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TMI Blog1965 (3) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Officer issued a recovery certificate under section 46(2) of the Income-tax Act, 1922, for Rs. 33,695. By an order of the Income-tax Appellate Tribunal dated December 6, 1961, the amount of penalty imposed on the petitioner-firm was reduced to Rs. 5,900. The total amount due from the petitioner thus stood reduced by a sum of Rs. 13,300. On February 7, 1961, the Income-tax Officer had sent a communication to the Collector stating that the arrears outstanding from the petitioner were Rs. 16,995.70 nP. The petitioner has characterised this document as a fresh recovery certificate. In the counter-affidavit the Income-tax Officer has stated that this was not a fresh recovery certificate but only an intimation to the Collector about the details of the assets owned by the firm as also some of the outstanding arrears. From paragraph 11 of the petition it appears that this amount of Rs. 16,995.70 nP. consisted of a sum of Rs. 2,500 only on account of penalty for 1949-50. The petition does not state that this document included the balance of the penalty due for the next two succeeding years. The total penalty on February 7, 1961, was Rs. 19,200. It had not been reduced till then. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Act makes it retrospective. It says : " The provisions of this Act shall apply and shall be deemed always to have applied, in relation to every notice of demand served upon an assessee by any taxing authority under any Scheduled Act whether such notice was or is served before or after the commencement of this Act. " Hence, the provisions of this Act will apply to the notice of demand served upon the petitioner and for non-compliance whereof, the recovery certificate was issued on July 20, 1959. Section 3 of this Act validates certain proceedings. Its material provisions are that " Where Government dues are reduced in appeal or other proceedings, it shall not be necessary for the taxing authority to serve upon the assessee a fresh notice of demand ", but its sub-section (1)(b)(ii) and (iii) says : " (ii) The Taxing Authority shall give intimation of the fact of such reduction to the assessee and, where a certificate has been issued to the Tax Recovery Officer for the recovery of such amount, also to that officer. (iii) Any proceedings initiated on the basis of the notice or notices of demand served upon the assessee before the disposal of such appeal or proceeding may be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the validating Act. The argument is that these provisions do not operate with retrospective effect. Section 5 of this Act says that the provisions of this section apply and shall be deemed always to have applied in relation to every notice of demand whether such notice was served before or after the commencement of this Act. So in relation to a notice of demand served even prior to the commencement of this Act, the provisions are available and applicable. The phrase " shall be deemed always to have applied " makes the position clear beyond doubt that the provisions of sub-clauses (2) and (3) of clause (b) will have to be complied with even in a case where the notice of demand was served prior to the commencement of this Act. The provisions of sub-clauses (2) and (3) are mandatory in nature. Non-compliance therewith will render the proceedings a nullity and clause (c) will not be available to save the proceedings. In the present case the original demand was for Rs. 33,695. On December 6, 1961, the demand on account of penalty was reduced by a sum of Rs. 13,300. From this date on the proceedings could validly have continued for recovery of the balance, namely, Rs. 20,000 and odd. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4, 1964, the petitioner made an application to the Sub-Divisional Officer, who was conducting the recovery proceedings, stating that Rs. 8,500 had been paid towards the arrears of demand against the petitioner and that the Inspecting Assistant Commissioner has stayed the demand. A copy of the stay order was also annexed with this application and it was prayed that the recovery proceedings be stayed and that no steps for the confirmation of sale be taken in respect of the properties which have been auctioned during the operation of the aforesaid stay order. On April 7, 1964, a letter was issued from the Collector's office. It requested the Commissioner to confirm the sales of the auctioned properties. A copy of this letter is annexure " I " to the petition. It does not mention the fact that a stay order is in operation. The petition states that the Commissioner was not apprised of the stay order. On April 14, 1964, by an order No. 2118/III-50 (62-63) (copy whereof is annexure " J " to the petition), the Commissioner confirmed the sales of all the three properties. The Income-tax Officer in his counter-affidavit has admitted all these facts. Sri Rati Ram Singh, the Naib Tahsildar, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has been made a party to this petition. No affidavit has been filed on his behalf. From the other affidavits on the record, it is clear that the Inspecting Assistant Commissioner did not afford the petitioner any opportunity to clear those misapprehensions in his mind or to explain them. He vacated the stay order ex parte. It was, in my opinion, incumbent on the Inspecting Assistant Commissioner to have afforded an opportunity for explanation to the petitioner before vacating the stay order. This order does violate the principles of natural justice. The power to grant or vacate a stay may be quasi-judicial or administrative in nature. Even if it is administrative, it is not an arbitrary one. It has to be exercised according to the rules of reason and justice and not according to one's fancy or humour. The discretion vested in the Inspecting Assistant Commissioner is not arbitrary and fanciful : See Minister of National Revenue v. Wright's Canadian Ropes Ltd. Article 226 of the Constitution confers on the High Court ample jurisdiction to set aside an arbitrary order passed by a statutory authority. Appropriate orders, as may be necessary to meet the ends of justice, can be passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing directed to undo the wrong by restoring possession, the purchasers will, in the eye of law, be duty bound to aid and assist them. At common law they will be deemed entrusted with the public duty to give back possession to the authorities. Mandamus lies against a private person or body entrusted by common law with a public duty : Arunachalam Chettiar Firm v. Kaleeswarar Mills. When all concerned parties are before the court, a complete and an effective order is appropriate. The second preliminary objection urged was that on the petitioner's own showing the joint Hindu family which was assessed to tax has stopped business since 1955-56 and has ceased to exist since 1956 owing to the institution of a partition suit (Suit No. 13 of 1956) between Chandra Shekher, one of the members of the family, and the other members, in the Court of the Civil Judge, Orai, which had been decreed. The institution of the partition suit or its being decreed will not cause disruption of the Hindu undivided family for the purposes of the Income-tax Act. Section 25A, clause (3) of the Income-tax Act, 1922, says : " Where such an order has not been passed in respect of a Hindu family hitherto assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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