T.R. Subramonia Iyer Vs. Income-tax Officer, New Delhi and anr. - Court Judgment

T.K. Joseph, J.

1. This is an application under Article 226 of the Constitution of India. The 1st Respondent is the Income-tax Officer, First Additional Contractors' Circle New Delhi and the 2nd Respondent. The Collector of Trivandruiri District. The petitioner was' a partner of 'V. Industrials' Trivandrum, a firm in partnership carrying on business at Trivandrum. The petitioner's case is that the firm was supplying stores to the War Supplies Department of the Government of India in 1942-1943 on the basis of contracts entered into at Trivandrum. The goods were manufactured and delivered at Trivandrum & payment was also received at Trivandrum. The firm had paid income-tax to the State Government for the relevant period. The 1st Respondent also assessed the Firm to income-tax for the identical period. The petitioner is not aware of any notice regarding such 'assessment proceedings except a demand made by the Income-tax Officer, Tirunelveli to which he sent a reply deny-ing, his liability to pay tax and questioning the jurisdiction of the 1st Respondent to make the assessment. However he received a notice from the 2nd Respondent demanding payment of a sum of Rs. 2780-3-0 as income-tax. This demand is illegal and without jurisdiction. The assessment itself was without jurisdiction. The recovery of tax is barred under Section 46(7) of the Income-tax Act. The 2nd Respondent has no right to resort to the provisions of Act VII of 1951 for recovery of tax alleged to be due under the Indian Income-tax Act prior to the extension of the Act to tin's State. The Income-tax Officer of Tirunelveli on whose request the 2nd Respondent has initiated proceedings had no jurisdiction to recover tile tax. On these grounds the petitioner prayed for the following reliefs:

(i) To call upon the 2nd counter-petitioner to produce or cause to be produced before this Honourable Court any legal warrant or authority for making the demand on the petitioner as stated in the Notice No. 7773 dated 23-3-1955.

(ii) To remove or cause to be removed the said Notice and all proceedings relating thereto into this Honourable Court and to Quash the same.

(iii) To prohibit or to restrain the counter-petitioners from making any demand recovery from the petitioner or the sum mentioned in the said notice or from taking other or further action towards recovering the same.

On behalf of the 1st Respondent a counter-affidavit was filed by the Income-tax Officer, Tirunelveli stating that the assessment was made by the 1st Respondent as the assessed income arose in what was then known as British India. The assessment was made after notice to the petitioner, The allegation that no notice was sent to him by the 1st Respondent was denied and a postal acknowledgment signed by the petitioner was produced. The assessment was made under Section 23(4) of the Income-tax Act as the petitioner did net file any return. It is further stated that the contract was made in Delhi and the payments were also made in Delhi. The Income-tax Officer of New Delhi had therefore jurisdiction to assess the Firm. The allegation that the proceedings started by the 2nd Respondent were invalid was denied. It was also stated that this was not fit case for invoking the extraordinary jurisdiction of this court as the petitioner could seek effective remedies under the Income-tax Act.

2. Shri H. Ramakrishna Iyer, learned counsel for the petitioner contended that the order of assessment made by the Income-tax Officer, New Delhi on 20th February 1948 was without jurisdiction as the petitioner was a subject of the State of Travan-core an independent sovereign State at that time. The petitioner was residing in and carrying on business in the State of Travancore and the State Authorities assessed him to tax on the identical amount. The order of assessment was sought to be quashed on this ground'. We are unable to grant this prayer. The 1st Respondent who made the order of assessment is outside the territorial jurisdiction of this court and Shri Ramakrishna Iyer conceded that in view of the division of the Supreme Court this court had no jurisdiction to issue a writ quashing the order of assessment. However ha wanted us to express an opinion on the validity ofthe assessment. We do not consider it proper to express any opinion regarding the order of assessment which was made before the Constitution of India was passed. It may also be stated that there is no specific prayer in the petition for quashing the order of assessment. This prayer must therefore be refused.

3. The matter which is properly before us is the validity of the proceedings initiated by the 2nd Respondent, the Collector of Trivandnim under the Revenue Recovery. Act, on the basis of the certificate issued by the Income-tax Officer, Tirunelveli. The certificate in question has been produced by the 2nd Respondent and it reads as follows:

'This is to certify that the sum of Rs. 2,780-13-0 (Rupees Two thousand seven hundred and eighty and annas thirteen only) which is due from M/s. V. Industrial, c/o Travancore War Supply Syndicate, Trivandrum, Travaneorc State on account of income-tax/super-tax and penalty 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 it is an arrear of land-revenue.'

This certificate purports to have been issued under Section 46(2) of the Indian Income-tax Act which is as follows:

'The Income-tax Officer may forward to the Collector a certificate under his signature specifying the amount of arrears due from an assessee, and the Collector, on receipt of such certificate-shall proceed to recover from such assessee the amount Specified therein as it were an arrear of land revenue;

Provided that without prejudice to any other powers of the Collector in this behalf, he shall for the purpose of recovering the' said amount have the powers which under the Code of Civil Procedure, 1908, (V of 1908) a Civil Court has for the purpose of the recovery of an amount due under a decree'.

On receipt of a proper certificate the Collector is authorised under the Indian Revenue Recovery-Act to initiate proceedings for recovery of tax. Sections 3 and 5 which govern the matter may be extracted:

'3 (1) Where an arrear of land-revenue, or a sum recoverable as an arrear of land-revenue, is payable to a Collector by a defaulter being or having property in a district other than that in which the arrear accrued or the sum is payable, the Collector may send to the Collector, of that other district a certificate in the form as nearly as may be of the schedule stating.

(a) the name of the defaulter & such other particulars as may be necessary for his identification and

(b) the amount payable by him and the account on which it is due.

(2) The certificate shall be signed by the Collector making it, (or by any officer to whom such Collector may, by order in writing, delegate this duty) and, save as otherwise provided by this Act, shall bo conclusive proof of the matters therein stated.

(3) The Collector of the other district shall, on receiving the certificate proceed to recover the amount stated therein as if it were an arrear of land-revenue which had accrued in his own district.

'Section 5. Where any sum is recoverable as an arrear of land revenue by any public officer other than a Collector or by any local authority, the Collector of the district in which the office of that officer or authority, proceed to recover the sum as if it were an arrear of land-revenue which has accrued in his own district, and may send a certificate of the amount to, be recovered to the Collector of another district under the foregoing provisions of this Act, as if the sum were payable to himself.

Here the amount is due to the Income-tax Officer, New Delhi and under Section 5 he has to request the Collector of Delhi to recover the same. As the person from whom the tax is to be recovered is Outside the Collector's District the Collector of Delhi has to send a certificate to the Collector of Trivendrum and it is only on receipt of such a certificate that the latter can lake proceedings under the Revenue Recovery Act. These provisions of the Revenue Recovery Act have not been complied with in this case. Instead of requesting the Collector or Delhi the 1st Respondent appears to have requested the Income-tax Officer of Tirunelveli to have the amount collected. There is no provision in the Income-tax Act or the Revenue Recovery Act which enables him to request another Income-tax Officer to make the collection. The Income-fax Officer to whom tax is due may send a certificate to the Collector of his District but not to another officer as was done in this case. The certificate on which the 2nd Respondent is now acting is not one sent by the Collector of another District. Even if it were an assessment made by the Income-tax Officer Tirunelveli he could issue acertificate only to the Collector of Tirunelveli and not to the Collector of Trivandrum. A Collector Can act only on the certificate of a public officer or local authority having office in his District or on the certificate of the Collector, of another District. Section 4(1) of the Revenue Recovery Act provides that when the Collector of a District receives a certificate under this Act he may issue a proclamation prohibiting the transfer or charging any immovable property belonging to the defaulter in the district and also take further steps for realisation of the amount specified in the certificate. Thus the Collector gets jurisdiction only on receipt of a certificate under the Revenue Recovery Act sent by a person competent to do so. Such a certificate has not been received by the 2nd Respondent and the proceedings taken by him are therefore wanting in jurisdiction. This cannot be considered merely as an irregularity in procedure since the Collector gets jurisdiction' only on receipt of a valid certificate. The proceedings for recovery of tax by the 2nd Respondent must therefore be quashed. The question whether proceedings for recovery of tax are barred under Section 66(7) does not therefore arise.

4. As the proceedings taken by the 2nd Respondent are without jurisdiction, the steps taken by him for recovery of tax from the petitioner are quashed. The 2nd Respondent is also prohibited from taking further steps on the basis of the certificate received by him from the Income-tax Officer, Tirunelveli. The Original Petition is allowed as indicated above. In the circumstances of the case we make no order as to costs.