TMI Blog1977 (7) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... rash. On the death of the father, a sum of Rs. 2,49,874 was received by Lala Bansi Dhar from the insurance company on account of an accident insurance policy covering the risk of the life of the deceased. The income derived from the said amount was treated as the income of Lala Bansi Dhar and was assessed in his personal assessment. Lala Bansi Dhar was married on 3rd February, 1953, and a son, Tilak Kumar, was, born on 3rd February, 1956. The income from the insurance amount continued to be assessed in the personal assessment of Lala Bansi Dhar even after formation of the HUF in his marriage and birth of a son, and continued to be so assessed till the assessment year 1959-60. For the first time in the assessment year 1960-61, the Income-tax Officer treated the income from the insurance amount as that of the H.U.F. and assessed the same in the hands of the H.U.F. On appeal by the assessee-H.U.F., the Appellate Assistant Commissioner set aside the assessment holding that the income was the personal income of Lala Bansi Dhar and not of the H.U.F. Against that order, the revenue preferred an appeal to the Income-tax Appellate Tribunal. A similar appeal was also preferred to the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s karta in his personal assessment, the H.U.F. is again asked to pay tax over again in respect of the same income. In opposition to the application, a counter-affidavit has been filed on behalf of the respondent in which a preliminary objection has been raised that under the provisions of the Income-tax Act, this High Court exercises only an advisory or consultative jurisdiction and has consequently no jurisdiction or power to grant stay of the recovery of tax as prayed for in the application, and that, in fact, the grant of stay by the High Court and the Supreme Court has been prohibited by the Act. On merits, however, it was admitted that tax had been paid by Lala Bansi Dhar in his personal capacity on the basis of the same income which had been returned by him in his individual income-tax return. Yet, it was submitted that as a result of the impugned order of the Appellate Tribunal, the income from the insurance amount is assessable in the hands of the H.U.F. and the H.U.F. is obliged to pay the tax unless and until the question of law referred to this court is answered in favour of the assessee and that the assessee will not be prejudiced if no stay is granted and the tax is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Section 66(6) of the Act of 1922 and section 260(2) of the Act of 1961 make it clear that the costs of the reference shall be in the discretion of the court. The Act of 1922 or the Act of 1961 does not contain any express provision empowering the High Court or the Supreme Court to grant stay of recovery of the tax including (sic) pending the disposal of the reference before it. That is why the assessee has sought to invoke the inherent jurisdiction or power of this High Court. The learned counsel for the assessee relied upon the decision of a Division Bench of the Andhra High Court in Polisetti Narayana Rao v. Commissioner of Income-tax [1956] 29 ITR 222. In that case, Subba Rao C.J. and Bhimasankaram J. held that in a proper case the High Court has power under section 151 of the Code of Civil Procedure (i.e., inherent jurisdiction) and article 227 of the Constitution to order stay of recovery of tax pending the disposal of the reference before it. The learned judges referred to the observations of Woodroffe J. and Mookerjee J. in Hukam Chand Boid v. Kamalanand Singh [1906] ILR 33 Cal 927, regarding the inherent powers of a court. In that case, a subordinate court made deliver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VII)." In the alternative, the Division Bench of the Andhra High Court referred to article 227 of the Constitution of India. The learned judges pointed out that the power of " superintendence " vested in the High Court under article 227 is not merely administrative, but also judicial, as held by the Supreme Court in Waryam Singh v. Amarnath [1954] SCR 565. They rejected a contention urged before them that the Supreme Court observed in State of Orissa v. Madan Gopal Rungta [1952] SCR 28 that article 226 cannot be used for the purpose of giving interim relief as the only and final relief, and an interim relief can be granted only in aid of and as ancillary to the " main relief " which may be available to the party on the final determination of his rights in a suit or proceeding, that article 227 should be read in the light of the said interpretation put by the Supreme Court on article 226, and that since in a reference to the High Court under the Income-tax Act, there is no " main relief ", as such, available to the party on final determination of his rights in the pending proceedings " and the answer of the High Court to the reference may at best indirectly involve the refund of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the jurisdiction of the High Court in a reference under the Income-tax Act is a special jurisdiction of advisory or consultative nature and not original or appellate or revisional jurisdiction. But it has to be noticed that it was so pointed out in all those decisions in the context of the power or jurisdiction of the High Court for passing an order answering the question referred to it, which question is related to the merits of the order of the Appellate Tribunal. On the other hand, the question with which we are concerned is the power of the High Court to exercise its inherent jurisdiction which is de hors the Income-tax Act, and to pass an order of stay which is not related to the merits of the order of the Appellate Tribunal. Section 66(8) of the Act of 1922 and section 269 of the Act of 1961 make it clear that the High Court mentioned in section 66(1) of the former Act and section 256(1) of the latter Act is the High Court duly constituted as such for the State or the Union Territory, as the case may be. It is well settled that the High Court, as a " court ", has inherent jurisdiction to act ex debito justitiae if the circumstances of a case so demand. The inherent jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons cited by the learned counsel. In Seth Premchand Satramdas v. State of Bihar [1951] 19 ITR 108 the Supreme Court held that an appeal lay to the Federal Court against an order of the Patna High Court dismissing an application under section 21(3) of the Bihar Sales Tax Act No. VI of 1944 (which is similar to section 66(3) of the Indian Income-tax Act of (1922) for directing the Board of Revenue, Bihar, to state a case and refer it to the High Court, as such an order is not a " final order " within the meaning of clause 31 of the Letters Patent of the Patna High Court in the exercise of either its appellate or original jurisdiction within the meaning of the said clause, but was one passed in exercise of its consultative jurisdiction. In New Jehangir Vakil Mills Ltd. v. Commissioner, of Income-tax [1959] 37 ITR 11, 20, the Supreme Court held that the jurisdiction of the High Court under section 66 of the Indian Income-tax Act, 1922, is a consultative or advisory jurisdiction, and the High Court cannot under section 66(4) refer the case back to the Tribunal to find new facts or embark upon a new line of enquiry which would enable either the assessee or the Commissioner to make out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a provision of the statute which is ultra vires, to that extent it would be acting outside the Act, and that in that event a suit to question the validity of such an order made outside the Act would certainly lie in a civil court. Mr. Kirpal sought to rely on the observation that an authority created by a statute must act under the Act and not outside it, and to argue that the High Court's jurisdiction in the reference being one conferred by section 66 of the Act of 1922 or section 256 of the Act of 1961, it cannot exercise any other jurisdiction outside the Act. The observation that the authority created by a statute " must act under the Act and not outside it " refers in the context obviously to the disposal or decision of the main matter brought before the authority. In the case of a reference to the High Court, the main matter brought before the court is the question that has been referred to it for its opinion, and the " act " of the High Court contemplated by the above observation is its act of answering that question. In answering that question, the High Court has necessarily to act under and within the scope of section 66 or section 256, as the case may be, and it cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nair C.J., M. U. Isaac and George Vadakkel JJ, in K. Ahamad v. Commissioner of Incom-tax [1974] 96 ITR 29, 34. Thus, the fact that the nature of the jurisdiction of the High Court in a reference to it under section 66 of the Act of 1922 or section 256 of the Act of 1961 was consultative or advisory and not original or appellate or revisional was mentioned in the various decisions referred to above in the context of the power or jurisdiction of the High Court for passing an order answering the question referred to it, which question is related to the merits of the order of the Appellate Tribunal. The said decisions are not, therefore, of any assistance to the learned counsel in his submission that the High Court cannot be said to have any inherent jurisdiction or power to grant stay of recovery of the tax pending the disposal of the reference. In this connection, the learned counsel for the assessees in I.T.R. Nos. 1 and 2 of 1974, etc., in which also applications for stay have been filed, referred us to two decisions. The first decision is that of a Division Bench of the High Court of Andhra Pradesh in Chaganti Raghava Reddy v. Income-tax Officer [1959] 36 ITR 47. The Division ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference. Section 260(1) of the Act of 1961 (which is similar to section 66(5) of the Act of 1922) reads as follows : " 260. Decision of High Court or Supreme Court on the case stated.- (1) The High Court or the Supreme Court upon hearing any such case shall decide the questions of law raised therein, and shall deliver its judgment thereon containing the grounds on which such decision is founded, and a copy of the judgment shall be sent under the seal of the court and the signature of the Registrar to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conformably to such judgment." Section 262(1) of the Act of 1961 (which is similar to section 66A(3) and 1st proviso) reads as follows : " 262. Hearing before Supreme Court.--(1) The provisions of the Code of Civil Procedure, 1908 (V of 1908), relating to appeals to the Supreme Court shall, so far as may be, apply in the case of appeals under section 261 as they apply in the case of appeals from decrees of a High Court : Provided that nothing in this section shall be deemed to affect the provisions of sub-section (1) of section 260 or section 265." Section 265 of the Act of 1961 (which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court decides the questions that have been referred, the Tribunal reconsiders the matter and decides it and thus finally disposes of the appeal. But it has to be noticed that the Tribunal has to pass orders in the appeal only conformably to the judgment of the High Court or the Supreme Court in a reference. Also, it is final so far as the questions referred are concerned and is binding on the parties and the Tribunal. The judgment has thus as much force as any other judgment of a court. As regards the first part of argument (b), we have already pointed out that we are concerned with the question of passing an order of stay of recovery of the tax, not in exercise of any jurisdiction or power conferred by the Income-tax Act or the Code of Civil Procedure, but in exercise of the inherent jurisdiction or power vested in the High Court or the Supreme Court as a " court ". Although an application invoking the inherent jurisdiction or power of a court is usually described as one under section 151 of the Code of Civil Procedure, it is well settled that inherent jurisdiction or power is inherent in a court, and section 151 of the Code of Civil Procedure does not confer such juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the argument. Section 265 merely states 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 in the case ". In our opinion, it only means that the making of a reference or the filing of an appeal shall not render the tax not payable, or in other words, the making of a reference or the filing of an appeal shall not by itself operate automatically as stay of the recovery of the tax. The language used in the section, the framing of the sentence and the words " notwithstanding ......... a reference has been made or an appeal has been preferred ......... tax shall be payable " indicate, in our opinion, that what is intended to be provided is only that the making of the reference or the filing of the appeal shall not mean that the payment of the tax is automatically suspended or stayed pending the disposal of the reference or the appeal, as the case may be. They do not imply at all any further intent or that the payment of the tax can in no case be stayed or that no direction of any sort regarding the payment can be given by the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 151 of the Code. This proposition has no hearing on the question under consideration by us. As stated earlier, we are concerned with the question of passing an order of stay of recovery of tax, not in exercise of any jurisdiction or power conferred by the Income-tax Act or the Code of Civil Procedure, but in exercise of the inherent jurisdiction or power vested in the High Court or the Supreme Court as a " court ". We have pointed out above that there is nothing in the Income- tax Act which expressly or by necessary implication excludes the inherent jurisdiction. The third submission of Mr. Kirpal was that, in any case, the assessee should apply to the Appellate Tribunal for stay of the recovery of the tax pending the disposal of the reference as the appeal before the Tribunal continues to be pending notwithstanding the reference, and that the High Court or the Supreme Court should not exercise its inherent jurisdiction or power and grant stay. It is true that, as observed by Chagla C.J. in the case of S. C. Cambatta Co. [1956] 29 ITR 118 (Bom), when a reference has been made by the Tribunal, the appeal before it is not finally disposed of, and it is only after the refe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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