer was bad, and directed that a fresh notice under section 7 be issued under the signature of the Certificate Officer. The other objections were overruled. An appeal was preferred before the Divisional Commissioner against the order of the Certificate Officer. The learned Divisional Commissioner while hearing the appeal for admission on 21st August, 1957, overruled the objection relating to the failure to issue a fresh certificate under section 46(2) of the Income-tax Act and to file a fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll Bhutoria and observed that if the public demand was sufficiently identified the omission to mention some particulars would not vitiate the certificate proceedings; and that in the present case the certificate debtor could identify the public demand quite clearly and, therefore, the lack of some particulars in the certificate was reason for cancelling the certificate. The learned member also dealt with point regarding filing of a fresh certificate after the service of a fresh notice of demand, observing that in view of the decision in Ladhuram Taparias case, the service of a fresh notice of demand was not necessary when the demand was reduced in appeal, and that, therefore, the fresh notice of demand for the reduced amount of the demand should be taken as non-existent and would not make any difference. Accordingly, the learned Member allowed the revision petition and directed that the certificate case do proceed. The petitioner, Ajit Kumar Ganguli, has obtained this rule under article 227 of the Constitution against the aforesaid order of the Board of Revenue. Mr. H.P. Mukherjee, appearing on behalf of the petitioner, has urged before us that the unreported decision on which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate is given, then the whole basis for the proceeding is gone. It is quite clear that if there is no certificate signed at all under the provisions of the Public Demands Recovery Act, the entire certificate proceeding is without jurisdiction. The existence of such a certificate is absolutely necessary for the validity of the proceedings, but the observations of the Judicial Committee in the above case cannot in our opinion be interpreted to mean that if there is the slightest deviation from the prescribed form, or the slightest error or omission in filling up the form, the proceedings become without jurisdiction. It is undoubtedly necessary that the certificate should be duly signed by the authorised officer, and should show the name of the creditor (and the debtor) and the amount due under the certificate, but there appears to be no justification for reading more into the above decision. This position follows from the next decision of the Judicial Committee, viz., Doorga Prosad Chamaria v. Secretary of State, decided in 1945 under the Publication Demands Recovery Act 1913 (Bengal Act III of 1913). From the statement of facts, it appears that in the certificate field in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Committee, and this court can hardly require that a certificate under section 4 of the Bengal Act III 1913 should incorporate the matters required in a summary judgment. This is more or less what was pointed out in the next decision of this court, the unreported case, Union of India v. Jiwanmull Bhutoria. The division bench in deciding the case drew attention to Doorga Prosad Chamarias case, and held that it was not necessary to mention the period or the date of the demand under section 29 or section 45 of the Income-tax Act, and that it was not necessary to mention against the heading further particulars that the assessment is in respect of a concealed or undisclosed income. This division bench did not consider a reference to a full bench necessary, though their view of the law was different from that of the division bench decided the case, Abanindra Kumar Maity v. A.K. Biswas, because the letter bench had failed to take into consideration the second decision of the Judicial Committee in Doorga Prosad Chamarias case which is binding on this court. This reported decision laid down the test that the debt due must be sufficiently identified in the certificate, and if the publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the creditor and the debtor should appear therein. The later decision of the Privy Council dealt with a case in which there was a certificate signed and filed by an authorised officer in a prescribed form, and their Lordships had only to deal with the question of sufficiency of the particulars entered in the form. The two decisions are complementary and not contrary at all. In Satish Chandra Bhowmick v. Union of India, it was held that for the validity of the certificate proceedings, the necessity is not merely that the certificate is intelligible and the procedure adopted is one of substantial compliance with law, but the necessity is strict adherence to every requirement of the Act, which is a minimum guarantee that the legislature has prescribed in a summary procedure. It is a matter of regret that the division bench should have decided the case on a view of law contrary to that of the unreported decision of another division bench and not referred the matter to a full bench. We would certainly have referred to a full bench the question involved, viz., whether substantial compliance with the prescribed form of certificate, so that the public demand can be identified, is suff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the discontinued firm for the assessment yea 1943-44 and the imposition of penalty under section 28(1)(b) of the Income-tax Act had been done in the presence of the petitioner or his representative; notices of both demands under section 29 of the Income-tax Act had duly been served; the petitioner filed an appeal and a second appeal from the order of assessment of tax and imposition of penalty; and in pressing his application for cancelling the certificate it was urged that the tax demand for ₹ 83,111-15-0 and penalty of ₹ 81,527-10-0 had been lumped together in the certificate and that this was a fatal defect. It is clear therefore that the petitioner fully understood what was the public demand mentioned in the certificate, even though the items making up total demand were not separately specified therein and the demand was loosely described or misdescribed as income-tax for 43-44 instead of income-tax for 1943-44 and penalty under section 28(1)(b). We find that the certificate could be understood by the petitioner in spite of the defects it contained, and the petitioner was not prejudiced in any way on account of the defects, and therefore, in view of the decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e laid down in the Act; the income assessed in respect of an individual or firm may arising outside the State, and, if so, the taxes assessed on such income would include demand arising outside the State. But the legislation which makes the public demand arising outside the State recoverable within the State by the certificate procedure is the Central Act, e.g., section 46(2) of the Income-tax Act. The Public Demands Recovery Act, 1913, is primarily a piece of legislation laying down the procedure for collection of public demands arising within the State of Bengal (now West Bengal); the fact that it may in conjunction with certain Central Acts be used for recovery of public demands arising outside the State does not make it a piece of legislation falling within item 43 of the Concurrent List. In this connection, we may recall the dictum of the Judicial Committee in the case of Profulla Kumar Mukherjee v. Bank of Commerce, that with reference to the pith and substance of a statute, it has to be decided to what list it appertains. Accordingly, it must be held that for an amendment of Bengal Act III of 1913, the assent of the President is not normally required. Such assent may be requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of taxes and other public demands . Mr. Balai Lal Pal, appearing on behalf of the income-tax department, has cited a decision of the Travancore-Cochin High Court in this connection, viz., Krishna Rao v. Municipal Sales Tax Officer, in support of the proposition that item 43 of List III relates only to claims which arise outside the State, i.e., do not arise within the State. But this appears to be clear by reading the item itself. Further, West Bengal Act XI of 1961 does not purport to amend the Public Demands Recovery Act (Bengal Act III of 1913). It only declares that certificates filed and notices served under Bengal Act III of 1913 shall not be deemed to be invalid only because of defects, errors or irregularities in the form thereof. The insistence in some of the courts decisions on the necessity of the strictest compliance with the forms, by referring to section 38 and rule 84 of the Act, appears really to have gone against the terms of rule 84 itself. Rule 84 provides that the forms set forth in the appendix shall be used, with such variations as circumstances may require. Hence Certificate Officers have the power to make necessary variations in the forms, wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed two further grounds, which were summarily overruled by the Divisional Commissioner when admitting the appeal filed before him. The first of these grounds relates to the assessment of a discontinued unregistered firm. Section 44 of the Income-tax Act in its present form provides (sub-section (1)) that where any business carried on by a firm or other association of persons has been discontinued, or where a firm or other association of persons is dissolved, the Income-tax Officer shall make an assessment of the total income of such firm or other association of persons as such as if no such discontinuance or dissolution has taken place; sub-section (3) provides that every person who was at the time of such discontinuance or dissolution a partner of the firm or a member of the association, shall be jointly and severally liable for the amount of tax or penalty payable. Before the amendment of section 44 in 1958, it was in different terms and the provisions as they then stood were interpreted by Sinha J. in Manindra Lal Goswami v. R.N. Bose as follows : There is nothing in section 44 which authorises assessment of a firm as such, after its discontinuance or dissolution,... it is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of demand has already been given in respect of the tax determined by the assessment order, it is not necessary that a second notice of demand under section 29 of the Income-tax Act should be served on the assessee when the demand is reduced by an Appellate authority. In Ladhurams case, the certificate case started on the basis that the original assessment was kept pending; after the reduction of the amount of demand by the order of the Appellate Tribunal, there was no service of fresh notice under section 29, but there was service of notice under section 56(5A) calling upon the assessee to pay up the reduced amount, and on failure of the assessee to pay, the certificate proceeding was continued. It was held that there was nothing irregular in the above proceedings, and the certificate proceedings might continue. Mr. Mukherjee has sought to distinguish the present case by pointing out that in this case, the Income-tax Officer issued a fresh demand notice under section 29 for ₹ 41,666-11-0 on 28th April, 1950, after the decision of the Appellate Tribunal. He has urged that the issue of this fresh demand notice under section 29 nullified the earlier demand notice under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt; provided that the Income-tax Officer may in his discretion treat the assessee as not being in default so long as such appeal is not disposed of. Accordingly, the Income-tax Officer may in his discretion issue the certificate under section 46(2) after serving the notice of demand in respect of his own assessment, and if he does so, he treats the assessee to be in default; or he may await the result of the appeal by the assessee, and issue fresh notices of demand after the disposal of the appeal by the Appellate Assistant Commissioner and by the Income-tax Appellate Tribunal, and issue the certificate under section 46(2) only after the order of the Appellate Tribunal, in which case he has treated the assessee as being not in default till the disposal of the appeals and the issue of the notice of demand on the basis of the order of the Appellate Tribunal. In the case of Metropolitan Structural Works Ltd. v. Union of India, the second course mentioned above was followed; and it was held that the successive demand notices were legal, and limitation would run from the last demand notice. But, in the present case, the Income-tax Officer did not treat the assessee as not in default pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , this court may interfere under article 227 of the Constitution when the subordinate court or Tribunal has acted without jurisdiction or has committed some manifest injustice but not when it has decided a point of law wrongly. In the present case, the learned Member of the Board of Revenue was clearly acting within the limits of his authority, and the order passed by him cannot be regarded as unjust in any way. Therefore, we must accept the contention of Mr. Pal that even if the decision of the learned Member on the last point were erroneous in law (which in our opinion it was not), we could not interfere. Mr. Mukherjee has referred to the fact that the petitioner with his partners has already paid ₹ 64,500 against the modified demand of ₹ 51,666-10-0 on account of income-tax and super-tax with surcharges and ₹ 50,100 as penalty, out of the income finally determined as ₹ 1,13,750, and that the balance of ₹ 37,266-11-0 due might well have been remitted by the Central Board of Revenue. But even if it is assumed that the Central Board of Revenue has been unkind, it cannot in any case be held that the order of the learned Member, Board of Revenue, has res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he materials produced in support of the contentions raised in the petition. In just and fit cases, this court will certainly interfere if it is found that the subordinate courts had not acted within their authority under the power of superintendence given to this court under article 227 of the Constitution. Mr. Mukherjee took a point that both the orders of assessment and penalty were made in 1948 and at that time the assessee, the unregistered firm, was already non-existent, having been dissolved with effect from August 8, 1942. Mr. Mukherjee drew our attention to section 44 of the Income-tax Act and submitted that the persons who were partners of the said dissolved firm were jointly and severally liable to assessment under Chapter IV and for the amount of tax payable and all the provisions of Chapter IV shall, so far as it may, apply to any such assessment. In this connection, Mr. Mukherjee relied on the decision in the case of Manindra Lal Goswami v. R.N. Bose. In that case Sinha J. held that there is nothing in section 44 which authorises assessment of a firm as such after its discontinuance or dissolution. This does not, however, mean that its liability is gone. The liab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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