1985 (3) TMI 59 - HC - Wealth-tax

Summary

Issues Involved:
1. Maintainability of the application for stay of reassessment proceedings.
2. Jurisdiction and inherent powers of the High Court under Section 27 of the Wealth-tax Act.
3. Scope of the High Court's advisory jurisdiction.
4. Powers under Article 227 of the Constitution.
5. Impact of the pending reference on reassessment proceedings.

Issue-wise Detailed Analysis:

1. Maintainability of the application for stay of reassessment proceedings:
A preliminary objection was raised regarding the maintainability of the application for stay of reassessment proceedings. It was argued that the High Court, while hearing a reference under Section 27 of the Wealth-tax Act (W.T. Act), acts only in an advisory jurisdiction and cannot issue an order of stay or injunction as an interim measure. The court concluded that it does not have the inherent power to grant such relief while exercising its advisory jurisdiction.

2. Jurisdiction and inherent powers of the High Court under Section 27 of the Wealth-tax Act:
The court examined whether it has inherent power while hearing a reference under Section 27 of the W.T. Act. It was clarified that the High Court does have inherent power, as established in cases like Jaipur Mineral Development Syndicate v. CIT and Lakshmi Industries & Cold Storage Co. (P.) Ltd. However, this inherent power is limited to procedural matters and passing orders ancillary or incidental to the advice the court proposes to give while answering the questions referred to it.

3. Scope of the High Court's advisory jurisdiction:
The court reiterated that its jurisdiction under Section 27 of the W.T. Act is purely advisory, as held in several Supreme Court cases such as CIT v. Scindia Steam Navigation Co. Ltd., Venkataraman & Co. (P.) Ltd. v. State of Madras, and Sarathy Mudaliar v. CIT. The High Court does not exercise appellate or revisional jurisdiction over the Tribunal but acts in an advisory capacity to answer the questions referred to it.

4. Powers under Article 227 of the Constitution:
The court considered whether it could exercise its powers under Article 227 of the Constitution to grant the stay. It concluded that the power of superintendence under Article 227 is to be exercised sparingly and only to ensure that subordinate courts function within their authority. It would not be a proper exercise of discretion to direct the Wealth-tax Officer (WTO) not to pass a fresh order of assessment when he is obligated to do so by the order of remand passed by the Appellate Assistant Commissioner (AAC) and affirmed by the Tribunal.

5. Impact of the pending reference on reassessment proceedings:
The court addressed the concern that the reference might become infructuous if the WTO passes a fresh order of assessment. It was clarified that any decision by the WTO in pursuance of the order of remand would be subject to the result of the opinion of the High Court. The reference will not become infructuous because the Tribunal will have to decide the appeal in light of the High Court's answers to the questions referred.

Conclusion:
The court dismissed the application for stay of reassessment proceedings, concluding that it does not have the jurisdiction to grant such relief while exercising its advisory jurisdiction under Section 27 of the W.T. Act. The inherent power of the High Court is confined to procedural matters and passing orders ancillary to the advice it proposes to give. The power under Article 227 of the Constitution is limited to ensuring that subordinate courts function within their authority and does not extend to granting stays in such cases. The reassessment proceedings will not render the reference infructuous, as any decision by the WTO will be subject to the outcome of the reference.