1965 (3) TMI 23 - SC - Income Tax

Whether a reference would lie to the High Court against an order of the Commissioner? Held that - If a tax is due in consequence of an order from an assessee, the Income-tax Officer is under a duty to serve on him a notice of demand. Pursuant to the directions given by the Tribunal the Income-tax Officer made fresh calculations under the head Capital gains and ascertained the amount due from the assessee. In the circumstances, pursuant to the said calculation, he should have passed an order and issued a notice of demand to the assessee. In not doing so, it must be held that the Income-tax Officer did not discharge his duty which he was bound to do under the Act ; with the result he had become amenable to a writ of mandamus directing him to do what he should have done under the Act. In the result, the order of the High Court is set aside and we issue a writ of certiorari quashing the order of the Commissioner and a writ of mandamus directing the Income-tax Officer to pass an order and issue a notice in accordance with law.

Issues Involved:
1. Maintainability of the writ of certiorari against the Commissioner's order under section 33A of the Income-tax Act.
2. Adequacy of the affidavit supporting the writ petition.
3. Applicability of the Bombay High Court's decision to the present case.
4. Whether a revision lay to the Commissioner under section 33A(2) of the Act.
5. Obligation of the Income-tax Officer to issue a notice of demand under section 29 of the Act.

Issue-wise Detailed Analysis:

1. Maintainability of the writ of certiorari against the Commissioner's order under section 33A of the Income-tax Act:

The court first addressed the preliminary objection regarding the maintainability of the writ of certiorari. It was argued that the order of the Commissioner under section 33A was an administrative act and thus not subject to certiorari. The court referred to Article 226 of the Constitution, which confers wide powers on High Courts to issue writs for the enforcement of rights. The court emphasized that the scope of certiorari in India is broader than in England and includes quasi-judicial acts. The court concluded that the Commissioner's order under section 33A(2) involved judicial functions, as it affected the rights of the assessee and required the Commissioner to act judicially. Therefore, the writ of certiorari was maintainable.

2. Adequacy of the affidavit supporting the writ petition:

The High Court dismissed the writ petition on the ground that the affidavit filed in support was unsatisfactory. The Supreme Court examined the relevant rule (sub-rule (2) of rule 1 of Chapter XXII of the Rules of Court of the Allahabad High Court) and found that the application complied with the rule. The deponent, Dhruva Das, was fully conversant with the facts and had based his affidavit on personal knowledge and perusal of records. The court held that the affidavit was sufficient and that the High Court should have provided an opportunity to rectify any defects instead of dismissing the petition in limine.

3. Applicability of the Bombay High Court's decision to the present case:

The High Court had found that the facts in the Bombay High Court's decision were different from the present case. The Supreme Court disagreed, noting that the Bombay decision was based on the same documents and transaction. The court did not express an opinion on the correctness of the Bombay decision but acknowledged that it raised an arguable question requiring serious consideration.

4. Whether a revision lay to the Commissioner under section 33A(2) of the Act:

The court examined whether a revision was maintainable under section 33A(2) against the Income-tax Officer's order. It was found that no appeal lay against the computation made by the Income-tax Officer to the Appellate Assistant Commissioner, as no order under section 23(3) was made nor a regular notice of demand issued. Consequently, the Commissioner had the power to revise the order under section 33A(2).

5. Obligation of the Income-tax Officer to issue a notice of demand under section 29 of the Act:

The court addressed whether the Income-tax Officer was required to issue a notice of demand under section 29. It found that the Officer, having recalculated the capital gains as directed by the Tribunal, was obligated to issue a notice of demand. The failure to do so was a neglect of statutory duty, making the Officer amenable to a writ of mandamus.

Conclusion:

The Supreme Court set aside the High Court's order, issued a writ of certiorari quashing the Commissioner's order, and directed the Income-tax Officer to issue a notice of demand in accordance with law. The appeal was allowed, and costs were awarded to the appellant.

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