TMI Blog1982 (9) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... | Piramal Gulab Rai Girdhari Lal Pooran Mal Ganga Issueless Hari Prasad | (Adopted son) --------------------------- | | | Mohan Lal Sohan Lal Hari Prasad Hari Prasad is the petitioner before us. On the basis of the aforesaid assessments two notices of demand dated December 31, 1946, were served on the assessee, HUF. The notice in respect of assessment year 1943-44, stated that a sum of Rs. 53,411-12 annas as specified in the attached form had been determined payable by it and in the notice for the assessment year 1944-45, the sum mentioned was Rs. 40,216-7 annas. According to the petitioner these demand notices were in respect of income-tax dues only and in respect of excess profits tax liability no demand was ever issued by the I.T. Dept. Further, according to the petitioner the aforesaid two notices of demand were not served on the assessee. Later on, a recovery certificate dated March 27, 1947, for sum of Rs. 2.55,366-14 annas was issued against S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... December 7, 1979, passed by respondents Nos. 2 and 1 respectively and for setting aside the auction sale dated May 12, 1977. There is also a prayer for the issue of a writ of prohibition restraining respondents Nos. 1 and 2 from realizing the impugned tax dues from the petitioner. A counter affidavit has been filed by respondents Nos. 1, 2 and 4. Some of the facts, set out in the petition, are not admitted and have been controverted. It has been averred that at the material time Sri Mohan Lal was the karta of the HUF. M/s. Pooran Mal Onkar Mal and Sohan Lal and Hari Prasad were the other co-partners. Since the HUF did not pay the demand raised, a recovery certificate dated March 27, 1947, was issued by the EPTO-cum-ITO, Kanpur, for Rs. 2,55,366-14 annas to the Collector, Faizabad, in the name of Sri Mohan Lal Marwari Deoriawala, Pahari Kothi, Ayodhya, District Faizabad. The Collector, Faizabad, could not realize the outstanding arrears and hence an amended certificate dated August 11, 1951, was issued to the Collector, Deoria, for Rs. 2,35,447-7 annas by the ITO, B-Ward, Gorakhpur, in the name of M/s. Pooran Mal Onkar Mal, Deoria. The Collector, Deoria, attached the house No. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r passed by this court was as under : " ' The basic grievance raised by the petitioner in this petition as also by the application for amendment is that the property which is being sold is not liable to be attached and sold for recovery of the dues of the Hindu undivided family. It is open to the petitioner to file an objection in this regard under rule 11 of the Second Schedule of the Income-tax Act, and if he failed to satisfy the Tax Recovery Officer he could file suit for obtaining necessary relief as provided in rule 11(6) of the Second Schedule of the Income-tax Act. Since an alternative remedy is/was open to the petitioner the petition under article 226 of the Constitution cannot be entertained. Rejected. Date : 11-5-77. (Sd.) H. N. Seth (Sd.) M. B. Farooqi." Thereafter, the petitioner moved an objection under r. 11 of the Second Schedule to the Act on June 2, 1977. A copy of which is annex. 11 to the writ petition. He moved an amendment application on December 26, 1977, by which he sought to convert his objection under r. 9 instead of r. 11 of the Schedule and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal against that order by the Tax Recovery Commissioner also failed, was to come to this court by way of writ petition. Thus, the alternative remedy provided in sub-r. (6) of r. 11 was not available to the petitioner. Two main submissions were advanced before us on behalf of the petitioner by his learned counsel, Sri S. P. Gupta: firstly, that the recovery certificate dated March 27, 1947, stood withdrawn impliedly or cancelled and it was also not acted upon, and thus was of no avail to the respondents. In the same connection it was urged that this certificate was issued to Sri Mohan Lal, individual, and not to the assessee, HUF. The second submission made was that the recovery proceedings which started on the basis of the second certificate dated August 11, 1951, were invalid for two reasons: (1) the certificate was barred by time under s. 46(7) of the 1922 Act, and (2) it was only the ITO, Kanpur, who could issue the recovery certificate and not the ITO, Gorakhpur. In the same connection it was emphasised that there was absolutely no link between these two certificates and the first, being a nullity, could not save the period of limitation for taking proceedings for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is withdrawn; (iii) where the date of payment of tax has been extended by an income-tax authority, be reckoned from the date up to which the time for payment had been extended; (iv) where the sum payable is allowed to be paid by instalments, from the date on which the last of such instalments was due: Provided further that nothing in the foregoing proviso shall have the effect of reducing the period within which proceedings for recovery can be commenced, namely, after the expiration of one year from the last day of the financial year in which the demand is made. Explanation.- proceeding for the recovery of any sum shall be deemed to have commenced within the meaning of this section, if some action is taken to recover the whole or any part of the sum within the period hereinbefore referred to, and for the removal of doubts it is hereby declared that the several modes of recovery specified in this section are neither mutually exclusive, nor affect in any way any other law for the time being in force relating to the recovery of debts due to Government, and it shall be lawful for the Income-tax Officer, if for any special reasons to be recorded he so thinks fit, to have r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is is to certify that the sum of Rs. 2,55,366-14 which is due from Seth Mohan Lal Marwari, Deoriawala, son of resident of Pahari Kothi, Ayodhya, District Faizabad on account of income-tax/super-tax, E.P.T. is in arrear with reference to the provisions of sub-section (2) of section 46 of the Indian Income-tax Act, 1922, you are hereby requested to recover the same as if it were an arrear of land Revenue. Sd/ Illegible, III Addl. cum-E.P.T., Income-tax Officer, Cawnpore." It would be seen that this certificate was issued by the I.T.cum E.P.T. Officer, Cawnpore. It was issued to the Collector, Faizabad District. The recovery was to be made from Seth Mohan Lal Marwari, Deoriawala, r/o Pahari Kothi, Ayodhya, District Faizabad. The sum mentioned therein was Rs. 2,55,366-14 annas and it was on account of income-tax/super-tax, E.P.T. arrears. Various objections were raised by learned counsel for the petitioner in regard to this certificate. They were : that it was addressed by the III Addl-cum-E.P.T., ITO, Cawnpore, to the Collector, Faizabad, which he could not do; that it was in the name of Seth Mohan Lal Marwari and not the assessee-HUF. In other words, it was not a rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th August, 1948, from the ITO, E.P.T. Circle, Cawnpore, to the Collector, Faizabad, which shows that the Kothi and the attached temple were attached in pursuance of the said recovery certificate and the pujari Of that temple filed an objection against that attachment. Further information was given that Mohan Lal Marwari had certain properties in Deoria and the details of the same were given. It appears that ultimately the Deputy Commissioner, Faizabad, returned the papers to the ITO, E.P.T. Circle, Kanpur, with letter dated December 4, 1948, saying that Mohan Lal resides in Deoria district and action may be taken to recover the amount through the Collector, Deoria. Both these letters are annexed to the counter affidavit. The question for consideration is as to whether this recovery certificate is null and void because of the defects pointed out on behalf of the petitioner. In Ram Charan Lal Ram Narain v. ITO [1965] 56 ITR 316, learned single judge of this court took the view that under s. 46(2) of the 1922 Act read with s. 5 of the Revenue Recovery Act, 1890, an ITO can make a request for recovery of arrears of income-tax only to the Collector of the District in which his office i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf of the petitioner is a decision of this court in Baladin Ram Kalwar v. ITO [1966] 62 ITR 392. The ratio of that decision is that where the notices of demand were against the HUF, the recovery certificates issued against the karta in his individual capacity were without jurisdiction. So far as this proposition of law is concerned, there can be no dispute about it, Section 45 of the 1922 Act declares that an assessee failing to pay the tax demanded within the time mentioned in the notice of demand will be deemed to be in default. An " assessee " is defined in . 2(2)as " a person by whom tax is payable ". In a case where the assessee is an undivided Hindu family and if default is committed in the payment of the tax due, it is a default committed by the HUF. It cannot be said that the default has been committed by the karta. However, in our opinion, the matter has to be examined in proper perspective with a reference to the antecedent and contemporary circumstances. We have already mentioned above that the order for the issue of recovery certificate was made in the file of the assessee-HUF. There is no dispute that Seth Mohan Lal was the karta of the assessee-HUF at the relevant tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court to quash the certificate proceeding at Ranchi. One of the contentions urged was that under s. 46(2) of the 1922 Act the ITO may forward to the Collector a certificate under his signature for recovery of the arrears of tax due from an assessee, but such a certificate must be sent to the Collector of the district wherein is situated the office of the particular ITO forwarding the certificate. Hence, the ITO, Hazaribagh, had no jurisdiction to amend the certificate upon which the certificate case had been started at Ranchi. This contention was repelled and it was ruled that the ITO of any place in Bihar is competent to forward a certificate under s. 46(2) of the 1922 Act to any Collector of the State, if he proceeds to realise the arrears of tax by institution of proceedings under the Bihar and Orissa Act, and not under the Revenue Recovery Act, 1890. In the present case as well there is nothing to indicate that the proceedings to realise the arrears of tax were instituted under the Revenue Recovery Act. That being so, the impugned certificate did not suffer from any illegality, inasmuch as it was forwarded by the ITO, Cawnpore, to the Collector, Faizabad. We are, thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was issued to the Collector, Deoria, and was in the name of Pooranmal Onkar Mal, Deoria. The amount for which it was issued was Rs. 2,35,447-14 annas, and the details of that amount were also specifically given. According to the learned counsel for the petitioner there was absolutely no link between these two certificates because of the differences noted above. The main effort of the learned counsel was again to show that the earlier certificate was a nullity and was not a recovery certificate contemplated by s. 46(2) so as to save the limitation of one year provided in sub-s. (7) of that section. We do not find much force in this submission either. It is correct that this certificate was issued by a different ITO but the challenge of the petitioner is not that that ITO had not come to seize of the matter at the relevant time. The fact that it was issued by the ITO to the Collector, Deoria, would also not render it invalid for the reasons already discussed. The fact that the amount mentioned in the two certificates was different would also not go to show that there was no link between them. We have already indicated above that the earlier certificate was issued in the name of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion was saved. The subsequent certificate, therefore, is not barred by time on any view whatsoever. Sri Gupta reminded us of the scope of the jurisdiction under art. 226 of the Constitution. We are very much conscious of it and, as ruled in M. Naina Mohammad v. K. A. Natarajan AIR 1975 SC 1867, 1868: " The boundaries of the High Court's jurisdiction under article 226 are clearly and strongly built and cannot be breached without risking jurisprudential confusion. The power is supervisory in nature ....... .." It is established, therefore, that the power of this court in exercise of jurisdiction under art. 226 of the Constitution is supervisory and not appellate in nature. We find that the Tax Recovery Commissioner in his appellate order took notice of two important aspects in the case, and they were stressed as well before us by the learned standing counsel. They are, firstly, that the writ petition is highly belated and secondly that the conduct of the petitioner has not been such so as to entitle him to the reliefs claimed. We shall examine these two aspects a little closely. As noted above, the first recovery certificate was issued on March 27, 1947, and the other on Aug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest in the property, it was not liable to attachment or sale. It is clear that the petitioner was guilty of laches for which no explanation whatsoever is forthcoming, and on this ground alone we would be justified in dismissing the petition. In State of Orissa v. Arun Kumar Patnaik, AIR 1976 SC 1639, where the appointment of one K was gazetted on March 14, 1962 and the notification dated November 15, 1968, showed K's confirmation as on February 27,1961 and that of the petitioner, on May 2, 1962 and till May 29, 1973, when the writ petitions were filed, the petitioners did nothing except to file a representation to Government and a memorial to Governor on April 16, 1973, it was held that there was long and inexplicable delay and the grievance was " too stale to merit redress ". It was emphasised that an extraordinary jurisdiction should not be exercised in such an object disregard of consequences and in favour of persons who were unmindful of their so-called rights for many long years. Similarly, in State of Orissa v. Sri Pyarimohan Samantaray, AIR 1976 SC 2617, it was found that even though a cause of action arose to the petitioner as far back as 1962, on the rejection of hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xist, to their advantage and to the disadvantage of the appellant. It was held that the petitioners could not be heard to say, when the department invoked the self same jurisdiction on important grounds, that review orders of the competent officer were void for want of jurisdiction and must be set aside for that reason. It was held that the conduct of the writ petitioners was, therefore, such as to disentitle them of certiorari and the High Court erred in ignoring that important aspect of the matter, even though it was sufficient for the dismissal of the writ petition. The present case stands on a much stronger footing because it has been found as a fact that the petitioner made a fraudulent and collusive transfer of his share in the house property with a view to defeat the recovery. In our opinion, this conduct of the petitioner, therefore, clearly disentitles him to certiorari. We do not propose to enter into the merits of the contention urged by Sri Katju that the petitioner cannot be granted any relief also for the reason that he stated false facts in the writ petition. That is, in regard to petitioner's allegations in para. 3 of the writ petition that no notice of demand in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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