1971 (12) TMI 14 - HC - Income Tax

Petitioner applied to the Central Board of Revenue under section 34(1B) for a settlement of the matter relating to the assessment -proposed settlement was accepted an order was passed under section 34(1B) as per which the proportion of appreciation in value of shares was to be paid in future - Whether the amount can be demanded without hearing the assessee and whether it could be questioned in a writ - Even if technically it may have been necessary for the Central Board of Revenue to have passed another order quantifying the amount and to give the petitioner an opportunity of hearing before such quantification was made - the petitioners having failed to prove that they suffered any injury or that any legal right of theirs has been affected by the demand made from them, they cannot invoke the extraordinary jurisdiction of this court

Summary

Issues:
Appeal against dismissal of writ petition challenging Income-tax Officer's order to pay a sum under section 34(1A) of the Income-tax Act, 1922. Interpretation of settlement terms requiring payment of additional sum based on share appreciation. Jurisdiction of court under article 226 of the Constitution. Contention regarding quantification by Central Board of Revenue under section 34(1B) and principles of natural justice.

Analysis:

The judgment pertains to an appeal against the dismissal of a writ petition challenging the Income-tax Officer's order to pay a sum under section 34(1A) of the Income-tax Act, 1922. The petitioner had applied for settlement of assessment for certain years, which was accepted by the Central Board of Revenue under section 34(1B). The settlement terms included a clause requiring the assessee to pay a further sum equal to 2/3rd of the net appreciation in the market value of shares. The amount demanded was based on this clause, and the Income-tax Officer issued orders for payment, which the petitioners contested. The single judge dismissed the writ petition, holding that the liability to pay the amount was established under the settlement terms, and the petitioners failed to prove any excess demand or injury caused by the order.

The appellant contended that section 34(1B) did not allow for a second quantification by the Income-tax Officer and argued that the amount should have been specified by the Central Government through a civil suit. Additionally, the appellant raised concerns regarding the lack of opportunity to be heard and adherence to principles of natural justice in determining the amount. However, the court found that the settlement clearly outlined the assessee's liability to pay the additional sum based on share appreciation, as per the terms agreed upon with the Central Board of Revenue.

The court emphasized that the liability to pay the amount arose from the settlement terms, and the petitioners had already paid the demanded sum. It was noted that the petitioners did not demonstrate any injury or excessiveness in the amount computed by the Income-tax Officer. Even if there were technical deficiencies in quantification or procedural aspects, the petitioners had accepted the liability under the settlement and had satisfied it, precluding them from seeking court intervention to avoid the payment obligation.

Ultimately, the court upheld the single judge's decision, concluding that the petitioners had accepted the liability under the settlement terms and had failed to establish any grounds for challenging the demand or the order issued by the Income-tax Officer. The appeal was dismissed with costs, affirming the validity of the demand and the petitioners' obligation to fulfill it as per the settlement agreement.

Judgment: Appeal dismissed.