1955 (9) TMI 55 - HC - Income Tax

Issues Involved:
1. Jurisdiction of the High Court to stay the collection of income-tax arrears.
2. Applicability of Section 66(7) of the Income-tax Act.
3. Invocation of Section 151 of the Civil Procedure Code and Article 227 of the Constitution of India.
4. Jurisdictional limitations concerning the Commissioner of Income-tax located outside Andhra Pradesh.

Issue-wise Detailed Analysis:

1. Jurisdiction of the High Court to Stay the Collection of Income-tax Arrears:
The petitioner sought a stay on the collection of income-tax arrears pending the disposal of a reference under Section 66(2) of the Income-tax Act. The High Court had previously directed the Tribunal to state a case and submit a question of law for its opinion. The Advocate-General contended that the High Court lacked jurisdiction to issue such an order, arguing that the Court's role under Section 66(2) is merely consultative and advisory. He emphasized that the High Court has no power to pass a decree or order under the Income-tax Act, citing the non obstante clause in Section 66(7) as a bar to such orders.

2. Applicability of Section 66(7) of the Income-tax Act:
Section 66(7) states that income-tax shall be payable in accordance with the assessment made, notwithstanding a reference to the High Court. The proviso allows for a refund if the assessment amount is reduced as a result of the reference. The Advocate-General argued that this clause prevents the High Court from directing a stay. However, the petitioner's counsel invoked the Court's inherent powers under Section 151 of the Civil Procedure Code and Article 227 of the Constitution, arguing that the proviso to Article 225 removes limitations on the High Court's original jurisdiction concerning revenue matters.

3. Invocation of Section 151 of the Civil Procedure Code and Article 227 of the Constitution of India:
The Court considered whether its inherent powers under Section 151 of the Civil Procedure Code could be invoked to stay the collection of revenue. The Court referenced past judgments, including Hukum Chand Boid v. Kamalanand Singh, which recognized the inherent power of the Court to act ex debito justitiae. The Court concluded that Section 66(7) does not define the scope of the High Court's power to stay proceedings and agreed that Section 151 could be invoked in a proper case. Additionally, the Court examined its jurisdiction under Article 227, which extends to judicial superintendence, as affirmed by the Supreme Court in Waryam Singh v. Amarnath. The Court acknowledged that while Article 227 should be used sparingly, it could be invoked where no other remedy is available.

4. Jurisdictional Limitations Concerning the Commissioner of Income-tax Located Outside Andhra Pradesh:
The Advocate-General raised an objection regarding the jurisdiction of the High Court over the Commissioner of Income-tax in Hyderabad, who is beyond the Court's territorial jurisdiction. The Court agreed that its superintendence under Article 227 and powers under Article 226 are limited to its territorial jurisdiction. However, the petitioner's counsel argued that the order of collection was enforced by an Income-tax Officer within Andhra Pradesh, suggesting that directions could be issued to the local officer. The Court acknowledged the jurisdictional anomaly but found it unnecessary to resolve this issue for the current case.

Conclusion:
The Court dismissed the petition, stating that mere inability to pay by the assessee is not a sufficient ground for directing a stay on the collection of tax. The circumstances of the case did not warrant interference, as they were not substantially different from other cases where references were pending. The petition was dismissed with costs.

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