Full Judgment Text
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PETITIONER:
DWARKANATH, HINDU UNDIVIDED FAMILY
Vs.
RESPONDENT:
INCOME-TAX OFFICER, SPECIAL CIRCLE, KANPUR
DATE OF JUDGMENT:
29/03/1965
BENCH:
SUBBARAO, K.
BENCH:
SUBBARAO, K.
SHAH, J.C.
SIKRI, S.M.
CITATION:
1966 AIR 81 1965 SCR (3) 536
CITATOR INFO :
R 1976 SC 578 (11)
RF 1980 SC1579 (25)
R 1985 SC 167 (36,38)
RF 1986 SC1272 (83)
R 1987 SC 537 (18)
F 1989 SC1607 (18)
ACT:
Indian Income-tax Act (11 of 1922), s. 33A(2)-Commissioner’s
power of revision-If administrative or
quasi-judicial--"Deponent’s own knowledge", meaning of.
HEADNOTE:
Pursuant to the directions of the Income-tax Appellate
Tribunal, the Income-tax Officer, determined the assessee’s
capital gains under s. 12B of the Income-tax Act, 1922. He
did not, however, make any order under s. 23(3) of the Act,
nor did he issue a notice of demand under s. 29 of the Act.
The assessee filed an application before the Commissioner of
Income-tax, under s. 33A(2) of the Act, for revising the
computation made by the Income-tax Officer drawing his
attention to a decision of the Bombay High Court in
Baijnath’s case, (1957) 31 I.T.R 643, as to how the capital
gains should be ascertained. That decision was based upon a
consideration of the very documents which were the basis of
the assessees’ claim. The Commissioner dismissed the
revision petition as not maintainable, as well as on merits,
ignoring the Bombay decision. Meanwhile, the assessee filed
an application requesting the Income-tax Officer to issue a
notice of demand under s. 29, to enable him to file an
appeal, but the Officer declined to do so. The assessee
filed a writ application in the High Court for issuing
appropriate writs to the Commissioner and the Income-tax
Officer, but the High Court dismissed it in limine.
In his appeal to this Court, the assessee contended that (i)
the High Court erred in holding that the affidavit filed in
support of the writ petition was not in accordance with law,
and that even if there were any defects the High Court
should have given him an opportunity to rectify them, and
(ii) the High Court erred in distinguishing the Bombay
decision and in holding that there was no force in the
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revision filed before the Commissioner, and that, the High
Court should have directed the Commissioner to entertain the
revision and dispose of it in accordance with law by giving
suitable directions to the Income-tax Officer. The
respondent raised a preliminary objection that as the order
of the Commissioner was an administrative act, Art. 226 of
the Constitution could not be invoked.
HELD:(i) As no appeal lay to the Appellate Assistant
Commissioner against the calculations made by the Income-tax
Officer, the Commissioner had powers under s. 33A(2) to
revise the Income-tax Officer’s order. The jurisdiction
conferred on the Commissioner by the section is a judicial
one, The nature of the jurisdiction and the rights decided
carry with them necessarily the duty to act judicially in
disposing of the revision. Further, the fact that a
Division Bench of one of the High Courts in India had taken
a view in favour of the assessee, indicated that the
question raised was arguable and required serious
consideration. Therefore, a writ of certiorari quashing the
order of the Commissioner dismissing the assessee’s revision
petition, should be issued. [544E-G; 548D]
537
Sitalpore Colliery Concern Ltd. v. Union of India, (1957) 32
I.T.R. 26, Additional Income-tax Officer, Cuddapah v.
Cuddapah Star Transport Co. Ltd. (1960) 40 I.T.R. 200 and
Suganchand Saraogi v. Commissioner of Income-tax, (1964) 53
I.T.R, 717, overruled.
Even if the Commissioner only made an administrative order
in refusing, to give any direction to the Income-tax
Officer, the assessee would still be entitled to approach
the High Court under Art. 226, and a writ of mandamus
directing the Income-tax Officer to discharge his statutory
duty of passing the order and issuing the notice of demand
in accordance with law, should be issued. [546C-E]
(ii)The affidavit filed on behalf of the assessee was
complete and compiled with the rules made by the High Court.
The affidavit spoke only of matters which were within the
deponent’s own knowledge, because, the phrase "deponent’s
own knowledge" is wide enough to comprehend the knowledge
derived from a perusal of relevant documents. Even if the
affidavit was defective in any manner, the High Court
instead of dismissing the petition in limine should have
given the assessee, a reasonable opportunity to file a
better affidavit. [547F-G, H]
(iii)The High Court was also in error in holding that
the decision of the Bombay High Court was given on different
facts, for the facts in both cases were the same and they
arose out of the same transaction. [548B-C]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 62 of 1964.
Appeal by special leave from the judgment and decree dated
July 28, 1959 of the Allahabad High Court in Civil
Miscellaneous Writ No. 2071 of 1959.
A. V. Viswanatha Sastri, Rameshwar Nath, S. N. Andley and
P. L. Vohra, for the appellant.
Gopal Singh and R. N. Sachthey, for the respondents.
The Judgment of the Court was delivered by
Subba Rao, J. The facts leading up to this appeal may
briefly be narrated. Gujarat Cotton Mills Co. Ltd.,
hereinafter called the Company, is a limited company having
its registered office at Ahmedabad. In the year 1938 the
Company appointed Messrs. Pira Mal Girdhar Lal & Co.,
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hereinafter called the Agency Firm, as its Managing Agents.
On February 28, 1938, a formal agreement was entered into
between the Company and the Agency Firm. The said Agency
Firm was formed under an instrument of partnership dated
February 26, 1938, with 11 partners-3 of them are
compendiously described as the "Bombay Group" and the
remaining 8 of them as the "Kanpur Group". With certain
variations in the constitution of the Agency Firm, the said
firm functioned as the Managing Agents of the Company till
September 1946. In September 1946 shareholding of the
partners of the Agency Firm in the Company was as follows:
Kanpur Group 32,500 shares.
Bombay Group 26,362 shares.
538
Because of certain differences between the partners, they
decided among themselves to sell their shares and to
surrender their Managing Agency. On September 7, 1946, the
said 11 partakers entered into an agreement with the firm of
Messrs. Chhuttu Ram & Sons of Bihar, hereinafter called the
Purchaser Firm. Under that agreement it was provided that
65012 shares held by the 11 partners of the Agency Firm,
directly or through their nominees, should be sold to the
Purchaser Firm at Rs. 65 per share and that the Agency Firm
should before November 15, 1946, resign its ’office of
Managing Agency of the Company. It was a condition of the
agreement that it should have operation only after the
Purchaser Firm or its nominees were appointed as the
Managing Agents of the Company. On October 30, 1946, the
Company held its General Body Meeting and accepted the
resignation of the Agency Firm and by another resolution
appointed the Purchaser Firm as the Managing Agents in its
stead. In terms of the agreement, the Purchaser Firm paid
for the entire shareholding of the partners of the Agency
Firm at Rs. 65 per share. The appellant is a Hindu
undivided family. Its karta was one Dwarkanath and the
present karta is his son Ramji Prasad. The said family was
’one of the II partners of the Agency Firm belonging to ’the
Kanpur Group. Out of the total shareholding the appellant
held 11,230 shares. It received the price for the said
shares at the rate of Rs. 65 per share. It was assessed to
income-tax for the year 1948-49 and the Income-tax Officer
by his order dated June 5, 1952. assessed the excess amount
of Rs. 2,98,909 realized by the assessee under the head
"income from business", i.e., the difference in the amount
for which it purchased the shares and that for which it sold
them. On appeal, the Appellate Assistant Commissioner of
Income-tax confirmed the same. On further appeal, the
Income-tax Appellate Tribunal, Delhi Bench, held that the
said receipt bad to be taxed as "capital gains" under s.
12B. of the Income-tax Act, 1922, and directed the Income-
tax Officer to modify the assessment in accordance with its
order. The assessee made an application under s. 35 of the
Income-tax Act to the Tribunal for further directions and
the Tribunal, by its order dated March 26, 1954, amended its
previous order dated August 3, 1953, by substituting the
word "processed" in place of the word "assessed" in its
previous order. The assessee raised various contentions
before the Income-tax Officer, inter- alia, that the said
income was not liable to be taxed under s. 12B of the
Income-tax Act under the head "capital gains" and that in
any case in order to determine the amount of capital gains
the market value of the shares only should be taken into
consideration, as the price of Rs. 65 per share included
also the consideration for the relinquishment of the
managing agency rights. The Income-tax Officer rejected the
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said contentions of the assessee. He redetermined the
assessable income under the heading "capital gains" but did
not issue a notice of demand as prescribed in s. 29 of the
Income-tax Act. After making an infructuous attempt to get
suitable directions
539
from the Appellate Tribunal, on March 5, 1956, the assessee
filed an application before the Income-tax Officer to issue
a notice of demand under s. 29 of the Income-tax Act so that
it might prefer an appeal against the same to the
appropriate authority. But the Income-tax Officer refused to
issue any such notice. The assessee preferred an appeal
against that order to the Appellate Assistant Commissioner
under s. 30 of the Income-tax Act and that was dismissed
on March 8, 1957, on the ground that it was not
maintainable. Meanwhile on September 27, 1956, the appellant
filed an application before the Commissioner of Income-tax
under s. 33A(2) of the Income-tax Act for revising the order
of the Income-tax Officer dated September 28, 1955. On
March 28, 1959, the Commissioner dismissed the revision
petition on two grounds, namely, (1) that it was not clear
whether the revision petition under s. 33A of the Income-tax
Act was maintainable, and (ii) on merits. It may be noticed
that long before the revision petition was dismissed, the
appeal filed by the assessee against the order of the
Income-tax Officer to the Appellate Assistant Commissioner
was dismissed on March 8, 1957. On November 18, 1957, the
attention of the Commissioner was also drawn to the fact
that the Bombay High Court in the case of a reference to
that Court at the instance of the Bombay Group held that the
market value of the shares should be taken into
consideration to ascertain the excess realized on the sale
of the shares of the assessee for the purpose of capital
gains tax. The Commissioner ignored that decision in
dismissing the revision. Thereafter, on July 28, 1959, the
assessee filed Writ Application No. 2071 of 1959 in the High
Court of Judicature at Allahabad, inter alia, for a writ of
certiorari or any other direction or order of like nature to
quash the order of the Income.tax Commissioner, Lucknow,
dated March 28, 1959, and the Order of the Income-tax
Officer dated September 28, 1955, and for a writ of
mandamus or any other order or direction of the like
nature directing the Commissioner to pass a fresh order in
accordance with the decision of the Bombay High Court and
direct the Income-tax Officer to pass a fresh order in
accordance with law and to issue a notice of demand as
required by s. 29 of the Income-tax Act. The High Court
dismissed the said application in limine mainly on the
following three grounds: (1) the affidavit filed in support
of the writ petition was highly unsatisfactory and on the
basis of such an affidavit it was not possible to entertain
the petition; (2) the facts given in the affidavit were
incomplete and confused; and (3) even on merits, there was
no force in the revision petition Hence the appeal.
Mr. A.V. Viswanatha Sastri, learned counsel for the
appellant, contended that the affidavit filed in support of
the petition was in accordance with law, and that, even if
there were any defects, the Court should have given an
opportunity to the appellant to rectify them; and that the
High Court should have held
540
that the revision against the order of the Income-tax
Officer to the Commissioner was maintainable under s. 33A of
the Act, as the appeal against that order to the Appellate
Assistant Commissioner was not maintainable and that it
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should have directed the Commissioner to entertain the
revision and dispose of it in accordance with law directing
the Income-tax Officer to issue a notice of demand under s.
29 of the Income-tax Act. He further contended that the High
Court went wrong in holding that the facts in the Bombay
decision were different from those in the present case, for
the facts in both the cases were the same and in fact they
arose out of the same transaction, namely, the sale of the
shares by the Agency Firm to the Purchaser Firm.
Mr. Gopal Singh, learned counsel for the Revenue,
while supporting the order of the High Court raised a
preliminary objection, namely, that the order of the
Commissioner under s. 33A of the Income-tax Act was
administrative act and, therefore, no writ of certiorari
would lie to the High Court to quash that order under Art.
226 of the Constitution.
We shall first take the preliminary objection, for if we
maintain it, no other question will arise for consideration.
Article 226 of the Constitution reads:
" ......... every High Court shall have power,
throughout the territories in relation to which it exercises
jurisdiction, to issue to any person or authority, including
in appropriate cases any Government, within those
territories directions, orders or writs, including writs in
the nature of habeas corpus, mandamus, prohibition, quo
warranto and certiorari, or any of them, for the enforcement
of any of the rights conferred by Part III and for any
other purpose."
This article is couched in comprehensive phraseology and it
exfacie confers a wide power on the High Courts to reach
injustice wherever it is found. The Constitution
designedly used a wide language in describing the nature of
the power, the purpose for which and the person or authority
against whom it can be exercised. It can issue writs in the
nature of prerogative writs as understood in England; but
the scope of those writs also is widened by the use of the
expression "nature", for the said expression does not equate
the writs that can be issued in India with those in England,
but only draws an analogy from them. That apart. High Courts
can also issue directions. orders or writs other than the
prerogative writs. It enables the High Courts to mould the
reliefs to meet the peculiar and complicated requirements of
this county. Any attempt to equate the scope of the power
of the High Court under Art. 226 of the constitution with
that of the English Courts to
541
issue prerogative writs is to introduce the Unnecessary
procedural restrictions grown over the years in a
comparatively small country like England with a unitary form
of government into. a vast country like India functioning
under a federal structure. Such a construction defeats the
purpose of the article itself. To say this not to say that
the High Courts can function arbitrarily under this article.
Some limitations are implicit in the article and others may
be evolved to direct the article through defined channels.
This interpretation has been accepted by the Court in
Basappa v. Nagappa(1) and P.J. Irani v. State of Madras(2).
But we are satisfied that this case falls directly within
the confines of the certiorari jurisdiction as understood in
England. It is well settled that a writ of certiorari can be
issued only to quash a judicial or a quasi-judicial act and
not an administrative act. It is, therefore, necessary to
notice the distinction between the said two categories of
acts. The relevant criteria have been laid down with clarity
by Atkin, L.J., in King v. Electricity commissioners(3),
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elaborated by Lord Justice Scrutton in Rex v. London County
Council(4) and authoritatively restated in Province of
Bombay v. Kusaldas S. Advani(5). The said decisions laid
down the following conditions to be complied with: (1) The
body of persons must have legal authority; (2) the authority
should be given to determine questions affecting the
rights of subjects; and (3) they should have a duty to act
judicially. So far there is no dispute. But in decided
cases, particularly in India, there is some mixing up of two
different concepts, viz., administrative tribunal and
administrative act. The question whether an act is a
judicial act or an administrative one arises ordinarily in
the context of the proceedings of an administrative tribunal
or authority. Therefore, the fact that an order was issued
or an act emanated from an administrative tribunal would
not make it anytheless a quasi-judicial act if the aforesaid
tests were satisfied. The concept of a quasi-judicial act
has been conceived and developed by English Judges with a
view to keep the administrative tribunals and authorities
within bounds. Parker, J., in R.V. Manchester Legal Aid
Committee(1) brought out the distinction between judicial
and administrative acts very vividly in the following
passage:
"The true view, as it seems to us, is
that the duty to act judicially may arise in
widely different circumstances which it would
be impossible, and, indeed, inadvisable, to
define exhaustively ....... When, on the
other hand, the decision is that of an
administrative body and is actuated in whole
or in part by questions of policy, the duty to
act judicially may arise in the course of
arriving at that decision. Thus, if in order
to arrive at the decision, the
(1) [1955] 1 S.C.R. 250.
(2) [1962] 2 S.C.R. 169.
(3) [1924] 1 K.B. 171.
(4) [1931] 2 K.B. 215.
(5) [1950] S.C.R. 621.
(6) [1952] 2 Q.B. 413, 428.
542
body concerned had to consider proposals and
objections and consider evidence, then there
is the duty to act judicially in the course of
that inquiry ...........................
Further, an administrative body in
ascertaining facts or law may be under a duty
to act judicially notwithstanding that its
proceedings have none of the formalities of
and are not in accordance with the practice of
a court of law ..............................
If on the other hand, an administrative body
in arriving at its decision at no stage has
before it any form of his and throughout has
to consider the question from the point of
view of policy and expediency, it cannot be
said that it is under a duty at any stage to
act judicially".
The relevant principles have been succinctly
stated in Halsbury’s Laws of England, 3rd
Edn., Vol. 11, at pp. 55 and 56 thus:--
It is not necessary that it should be a court:
an administrative body in ascertaining facts
or law may be under a duty to act judicially
notwithstanding that its proceedings have none
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of the formalities of, and are not in
accordance with the practice of, a court of
law. It is enough if it is exercising, after
hearing evidence, judicial functions in the
sense that it has to decide on evidence
between a proposal and an opposition. A body
may be under a duty, however, to act
judicially (and subject to control by means of
these orders) although there is no form of lis
inter partes before it: it is enough that it
should have to determine a question solely on
the facts of the particular case, solely on
the evidence before it, apart from questions
of policy or any other extraneous
considerations".
"Moreover an administrative body, whose
decision is actuated in whole or in part by
questions of policy, may be under a duty to
act judicially in the course of arriving at
that decision ......... If, on the other
hand, an administrative body in arriving at
its decision has before it at no stage any
form of lis and throughout has to consider the
question from the point of view of policy and
expediency, it cannot be said that it is under
a duty at any time to act judicially".
These are innumerable decisions of this Court where it
issued a writ of certiorari to quash a quasi-judicial act of
an administrative tribunal or authority. This Court set
aside the order of the Andhra Pradesh State Government
approving the order of nationalisation of road transport
made by the Andhra Pradesh Road Transport Undertaking in
Gullapalli Nageswara Rao v. Andhra Pradesh State Road
Transport Corporation(1), the order of the Examination
(1) [1959] Supp. 1 S.C.R. 319.
543
Committee cancelling the examination results on the ground
that it did not give opportunity to the examinees to be
heard before the order was made in Board of High School and
Intermediate Education, U.P., Allahabad v. Ghanshyam Das
Gupta(1), and the order of the Revenue Board made in a
revision petition against the order of the Deputy
Commissioner impounding the document without hearing the
aggrieved party in The Board of Revenue, U.P. v. Sardarni
Vidyawati(2). In all these cases the Government, the
Examination Committee and the Board of Revenue were
administrative bodies, but the acts impugned were quasi-
judicial ones, for they had a duty to act judicially in
regard thereto. The law on the subject may be briefly stated
thus: The provisions of a statute may enjoin on an
administrative authority to act administratively or
judicially. If the statute expressly imposes a duty on the
administrative body to act judicially, it is a clear case
of a judicial act. But the duty to act judicially may not be
expressly conferred but may be inferred from the provisions
of the statute. It may be gathered from the cumulative
effect of the nature of the rights affected, the manner of
the disposal provided, the objective criterion to be
adopted, the phraseology used, the nature of the power
conferred or the duty imposed on the authority and other
indicia afforded by the statute. In short, a duty to act
judicially may arise in widely different circumstances and
it is not possible or advisable to lay down a hard and fast
rule or an inflexible rule of guidance.
With this background let us look at the
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relevant provisions of the Income-tax Act.
Section 33A(2). The Commissioner may, on
application by an assessee for revision of an
order under this Act passed by any authority
subordinate to the Commissioner, made within
one year from the date of the order (or within
such further period as the Commissioner may
think fit to allow on being satisfied that the
assessee was prevented by sufficient cause
from making the application within that
period), call for the record of the proceeding
in which such order was passed, and on receipt
of the record may make such inquiry or cause
such inquiry to be made, and, subject to
the provisions of this Act, pass such order
thereon, not being an order prejudicial to the
assessee, as he thinks fit.
Provided that 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 but has not been
made, the time within which such appeal may be
made has not expired,
[1962] Supp. 3 S.C.R. 36. (2) [1962] Supl. 3 S.C.R. 50’
544
or, in the case of an appeal to the Appellate Tribunal, the
assessee has not waived his right of appeal, or
(b) where an appeal against the order has been made to the
Appellate Assistant Commissioner, the appeal is pending
before the Appellate Assistant Commissioner, or
(c) the order has been made the subject of an appeal to the
Appellate Tribunal.
Provided further that an order by the Commissioner
declining to interfere shall be deemed not to be an order
prejudicial to the assessee.
Under this sub-section an assessee may apply to the
Commissioner for revision of an order under the Act by an
authority subordinate to him. Such application shall be
filed within one year from the date of the order or within
such further period as the Commissioner may think fit to
allow. On receipt of such an application the Commissioner
may call for the record of the proceeding in which such
order was made and make such enquiry or cause such enquiry
to be made. After such enquiry he can make an order not to
the prejudice of the assessee but to his benefit. Such
revision is not maintainable if the time prescribed for an
appeal against such an order to the appropriate authorities
has not expired or if an appeal against such an order is
pending before the appropriate authorities. The scope of the
revision is, therefore, similar to that prescribed under
different statutes. Prima facie the jurisdiction conferred
under s. 33A(2) of the Act is a judicial one. The order that
is brought before the Commissioner affects the right of the
assessee. It is implicit in revisional jurisdiction that the
revising authority shall give an opportunity to the parties
affected to put forward their case in the manner prescribed.
The nature of the jurisdiction and the rights decided carry
with them necessarily the duty to act judicially in
disposing of the revision. The fact that the Commissioner
cannot make an order to the prejudice of an assessee does
not possibly change the character of the proceeding. Though
the Commissioner may not change the order of the inferior
authority to the prejudice of the assessee, he may not give
the full relief asked for by the assessee.
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But it is said that the Commissioner exercising
jurisdiction under s. 33A of the Act is only functioning as
an administrative authority and all his orders made
thereunder partake that character. Reliance is placed on the
decision of the Judicial Committee in Commissioner of
Income-tax, Punjab, N.W.F. & Delhi Provinces, Lahore v.
Tribune Trust, Lahore(1). There, the Judicial Committee held
that the assessments, which were duly made by the Income-tax
(1947) L.R. 74 I.A. 306. 317, 318.
545.
Officer in the proper exercise of his duty, were not a
nullity, but were validly made and were effective until they
were set aside; and that a reference to the High Court did
not lie from an order under s. 33 of the Act unless that
order was prejudicial to the assessee in the sense that he
was in a worse position than before the order was made. But
the Board incidentally made the following observations:
"On the contrary, s. 33 follows a number of sections which
determine the rights of the assessee and is itself, as its
language clearly indicates, intended to provide
administrative machinery by which a higher executive officer
may review the acts of his subordinates and take the
necessary action on such review. It appears that, as a
matter of convenience, a practice has grown up under which
the commissioner has been invited to act "of his own
motion", under the section, and where this occurs a certain
degree of formality has been adopted. But the language of
the section does not support the contention, which lies at
the root of the third question and is vital to the
respondent’s case, that it affords a claim to relief".
Continuing the same idea that Board observed:
"The Commissioner may act under s. 33 with or without
invitation of the assessee: if he does so without
invitation, it is clear that, if he does nothing to worsen
the position of the assessee, the latter can acquire no
right: the review may be a purely departmental matter of
which the assessee knows nothing. If, on the other hand,
the commissioner acts at the invitation of the assessee and
again does nothing to worsen his position, there is no
justification for giving him a new right of appeal".
These observations were made in the context of a question
whether a reference would lie to the High Court against an
order of the Commissioner. But the question whether the
order of the Commissioner under s. 33 of the Act was a
judicial or a quasi-judicial act subject to the prerogative
writ of certiorari was neither raised nor decided in that
case: that question was not germane to the enquiry before
the Board, for the appeal did not arise out of any order
made in a writ of certiorari. Section 33, which was
considered by the Privy Council was repealed by the Amending
Act of 1939; but by Act XXIII of 1941 the revisional powers
of the Commissioner were restored. Section 33-A took the
place of s. 33 with certain modifications. Sub-section (1)
of s. 33A provided for the Commissioner acting suo motu; and
sub-s. (2)thereof, on the application of the assessee. Under
this section the Commissioner can exercise the revisional
jurisdiction subject to the conditions mentioned therein.
While s. 33 only provided for the suo motu exercise of the
jurisdiction, s. 33A enables an assessee to apply to the
Commissioner to revise the order of his subordinate
officer.
546
Some of the High Courts, under the impression that the Privy
Council held that the act of the Commissioner was an
administrative one, ruled that a writ of certiorari. would
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not lie to quash the order of the Commissioner under s. 33A
of the Act: see Sitalpore Colliery Concern Ltd. v. Union of
India(1); Additional Income-tax Officer, Cuddapah v.
Cuddapah Star Transport Co. Ltd.(2); and Suganchand Saraogi
v. Commissioner of Income-tax, Calcutta(3). They did not
consider the scope of the revision before the Commissioner
and whether the orders made thereunder satisfied the well
settled tests of "judicial act" laid down by this Court. In
our view, for the reasons mentioned by us earlier, the said
judgments were decided wrongly.
That apart, on the assumption that the order of the
Commissioner under s. 33-A of the Act was an administrative
one, the respondent would not be in a better position. What
the appellant complains is that the Income-tax Officer in
terms of s. 29 of the Act is under an obligation to issue a
demand notice. If the said contention was correct, he did
not discharge the duty imposed on him by the statute. If the
Commissioner only made an administrative order in refusing
to give any direction to the Income-tax Officer, it would
not exonerate the said officer from discharging his
statutory duty. In that event the assessee would certainly
be entitled to approach the High Court under Art. 226 of the
Constitution for the issue of a writ of mandamus or other
appropriate direction to the Income-tax Officer to discharge
his statutory duty. We, therefore, reject the preliminary
objection of the respondents.
The High Court mainly dismissed the writ petition on
the ground that the affidavit flied in support of the writ
petition was highly unsatisfactory and that on the basis of
such an affidavit it was not possible to entertain the
petition. In exercise of the powers conferred by Art. 225 of
the Constitution and of other powers enabling it in that
behalf the High Court of Allahabad framed the Rules of
Court. Chapter XXII thereof deals with the procedure to be
followed in respect of a proceeding under Art. 226 of the
Constitution other than a writ in the nature of habeas
corpus. The relevant rule is sub-r. (2) of r. 1 of Ch. XXII,
which reads:
"The application shall set out concisely in
numbered paragraphs the facts upon which the
applicant relies and the grounds upon which
the Court is asked to issue a direction, order
or writ, and shall conclude with a prayer
stating clearly, so far as circumstances
permit, the exact nature of the relief sought.
The application shall be accompanied by an
affidavit or affidavits in proof of the facts
referred to in the application. Such
affidavit or affidavits shall be restricted to
matters which are within the deponent’s own
knowledge".
(1) [1957] 32 I.T.R,. 26.
(2) [1960] 40 I.T.R. 200.
(3) [1964] 53 I.T.R. 717.
547
The application filed in the High Court certainly complied
with the provisions of sub-r. (2) of r. 1 of Ch. XXII of the
Rules of Court of the Allahabad High Court. It set out
concisely in numbered paragraphs the facts upon which the
applicant relied, the grounds on which the Court was asked
to issue the direction and the exact nature of the relief
sought. But it is said that the affidavit filed in support
of the application did not speak to matters which were
within the deponent’s own knowledge. Dhruva Das, the
deponent of the affidavit, is a relative of the petitioner
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and he also looked after the case on his behalf as his
pairokar and was fully conversant with the facts. He
solemnly affirmed and swore as follows:
"I Dhruva Das, aforesaid deponent do
hereby solemnly affirm and swear that the
contents of paras 1, 2, 3 and 50 partly are
true to my personal knowledge, that the
contents of paras. 4, 5, 6, 7, 8, 9, 10. 11,
12. 13, 14, 15, 16, 20, 21, 25, 27, 29 partly,
31, 32, 34, 37, 38.41, 42, 44 are based on 46
and 50 partly and paras 17, 18, 19, 22, 23,
24, 26, 28, 29, partly 30, 33’, 35, 36, 39,
40, 43, 48 partly are based on perusal of the
record, those of paras 47, 48 partly 49 and 50
partly are based on legal advice, which I
believe to be true, that no part of this
affidavit is false and nothing material has
been concealed in it".
In paragraphs which are based on a perusal of the record
the deponent referred to the relevant orders of the Income-
tax authorities and also to the relevant agreements and the
copies of the said orders and agreement were also annexed to
the affidavit as schedules. It is not clear from the
schedules whether certified copies or the original of the
orders received by the appellant were filed. The said
agreements and the orders afford sufficient basis to
appreciate the case of the appellant and for disposing of
the same. "Deponent’s own knowledge" in r. 1(2) of Ch. XXII
of the Rules is wide enough to comprehend the knowledge of
the appellant derived from a perusal of the relevant
documents; and the affidavit in express terms disclosed and
specified the documents, the source of the appellant’s
knowledge. He swore in the affidavit that the documents
annexed to the affidavit were true copies of public
documents. If they are certified copies of public documents,
they prove themselves; if they are original of the orders
sent to the appellant, the deponent, as his agent, speaks to
their receipt. It is, therefore, not correct to say that the
facts stated in the affidavit are not based on the
deponent’s knowledge. The other facts alleged in the
affidavit are only introductory in nature and if they are
excluded the result will not be affected. That apart, if the
affidavit was defective in any manner the High Court,
instead of dismissing the petition in limine, should have
given the appellant a reasonable opportunity to file a
better affidavit complying with the provisions of r. 1 of
Ch. XXII of the Rules. We cannot, therefore, agree with the
High Court that the petition was liable to be dismissed in
limine in view of the alleged defects in the affidavit.
548
Nor can we agree with the High Court that the facts
given in the affidavit are incomplete and confused. On the
other hand, a careful perusal of the affidavit, along with
the documents annexed thereto, discloses clearly the
appellant’s case: it gives the necessary facts and the
reliefs sought for. We do not find any missing link in the
narrative of facts or any confusion in the nature of the
reliefs asked for.
We cannot also agree with the High Court that the
decision of the Bombay High Court in Baijnath Chaturbhuj v.
Commissioner of Income-tax, Bombay City 11(1) was given on
different facts and that it was impossible to contend that
any part of the money paid by Messrs. Chaturam & Sons was
really compensation for the managing agency rights. The
Bombay decision was given in the context of the dispute
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between the Bombay Group and the Income-tax authorities and
was based upon the consideration of the very documents which
are the basis of the appellant’s claim. We do not propose to
express any opinion on the correctness or otherwise of that
decision. But, the fact that a Division Bench of one of the
High Courts in India had taken the view in favour of the
appellant indicates that the question raised is, in our
view, an arguable one and it requires serious consideration.
We are satisfied that this is not a case where the High
Court should have dismissed the writ petition in limine. We
find in the decree issued by the High Court that Sri Gopal
Behari appeared on behalf of the opposite parties;
presumably he appeared as the appellant must have issued
notice in terms of r. 1(4) of Ch. XXII of the Rules. Be that
as it may, the High Court did not finally decide two
important questions that really arose ’for consideration
before it, namely: (i) whether a revision lay to the
Commissioner under s. 33-A(2) of the Act against the order
of the Income-tax Officer; and (ii) whether the Income-tax
Officer should have issued a demand under s. 29 of the Act.
If a revision lay to the Commissioner, the Commissioner
should have considered the second question before dismissing
it. Therefore, the question is whether a revision lay to the
Commissioner under s. 33-A(2) of the Act. A revision does
not lie to the Commissioner against an order where an appeal
against that order lies to the Appellate Assistant
Commissioner but has not been made and the time within which
such an appeal may be made has not expired or where an
appeal against the order has been made, it is pending before
him. It follows that if no appeal lies against the order an
officer to the Appellate Assistant Commissioner, the
Commissioner can revise that order under s. 33-A of the Act.
In the present case, pursuant to the directions of the,
Tribunal, Delhi Bench, the Income-tax Officer determined
the assessee’s capital gains under s. 12-B of the Act; but
the Income-tax Officer did not make any order under s. 23(3)
of the Act, nor
(1957) 31/.T.R. 643.
549
did he issue a regular notice of demand as prescribed under
s. 29 of the Act. The result was, no appeal lay against the
computation made by the Income-tax Officer to the Appellate
Assistant Commissioner. Indeed, on March 8, 1957, the
Appellate Assistant Commissioner rejected the appeal filed
by the appellant as being not maintainable. As no appeal lay
to the Appellate Assistant Commissioner against the
calculations made by the Income-tax Officer, the
Commissioner had certainly power to revise the said order.
On March 5, 1956, the appellant flied an application
requesting the Income-tax Officer to issue a notice of
demand as required by s. 29 of the Act. But the said Officer
declined to issue the notice of demand. The question is
whether he was bound to issue a notice of demand under s. 29
of the Act. Section 29 of the Act reads:
"When any tax, penalty or interest is
due in consequence of any order passed under
or in pursuance of this Act, the Income-tax
Officer shall serve upon the assessee or other
person liable to pay such tax, penalty or
interest a notice of demand in the prescribed
form specifying the sum so payable".
Under this section, if a tax is due in consequence of an
order from an assessee, the Income-tax Officer is under a
duty to serve on him a notice of demand. Pursuant to the
directions given by. the Tribunal the Income-tax Officer
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made fresh calculations under the head ’capital gains’ and
ascertained the amount due from the assessee. In the
circumstances, pursuant to the said calculation, he should
have passed an order and issued a notice of demand to the
assessee. In not doing so, it must be held that the
Income-tax Officer did not discharge his duty which he was
bound to do under the Act; with the result he had become
amenable to a writ of mandamus directing him to do what he
should have done under the ,Act.
In the result, the order of the High Court is set aside
and we issue a writ of certiorari quashing the order of the
Commissioner and a writ of mandarnus directing the Income-
tax Officer to pass an order and issue a notice in
accordance with law. The appellant will have his costs
throughout.
Appeal allowed.
550