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TMI Blog1977 (9) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner-assessee seems to be a very enterprising person who left the country early in life and who established a fairly successful business at Colombo in Ceylon. He had considerable income accruing or arising from his business in Colombo. He had also income accruing to him in India. Statements have been filed which are in the typed set of papers showing Indian income as a percentage of total world income as assessed in India. This is at p. 1 of the typed set of papers. From this, it is seen that from the year 1951-52 onwards, the writ petitioner had been assessed to income-tax on considerably large amounts and that the percentage of Indian income to total world income ranged from 2.48 to 11.57 for the years which have been referred to therein. The circular to which we adverted categorically stated thus : "...assessees having income in Pakistan, which cannot be brought into India, should be asked to pay tax only on the Indian income by treating it as the total income for the purposes of the Income-tax Act. The balance of the tax should be stayed by the Income-tax Officer under section 220(7)." Admittedly, as is clear from what we have already stated, the income arising in Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The court felt that an opportunity should be given to the petitioner to establish this aspect and, in the circumstances of the case, directed that the revenue should not bring the attached property for sale for arrears of tax due on the foreign income. The writ petition was dismissed subject to the above observations. At this stage, we must also refer to a preliminary objection raised by Mr. Rangaswamy on behalf of the revenue that in view of the approach by the petitioner to this court by way of W.P. No. 3223 of 1969 and the dismissal of that petition, the petitioner should not be allowed to re-agitate the matter as the earlier decision would operate as res judicata. though this argument was put forward at the time of the hearing, we do not find on a perusal of the pleadings that any such specific plea was put forward that the present petition is not maintainable in view of the decision in W. P. No. 3223 of 1969. We do not think, therefore, that it would be proper or just to dismiss this petition which, as far as we are able to see, raises the question of interpretation of an important provision of the Act, namely, s. 220(7), on which no decision of any court has been brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whatever source derived which- (a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year; or (c) accrues or arises to him outside India during such year ........" Clause (c) clearly makes the income which had accrued or arisen to the writ petitioner in Ceylon a part of the total income of the writ petitioner and in view of the charging section, the tax has been imposed in accordance with the terms of the Act on the entire total income including the income that arose in Ceylon. That is the manner in which the assessment orders have been passed in relation to the various years against the assessee. We consider that those assessment orders are in accordance with the provisions of the Act and those assessment orders have not been challenged as being in violation of any provisions of the Act or as not supported by the provisions of the Act. The total tax, therefore, imposable on the petitioner must be taken to have been settled except in regard to such assessment orders which have been questioned in appeal and the appeals are pending before the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a person in accordance with the provisions of the Act which necessarily implies that tax must be calculated on the basis of his total income and at the rate applicable to that total income, the ITO can alter the quantum of the total tax due from the assessee by bifurcating the foreign income and the Indian income and by treating them as two separate incomes on which separate taxes have to be calculated in accordance with the provisions of the Act. The effect of such a procedure in given cases, where the foreign income is large, would be to reduce the total tax that is imposable on a person. If the argument of counsel is not accepted, the assessee will no doubt have to pay very much more by way of tax on the Indian income, which is a negligible part of his total income, than what he would have had to pay if tax is calculated on his Indian income as if that was his total income. The tax that he would then have to pay would be negligible because his Indian income was only an insignificant part of his total income. But if the tax is to be calculated by taking into account the foreign income as well, the average rate of tax in regard to the Indian income will go up. The complaint was th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve caused any grievance to the petitioner excepting perhaps the disappointment that what the assessees, if they had income in Pakistan would have got, he did not get. Such a disappointment we cannot treat as a grievance for the purpose of art. 226 of the Constitution. Now, we shall deal with the question whether where assessees who had income in Pakistan having been given by-the CBDT a concession which they gave by stating that the tax should be calculated on the basis that their Indian income should be treated as their total income, the same should also be extended to the assessees in view of the equality clause embodied in art. 14 of the Constitution. What has been done in the circular is against the provisions of law. No one can contend before us in proceedings under art. 226 of the Constitution that the wrong act must be extended to him as well in order to satisfy the provisions of art. 14, The equality before law does not mean that there must be equality in illegality. The statute compels us to take the view that we took and no action done without authority interpreting the statute in a wrong manner can be claimed to have conferred any benefit on the petitioner before us wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t point on this aspect, we consider that considerable time having elapsed and very much larger amounts having been claimed by the income-tax authorities as due from the petitioner and steps for the recovery of those amounts having also been initiated, it is necessary that the writ petitioner must be afforded reasonable and full opportunities for raising any contention that may be available to him regarding the quantum of the taxes that is claimed and which, according to him, is not actually due from him; regarding the question whether the Explanation is attracted at all and regarding the question whether he has satisfied the conditions of s. 220(7) in order to claim the benefits of the Act. We consider that the principles of natural justice require that the assessee must be given further opportunity before his properties are sold and coercive steps taken to collect the very large amounts claimed to be due. It cannot be gainsaid that he has been, as we said earlier, an active man and had earned large income which had also benefited the revenue and it is not necessary that when he has retired from his business and has come back to India, he must be denied an opportunity to state his ..... X X X X Extracts X X X X X X X X Extracts X X X X
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