9911796707
TMI Blog1965 (5) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee paid the tax so assessed. Regular assessment of the income of the assessee was made on March 31, 1953, by the Income-tax Officer, and it was found that the tax paid on the basis of the estimate of the assessee was less than eighty per cent. of the tax determined as a result of the regular assessment. But the Income-tax Officer made no charge for interest under sub-section (6) of section 18A of the Income-tax Act. The departmental auditor raised an objection in auditing accounts of C-II Ward that a mistake was committed by the Income-tax Officer in failing to charge interest in making the order of assessment against the assessee. On September 21, 1956, the Income-tax Officer served a notice upon the assessee requiring him to show cause why the mistake in not levying interest be not rectified and why he should not be directed to pay " penal interest " under section 18A(6). On October 4, 1956, the Income-tax Officer recorded the following order : " During the internal checking of C-II Ward, the auditor has pointed out a mistake in not charging penal interest under section 18A(6). As this mistake is apparent from record the same is rectified under section 35 after giving due not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly some claim or question respecting property of the like amount or value ; or (c) that the case is a fit one for appeal to the Supreme Court..... " The power to issue a certificate under article 133 may be exercised only in respect of a judgment, decree or final order of a High Court in a civil proceeding, and the order passed by the High Court disposing of the petition filed by the assessee for the issue of a writ under article 226 is a judgment. But Mr. A. V. Viswanatha Sastri for the assessee contended in the first instance that the expression " civil proceeding " in article 133 only means a proceeding in the nature of or triable as a civil suit and a petition for the issue of a high prerogative writ not being such a proceeding, against the order passed by the High Court no appeal lay to this court with certificate under article 133. In the alternative, counsel contended that even if a proceeding for the issue of a writ under article 226 of the Constitution may in certain cases be treated as a civil proceeding, it cannot be so treated when the party aggrieved seeks relief against the levy of tax or revenue claimed to be due to the State. This court is invested by the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court with certificate granted under article 133 of the Constitution, and from a judgment, final order or sentence in a criminal proceeding an appeal lies with certificate granted under article 134 of the Constitution, but from an order passed in a proceeding relating to revenue the right of appeal may be exercised only with leave of this court. Counsel seeks support for this argument primarily from the phraseology used in article 132 of the Constitution. That article, by its first clause, provides : " An appeal shall lie to the Supreme Court from any judgment, decree or final order of a High Court in the territory of India, whether in a civil, criminal or other proceeding, if the High Court certifies that the case involves a substantial question of law as to the interpretation of this Constitution. " Counsel relies upon the classification of proceeding made in article 132(1) and seeks to contrast it with the phraseology used in articles 133(1) and 134(1). He says that " other proceeding " in article 132 (1) falls within the residuary class of proceedings other than civil or criminal, and such a proceeding includes a revenue proceeding. The expression " civil proceeding " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of his civil rights against another person or the State, and which if the claim is proved would result in the declaration express or implied of the right claimed and relief such as payment of debt, damages, compensation, delivery of specific property, enforcement of personal rights, determination of status, etc. There is therefore under the Constitution a right of appeal to this court with special leave from the adjudications of all courts and tribunals (except tribunals constituted by or under laws relating to Armed Forces). An appeal also lies to this court against all adjudications by a High Court from judgments, decrees and orders in cases in which a substantial question as to the interpretation of the Constitution is involved, whatever the nature of the proceeding. Appeals from criminal proceedings lie as a matter of right in cases falling within clauses (a) and (b) of article 134, and in cases certified as fit for appeal under clause (c) of article 134, and from civil proceedings of the nature certified by the High Court under article 133(1), clause (a), (b) or (c). For reasons already stated, a proceeding for relief against infringement of civil right of a person is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate legislature, no High Court shall have any original jurisdiction in any matter concerning the revenue, or concerning any act ordered or done in the collection thereof according to the usage and practice of the country or the law for the time being in force. This section barred the High Court from exercising original jurisdiction in matters concerning revenue. There was no such bar against subordinate courts, nor against the exercise of appellate jurisdiction by the High Courts in matters concerning revenue instituted in subordinate courts. No provision has been made in the Constitution similar to section 226 of the Government of India Act, and there is no reason to think that it was intended to deprive the High Court of its power to certify cases concerning revenue, by enacting that the High Court may certify a case in a civil proceeding. No ground is suggested for acceptance that while removing the ban against the High Court's original jurisdiction in matters concerning revenue, the Constitution imposed another ban against the exercise of power to certify cases decided by the High Court in the appellate as well as original jurisdiction when the cases concerned revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for enforcement of civil rights merely because the proceeding is not tried as a civil suit. In a large majority of the cases in which the jurisdiction of the High Court to certify a case under article 133(1) was negatived it appears to have been assumed that the expression " other proceeding " used in article 132 of the Constitution is or includes a proceeding of the nature of a revenue proceeding, and therefore the expression " civil proceeding " in article 133(1) does not include a revenue proceeding. This assumption for reasons already set out is erroneous. We do not think that any useful purpose will be served by entering upon a detailed analysis of the cases to which our attention was invited in which the view has been expressed that in a petition under article 226 of the Constitution where relief is claimed in respect of action sought to be taken by the revenue authorities, the High Court has no power to issue a certificate under article 133 of the Constitution. Express prescription of two independent conditions by the Constitution on the existence of which alone the jurisdiction of the High Court may be invoked, has in some cases been obliterated, and the ground that fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Assessment and demand for advance payment of tax are therefore provisional. If ultimately the advance tax paid is in excess of the tax finally assessed, refund will be granted to the assessee ; if the advance tax paid is less than what is payable, the balance becomes payable on the final assessment. With the object of enforcing compliance with the provision for payment of advance tax effectively, and at the same time to protect the assessee from avoidable harassment, the legislature made a provision under sub-section (2) of section 18A enabling the assessee before the last instalment is due to intimate his own estimate of the income of the previous year to the Income-tax Officer and the tax payable by him calculated in the manner laid down in sub-section (1) and to pay such amount as accords with his estimate. Provision is also made for submitting revised estimate of income. The legislature by sub-section (6) also on the other hand penalises an assessee who seeks to evade liability to pay advance tax by underestimating his income by providing that if in any year an assessee paid tax under sub-section (2) or (3) on the basis of his own estimate and the taxso paid is less than ei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion given to the fifth proviso added to sub-section (6) by Act 25 of 1953, the Income-tax Officer was invested with the discretion to reduce or waive interest payable by the assessee, this power the Income-tax Officer must, in view of the retrospective amendment, be deemed in law to have possessed on the date on which the order of assessment was made in this case. The Attorney-General appearing on behalf of the Commissioner contended that to the fifth proviso to section 18A(6) no retrospective operation could effectively be given, because the rules, which alone could render the discretion operative, were framed for the first time in December, 1953. We are unable to agree with that view. The legislature has expressly given operation to the fifth proviso to section 18A(6), from April 1, 1952. It is true that the proviso operates only in respect of cases and under circumstances as may be prescribed, but as soon as the rules were framed, which effectuate the purposes for which the proviso was enacted, the proviso and the rules became effective retrospectively from April 1, 1952. Mr. Sastri appearing on behalf of the assessee contended that this court has laid down in T. Cajee v. U. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive operation from April 1, 1952) that the Income-tax Officer has power under section 35 of the Act to rectify a mistake in the assessment, even though the mistake was the result of a legal fiction arising from the retrospective operation given to the amending Act. In Venkatachalam's case on October 9, 1952, the Income-tax Officer assessed the taxpayer for the assessment year 1952-53 and gave him credit for certain amount as representing interest on tax paid in advance under section 18A(5). Thereafter, on May 24, 1953, the Indian Income-tax (Amendment) Act (25 of 1953) came into force which added a proviso to section 18A(5) that the assessee was entitled to interest not on the whole of the advance tax paid by him, but only on the difference between the payment made and the amount assessed. This amendment being retrospective as from April 1, 1952, the Income-tax Officer acting under section 35 of the Act rectified the assessment order and directed that the assessee be given credit for a smaller amount by way of interest on tax paid in advance, and issued a notice of demand against the assessee for the balance remaining due by him. The assessee filed a petition in the High Court of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purported to exercise his discretion when he passed the order of assessment and did not impose any liability for payment of interest under section 18A(6). That may be so. But the case of the assessee did fall within the terms of rule 48(1) and the Income-tax Officer must in law be bound to consider whether he was entitled to reduction or waiver of interest under the fifth proviso. The amendment and the rules which came into operation later must in view of the retrospective operation be deemed to be then extant, and the fact that the Income-tax Officer could not in making the assessment have adjusted his approach to the problem before him in the light of those provisions is irrelevant in considering the legality of his order. The order of the Income-tax Officer which did not take note of the law deemed to be in force must be regarded as defective. The matter was brought before the Commissioner of Income-tax and it is unfortunate that the Commissioner in considering the matter under section 33A assumed that the amending Act 25 of 1953 had no retrospective operation and rejected the claim of the assessee on the ground that at the date when the order of assessment was made, Act 25 of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led under section 18A(2) an estimate of their income and on September 27, 1947, they made an advance payment of tax on its basis. On January 10, 1948, they filed a revised estimate in pursuance of which they made a further advance payment towards the tax on January 17, 1948. On August 23, 1950, they paid the tax in pursuance of the provisional assessment made on July 22, 1950, under section 23B. All this was with respect to the assessment year 1948-49. While making the regular assessment on March 31, 1953, the Income-tax Officer omitted to charge penal interest as required by section 18A(6) of the Income-tax Act. It is not disputed that according to the law as it stood on the date on which the regular assessment was made the Income-tax Officer was bound to charge penal interest. By Act 25 of 1953, which came into force on May 24, 1953, the following proviso was added to section 18A(6) : " Provided further that in such cases and under such circumstances as be prescribed, the Income-tax Officer may reduce or waive the interest payable by the assessee. " In order to give effect to the proviso the Central Board of Revenue framed rule 48 and notified it on December 14, 1953. The rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court granted relief to the respondents was that the Amending Act of 1953 which enacted the last proviso to section 18A(6) was made retrospective from April 1, 1952 ; that, therefore, the proviso must be regarded as being on the statute book on the date on which the regular assessment was made, that, according to the High Court, being the position the conclusion to be reached was that the Income-tax Officer had vested in him a discretion to reduce or waive the interest payable by the assessee notwithstanding the fact that the proviso was not there on the statute book when the assessment order was made. After referring to the earlier decision of the High Court in Shantilal Rawji v. M. C. Nair, IV Income-tax Officer, E Ward, Bombay, the learned judges observed : " In our judgment in the case we referred to the decision of the Supreme Court in State of Bombay v. Pandurang Vinayak, where their Lordships of the Supreme Court pointed out the effect of a deeming provision being inserted in any statute and being given retrospective operation. We also referred to a passage from the judgment of Lord Asquith in East End Dwellings Co. Ltd. v. Finsbury Borough Council, in which the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer. Let it not be fotgotten that when he made that assessment, in point of fact, he possessed no discretion and, therefore, be was bound by law to charge penal interest. His omission to do so must, therefore, be ascribed to an oversight and not to deliberateness. An omission to do what he was bound by law to do (sic) the Income-tax Officer committed an error and that error appears on the face of the record. He was, therefore, competent to rectify under section 35. Indeed, if instead of on March 31, 1953, the Income-tax Officer had made the regular assessment on March 31, 1952, could there have been any scope for the surmise that his omission to charge penal interest was attributable to the exercise of any discretion ? At any rate without further material we cannot even assume that while making the regular assessment on March 31, 1953, the Income-tax Officer, upon an erroneous view of law, came to the conclusion that he had discretion under section 18A(6) to reduce or waive any interest and that, therefore, he purported to exercise that discretion. At least, prima facie, the Income-tax Officer in omitting to charge penal interest made a mistake. This would appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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