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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 ..... hip being annexure A to the original petition 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 'unregistered firm.' The 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/- 1952-53 2,85,792/- 23 (3) 3,32,661/- 1954-55 1,22,400/- 23 (3) 1,11,043/- 1955-58 58,704/- 23 (3) 67,174/- The Income Tax Officer examined subsequently t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 the income of the firm for the relevant assessment year. But then, he has stated that he has taken into account "all the relevant facts" of the case. It is clear from the order itself that the Income Tax Officer had examined the books of account and the result of the examination was doubtlessly available to the Commissioner of Income Tax. This jurisdiction cannot be said to be of a Court of Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 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 liable to be quashed on the ground of error of law apparent on the face of the record. No doubt, the Commissioner says in one place of his order that the books of account cannot be made the basis of assessment when an ex parte assessment is going to be framed. It cannot be said that he ignored the cooks of account altogether in making his estimate of the business income of the appellant. In the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 India and that an order of the Commissioner under the said section cannot he quashed by the issue of a writ of certiorari. There is one decision however of the Bombay High Court wherein an order of the Commissioner under Section 33A was quashed by a writ of certiorari. The said decision was made in the case of Bhagwandas Kebaldas v. N. D. Mehrotra [1959]36ITR538(Bom) . In that case however the point tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 orders thereon as he thinks fit : Provided that he shall not pass any order pre-judicial to an assessee without hearing him or giving him a reasonable opportunity of being heard." The Privy Council in the Tribune Trust case, AIR 1948 P C 102 was called upon to decide whether the Commissioner was justified in denying the relief claimed by the assessee under Section 33 of the Income Tax Act. In that c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 appeal may be brought, and by Section 31 defines powers and duties of the Assistant Commissioner upon the hearing of an appeal. This section contains a proviso that the Assistant Commissioner shall not enhance an assessment unless the appellant has had a reasonable opportunity of showing cause against such an enhancement. Section 32 provides that any assessee objecting to an order passed by an Assistant Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 Commissioner for reconsideration. We feel, as the Privy Council felt, in that case, that upon so slender a ground it cannot be said that the Commissioner had exercised his discretion improperly and direct him to exercise it differently, 14. The Privy Council deals with the nature of the order passed by the Commissioner under Section 33 of the Income Tax Act as it then stood while a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, may pass such order thereon, not being an order prejudicial to the assessee, as he thinks fit. Provided the Commissioner shall not revise any order under this sub-section if- (a) where an appeal against the order lies to the Appellate Assistant Commissioner or to the Appellate Tribunal, the time within which such appeal may be made has not expired, or (b) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed 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 an administrative order, there is no reason why an order under Sub-section (2) should not be also an administrative order. Mr. Mitra however explains that when he says that the order under Sub-section (1) may be administrative he is not really making any concession. He simply says that even assuming that the order under Sub-section (1) is an administrative order an order under Sub-section (2) must be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject 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 the Appellate Tribunal by the Income Tax Amendment Act of 1939 the old Section 33 which conferred the revisional jurisdiction on Commissioner was repealed and thus the Commissioner's revisional powers were taken away. But in order to obviate the hardship involved in cases where the stakes were small, the revisional powers of the Commissioner were restored by the Indian Income Tax Amendment Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rit 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 requisitioning the disputed premises, and certain broad propositions were laid down for the purpose of ascertaining whether an order is administrative or judicial or quasi-judicial, Mr. Mitra reads out the following passage from the judgment delivered by Das, J. : "What are the principles to be deduced from the two lines of cases I have referred to ? That the principles, as I apprehend are : ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 respect of orders passed by the Revenue Authorises under the provisions of the Eastern Bengal and Assam Excise Act, 1910. All the four cases followed a common pattern. They came from the non-prohibited areas in the State of Assam where the sale of country spirit is regulated by licence issued by the authorities under the provision of the Act, The settlement of shops for the sale of such liquor is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 only lays down that no appeal shall lie against the orders of composition, thus, leaving all other kinds of orders open to appeal or revision . . . Thus on a review of the provisions of the Act and the rules framed thereunder, it cannot be said that the authorities mentioned in Section 9 of the Act, pass purely administrative orders which are beyond the ambit of the High Court's power of supervis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Those features however are not present in the case of the authority created under Section 33A of the Indian Income Tax Act. Therefore, the principles laid down by the Supreme Court in Nagendra Nath Bora's case [1958]1SCR1240 do not go to show that the Commissioner under Sub-section (2) of Section 33A of the Income Tax Act is required to act Judicially or that an order passed by him under that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. 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 do any act which will prejudicially affect the subject, then, although there are no two parties apart from the authority and contest is between the authority proposing to do the act and the subject opposing it, the final determination of the authority will yet be a quasi-judicial act provided the authority is required by the statute to act judicially." The learned Chief Justice point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Bhagwati, J. as he then was. His Lordship ultimately came to the following conclusion ; "The petitions will, therefore, be allowed and the petitioners will be entitled to an order declaring that Section 5(1)(a)(iii) of the Working Journalists (Conditions of service) and Miscellaneous Provisions Act, 1955 is ultra vires the Constitution of India and that the decision of the Wage Board dated 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ganese 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 appellant made an application under Article 226 of the Constitution to the Punjab High Court praying for quashing the order of the Central Government passed in January 1954 granting a ruining lease to the third respondent with respect to two out of the five villages on the ground that it was a quasi-judicial order and that the rules of natural justice had not been followed, inasmuch as he had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive 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 his powers under Section 33A (2). We are unable to accept this argument. The distinction sought to be made by Mr. Mitra between the two classes of orders is a distinction without difference, and in all the cases discussed above, their Lordships refused to set aside the order of the Commissioner on certiorari, not because the Commissioner refused to interfere but because in the opinion of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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