1978 (12) TMI 9 - HC - Income Tax

Summary

Issues Involved:
1. Authority of the Central Government to issue the impugned notification.
2. Estoppel against the Central Government.
3. Violation of Article 14 of the Constitution of India.

Detailed Analysis:

Re: Point (a) - Authority of the Central Government to Issue the Impugned Notification
The petitioner contended that as of the date of the impugned notification, the Central Government lacked the authority to amend or rescind the earlier notification since such power was only introduced on September 9, 1972, through a proviso to Section 297(2)(1) of the Income Tax Act, 1961. The court held that this argument was unsound. The power to issue and rescind notifications was inherent in the original statutory power under Section 60A of the Indian Income Tax Act, 1922. The court referred to Section 21 of the General Clauses Act, which provides that the power to issue a notification includes the power to rescind it. Therefore, the Central Government had the authority to issue the impugned notification even before the proviso was introduced in 1972.

Re: Point (b) - Estoppel Against the Central Government
The petitioner argued that the Central Government was estopped from withdrawing the exemption because it had induced the petitioner to lease part of the Mysore Palace. The court found that this contention lacked factual and legal basis. The allegation that the government pressured the petitioner to lease out part of the palace was denied by the respondents and was not supported by the petitioner's own earlier representation. Additionally, the court noted that estoppel cannot be applied against the exercise of statutory power by the government unless it is necessary to prevent fraud or manifest injustice. The circumstances pleaded by the petitioner were insufficient to sustain the plea of estoppel.

Re: Point (c) - Violation of Article 14 of the Constitution of India
The petitioner claimed that the impugned notification was discriminatory and violated Article 14 because other Rulers who had let out portions of their palaces did not face similar withdrawal of exemptions. The court observed that the allegations were general and lacked specificity. The respondents denied the allegations and provided an example of another palace where the exemption was withdrawn under similar circumstances. The court emphasized that a challenge based on Article 14 must be specifically pleaded and proved. The petitioner's allegations did not meet the required standards of specificity and were insufficient to sustain the plea of hostile discrimination.

Conclusion:
The court dismissed the writ petition, holding that the Central Government had the authority to issue the impugned notification, the plea of estoppel was not substantiated, and the claim of violation of Article 14 lacked specificity and proof. Consequently, the rule was discharged, and each party was directed to bear its own costs.