Full Judgment Text
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PETITIONER:
COMMISSIONER OF INCOME TAX BHUBANESHWAR & ANR.
Vs.
RESPONDENT:
PARMESHWARI DEVI SULTANIA & ORS.
DATE OF JUDGMENT: 06/03/1998
BENCH:
SUJATA V. MANOHAR, D.P. WADHWA
ACT:
HEADNOTE:
JUDGMENT:
THE 6TH DAY OF MARCH, 1998
Present :
Hon’ble Mrs. Justice Sujata V. Manohar
Hon’ble Mr. Justice D.P. Wadhwa
Ranbir Chandra, C.V.S. Rao, (Ms. Shashi Kiran) Adv. for B.K.
Prasad, Advs. for the appellants
N.K. Bisht, Adv (NP), for the Respondents
Joseph Vellapally, Sr. Adv., and R.K. Kapoor, Adv. with him
for the Amicus Curiae appointed by the Courts.
J U D G M E N T
The following judgment of the Court was delivered:
D.P. Wadhwa, J.
Commissioner of Income Tax, Bhubaneshwar and Union of
India, Ministry of Finance have filed this appeal against
the judgment dated October 24, 1994 of the Orissa High Court
which the High Court dismissed their revision and affirmed
the order of the subordinate court rejecting the plea of the
Revenue that a suit for partition filed by the first
respondent was not maintainable in view of the bar of in
Section 293 of the Income Tax Act, 1961 (for short, the
‘Act’).
Respondent No.1, as the plaintiff, filed a suit for
partition against 7 defendants, defendants 6 and 7 being
respectively Union of India through Finance Secretary and
Commissioner of Income Tax, Orissa, now the appellant before
us. Defendants 1 and 2 are step-brothers and defendants 3 to
5 are step-sisters of the plaintiff. Plaintiff said that she
was the daughter of Bansidhar Agarwal from his first wife,
while defendants 1 to 5 were the children of Bansidhar
Agarwal from his second wife. Defendant No. 1 is Babulal
whose residential and business premises were subjected to
search and seizure assets including certain gold ornaments,
subject matter of the suit filed by the plaintiff, were
seized. In the suit the plaintiff had prayed for partition
of those very gold ornaments. Plaintiff said that her mother
died in 1938 and that at that time she was possessed of 200
tolas of gold ornaments which was her stridhan. Her mother
made a will bequeathing gold ornaments to the plaintiff and
other children of Bansidhar form his second wife in
proportion to number of daughters of each of such children
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to meet the dowry demand and marriage requirements of their
daughters. These ornaments were kept in the custody of
father of the plaintiff who died on February 10, 1990. After
his death the ornaments came in the custody of Babulal
Agarwal, the first defendant. The family decided to
partition the ornaments. At that time there were 14 grand-
daughters who were the daughters of the plaintiff and
defendants 1 to 5. Since the plaintiff had 5 daughters she
was entitled to 5/14th share in the ornaments. But before
the partition could take place, Income Tax Officer raided
the house of the first defendant on March 23, 1990 and
seized those gold ornaments which weighed 2128 gms. along
with other assets. Plaintiff said that she filed a petition
before the Income Tax Officer for return of the ornaments
but he refused. The plaintiff then issued a notice to the
Commissioner of Income Tax, Orissa, defendant No.7, who, it
is alleged, assured her that justice would be done to her
claim and had stated that her case would be disposed of
within three months. Nothing happened in spite of the
reminders and no decision was taken. This gave cause of
action to the plaintiff. She served a notice under Section
80 of Code of Civil Procedure on Defendants 6 and 7 and
thereafter filed the suit.
From the facts, it is quite obvious that the plaintiff
would not have filed the suit for partition as there was no
dispute to her claim by other relatives but for the fact
that gold ornaments were then in the custody of the Income
Tax Department. Notices of the suit were served on
Defendants 6 and 7. They filed an application in the Court
on August 7, 1992 challenging the very maintainability of
the suit in view of Section 293 of the Act. The Section is
as under :
"293. Bar of suits in civil courts.
No suit shall be brought in any
civil court to set aside or modify
any proceeding taken or order made
under this Act, and no prosecution,
suit or other proceeding shall lie
against the Government or any
officer of the Government for
anything in good faith done or
intended to be done under this
Act."
As to why the suit was not maintainable, reference was
made to the operations conducted under Section 132 of the
Act and the order passed in those proceedings under the Act.
Under the authorisation issued by the Director of Income Tax
(Investigation), Hyderabad under sub-section (1) of Section
132, search and seizure operations were conducted in the
residence-cum-business premises of Babulal and also at the
business premises of a company of which he was the Managing
Director. Two bank lockers in the name of plaintiff would
not have filed the suit for partition as there was no
dispute to her claim by other relatives but for the fact
that gold ornaments were then in the custody of the Income
Tax Department. Notices of the suit were served on
Defendants 6 and 7. They filed an application in the Court
on August 7, 1992 challenging the very maintainability of
the suit in view of Section 293 of the Act. The Section is
as under :
"293. Bar of suits in civil
courts. No suit shall be brought in
any civil court to set aside or
modify any proceeding taken or
order made under this Act, and no
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prosecution, suit or other
proceedings shall lie against the
Government or any officer of the
Government for anything in good
faith done or intended to be done
under this Act."
As to why the suit was not maintainable. reference was
made to the operations conducted under Section 132 of the
Act and the order passed in those proceedings under the Act.
Under the authorisation issued by the Director of Income Tax
(Investigation), Hyderabad under sub-section (1) of Section
132, search and seizure operations were conducted in the
residence-cum-business premises of Babulal and also at the
business premises of a company of which he was the Managing
Director. Two bank lockers in the name of Babulal and his
brother Girdharilal in the Andhra Bank were also searched.
These search operation were carried on from March 23, 1990
to March 26, 1990. Case, Jewellery, diamond ornaments,
silver coins and ingots were found and seized. Statement of
Babulal was recorded under sub-section (4) of Section 132 of
the Act. In respect to cash and jewellery Babulal admitted
having concealed income of Rs. 7,00,000/- which according to
him was the value of the gold ornaments found in excess of
515 tolas which had been disclosed by him and his family
members in his wealth-tax return. He offered an additional
income of Rs. 3,50,000/- in his name and the same amount in
the name of his brother on account of undisclosed investment
in acquisition of gold ornaments. During the course of
investigation, Babulal also gave written submission,
Regarding gold ornaments, his stand now was that gold
ornaments weighing 2128 gms. belonged to Mani Devi who was
the first wife of his father and as per her wished, h is
father was the custodian of this jewellery on behalf of the
plaintiff who was the only daughter of his father from his
first wife and also on behalf of the children to be gotten
after remarriage of his father. His contention was that this
jewellery had been kept by his father who was now no longer
alive. After completion of the investigation, the Income Tax
Officer passed an order under Section 132(5) of the Act
holding that total liabilities on account of tax, interest
and penalty of Babulal came to Rs, 56,079/- as against which
value of the assets seized during the course of search and
seizure operation which included the gold ornaments in
question to be retained with the Department. The Income Tax
Officer disbelieved the version of the Babulal that gold
ornaments in question were owned by his step-mother and how
she wished to distribute the same among her daughter and
other children that may be born to the second wife of her
husband. According to Babulal, as per his second version,
the gold ornaments remained in the custody of his father
from 1938 till 1990, when he died without these having been
utilised as per the wishes of his step-mother, natural
mother of the plaintiff. The assets retained by the order
under sub-section (5) of Section 132 are to be dealt with in
accordance with the provisions of Section 132B of the Act.
An order was passed under sub-section (5) of Section
132 of the Act can be objected to under sub-section (11)
thereof to the Commissioner of Income Tax. We may set out
Section 132, in the relevant part, as under :
"132. Search and seizure.- (1)...
(2) ...
(3) ...
(4) The authorised officer may,
during the course of the search or
seizure, examine on oath any person
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who is found to be in possession or
control of any books of account,
documents, money, bullion,
jewellery or other valuable article
or thing and any statement made by
such person during such examination
may thereafter be used in evidence
in any proceeding under the Indian
Income tax Act, 1992 (11 of 1922),
or under this Act.
Explanation : For the removal of
doubts, it is hereby declared that
the examination of any person under
this sub-section may be not merely
in respect of any books of account,
other documents or assets found as
a result of the search, but also in
respect of all matters relevant for
the purposes of any proceeding
under the Indian Income-tax Act,
1922 (11 of 1922), of under this
Act.
(4A) Where any books of account,
other documents, money, bullion,
jewellery or other valuable article
or thing are or is found in the
possession or control of any person
in the course of a search, it may
be Presumed--
(i) that such books of account,
other documents, money,
bullion, jewellery or other
valuable article or thing
belong or belongs to such
person;
(ii) that the contents of such
books of account and other
documents are true; and
(iii) that the signature and every
other part of such books of
account and other documents
which purporting to be he
handwriting of any particular
person or which may reasonably
be assumed to have been signed
by, or to be in the
handwriting of, any particular
person, are in that person’s
handwriting of, any particular
person, are in that person’s
handwriting, and in the case
of a document stamped,
executed or attested, that it
was duly stamped and executed
or attested by the person by
whom it purports to have been
so executed or attested.
(5) Where any money, bullion,
jewellery or other valuable article
or thing hereafter in this section
and in sections 132A and 132B
referred to as the assets is seized
under sub-section (1) or sub-
section (1A), the Income-tax
Officer, after affording a
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reasonable opportunity to the
person concerned of being heard and
making such enquiry as may be
prescribed, shall, within one
hundred and twenty days of the
seizure, make an order, with the
previous approval of the Deputy
Commissioner .--
(i) estimating the undisclosed
income (including the income
from the undisclosed property
in a summary manner to the
best of his judgment on the
basis of such materials as are
available with him;
(ii) calculating the amount of tax
on the income so estimated in
accordance with the provisions
of the Indian Income-tax Act,
1922 (11 of 1922), or this
Act;
(iia) determining the amount of
interest payable and the
amount of penalty imposable in
accordance with the provisions
of the Indian Income-tax Act,
1922 (11 of 1922), or this
Act, as if the order had been
the order of regular
assessment;
(iii) specifying the amount that
will be required to satisfy
any existing liability under
this Act and any one or more
of the Acts specified in
clause (a) of sub-section (1)
of section 230A in respect of
which such person is in
default or is deemed to be in
default,
and retain in his custody such
assets or part thereof as are in
his opinion, sufficient to satisfy
the aggregate of the amounts
referred to in clauses (ii),, (iia)
and (iii) and forthwith release the
remaining portion, if any, of the
assets to the person from whose
custody they were seized :
Provided that it, after taking into
account the materials available
with him, the materials available
with him, the Income-tax Officer is
of the view that it is not possible
to ascertain to which particular
previous year or years such income
or any part thereof relates, he may
calculate the tax on such income of
part, as the case may be, as if
such income or part were the total
income chargeable to tax at the
rates in force in the financial
year in which the assets were
seized and may also determine the
interest or penalty, if any,
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payable or imposable accordingly :
Provided further that where a
person has paid or made
satisfactory arrangements for
payment of all the amounts referred
to in clause (ii), (iia) and (iii)
or any part thereof, the Income-tax
Officer may, with the previous
approval of the Chief Commissioner
or Commissioner, release the assets
or such part thereof as he may deem
fit in the circumstances of the
case.
(6) The assets retained under sub-
section (5) may be dealt with in
accordance with the provisions of
section 132B.
(7) If the Income-tax Officer is
satisfied that the seized assets or
any part thereof were held by such
person, for or on behalf of any
other person, the Income-tax
Officer may proceed under sub-
section (5) against such other
person and all the provisions of
this section shall apply
accordingly.
XXX XXX XXX
(11) If any person objects for any
reason to an order made under sub-
section, he may, within thirty days
of the date of such order, make an
application to the Chief
Commissioner or Commissioner,
stating therein the reasons for
such objection and requesting for
appropriate relief in the matter.
132B. Application of retained
assets--
(1) The assets retained under sub-
section (5) of section 132 may be
dealt with in the following manner,
namely :-
(i) The amount of the existing
liability referred to in
clause (iii) of the said sub-
section and the amount of the
liability determined on
completion of the regular
assessment or reassessment for
all the assessment years
relevant to the previous years
to which the income referred
to in clause ((i) of that sub-
section relates including any
penalty levied or interest
payable in connection with
such assessment or
reassessment and in respect of
which he is in default or is
deemed to be in default may be
recovered out of such assets.
(ii) If the assets consist solely
of money, or partly of money
and partly of other assets,
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the Assessing Officer may
apply such money in t he
discharge of the liabilities
referred to in clause (i) and
the assessee shall be
discharged of such liability
to the extent of the money so
applied.
(iii) The assets other than money
may also be applied for the
discharge of any such
liability referred to in
clause (1) as remains
undischarged and for this
purpose such assets shall be
deemed to be under distraint
as if such distraint was
effected by the Assessing
Officer of, as the case may
be, Tax Recovery Officer under
authorisation from the Chief
Commissioner under sub-section
(5) of section 226 and the
Assessing Officer or, as the
case may be, Tax Recovery
Officer may recover the amount
of such liabilities by the
sale of such assets and such
sale shall be effected in the
manner laid down in the Third
Schedule.
(2) Nothing contained in sub-
section (1) shall preclude the
recovery of the amount of
liabilities aforesaid by any other
mode lain down in this Act.
(3) Any assets or proceeds thereof
which remain after the liabilities
referred in clause (i) of sub-
section (1) are discharged shall be
forthwith made over or paid to the
persons from whose custody the
assets were seized.
(4)(a) The Central Government shall
pay simple interest at the rate of
fifteen per cent per annum on the
amount by which the aggregate of
money retained under section 132
and of the proceeds, if any, of the
assets sold towards the discharge
of the existing liability referred
to in clause (iii) of sub-section
(5) of that section exceeds the
aggregate of the amounts required
to meet the labilities referred to
in clause (i) of sub-section (1) of
this section.
(b) Such interest shall run from
the date immediately following the
expiry of the period of six months
from the date of the order under
sub-section (5) of section 132 to
the date of the regular assessment
of reassessment referred to in
clause (i) of sub-section (1) or,
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as the case may be, to the date of
last of such assessments or
reassessments."
In view of the proceedings conducted under Section 132
of the Act and order having been passed under sub-section
(5) of Section 132 thereof and seized assets including the
gold ornaments, subject matter of the suit ordered to be
retained, the Revenue objected to the maintainability of the
suit and said that it was clearly barred by Section 293 of
the Act and a civil court had no jurisdiction to try such a
suit under Section 9 of the Code of Civil Procedure. Section
9 of the Code imparts jurisdiction on a civil court to try
of suits of the civil nature excepting suit of which their
cognizance is either expressly or impliedly barred.
The Subordinate Judge framed and tried the preliminary
issue on the maintainability of the suit. He observed that
Section 293 of the Act could not be a blanket bar for all
types of civil suit brought for redress against infringement
of a legal right for which no remedy was prescribed under
the Act. According to him, the claim of the plaintiff as set
out in the suit had not been adjudicated by defendant No.7
and on that account legal right of the plaintiff stood
violated and she suffered legal injury which entitled her to
judicial process to file a suit. Thus, according to the
learned Subordinate Judge, there is no remedy in the Act for
redressal of the grievance of the plaintiff and the relief
which the plaintiff claimed in the suit could not be granted
to her in the Act. He, therefore, held the suit to be
maintainable. Commissioner of Income Tax and Union of India
aggrieved of this order filed a revision in the Orissa High
Court. The learned Single Judge upheld the order of the
Subordinate Judge and dismissed the revision. High Court did
note the fact that the plaintiff filed a petition before the
Income Tax Officer for returning the seized gold ornaments
but the prayer was refused and that thereafter she issued a
notice to the Commissioner of Income Tax and when that
yielded no result, she filed the suit for partition of the
suit properties. High Court also noticed that the order
passed under sub-section (5) of Section 132 of the Act was
not appealed against and had become final and further that
the assessment proceedings were still pending before the
Deputy Commissioner, Income Tax (Assessment). High Court
referred to a decision of this Court in Dulhabhai vs. State
of Madhya Pradesh [(1968) 3 SCR 662 - AIR 1969 SC 78]
wherein seven principles were laid down regarding exclusion
of jurisdiction of a civil court. According to the High
Court, the suit filed by the plaintiff was not to set aside
or modify the order passed by the Income Tax Officer under
Section 132(5) of the Act and had she filed suit for that
purpose, the plaint could have been rejected at the
threshold in the face of the bar contained in Section 293 of
the Act. A perusal of entire provision of Section 132 would
show that it did not give finality to any order passed under
sub-section (5) thereof, though the order could be varied or
modified by the Chief Commissioner or Commissioner, as the
case may be, but even that order did not give finality under
the Act. High Court said that :
"it has to be borne in mind that
section 132 of the Act relates to
the pre-assessment stage. In order
to oust the jurisdiction of the
civil court in the case at hand one
has to examine whether the Income
tax Officer under sub-section (11)
of Section 132 would be able to
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grant the relief claimed by
opposite party No.1 that the seized
gold ornaments are subject to
partition, it being the stridhan
property of her mother who
bequeathed the same in a will. As
the matter, I am of the view,
neither the Income-tax Officer nor
the named authority under sub-
section (11) of section 132 would
be able to grant the aforesaid
relief. Opposite Party No.1 is not
an assessee and she is a third
party so far as the proceeding
initiated against opposite party
No.2 under Section 132 of the Act
is concerned."
High Court also held that although Section 132 provided
for a remedy by way of challenge before the named authority
under sub-section (11) of Section 132 of the Act, plaintiff
could not redress her grievance because the relief of
partition claimed by her in the suit could not be granted by
the statutory machinery provided in the Act.
We do not think that the High Court approached the
question in its proper perspective. It failed to consider
the effect of the decree if passed in the suit on the order
under Section 132(5) of the Act or other proceedings under
Section 132B of the Act. When Section 293 originally stood,
it provided that "no suit shall be brought in any civil
court to set aside or modify any assessment or order made
under this Act". The word "assessment" was omitted and the
words "proceeding taken" were inserted in its place. This
made the section more comprehensive in nature. Direct effect
of the decree in the suit would be that the gold ornaments,
subject matter of this suit, would be taken out of the order
of the Income Tax Officer under Section 132 (5) of the Act
and would not be available to be applied in proceedings
under Section 132B of the Act. It is immaterial if the
proceeding under Section 132 gives no finality to the order
passed under Section 132 (5) of 132(11) of the Act. It is
not the case of the Revenue that Income Tax Authority can
grant decree for partition. It is not also material for the
decision of the case if the will now set up by the plaintiff
was genuine or not. The question that felt squarely for
consideration was the right or the plaintiff as a third
party in the proceedings under Section 132 of the Act. If we
analyse the section, the following steps are visualise :
"(1) search is conducted under the
authorisation of the named
authority;
(2) seizure of the assets, books of
accounts, documents etc. in
pursuance thereto;
(3) to examine on oath any person
during the course of search or
seizure operations who is found to
be in possession or control of any
of the assets, books of account,
documents etc.;
(4) statements so recorded can be
used in evidence in any proceeding
under the Act;
(5) there is a presumption that
assets, books of account or
documents found in control of any
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person in the course of search
belong to him and that the
contents of books of account and
documents are true and that
signatures, books of account and
documents which purported to be in
the writing of any particular
person are signed or in the hand-
writing of that particular person;
(6) after affording a reasonable
opportunity of being heard and
after making enquiry as prescribed,
the Income Tax Officer is to pass
an order keeping in view the
requirements of sub-section (5) of
Section 132 of the Act;
(7) if the Income Tax Officer
passes order for retention of
assets, these are to be dealt with
in accordance with Section 132B;
(8) if the Income-tax Officer is
satisfied that the seized assets or
any part thereof belongs to any
other person, the Income-tax
Officer may proceed under sub-
section (5) against any such
person; and
(9) if any person objects for any
reason to the order made under sub-
section (5), he can approach the
Chief Commissioner or Commissioner
for redressal of his grievance.
A perusal of the order passed under Section 132(5)
would show that the Income-tax Officer was not satisfied
that the subject gold ornaments belonged to any other person
and not to Babulal. It was, therefore, not necessary for him
to proceed under sub-section (7) of Section 132 of the Act.
However, the plaintiff was well aware of the proceedings
under Section 132 and she did approach the Income-tax
Officer, as aforesaid, who rejected her petition. In any
case, she could have approached the Chief Commissioner or
Commissioner under sub-section (11), if she had any
objection for any reason to the order made under sub-section
(5) of Section 132 of the Act. We do not think sub-section
(11) is confined to only that person who was subjected to
search and seizure operation and against whom the order
under sub-section 132(5) was passed. The words "any person"
appearing in sub-section (11) of Section 132 of the Act are
significant and even a third party can made an application
to the Chief Commissioner or Commissioner giving reasons for
his objection to the order and seeking appropriate relief in
the matter. This remedy the plaintiff did not avail. When
the plaintiff was unable to get the release of the seized
gold ornaments, allegedly belonging to her mother, under the
provisions of the Act, she could not be filling a partition
suit indirectly get a decree to have a finding that the gold
ornaments belonged to her mother and that she had right to
claim her share therein. If she succeeds in her claim this
will have direct effect of getting that order of the Income-
tax Officer under Section 132(5) of the Act set aside or
modified to that extent. This Section 293 does not permit.
The decree if passed in a suit would not only effect 5/14th
share of the plaintiff which she was seeking on partition of
the gold ornaments, but also whole of the ornaments weighing
2128 gms would get effected and taken out of the order under
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sub-section (5) of Section 132 of the Act. Mr, Vellapalli,
who at out request, appeared amicus curiae submitted that
one had to see if the suit was filed before or after the
conclusion of the assessment proceedings. He said it was a
suit for title and not, in any way, for setting aside the
order passed by the Income-tax officer, even though as a
consequence of an ultimate decree, it might affect the
working of that order. He said form of the suit was to be
seen if it is maintainable or not and that the jurisdiction
of the civil court is decided as to how suit is framed.
According to Mr. Vellapalli, purpose of of Income-tax
proceedings is to determine the tax liability of the
assessee and if liability is created, then to recover that
and assets are to be retained but that was not an issue
before the civil court. He also referred to Schedule 2 of
the Act to contend that the Act did not altogether bar a
civil suit. It is difficult to accept such submissions. We
think Section 293 is quite specific and does not admit of
any ambiguity if ultimately a suit is to result in a decree
or order which sets aside or modifies any proceeding taken
or order made under the Act, that suit would not be
maintainable. We are not concerned with the frame of the
suit as such but to see the ultimate result to which the
suit as such but to see the ultimate result to which the
suit would lead to. In the present case, both the
Commissioner of Income-tax and Union of India have been
impleaded as defendants. On pleadings of the parties, an
issue will have to be framed on the validity of proceedings
under Section 132 of the Act which cannot be permitted in
view of the bar contained in Section 293 of the Act.
In Raleigh Investment Co., Ltd. vs. Governor-General in
Council [(1947) 15 ITR 332 (PC), a suit was filed by Raleigh
Investment Company Ltd. claiming repayment of Rs. 4, 35,
295/-, part of a larger sum paid by it under an assessment
of Income-tax made upon it. The basis of this claim was that
in the computation of assessable income, effect had been
given to a provision of the Income-tax Act, 1992 which in
the submission of the plaintiff was ultra vires the
legislature and that the assessment was, therefore, wrong.
One of the contention raised was that the suit was barred by
reason of Section 67 of the Income Tax Act, 1922. Section 67
contained bar of suits in civil court. Section 67 provided
as under :
"67. Bar of suits in Civil Court.-
No suit shall be brought in any
Civil Court to set aside or modify
any assessment made under this Act,
and no prosecution suit or other
proceeding shall lie against any
officer of the Government for
anything in good faith done or
intended to be done under this
Act."
The Court held that though in form the relief claimed did
not profess to modify or set aside the assessment, in
substance the suit was directed exclusively to a
modification of the assessment and was barred by Section 67
of the Indian Income-tax Act. In Kamala Mills Ltd. vs. State
of Bombay [(1965) 56 ITR 643 (SC)], plaintiff, the appellant
filed a suit claiming to recover certain amount paid as
sales tax on the ground that it had been illegally levied
against it. One of the questions for consideration was if
Section 20 of the Bombay Sales Tax Act, 1946 contained a bar
against the suit. Section 20 is as under :
"Save as is provided in section 23,
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no assessment made and no order
passed under this Act of the
rules made thereunder by the
Commissioner of any person
appointed under section 3 to assist
him shall b e called into question
in any civil court, and save as is
provided in sections 21 and 22, no
appeal or application for revision
shall lie against any such
assessment or order."
It was contended by the plaintiff that Section 20 had
no application because the order of assessment which the
plaintiff sought to challenge had been made by the relevant
Sales Tax Authorities without jurisdiction. This Court
repelled this argument and said that an assessment based on
an erroneous finding about the character of the transaction
was not an assessment made without jurisdiction and was not
outside the purview of Section 20 and that words in that
section were wide enough to take within its sweep even
erroneous orders of assessment and would be entitled to
claim protection against the institution of a civil suit.
The court then observed :
"The jurisdiction of a civil court
can be excluded even without an
express provision. In every case,
the question about the exclusion of
the jurisdiction of civil courts
either expressly or by necessary
implication must be considered in
the light of the words used in the
statutory provision on which the
plea is statutory provision on
which the pleas is rested, the
scheme of the relevant provisions,
their object and their purpose."
In State of Bombay (Now Gujarat) vs. Jagmohandas & Anr.
[(1966) 60 ITR 206 206], the respondent-plaintiff had filed
a suit against the State of Bombay for recovery of a certain
amount which it alleged it h ad paid as advance tax on
various dates, while submitting returns for a particular
period. It also claimed interest. The State raised objection
that the suit was barred by Section 13 and 20 of the Bombay
Sales Tax Act, 1946. This Court held that as no assessment
had been made under the Act was called in question in the
suit Section 20 of the Act did not bar the suit. This Court
also negatived the contention of the defendant that when a
registered dealer filed a return and calculated and paid tax
on the basis of the return, he, in fact, made an assessment
and, therefore, brought himself within Section 20 of the
Act. The Court said :
"We are unable to read the word
‘assessment’ in section 20 to
include a mere filing of return and
payment by a registered dealer. In
our opinion, the word "assessment"
has reference to assessments made
under section 11, and 11A of the
Bombay Sales Tax Act, 1946.
Therefore, we must overrule the
contention of the learned Solicitor
General that section 20 expressly
bars the present suit."
It is not necessary for us to consider the scope of
Section 13 referred to above as that is not relevant to the
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issue raised before us.
In Rangammal & Ors. vs. Union of India & Ors. [(1963)
48 ITR 598 (Mad)], the appellants-plaintiffs had brought a
suit for a declaration that property described in the plaint
should not be either sold or could be sold if at all only
subject to a charge in favour of the sixth plaintiff for
realisation of income tax arrears due from their elder
brother and for a permanent injunction restraining the
Union of India and the Collector of Coimbatore from bringing
those properties to sale for realisation of the income-tax
arrears due. It was the contention of the plaintiffs that
the brothers were having their independent business and were
not having joint family businesses. However, the Income-tax
authorities treated all the businesses as joint family
business and the status of the assessee was taken as
Undivided Hindu Family. In order to realise the arrears of
income-tax, the properties, subject matter of the suit, were
brought to sale. At that stage, the suit was filed. Earlier,
it appeared that the plaintiffs had filed a suit for
partition of joint family estate and a preliminary decree
was passed and then final decree where some of the
properties mentioned in the plaint in the present suit were
allotted to minor plaintiffs. One of the question raised was
whether the suit as such was barred by Section 67 of the
Income-tax Act, 1922. A Division Bench of the Madras High
Court, after examining the background of the case, observed
that it was true that prayer in the plaint was not couched
in terms which would bar the operation of section 67 of the
Income-tax Act because the prayer was for declaration that
the properties in question were not liable to be proceeded
against for the satisfaction of the demand due under the
assessment. The Court said that merely by casting the prayer
in the form a declaration, the substance of the prayer could
not b e hidden. The Court held that the substance here was
that the share of the minors in the joint family property
was not liable for the income-tax arrears because the tax
was assessed on businesses which were not joint family
businesses. The court, thus, held that Section 67 of the
Act was a bar to the maintainability of the suit even though
the declaration asked for did not in terms referred to
cancellation of the assessment made by the tax authorities.
Principles of law are, therefore, well settled where a
civil court will not assume jurisdiction. In Dulhabhai etc.
vs. State of Madhya Pradesh & Anr. [(1968) 3 SCR 662 - AIR
1969 SC 78], this Court laid 7 principles for the courts to
see if the suit was barred under Section 9 of the Code or
not. It is not necessary to set out all the 7 principles as
we find that the present suit would be barred under the
second principle laid by this Court which we reproduce as
under :
"Where there is an express bar of
the jurisdiction of the court, an
examination of the scheme of the
particular Act to find the adequacy
or the sufficiency of the remedies
provided may be relevant but is not
decisive to sustain the
jurisdiction of the civil court.
Where there is no express exclusion
the examination of the remedies and
the scheme of the particular Act to
find out the intendment becomes
necessary and the result of the
inquiry may be decisive. In the
latter case, it is necessary to
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see if the statute creates a
special right or a liability and
provides for the determination of
the right of liability and further
lays down that all questions about
the said right and liability shall
be determined by the tribunals so
constituted, and whether remedies
normally associated with actions in
civil courts are prescribed by the
said statute or not."
We have seen above that the scope of Section 293 of the
Act has been widened now even to include any proceeding
under the Act and it is not merely confined merely to set
aside or modify any order. From of suit is not relevant. It
is the substance which is to be seen. When the statute
prescribed certain procedure and proceedings thereunder are
held and order passed, it is difficult to accept a
contention that proceeding and order can be modified or set
aside in a civil suit filed by a third party. Section 293 is
specific and does not admit filing of a suit which has the
effect of even indirectly setting aside or modifying any
proceeding taken under the Act or order made thereunder. In
the present case, search and seizure were effected as per
the provisions of the Act, assets and documents seized and
statement of Babulal recorded under sub-section (4) of
Section 132 of the Act wherein he admitted that the gold was
acquired from his and brother’s undisclosed income which he
was even prepared to surrender to tax. It was thereafter in
the course of further enquiry that he came up with a version
that the gold ornaments in question belonged to his step-
mother who bequeathed the same for the benefit of children
of the plaintiff and other children that would be born to
the second wife of his father. This version did not find
favour with the Income-tax Officer and he was not satisfied
that gold ornaments in question did not belong to Babulal.
It was, a therefore, not necessary for him to issue any
notice under sub-section (7) of Section 132 of the Act to
the plaintiff. In any case, the plaintiff was well aware of
the proceedings before the Income-tax Officer and she could
have also filed objection to the order made by the Income-
tax Officer under Section 132(5) of the Act to the Chief
Commissioner or Commissioner under Section (11) thereof
which remedy she did not avail. Considering the whole
gravamen of the plaintiff in the suit and the law on the
subject, we are of the opinion that the Subordinate Judge
and the High Court were not correct in rejecting the
contention of the Revenue and holding that the suit was not
barred under Section 293 of the Act.
We, therefore, allow the appeal set aside the impugned
judgment of the High Court and of the Subordinate Judge and
dismiss the suit filed by the plaintiff.
We would like to record our appreciation of the
assistance rendered by Mr. Vellapalli and Mr. Kapur who
appeared amicus curiae at our request.