1975 (7) TMI 1 - SC - Income Tax

Claim that income is from agriculture - High Court held for the initial assessment year that income is from agriculture - assessee sought refund of tax on the basis of HC s decision for the subsequent years - There is no statutory duty on Central Board to consider applications for refund

Summary

Issues Involved:
1. Challenge under Article 226 of the Constitution.
2. Laches and delay in seeking remedy.
3. Nullity of assessment orders.
4. Statutory duty of the Central Board of Direct Taxes to grant refunds.
5. Justice versus legality.

Issue-wise Detailed Analysis:

1. Challenge under Article 226 of the Constitution
The appellant sought to challenge the assessment orders under Article 226 of the Constitution, arguing that the High Court had the power to quash orders that were "loudly illegal, deprivatory of property, and promoting unjust enrichment by the State." The court examined whether the orders of assessment, which had not been assailed through regular statutory remedies, could still be challenged under writ jurisdiction. The court concluded that while writ jurisdiction is not inhibited by statutory finality, it is subject to temporal and discretionary restraints, such as laches and unexplained delays.

2. Laches and Delay in Seeking Remedy
The appellant was found guilty of laches, as he had allowed significant time to lapse before seeking a remedy. The High Court had dismissed the writ petition on the grounds of finality of the assessment orders and the delay in filing the petition. The Supreme Court upheld this view, stating that the appellant's inaction and delay were unjustifiable. The court emphasized that Article 226 is not a blanket power and that unexplained delays could lead to the denial of redress.

3. Nullity of Assessment Orders
The appellant argued that the assessment orders were nullities because they taxed agricultural income, which is beyond the jurisdiction of the Income-tax Act. The court acknowledged that agricultural income is outside the legislative competence of Parliament and thus beyond the jurisdiction of the Income-tax Officer. However, the court also noted that the appellant's failure to appeal the assessments annually meant that the orders had become final and unassailable except through extraordinary writ jurisdiction, which was not justified due to the delay.

4. Statutory Duty of the Central Board of Direct Taxes to Grant Refunds
The appellant contended that the Central Board of Direct Taxes had a statutory duty to grant refunds for taxes illegally levied. The court found no statutory duty on the Central Board to consider applications for refunds in cases where assessment orders had become final due to the appellant's default. Therefore, a writ of mandamus could not be issued. The court suggested that while the Central Board had no judicial power to direct refunds, it could still take a liberal approach and reconsider the levy from an equitable standpoint.

5. Justice versus Legality
The appellant argued that justice was on his side, even if the law was against him. The court acknowledged that while the High Court had declared the income as agricultural and thus not liable to tax, the appellant's failure to appeal timely meant that the assessments were final. The court emphasized that judicial activism should not override legislative judgment and that in clear cases, the court has no option but to follow the law. The court concluded that the appeal for relief in the name of justice must fail, as the assessments were final and the Central Board had no judicial power to upset them.

Conclusion
The Supreme Court dismissed the appeal, stating that the appellant's delay and inaction were unjustifiable. The court upheld the High Court's discretion in refusing relief due to laches and emphasized that statutory remedies must be pursued diligently. The court also noted that while the Central Board could take an equitable approach, there was no statutory duty to grant refunds, and thus a writ of mandamus could not be issued. The parties were directed to bear their respective costs.