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TMI Blog1974 (11) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... rrears. He came to India some time in 1972, in connection with the death of a near relation. On coming to know of this the Income-tax Officer had intimated all ports of embarkation about the tax arrears of the assessee. By a petition dated February 14, 1972, the assessee requested the Additional Commissioner of Income-tax to direct the Income-tax Officer to issue a tax clearance certificate. This petition was forwarded to the Income-tax Officer, Circle-1, Karaikudi, for report. In his report, the Income-tax Officer pointed out that the assessee had not paid so far anything towards the arrears, that he had not moved the Ceylon authorities for remittance all these years, that his father has, some assets in India and that unless the assessee is pinned down to a specific programme of clearance of arrears with adequate security it would be difficult to realise the arrears once the assessee is permitted to leave India. In the meanwhile, the assessee filed another petition on February 18, 1972, offering to pay and to furnish security for due payment of the arrears in monthly instalments of Rs. 11,500. He also enclosed with this petition a copy of the security bond to be executed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s could not repatriate funds into India from Ceylon as permission was not granted by the Exchange Control authorities in Ceylon and that the assessee could not be treated as a defaulter under the provisions of section 220(7) of the Income-tax Act, 1961 (hereinafter called the Act), and that, therefore, the collection of tax arrears would have to be stayed. The respondent in his counter, in effect, contended that section 220(7) is not applicable at all, that the liability of the assessee and the petitioner is independent of section 220(7) and the assessee had clearly contracted himself out of the provisions of that section and that the liability is fastened on the assessee and on his default on the petitioner on the basis of the undertaking given by the assessee in his petition dated February 18, 1972, and the security bond executed by the petitioner. The respondent also contended that having obtained a clearance certificate from the authorities, which they are not bound to give when the tax was in arrears, after giving an undertaking to pay the tax arrears in instalments and furnishing a security bond executed by the petitioner herein for due payment of the same, it is not open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edure. The assessee also had enclosed the letter dated April 24, 1972, to the Controller of Exchange, Colombo, and the reply received by him. It is useful to extract the request of the assessee made in the letter dated April 24, 1972, to the Controller of Exchange. After stating that he had been assessed by the Indian income-tax authorities to pay tax amounting to Rs. 93,357 he had requested the authorities, " please be good enough to let me know whether you could issue me a permit for the remittance of this amount by me to India to meet the above-mentioned Indian income-tax liability ". The reply received was that the exchange control authorities are unable to issue the permit for such purpose in terms of the current exchange control procedure. The learned counsel for the revenue rightly characterised this letter and the reply as motivated only and is an attempt to circumvent the security bond furnished by the petitioner before the assessee was permitted to leave for Ceylon and that the question of applicability of section 220(7) does not arise at all for enforcing the security bond against the petitioner. The following circumstances in which the bond was executed clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the opinion of an income-tax authority, no intention of returning to India, shall leave the territory of India by land, sea or air unless he first obtains from such competent authority a certificate stating that he has no liabilities under the Income-tax Act, or that satisfactory arrangements have been made for the payment of all or any of such taxes which are or may become payable by the person. The respondent has stated that the clearance certificate under section 230 was given to the assessee only on his specific undertaking to pay the tax arrears in instalments of Rs. 1,500 per month from May, 1972, and to furnish security for the due and proper payment of the instalments. In this connection the learned counsel for the revenue also relied on the doctrine of promissory estoppel. This doctrine was first enunciated by Denning, J. (as he then was) in Central London property Trust Ltd. v. High Trees House Ltd. as flowing in equity when he found that on the facts in that case he could not rest his decision on the strict rule of estoppel. The principle as explained by Denning L.J. in the later case, Combe v. Combe is : " Where one party has, by his words or conduct, made to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court allowed the writ petition and, on a further appeal, the Supreme Court held, relying on the principle of promissory estoppel, that the assurance given by the Government under the Export Promotion Scheme would be enforceable because it was intended to be acted upon and was in fact acted upon. This principle was also accepted by the Supreme Court in a later case, Turner Morrison Co. v. Hungerford Investment Trust as a rule which " undoubtedly advanced the cause of justice ". In the present case, the assessee promised to pay the arrears in monthly instalments and the petitioner executed the bond agreeing to pay the amount in case of default by the assessee. This undertaking and the security bond was intended to be acted upon and in fact was acted upon by the department by permitting the assessee to pay the arrears in instalments and also issuing a tax clearance certificate in order to enable the assessee to leave the country. The assessee and the petitioner could not be permitted to repudiate this promise or act or bring an action inconsistent with the same. We are also of the view that having obtained a clearance certificate or a representation that he would pay the arrea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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