1950 (11) TMI 23 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the attachment orders issued by the Income Tax Officer under Section 46(5A) of the Income Tax Act.
2. Interpretation of "amount due" under Section 46(5A) of the Income Tax Act.
3. Applicability of Section 67 of the Income Tax Act as a bar to the application.
4. Powers of the High Court under Article 226 of the Indian Constitution.
5. Adequacy of legal remedy provided by Section 33A of the Income Tax Act.

Detailed Analysis:

1. Validity of the Attachment Orders Issued by the Income Tax Officer:
The petitioner, an American citizen and now a citizen of India, was assessed income tax for the assessment year 1946-47, resulting in a tax liability of Rs. 5,30,526. After partial payments, Rs. 4,67,657 remained due. The Income Tax Officer issued a notice of attachment under Section 46(5A) to the petitioner's employer, Chrestian Mica Industries Ltd., requiring them to pay any money due to the petitioner to the Income Tax Officer. Another notice was issued on 18-3-1949, after the Certificate Officer had already registered the case for recovery under the Bengal Public Demands Recovery Act, 1913. The petitioner applied for payment in instalments, which was granted at Rs. 5,000 per month by the Certificate Officer on 25-5-1950. The petitioner requested the Income Tax Officer to withdraw the attachment notices in light of this instalment order, but the request was allegedly rejected.

2. Interpretation of "Amount Due" under Section 46(5A) of the Income Tax Act:
The crux of the issue was whether "amount due" under Section 46(5A) refers to the total tax liability or the instalments as ordered by the Certificate Officer. The petitioner's counsel argued that the "amount due" should be interpreted as the instalments due per month, i.e., Rs. 5,000, as per the Certificate Officer's order. The Income Tax Officer, however, maintained that it referred to the entire outstanding amount. The court accepted the petitioner's interpretation, stating that the "amount due" should be the instalments as they become due, to avoid nullifying the instalment order granted by the Certificate Officer.

3. Applicability of Section 67 of the Income Tax Act as a Bar to the Application:
Section 67 of the Income Tax Act bars any suit, prosecution, or other proceedings against any officer for actions done in good faith under the Act. The respondent argued that this section barred the petitioner's application. The court, however, noted that the High Court's powers under Article 226 of the Indian Constitution are not fettered by Section 67. It emphasized that the court could interfere if the action of the executive was beyond the powers conferred by the Act or was mala fide. The court found no evidence of bad faith but held that the Income Tax Officer's actions were beyond the scope of the powers conferred by Section 46(5A).

4. Powers of the High Court under Article 226 of the Indian Constitution:
The court highlighted that Article 226 provides the High Court with wide powers to issue directions, orders, or writs for the enforcement of fundamental rights and for any other purpose. These powers are not subject to any restrictions imposed by existing laws, including the Income Tax Act. The court ruled that Article 226 is an overriding provision and is not controlled by Section 67 of the Income Tax Act.

5. Adequacy of Legal Remedy Provided by Section 33A of the Income Tax Act:
The respondent argued that the petitioner had an adequate remedy under Section 33A of the Income Tax Act, which allows for revision by the Commissioner. However, the court found that this remedy was not adequate as it was discretionary and not a matter of right for the petitioner. Moreover, the attachment order in question was over a year old, making it ineligible for revision under Section 33A. The court concluded that the remedy provided by Section 33A was neither convenient nor effective, thus not barring the High Court's intervention under Article 226.

Conclusion:
The court concluded that it was incumbent on the Income Tax Officer to either withdraw or revise the attachment order dated 18-3-1949 to align with the instalment order granted by the Certificate Officer. The petition was allowed, and the Income Tax Officer was directed to revise the attachment order to be consistent with the instalment order. The petitioner was awarded the costs of the application, certified for two counsel.