Mukutla Lalita Vs. Commissioner of Income Tax and ors. - Court Judgment

Excerpt:
- maximssections 2(xv) & 3(1) & (3): [v.v.s. rao, n.v. ramana & p.s. narayana, jj] ghee as a live stock product held, [per v.v.s. rao & n.v. ramana, jj - majority] since ages, milk is preserved by souring with aid of lactic cultures. the first of such resultant products developed is curd or yogurt (dahi) obtained by fermenting milk. dahi when subjected to churning yields butter (makkhan) and buttermilk as by product. the shelf life of dahi is two days whereas that of butter is a week. by simmering unsalted butter in a pot until all water is boiled, ghee is obtained which has shelf life of more than a year in controlled conditions. ghee at least as of now is most synthesized, ghee is a natural product derived ultimately from milk. so to say, milk is converted to dahi, then butter. scientifically or common sense point of view, even though ghee is not directly obtained from milk (which is certainly a product of cow/buffalo), it is certainly a product of a product of livestock i.e., cow or buffalo. it would be rather illogical or irrational to say that ghee is not a milk/dairy product or to say that it is not a product of livestock. section 2(x) and 2(iv) of the act used the plural products of livestock. the legislative intention is very clear that not only a product of livestock like milk (when notified by government), butter etc., are products of livestock but even derivative items (derived from a product of livestock) are intended to be product of livestock for the purpose of the act. thus the term ghee is to be interpreted on the basis of expression products of livestock as defined in section 2(xv) of the act. whatever products are declared as such by the government by notification, they become products of livestock for purpose of the act. consequently it was held that ghee is the product of livestock and by reason of power conferred under section 3(1) read with section 3(3) of the act on them it is competent for the government to declare ghee as product of livestock for the purpose of regulating its purchase and sale, in any notified market area. [per p.s. narayana, j,(dissenting)]if livestock or agricultural produce and the categories thereof had been specified in the statute itself by appending in the schedule or otherwise, that would stand on a different footing from the present provisions of the act which contemplate the issuance of notifications in accordance with the procedure ordained by the provisions specified supra. in view of the clear definition of the livestock and products of livestock, the ghee being derivative of butter or cream, if the language employed in definition to be taken as they stand, the only conclusion would be is that the ghee would not fall within ambit of the definitions aforesaid. sections 4 & 3: [v.v.s. rao, n.v. ramana & p.s. narayana, jj] declaration of notified area held, it is only under section 3 that government are required to publish draft notification inviting objections and section 3(3) mandates to consider objections and suggestions before issuing declaration order. it is very conspicuous that section 4 does not contemplate any draft notification inviting objections and suggestions before either constituting market committee, establishing notified market area or declaring notified market area for the purpose of levy of market fees. thus, except ordaining government to issue preliminary/draft notification inviting objections at the time of issuing declaration order under section 3(3) of the act nowhere much less under section 4 contemplates issuing a notification inviting objections. when the legislature has chosen to exclude principles of natural justice, the court cannot introduce rule of audi alteram partem and render statutory provisions unworkable. in such a case, maxim, expressum facit cessare tacitum (when there is express mention of certain things, then anything not mentioned is excluded) would apply. section 7: [v.v.s. rao, n.v. ramana & p.s. narayana, jj] levy of market fee element of quid pro quo - held, levying fees and tax are two forms of exercise of sttaes taxing power. there is no quid pro quo between tax payer and public authority as tax is a part of common burden. it is also well settled that fee is charge for special service or a benefit given to a class of individual fee payers and fee collected need not have correlation with actual service in exactitude but if it is shown that substantial portion of the fee is expended or the purpose for which it is levied, it would be justified. expressum facit cessare tacitum sections 4 & 3: [v.v.s. rao, n.v. ramana & p.s. narayana, jj] meaning when there is express mention of certain things, then anything not mentioned is excluded. - 127 and chapter xiv-b were inconsistent with each other and it has to be held because of such reason that a specific provision like chapter xiv-b would displace a general provision like s.lingaraja rath, j.1. the petitioner, who was hitherto being assessed for the purpose of income-tax by the ito, ward 3, kakinada, and had been allotted gir no. l-754, has come before us complaining to have received an order dt. 26th november, 1996, transferring her file from the jurisdiction of the third respondent - ito, kakinada - to the second respondent - asstt. cit, circle i,. rajahmundry, in purported exercise of the power under s. 127(2) of the it act, 1961, for short 'the act'. 2. mr. s. ravi, learned counsel for the petitioner, has raised the question that s. 127(1) and (2) of the act contemplates issue of a notice to the assessee before an order transferring the file is passed, but that no notice has been issued to the petitioner before effecting the transfer. 3. a counter-affidavit has been filed disclosing the stand that the petitioner's father's premises was raided which yielded some materials connecting also the petitioner to the suppressed income detected for which proceedings under chapter xiv-b are initiated against her under the provisions of s. 158bd, the papers relating to the search are to be handed over to the ito, kakinada, who is the ao so far as the petitioner is concerned, but that since under s. 158bg the assessment of the block period in pursuance of the search is to be done only by an officer of the rank of the asstt. cit, the file of the petitioner has also been transferred to the concerned asstt. cit, i.e., the second respondent herein. it has also been contended that the reference to s. 127(2) in the impugned order was erroneously made and that that provision has no application since chapter xiv-b is a specific procedure to be adopted to such cases. 4. section 127(2) provides that when transfer of the file of an assessee from one ao to the other is contemplated, the step to be taken is after giving the assessee reasonable opportunity to be heard and after recording the reasons for doing so, pass the order. chapter xiv-b lays down special procedure for assessment of search cases; the asstt. cit or a person above him is the designated officer to act as an ao instead of the normal procedure of the assessment being done by the ito. while under s. 158bd the papers obtained during the search are to be handed over to the ao, who is necessarily the ito for the person about whom the satisfaction is reached, that though he is another person, other than the person whose premises has been raided, yet has undisclosed income, there is no provision as to how the records from that ao shall stand transferred to the asstt. cit or any other officer higher to him, who is to carry on the assessment. it is to be noted that under s. 158bg, it is not the asstt. cit who is necessarily the ao, but he is the officer of the lowest rank who can become the ao under chapter xiv-b. hence, it can be imagined that an order has to be passed as to who shall be the ao under s. 158bg in the case of a search. such an order can be passed only by a higher officer who may be either the cit or chief cit, as the case may be. hence, unless such an order has been passed, the ao to whom the records have been handed over under s. 158bd cannot ipso facto hand over the records to the asstt. cit, until he has been chosen to act as the ao under s. 158bg. for doing so, a procedure for transfer of the records and the passing of orders to that effect is necessary for the records to be transferred to the officer selected under s. 158bg. it is in this context that the provisions of s. 127 have to be resorted to. it is for such reason, we are unable to agree with learned standing counsel that chapter xiv-b is a self-contained special provision relating to search procedures and assessments to which s. 127 has no application. the submission would have been correct if s. 127 and chapter xiv-b were inconsistent with each other and it has to be held because of such reason that a specific provision like chapter xiv-b would displace a general provision like s. 127. but as we see it, both provisions are supplemental to each other and that the provisions of s. 127 fill in the gap between the stage of ss. 158bd and 158bg. the impugned order passed under s. 127, hence, cannot be faulted by saying that the section was not applicable. it is also not correct, as has been contended, that giving a notice under s. 127 in the event of a proceeding under chapter xiv-b would be a mere formality without any substance as records are to be compulsorily handed over to the officer under s. 158bg. while in most of the cases the submission may be correct, yet it is conceivable that in some cases, reasonable opportunity being given as contemplated under s. 127(1) or (2) of the act, the person concerned may be able to convince the authority giving the notice that he is actually unrelated or unconnected to the proceeding started under chapter xiv-b. if such conclusion is reached, the authority at that stage may disassociate the person concerned from the specific proceeding in chapter xiv-b and may not transfer the papers to the other officer. as has been fairly pointed out by learned standing counsel himself, the provisions of s. 127(1) apply when the transfer is contemplated not only between the officers of the subordinate rank but also officers either with or without concurrent jurisdiction. hence, even when the records are to be transmitted to the officer not higher in rank than the officer to whom the papers are handed over in the first instance under s. 158bd, the provisions of s. 127 are to be complied with to give notice. 5. in this view of the exposition of the relevant scope of s. 127 and ss. 158bd and 158bg and the admitted position that the petitioner was not granted any opportunity before the transfer was effected, we would accept the submission of learned counsel for the petitioner and direct the first respondent cit to hear the petitioner in the matter of transfer of her file from respondent no. 3 to respondent no. 2 and pass appropriate orders. to facilitate the process, we direct, the petitioner shall make a representation to the first respondent within two weeks from today and that on such representation being made, the first respondent shall, after giving opportunity to the petitioner to be heard, dispose of the matter within four weeks thereafter by reasoned order communicated to the petitioner. the writ petition is disposed of accordingly. no costs.