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TMI Blog1963 (9) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... ition under Article 226 it transpires that the business of the partnership is to act as brokers in jute only, but the partners may by mutual consent embark upon any new line of business from time to time as they may agree upon on the same terms of partnership as made in the deed of partnership. The firm has since assessment year 1950/51 been assessed to Income Tax as unregistered firm. In respect of the years 1951/52 and 1952/33 the appellant firm filed appeals against the assessment and by an order dated 23rd July, 1958 the Appellate Assistant Commissioner remanded the matter to the Income Tax Officer for enquiry and report. 3. In respect of the assessment year 1953/54 the appellant firm failed to comply with the requisition contained in a notice under Section 22(2) of the Income Tax Act and also in a notice under Section 22(4) of the said Act, whereupon an assessment was made under Section 23(4) on an estimated income of ₹ 3,00,000. On June 14. 1958 the appellant applied under Section 33A of the Indian Income Tax Act to the Commissioner of Income Tax, Calcutta praying that the assessment made against the firm might be cancelled and the case remanded to the Income Tax Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant portion from the said order of the Income Tax Commissioner is quoted below ; 2. I have gone through the petition of the asses-see and his record carefully. There are no circumstances which can justify the reopening of the assessment. It is contended that the partners were outside Calcutta for couple of months, the exact period is not known, nor there is any proof to support allegation. The cause for non-compliance with the notice under Section 22(2) is not mentioned. Hence the assessment under Section 23(4) will stand, 3. Next is the question of quantum. The assessments in this case have been made on the following incomes. I am also noting below the gross income from brokerage in each year for that was the main source of income : Assessment year. Income on which the assessment has been made. Section under which the assessment was made. Gross Income from brokerage. 1950-51 47,179/- 23 (3) 58,952/- 1951-52 99,094/- 23 (3) 1,31,416/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well on merits. As to merits his Lordship observed as follows : Even on the merits, I do not see that any ground has been made out for my interference. What Mr. Mitra argues is that the figure of ₹ 1,75,000/- as income is an impossible figure, where the gross income is ₹ 1,18,000/-. In other words, he argues that the Income Tax Officer after looking into the hooks of account has found that the total income of the assessee is ₹ 1,18,000/- gross and yet the Commissioner holds the business income for the assessment year to be ₹ 1,75,000/-. Mr. Mitra argues that out of ₹ 1,13,000/- gross, at least ₹ 40,000/- would have to be deducted as expenses, so that the figure of ₹ 1,75,000/- must necessarily be bad. In this argument there seems to be several flaws. The sum of ₹ 1,18,000/- has not been found to be the total gross income of the assessee for the assessment year 1953-54, but is the gross income of the firm from brokerage Only. As I said above, it is evident that the firm has other source of income. It is true that the Commissioner has not stated the details of figures upon which he has arrived at the sum of ₹ 1,75,000/. as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a writ in the nature of certiorari. 8-10. In the present appeal Mr. Mitra appearing on behalf of the appellant has challenged the aforesaid decision of Mr. Justice Sinha both on merits as well as on the question of law decided by his Lord-; ship. Like Mr. Sinha, J. we too are of opinion that even though the matter can be disposed of on the preliminary objection, still we should also enter into the merits. Mr. Mitra suggests that in view of the report of the Income Tax Officer determining ₹ 1,18,000/- as gross receipt from brokerage, a taxable profit of Rs, 1,75,000/- is inherently impossible and demonstratively erroneous. We are unable to accept this suggestion made by Mr. Mitra. [After considering the case on merits his Lordship concluded : ] We are of opinion that the order of the Commissioner is not liable to be quashed on the ground that the Commissioner in passing the said order acted contrary to the principles laid down either in Commr. of Income Tax v. Laxminarain Badridas or in Gunda Subbayya v. Commr. of Income Tax Madras [1939]7ITR21(Mad) or in Sun Insurance Office v. Clark, (1912) 6 Tax Cas 59. We also are of opinion that order of the Commissioner is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive order and not a judicial one. The same view has been taken by the Andhra High Court in the case of Edera Venkaiah v. Commr. of Income Tax, Hyderabad,: AIR1959AP508 . The judgment in that case was delivered by Jagmohan Reddy J. who held that the revisional power of the Commissioner under Section 33A of the Income Tax Act is to be exercised only in the administrative capacity and that the Court will not interfere with such an order in revision under Section 33A. In that case also an order passed by the Commissioner under Section 33A was sought to be quashed on certiorari. This view of Jagmohan Reddy J. was subsequently endorsed by a Division Bench of the Andhra High Court in Addl. Income Tax Officer, Cuddapah v. Cuddapah Star Transport Co. Ltd. (I LR (1961) ] AP 32). In that case also their Lordships held that while acting under Section 33A of the Income Tax Act the Commissioner does not perform any judicial or quasi-judicial function. They further held that the orders of revision passed by the Commissioner under Section 33A being of an administrative character are outside the purview of the extra-ordinary jurisdiction of the High Court under Article 220 of the Constitution of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been held that the order passed by the Commissioner under Section 33A of the Income Tax Act is administrative in nature, referred to the decisions of the Privy Council reported in 74 Ind App 308 also in (1948) 18 I T R 214 also in. The present Section 33A of the Income, tax Act corresponds to Section 33 of the Income Tax Act as it stood before its amendment in 1941. It may be incidentally mentioned that prior to 1941 no right was given to an assessee to move the Commissioner who could call for the records of the subordinate officials suo motu and pass such orders as he thought fit. In 194l the assessee was given the right to apply for revision to the Commissioner of Income Tax, Section 33 of the Income Tax Act before its amendment in 1941 stood thus : (1) The Commissioner may of his own motion call for the record of any proceeding under this Act which has been taken by any authority subordinate to him or by himself when exercising the power of an Assistant Commissioner under Sub-section (4) of Section 5. (2) On receipt of the record the Commissioner may make such enquiry or cause such enquiry to be made and, subject to the provisions of this Act, may pass such ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the year 1931-12 was nullity in view of the decision of their Lordships of the Privy Council. 2. Whether the Commissioner of Income Tax acted improperly in refusing to exercise the discretion vested in him to cancel the said assessment and to order the repayments of the sums received from the assessees on account of those assessments. 3. Whether the assessees could be denied the relief claimed by them under Section 33, Income Tax Act on any valid ground. Their Lordships of the Privy Council in answering the aforesaid three questions made a general survey of the various chapters and sections of the Indian Income Tax Act as it then stood. With regard to the chapter containing Section 33 of the Income Tax Act, as it then stood, their Lordships observed as follows : Chapter 4, headed 'deductions and assessments' and consisting of Ss. 18 to 39 inclusive deals elaborately with these two subjects. It prescribes in details duties of the Income Tax authorities and the Obligations and lights of the assessee and in particular by Section 30 defines the right of appeal to the Assistant Commissioner against an assessment and the limit of time within which an appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sentence was not happily expressed it was sufficiently clear that what the Commissioner had in his mind was that it was open to the assessees to avail themselves of the procedure which the law provided, including if necessary an appeal to His Majesty in Council, and that as they had not done so he refused to reopen the assessments. Their Lordships concluded this portion of their judgment as follows : This was in fact the reason and, as their Lordships think, a valid reason for the course that he took. Moreover their Lordships, even if they thought that the Commissioner had not expressed himself with sufficient clarity, could do no more than send the matter back to him for further consideration. They would not, upon so slender a ground, conclude that he had exercised his discretion improperly and direct him to exercise it differently . Incidentally, it may be observed that Mr. Mitra here exactly wants us to do what the assessees in that case asked the Privy Council to do. Mr. Mitra suggests that by reason of the observations made by the Commissioner that in an ex parte assessment the account books cannot be made the basis of assessment, the matter should go back to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of his subordinate and take necessary action upon such review. In the opinion of their Lordships the machinery was administrative and the Commissioner was required to act as a higher executive officer reviewing the acts of his subordinate. These two expressions -- administrative machinery and higher executive officer--leave no room for doubt that in the opinion of their Lordships the order that the Commissioner passed under Section 33 of the Income Tax Act as it then stood, was in the nature of an administrative order. 15. Now, it is to be seen whether the position has in any way been altered as a result of the subsequent amendments of the Indian Income Tax Act. Section 33 of the Indian Income Tax Act which was the subject-matter of review in the Tribune case, is now represented by Section 33A of the Income Tax Act applicable to the present case. The said section tuns as follows : Sub-section (1) ; The Commissioner may of his own motion call for the record of any proceeding under this Act in which an order has been passed by any authorities subordinate to him and make such an enquiry or cause such an enquiry to be made and, subject to the provision of this Act, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. Mr. Mitra suggests that so far as Sub-section (1) is concerned the order passed by the Com-missioner when he calls for the record of his own motion may be regarded as an administrative order, but so far as the order under Sub-section (2) is concerned which is to be made by the Commissioner on application by the assessee for revision of an order must be regarded as a judicial order as distinguished from an administrative order. According to him, a right has been conferred on the assessee by Sub-section (2) to apply to the Commissioner for revision. Usually, such an application is to be made within one year from the date of the order complained of. But the Commissioner may condone the delay when he is satisfied that the assessee was prevented by sufficient cause from making the application within that period. Mr. Mitra says that this power of condonation clearly implies that the Commissioner is required to act not in his administrative capacity but as a judicial officer. We are, however, unable to accept this contention of Mr. Mitra. First of all, there is scarcely any difference between Sub-section (1) and Sub-section (2) of Section 33A. If an order under Sub-section (1) be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can acquire no right : the review may be a purely departmental matter of which the assesses knows nothing. If on the other hand the Commissioner acts at the invitation of the assessee and again does nothing to worsen his position, there is no justification for giving him a new right of appeal. He has a specific light of appeal against the assessment of order of the subordinate officer, which is subject to its own time limit. That he cannot enlarge by taking a course which is on his part purely voluntary. When their Lordships say in connection with the Commissioner's acting at the invitation of the assessee that there is no justification for giving him a new right of appeal, the Privy Council clearly means that the order passed on such a review is also a purely departmental matter. Therefore, we hilly agree with Mr. Justice Sinha that the nature of the proceeding initiated by the Commissioner under Sub-section (2) of Section 33A is in no way different from the nature of a proceeding initiated by the Commissioner under Sub-section (1) of Section 33A and that both the proceedings are administrative in nature. 17. It may incidentally be noted that after the constitution of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flat under Section 3, Bombay Land Regulation Ordinance (5 of 1947) which came into force on the 4th of December 1947. On the same date Dr. Vakil was informed that the Government had allotted the premises to Mrs. C. Dayaram who was also a refugee from Sind. Further orders were issued authorising an Inspector to take possession of the premises. On 4th March 1948 the petitioner filed a petition for a writ of certiorari and an order under Section 45, Specific Relief Act subsequently. The petition was heard by Bhagwati J. who inter alia granted the writ against the Province of Bombay and others. On appeal, the Appellate Court confirmed the order as regards the issue of the writ of certiorari against the appellant, but cancelled the order as regards the other parties. An appeal was preferred against the order of the Bombay High Court by the Province of Bombay to the Supreme Court. The appeal was allowed by the Supreme Court and the petition was dismissed. Mahajan J. and Mukherjee J. however, were in favour of dismissing the appeal, but they were in a minority. The learned Judges of the Supreme Court in that case had to consider the nature of the order passed by the Bombay Government in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the final determination of the authority will be quasi-judicial provided the authority is required by the statute to act judicially. We have already pointed out that so far as Sub-section (2) is concerned there is nothing to indicate that the Commissioner is required to act judicially in disposing of the application made by the assessee for revising the order of assessment passed by an authority subordinate to the Commissioner. That being the position we do not think that Kushaldas Advani's case [1950]1SCR621 supports the contention of Mr. Mitra that the order passed by the Commissioner in the present case in exercise of his powers under Sub-section (2) of Section 33A is either judicial or quasi-judicial. In our opinion, as already indicated, the order complained of is purely administrative and is not liable to be removed by a writ of certiorari. 19. The next case referred to is the case of Nagendra Nath Bora v. Commr. of Hills Division reported in [1958]1SCR1240 . In that case the Supreme Court had to hear four appeals analogously. The appeals were directed against the orders of the Assam High Court exercising its powers under Articles 226 and 227 of the Constitution in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion and Appeals Bhanuram Pegu moved the High Court of Assam under Articles 226 and 227 of the Constitution for a proper writ for quashing them. The High Court set aside the order of the Commissioner of Hills Division and Appeals who thereafter preferred, as stated above, Civil Appeal No. 670 of 1957 to the Supreme Court. Before the Supreme Court it was argued on behalf of the Commissioner of Hills Division and Appeals that the several authorities indicated in Section 9 of the said Act are really administrative bodies and therefore their orders that were passed in the first instance or on appeal should not be amenable to the writ jurisdiction or supervisory jurisdiction of the High Court under Articles 229 and 227 or the Constitution. The learned Chief Justice of India in disposing of this argument observed as follows ; If the matter had rested only with the provisions of the Act, apart from the rules made under Section 36 of the Act, much could have been said in support of this contention .... But when we come to the rules relating to appeals and revisions, we find that the widest scope for going up in appeal or revision, has been given to persons interested, because Rule 344 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cated by the Amendment Act of 1941. Again, under the Assam Act the ultimate jurisdiction to hear appeals and revisions was divided between the Assam High Court and the authority referred to in Sub-section (3) of Section 3 of that Act. The appeals and revisions arising out of cases covered by the provisions of the enactments specified in Schedule 'A' to that Act were to lie in and to be heard by the Assam High Court, and the jurisdiction to entertain appeals and revisions in matters arising under the provisions of the enactments specified in Schedule 'B' to that Act, was vested in the Authority to be set up under Section 3 (3), that is to say, in the Excise Appellate Authority. It has therefore been pointed out by the learned Chief justice of India that the Excise Appellate Authority, for the purposes of cases arising under the Excise Act, was vested with the powers of the highest Appellate Tribunal even as the High Court was in respect of the other group of cases. These features of the Assam Act played an important part in inducing the Supreme Court to hold that the various authorities referred to in Section 9 (1) of the Assam Act were required to act Judicially. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey prayed for a writ in the nature of certiorari for quashing the order passed by the State Government. Their Lordships of the Supreme Court had to consider whether the order passed by the State Government was quasi-judicial or administrative) because On the determination of that question depended the answer to the further question whether the said order was liable to be removed on certiorari. S. R. Das, C. J., in deciding this question referred to the earlier decision of the Supreme Court reported in [1950]1SCR621 . The learned Chief Justice of India quoted with approval the following passages from the earlier decision in Advani's case : (i) That if a statute empowers authority, not being a Court in the ordinary sense, to decide disputes arising out of a claim made by one party under the statute which claim is opposed by another party and to determine respective rights of the contesting parties who are opposed to each other, there is a lis and prima facie and in absence of anything in the statute to the contrary it is the duty of the authority to act judicially and the decision of the authority is a quasi-judicial act, and (ii) that if a statutory authority has power to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicate that in the present appeal there is a lis inter partes and that there is a claim and an opposition and that the decision is to he founded on the taking of evidence. We are, however, unable to accept this suggestion of Mr. Mitra. The tests 1-4 laid down by S. K. Das, J. are clearly not applicable to a decision to be made by the Commissioner under Sub-section (2) of Section 33A of the Indian Income Tax Act. In our opinion the Commissioner under Sub-section (2) of Section 33A of the Income Tax Act is only to consider the question of policy and expediency and at no stage has before him any form of lis. Therefore, in our opinion, this case, viz., Radeshyam's case decided by the Supreme Court does not help the appellant in the least. 22. Mr. Mitra next referred us to the case of Express Newspaper Ltd. v. Union of India, reported in (1961)ILLJ339SC . In that case by several petitions under Article 32 of the Constitution the petitioners raised the question as to the vires of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 45 of 1955, and the decision of the Wage Board constituted thereunder. The judgment of the Supreme Court was delivered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u Bhai v. Union of India, reported in in support of his contention that the order under challenge in the present appeal is quasi-judicial and not administrative. In that case the appellant before the Supreme Court was granted a mining lease in 1947 by the then ruler of Gangapur. The lease was annulled in June 1949. Thereafter the appellant applied in December, 1949 for mining leases for manganese in respect of five areas in the district of Sundagarh. Some defects having been pointed out in this application the appellants submitted a fresh application in September, 1950. In the meantime the third respondent also made application for mining leases for manganese for the same area in July 1950. Eventually in December 1952 the State of Orissa granted mining leases of the five areas to the appellant taking into account Rule 32 of the Rules which prescribe priority. The third respondent applied for review to the Central Government under Rule 52 of the Rules. The review application was allowed by the Central Government in January 1954 and the Government of Orissa was directed to grant a mining lease to the third respondent with respect to the two out of the five areas. Consequently, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the act of a body cannot be quasi-judicial unless that body has a duty to act judicially. So, the whole question is whether the Commissioner in the present case is required to act Judicially. The Privy Council in the Tribune Trust case has made it amply clear that the machinery contemplated by the old Section 33 corresponding to the new Section 33A of the Income Tax Act is administrative and not judicial or quasi-judicial. 24. Before we conclude we may note another argument of Mr. Mitra. He seeks to make a distinction between an order passed by the Commissioner under 5. 33A when he refuses to exercises his powers under that section and an order by which he actually interferes with the decision of a subordinate authority. He seems to suggest that when the Commissioner refuses to interfere, the order is administrative, but when he actually interferes, the order is judicial or quasi-judicial. He points out that in the Tribune Trust case and in most of the cases decided by the Indian High Courts the Commissioner refused to interfere, and therefore, according to him, those decisions are not applicable to the facts of the present case where the Commissioner has, in fact, exercised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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