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TMI Blog1979 (5) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... sment years during the pendency of this application. For the assessment year 1967-68, the petitioner in its business of manufacture of mustard oil, disclosed the gross profits in its trading account showing a return of 2.60%. The respective yields of oil, oil cake as also loss or shortage at 2.17% in the oil seeds due to refraction and in transit were also disclosed. In the assessment year, 1970-71 gross profit the petitioner's trading account was similarly disclosed on the basis of return of 2.61 %. The respective yields of oil, oil cake and gad and loss or shortage of seeds at 1.86% were shown. In the assessment year 1967-68, the ITO while accepting the yield, held that the shortage claimed was excessive and that the gross profits were understated. He added the sum of Rs. 60,020 disallowing the excess shortage claimed, another sum of Rs. 16,925 to the gross profits on estimate and a further sum of Rs. 15,928 in the gad account. Similarly for the assessment year 1970-71, the ITO while accepting the declared yield added the sum of Rs. 68,611 on account of excess shortage including gad and Rs. 67,653 to the gross profits. The petitioner preferred appeals before the AAC who gav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... success in the reference and it would cause hardship if the demand was realised during the pendency of the reference. It is contended that this court in its inherent jurisdiction under s. 151 of the Code of Civil Procedure de hors the I.T. Act is empowered to pass an order of stay of realisation of the illegal demand. It is further contended that s. 265 of the I.T. Act, 1961, is no bar for the exercise of powers of this court in such inherent jurisdiction. This application is opposed but no affidavit has been filed on behalf of the respondent in opposition to the petition.; At the hearing, it was contended by Dr. Debi Pal, Learned advocate for the assessee, that under the proviso to article 225 of the Constitution, the bar in s. 226 of the Government of India Act, 1935, on courts for exercise of their ordinary jurisdiction in respect of revenue matters had been removed and as such the court could exercise such jurisdiction in all revenue matters. It was further contended that under art. 227 of the Constitution a High Court has general power of superintendence over all subordinate courts and Tribunals operating within its jurisdiction and as such this court could give suitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e though the same should be rarely resorted to and should be invoked only in cases where there was no other remedy available. It was held that in a proper case the High Court had power under s. 151 of the CPC read with art. 227 of the Constitution to issue an order as was sought for and s. 66(7) of the Indian I.T. Act, 1922, did not limit the scope of its power. On the facts, however, it was held that mere inability to pay tax on the part of the petitioner was not a proper ground for directing the stay of collection. (b) ITO v. M. K. Mohammed Kunhi [1969] 71 ITR 815 (SC). In this case, penalties were imposed on the assessee under s. 271 (1)(c) read with s. 274(2) of the I.T. Act, 1961, for concealment of particulars of income and furnishing inaccurate particulars. The assessee preferred appeals to the Income-tax Appellate Tribunal and made an interim prayer for stay of collection, of the penalties imposed. The Tribunal declined to order any stay holding that it had no power to grant the same. The assessee moved the High Court under art. 226 of the Constitution. The High Court held that the Tribunal had power to stay the proceedings as also the collection of the penalties pending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate Tribunal to regulate its own procedure, but it is very doubtful if the power of stay can be spelt out from that provision. In our opinion the Appellate Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction. This is particularly so when section 220(6) deals expressly with a situation when an appeal is pending before the Appellate Assistant Commissioner, but the Act is silent in that behalf when an appeal is pending before the Appellate Tribunal. It could well be said that when section 254 confers appellate jurisdiction, it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceedings as will prevent the appeal if successful from being rendered nugatory. " The Supreme Court noted the decision of the Andhra Pradesh High Court in the case of Pollisetti Narayana Rao [1956] 29 ITR 222, but did not make any observation as to the correctness or otherwise of the said decision. (c) Jaipur Mineral Development Syndicate v. CIT [1977] 106 ITR 653 (SC). The f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercise such power provided the party concerned approaches the court with due diligence and shows sufficient cause for its non-appearance on the date of hearing. " (d) L. Bansi Dhar and Sons v. CIT [1978] 111 ITR 330 (Delhi). In this case, an application had been filed by the assessee before the Delhi High Court under s. 151 of the CPC in two I.T. References, inter alia, praying for an injunction restraining the Commissioner from enforcing and/or realising a demand raised in the assessment years involved in the reference and from taking any steps for the recovery thereof till the disposal of the pending references. The High Court considered the decision of the Andhra High Court in the case of Polisetti Narayana Rao [1956] 29 ITR 222 as also an earlier decision of this court in Hukum Chand Boid v. Kamalanand Singh [1906] ILR 33 Cal 927. It was noted that the High Court in a reference under the I.T. Act had a special jurisdiction of an advisory or consultative nature and did not exercise any original, appellate or revisional jurisdiction. It was, however, held that it was well settled that the High Court, as a " court ", had inherent jurisdiction to act ex debito justitiae if the ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence under s. 66 of the Indian I.T. Act, 1922, was not maintainable. It was held that the judgment of the High Court delivered on reference being neither a decree nor an order, there was no scope for application of s. 114 of the CPC. (b) CIT v. Hungerford Investment Trust Ltd. [1935] 31 TR 188 (Cal). In this case, an application had been made by the Commissioner, Bengal, for certificate that the questions involved in the reference before this court made it a fit case for appeal to the Privy Council. The petition was out of time as prescribed by the High Court Rules and an objection was taken as to the maintainability of the application on that ground. It was contended on behalf of the revenue that the Original Side Rules of the High Court had no application to income-tax appeals as they were governed only by the CPC. In adjudicating on the controversy the High Court observed that the jurisdiction conferred upon the court by s. 66 of the Indian I.T. Act, 1922, was a special jurisdiction and formed no part of the High Court's original or appellate jurisdiction. It was further observed that the High Court was not a court of appeal in income-tax cases, its functions being confined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Privy Council in Raleigh Investment Co. Ltd. v. Governor-General in Council [1947] 15 ITR 332, observed as follows (p. 130): "Section 66 is in two parts. Under section 66(1), within the prescribed time on an application made by an assessee or the Commissioner, the Appellate Tribunal shall refer to the High Court any question of law arising out of such order; if the Appellate Tribunal refuses to state a case, on an application filed by either of them, the High Court may require the Appellate Tribunal to state the case and to refer the same to it accordingly. On a reference made by the Appellate Tribunal to the High Court, the High Court shall decide the questions of law raised thereby and pass its judgment thereon and thereafter the Appellate Tribunal may pass such orders as are necessary to dispose of the case conformably to such judgment. It has been held by this court that the jurisdiction conferred upon the High Court by section 66 of the Income-tax Act is a special advisory jurisdiction and its scope is strictly limited by the section conferring the jurisdiction. It can only decide questions of law that arise out of the order of the Tribunal and that are referred to it. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nactments being the Letters Patents, the Government of India Act, 1935, and finally the Constitution. The power to issue injunction, permanent or temporary, was a power exercised under its equity jurisdiction, i.e, where the court was to apply the principle of equity in a given set of circumstances. Such equity jurisdiction was inherited from the English law and the principles for exercise of this jurisdiction were well-settled. In this connection, Mr. Ginwalla drew our attention to pages 807, 812, 814, 847 and 852 of the 4th Edn. of Halsbury's Laws of England, volume 16. Mr. Ginwalla further drew our attention to the fact that in a reference this court exercised its jurisdiction conferred under s. 256 of the I.T. Act, 1961, and not any other jurisdiction including jurisdictions conferred by arts. 226 and 227 of the Constitution. After due consideration of the submissions made on behalf of the parties as also those of Mr. Ginwalla as amicus curiae and the decisions on the issue, the law on the point appears to us to be as follows: (a) It is well settled that a court and in particular this court in exercising its jurisdiction as a " court " has certain inherent powers. (b) Suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e I.T. Act, 1961, has the jurisdiction in exercise of such inherent powers to issue orders of injunction and stay. Consideration of the provisions of the I.T. Act leaves us in no doubt that no jurisdiction has been conferred by the Act on this court to issue orders for stay of collection or recovery of taxes. The jurisdiction of this court under s. 256 of the I.T. Act, 1961, is strictly confined to decide questions of law raised in a reference by its judgment. Only after the judgment is delivered the Tribunal has to pass necessary orders to dispose of the case in conformity with the judgment under s. 260 of the Act. It follows, therefore, that the High Court, in disposing of a reference under ss. 256 to 260 of the Act, has a very limited jurisdiction. It does not dispose of the entire matter but its decision is confined only to the questions of law as do arise from the order of the Tribunal. In this view, there is no scope for the High Court to exercise its equity jurisdiction. It is also to be noted that in exercising its jurisdiction under s. 256 the High Court is not acting as a court of appeal as the Income-tax Appellate Tribunal does under s. 254 of the Act. The High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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