9911796707
TMI Blog1985 (12) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... s Nos. 82 and 83 of 1973 relating to the assessment years 1960-61 and 1962-63, respectively, praying that the High Court might be pleased to grant an order of injunction for restraining the Commissioner of Income-tax (1), Central Revenue Building, and/or his subordinate officers including the Income-tax Officer, Company Circle (III), from enforcing and/or realising the demand raised in the aforesaid assessment years 1960-61 and 1962-63, and from taking any steps for the recovery thereof till the disposal of the references pending in the High Court. The assessee is a Hindu undivided family. The karta of the Hindu undivided family is Lala Bansi Dhar. His father, Lala Murlidhar, died in the year 1949 in an air crash. On the death of the father, a sum of Rs. 2,49,874 was received by Lala Bansi Dhar from the insurance company on account of an accident insurance policy covering the risk of the life of the deceased. The income derived from the said amount was treated as the income of Lala Bansi Dhar and was assessed in his personal assessment. Lala Bansi Dhar was married on February 3, 1953, and son, Tilak Kumar, was born on February 3, 1956. The income from the insurance amount continue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding, that in the said appeals preferred by the assessee-Hindu undivided family on application by the assessee, the Tribunal had granted stay of recovery of the tax demanded on the condition that the assessee should furnish adequate security to the satisfaction of the Income-tax Officer, that since the matter relating to the two assessment years (1960-61 and 1962-63) was before the High Court in references under section 66(1) of the Indian Income-tax Act, 1922/section 256(1) of the Income-tax Act, 1961, similar order of stay should be granted by the High Court and prejudice would be caused to the assessee, if in spite of full tax being paid by its karta in his personal assessment, the Hindu undivided family is asked to pay tax over again in respect of the same income. counter-affidavit was filed in which a preliminary objection was raised that under the provisions of the Income-tax Act, the High Court exercised only an advisory or consultative jurisdiction and consequently had no jurisdiction or power to grant stay of the recovery of tax as prayed for in the application, and that, in fact, the grant of stay by the High Court and this court had been prohibited by the two Acts of 192 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of hearing of the appeals, it was stated by counsel on behalf of the assessee that in the decision of the Delhi High Court, ultimately the reference has been answered in favour of the assessee. So as far as the assessee in that matter is concerned, the question has become academic. The High Court of Delhi in its judgment had discussed all the relevant authorities. The references were pending under section 66(1) of the Act of 1922 for the first two years, in respect of similar appeals for the assessment years 1965-66 and 1969-70, the references were pending under section 256(1) of the Act of 1961. The scheme of section 66(1) of the Act of 1922 as well as section 256(1) of the Act of 1961 are well-known. The High Court noted and as is the case that the Act of 1922 did not and the Act of 1961 does not contain any express provision empowering the High Court or the Supreme Court to grant stay of recovery of tax including pending disposal of the reference before it or pass any order in that respect of the same. Therefore, the assessee sought to invoke the inherent jurisdiction or the ancillary powers of the courts. Prior to 1918, there was no provision for reference to the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd until the disposal of the appeal to the Supreme Court. Section 66A provides for reference to be heard by Benches of the High Courts and appeals in certain cases to this court The provisions of the Code of Civil Procedure relating to appeals to the Supreme Court, as far as might be applied in case of appeals under the section in like manner as in the case of appeals by the High Court provided that nothing in sub-section (3) shall be deemed to have effect on sub-section (5) or sub-section (7) of section 66. Sub-section (4) of section 66A provides that where the judgment of the High Court is varied or reversed in appeal under the section, effect shall be given to the order of the Supreme Court in the manner provided in sub-sections (5) and (7) of section 66 in the case of a judgment of the High Court. After the High Courts and, in cases of appeals to the Supreme Court, the courts answer the question in any manner or give certain opinion, the Appellate Tribunal would dispose of the appeals in accordance with the opinions expressed or answers given by the High Courts or the Supreme Court. Therefore, under the scheme, the appeal is kept pending before the Tribunal and the appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision was merely advisory or not. The decision or order made by the court under section 51 was merely advisory. This view was reaffirmed in CIT v. Bombay Trust Corporation [1936] 4 ITR 323 (PC). It is for this reason that section 66A of the 1922 Act expressly provided for an appeal from a decision of the High Court under section 66 of the said Act. The High Court noted that neither the 1922 Act nor the 1961 Act contained any express provision empowering the High Court or the Supreme Court to grant stay of recovery of tax pending disposal of the reference before it. The High Court in the decision under appeal held that it had inherent jurisdiction under section 66 of the 1922 Act or under section 256 of the 1961 Act to grant stay pending disposal of the reference. The High Court referred to several decisions some of which will have to be noticed here. Thereafter, on consideration of the relevant facts, the High Court granted the stay in the instant case as noted before. Reliance was placed by the High Court on the decision of the Andhra Pradesh High Court in Polisetti Narayana Rao v. CIT [1956] 29 ITR 222 (AP). The Andhra Pradesh High Court referred to the decision in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e scope of applicability of section 546 of the Code of Civil Procedure Justice Woodroffe at page 931 of the report observed: " The court has, therefore, in many cases, where the circumstances require it, acted upon the assumption of the possession of an inherent power to act ex debito justitiae and to do that real and substantial justice for the administration, for which it alone exists." Similarly, Justice Mookerjee observed at page 941 of the report as follows "It may be added that the exercise by courts, of what are called their inherent powers' or 'incidental powers' is familiar in other systems of law, and such exercise is justified on the ground that it is necessary to make its ordinary exercise of jurisdiction effectual, because, 'when jurisdiction has once attached, it continues necessaries an a the powers requisite to give it full and complete effect can be exercised, until the end of the law shall be attained' (see Works on Courts and their jurisdiction, section 27 and Wells on Jurisdiction of Courts, Chapter XVII)." These observations, however, will have to be understood in the context in which the same were made. If there was jurisdiction to do certain matters then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ramamurthy v. ITO [1956] 30 ITR 252 (AP), where Viswanatha Sastri J. observed that there was no conferment of an express power of granting stay of realisation of the tax, nor was there any power allowing the tax to be paid in instalments. The learned judge observed that neither the Appellate Assistant Commissioner nor the Appellate Tribunal was given the power to stay the collection of tax. Therefore, according to the learned judge, whether the law should not be made more liberal so as to enable an assessee who has preferred an appeal, to obtain from the appellate forum, a stay of collection of tax, either in whole or in part, on furnishing suitable security, was matter for the Legislature to consider. Referring to the decision in Polisetti Narayana Rao v. CIT [1956] 29 ITR 222 (AP), this court made an observation to the effect that " the same High Court held that stay could be granted by it pending reference of a case by the Appellate Tribunal to the High Court. This power the High Court had under section 151 of the Civil Procedure Code and under article 227 of the Constitution ". This passage, in our opinion, cannot be taken as approving the observations of the Andhra Pradesh Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was again considered by this court in Petlad Turkey Red Dye Works Co. Ltd. v. CIT [1963] 48 ITR 92 (SC). This court observed at page 98 of the report that the jurisdiction of the High Court was confined to giving an opinion. It was purely advisory and the High Court had no jurisdiction to direct the Tribunal to take fresh evidence. In Sarathy Mudaliar v. CIT [1966] 62 ITR 576 (SC), this court noted that the High Court cannot set aside the order of the Tribunal and the High Court does not sit in appeal over the judgment of the Tribunal. If the High Court found that the material facts were not stated in the statement of case, or the Tribunal had not stated its conclusion on material facts, the High Court might call upon the Tribunal to submit a supplementary statement of case under section 66(4) of the 1922 Act. It may be mentioned that it would be incidental to answering the question. In the case of CIT v. Greaves Cotton and Co. Ltd. [1968] 68 ITR 200 (SC), this court noted that it was well settled that the High Court was not a court of appeal in a reference under section 66 of the 1922 Act or under section 256 of the 1961 Act and it was not open to the High Court in such a refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avour of the assessee or the Revenue, as the case might be. Even while hearing a reference under a taxing statute, the High Court has certain inherent powers. But the extent and scope of the inherent power which can be exercised by an appellate or revisional court cannot be the extent and the scope of the inherent power of the High Court while exercising an advisory jurisdiction such as is conferred by section 27 of the Act. The inherent power which the High Court can exercise while hearing a reference under section 27 must be confined to the procedure about the hearing of a reference and to passing such orders as are ancillary or incidental to the advice which the High Court proposes to give while answering the questions. While hearing a reference under section 27, the Allahabad High Court further held that the High Court did not have the further inherent power to pass interim orders restraining the orders of the Appellate Assistant Commissioner or of the Tribunal being given effect to. It was further held that what the High Court could not do at the time of passing the final order, it could certainly not do as an interim measure in the purported exercise of its inherent power. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent power of the High Court and also of the Supreme Court had not been excluded by the general provision in section 265 of the 1961 Act which stated that notwithstanding that a reference has been made to the High Court or the Supreme Court or an appeal has been preferred to the Supreme Court, tax shall be payable in accordance with the assessment made. This section, it was submitted, did not impose any embargo on the inherent power. It was submitted that section 265 of the 1961 Act, as regards reference made to the High Court, is in pari materia with section 66(7) which also related to reference to the High Court. Section 66(7) was interpreted by the Andhra Pradesh High Court in Polisetti Narayana Rao v. CIT [1956] 29 ITR 222. It was submitted that the Legislature by adopting the identical language in the 1961 Act must be regarded as having accepted it in section 265 of the 1961 Act. It was submitted that in re-enacting similar provisions of section 66(7) in section 265, the Legislature must be regarded as intending the same meaning to the pari materia expression in the 1961 Act. For this, reliance was placed on the observations of the House of Lords in the cage of Barras v. Aber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders to dispose of the case in conformity with the judgment under section 260 of the Act. The High Court exercised a very limited jurisdiction. It did not dispose of the entire matter but its decision was confined only to the questions of law as arise from the order of the Tribunal. Therefore, it could not be said that the High Court exercised its general jurisdiction under article 227 of the Constitution in dealing with a reference. If the High Court could, in such case, exercise its powers under equity jurisdiction and grant a temporary injunction or a stay, it would have to ascertain and to go into facts for which the Income-tax Act, 1961, did not make any provision. Moreover, issuance of orders permitting collection or recovery of tax or staying such collection or recovery if made under exercise of inherent power would result in extension of the jurisdiction of the High Court under section 256 of the Act of 1961. The Calcutta High Court further was of the view that a court could not vest itself with such additional jurisdiction by invoking its inherent powers. Hence, the court, in seisin of a reference under the Income-tax Act, could not issue an order of temporary injunction, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e there is no express provision. Ex debito justitiae is to do justice between the parties. Rendering advice on the question of law referred to the courts has nothing to do with the recovery of taxes or granting stay in respect of the same. Therefore, in our opinion, it cannot be said that the High Court has inherent power or incidental power in the matter of a reference pending before it to grant stay of realisation or to grant injunction. That must remain within the jurisdiction of the appellate authority and pendency of a reference does not detract from that jurisdiction of the appellate authority. In our opinion, therefore, the High Court was in error in exercising its jurisdiction by passing an order for stay of realisation under section 151 of the Code of Civil Procedure in a pending reference. The High Court could have exercised its power if the appellate authority had not properly exercised its jurisdiction, not in reference jurisdiction but by virtue of its jurisdiction under article 226 or article 227 in appropriate cases. But that was not the case here. In that view of the matter, we are in respectful agreement with the views expressed by the Allahabad High Court in Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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