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TMI Blog1967 (8) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... Ward, Nellore, in Writ Petitions Nos. 539, 540 and 1540/64 and the Income-tax Officer, Mica Circle, Nellore, in Writ Petition No. 541/64 from proceeding with his proposals to reopen the petitioner's assessments. The petitioner in Writ Petition No. 541/64, Raja of Venkatagiri, challenged the notice issued to him in or about March, 1964, for the proposed reopening of assessment from 1950-51 onwards under section 148 of the Indian Income-tax Act, on the ground that the interim payments made by the Government under the Madras Estates Abolition Act XXVI of 1948, were income and as such they had escaped assessment. Writ Petitions Nos. 539 and 540 of 1964 were filed by Kumara Raja of Venkatagiri, the son of the petitioner in Writ Petition No. 541/64. The former was filed as karta of the Hindu undivided family consisting of himself and his two minor sons and the latter as individual. Writ Petition No. 1540 of 1964 is by the minor son of the petitioner in Writ Petitions Nos. 539 and 540 of 1964. In all the aforesaid writ petitions, the petitioners had challenged the notice and the proposed reopening of the assessment of the interim payments made by the Government under the Madras Estate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch case there would be no difficulty in reaching the conclusion that these interim payments were income liable to assessment under the Income-tax Act. All these writ petitions were disposed of by a single judgment and it was held that these interim payments were in the nature of revenue amounts payable for the non-payment of compensation on the abolition of the estate on which date ordinarily the landholders would be entitled to it. Originally these writ appeals were posted along with R.C. 35/63 in which the same question had arisen. The learned advocate for the appellants herein adopted the argument advanced by the learned counsel for the assessee in R.C. 85/63 and also made certain additional submissions. Later on these writ appeals were separated from R.C. 35/63 as a further question was raised by the learned counsel for the appellants in these writ appeals, to which we will advert in due course. After consideration of the arguments advanced by the learned counsel for the assessee in R.C. 35/63 and the learned counsel for the appellants herein, we pronounced judgment in R.C. 35/63 on 2nd August, 1967. The question referred to us therein was whether, on the facts and circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellants contentions is that the estates of Ramnad, Shivaganga and Bobbili all stand on the same footing as the estate of Venkatagiri and belong to one class and are governed by the same laws. The estate of Bobbili is situated in Andhra Pradesh and was abolished under the same statutory enactment, i.e., the Abolition Act. Even the estates of Ramnad and Shivagaga though situate in Madras State are similarly situate as Venkatagiri. According to the appellants, there was no distinction with regard to the interim payments payable under the Abolition Act in respect of these estates. He therefore contended that the action of the income-tax department in seeking to levy income-tax on the interim payments payable in respect of Venkatagiri Estate treating the same as revenue receipts amount to invidious and unfair discrimination against the principal landholder and the shares of Venkatagiri Estate. It was not open to the income-tax department to treat the said interim payments as revenue receipts while similar payments in respect of similar estates were held to be capital receipts and not exigible to tax, under the Income-tax Act. The department cannot adopt and apply contradictory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular reference to section 3(e) of the said Act which was amended in the year 1956 with retrospective effect. The counter affidavit further avers that the second respondent is of the view that the interim payments due and payable to the landholders in the Andhra Pradesh area to whom the provisions of the Andhra Act are applicable are of income nature and that there is a difference between the provisions of the Madras Act and the Andhra Act. If the income-tax authorities on a mistaken impression of the view of the board have erroneously accorded the same treatment of the amounts received by the Raja of Bobbili, it is not correct. They further averred that, in any event, any wrong or erroneous view taken or opinion expressed either by the Central Board of Direct Taxes or by the Commissioner of Income-tax, Madras, relating to any other case, will not in any way disentitle the first respondent from assessing the interim payments in accordance with law. The view expressed by the Central Board of Direct Taxes to the Commissioner of Income-tax, Madras, is not binding on the Commissioner of Income-tax, Andhra Pradesh, and the 1st respondent. The counter affidavit also refers to the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his argument he relied upon the opening sentence of paragraph 2 of that letter which we now read : " On reconsideration of the matter, the board has decided that all the payments of this kind interim or final have to be treated as capital receipts and it is not necessary to deal with the appeals in these cases before the Supreme Court. " He develops his argument thus : the decision of the board, that all payments of this kind, i. e., payments referred to in the case of Raja of Ramnad and Raja of Shivaganga, whether interim or final have to be treated as capital receipts, is of general nature and cannot be confined only to the special leave petitions that were then pending before the Supreme Court and which the Commissioner of Income-tax, Madras, was directed to withdraw. On the contrary, the contention of the learned counsel for the respondents is that this letter will have to be read in the context in which it was issued. The context is clear from the subject set out in the letter, i.e., special leave petitions the Supreme Court--Raja of Ramnad and Raja of Shivaganga. Further in paragraph 2, it is clearly stated that the special leave petitions in the Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mentioned in the Income-tax Act and the opinion expressed by the High Court or the Supreme Court. It is also now well settled that, as far as the income-tax is concerned, the principle of res judicata is not applicable and the Income-tax Officer is not bound by the decision rendered by him in an earlier order in regard to the same assessee. When these principles are kept in view, it becomes clear that the orders, instructions or directions that can be issued under section 119(1) are administrative directions which cannot in any manner fetter the discretion of the Income-tax Officer in making the assessment. This becomes more clear from the proviso to sub-section (1) of section 119 which says that no orders, instructions or directions shall be given by the Board so as to interfere with the discretion of the Appellate Assistant Commissioner in the exercise of his appellate function. The Appellate Assistant Commissioner's functions are not executive. They are only judicial and this proviso has been enacted to make it clear that the orders, instructions or directions of the Board will not interfere with the judicial or quasi-judicial functions. The question as to the nature of orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board would be calculated to deprive the assessing officer of his statutory function and would be against the grain of judicial powers which the officer is supposed to exercise. If the Appellate Assistant Commissioner is not bound by the Board's orders, but the Income-tax Officer is so bound, does it mean that the appellate authority can sit in judgment over the Board's decisions which the Income-tax Officer gave effect to ? Surely that cannot be the correct position." We are in respectful agreement with the aforesaid observations and in our opinion that decision is a complete answer to the contentions advanced by the learned counsel for the appellants and the petitioners. When it is conceded that the Income-tax Officer has to act judicially in the assessment proceedings, any order by his superior authority which is not the appellate authority or revisional authority, will not be binding on him. The learned counsel for the appellants tried to distinguish this case stating that there the question was whether the orders, directions or instructions issued by the Board in an individual case, could bind the Income-tax Officer. In that case, there was no general instruction iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it could not possibly be said that his discretion could be "legally" controlled by the Central Board of Revenue inasmuch as the discretion vested in him by statute and there is no statutory control of such discretion. The departmental rule can in no way affect a legal claim. In the writ appeals, the appellant prayed that the High Court would be pleased to issue a writ of prohibition or any other appropriate writ or order or direction prohibiting the respondent therein from proceeding with his proposals to reopen the appellants' assessment ; whereas in Writ Petitions Nos. 1479, 1536 and 1537 of 1957 the petitioner have prayed for a writ of mandamus or any other appropriate writ, order or direction under article 226 of the Constitution of India directing the respondent therein to forbear from proceeding with the proposal to reopen or to calculate and assess the interim payments received by the petitioners. As far as the question of issuance of writ prohibition is concerned, it has not been shown that the Income-tax Officer has no jurisdiction to issue the notices under section 34 of the 1922 Act. That being so, the appellants cannot ask for a writ of prohibition. For the purpose ..... 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