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Petitioner: KANPUR INCOME-TAX BAR ASSOCIATION and another VS Respondent: UNION OF INDIA and JUDGMENT
Court Name: Allahabad High Court Judge(s): R. K. Gulati, M. C. Agarwal Title:KANPUR INCOME-TAX BAR ASSOCIATION and another vs UNION OF INDIA and
JUDGMENT
Reported As: 2000 PTD 2630 Result: Petition dismissed Judgment JUDGMENT M. C. AGARWAL, J.---This is a petition under Article 226 of the Constitution of India preferred by the Kanpur Income-tax Bar Association through its Secretary, Naveen Bhargava and Mukesh Srivastava, a chartered accountant. The petitioners claimed to be legal practitioners in taxation laws and they challenged a clarification contained in paragraph 3 of a letter, dated November 25, 1997, issued by Sri A.K. Batabyal, Member (Investigation, Central Board of Direct Taxes. The following reliefs have been claimed in this writ petition: "(i) issue a writ, direction or order in the nature of certiorari calling for the record of the letter/communication dated November 25, 199? (Annexure 2),, and the record of the decision of the Government of India, if any, and to quash the same, (ii) issue a writ, direct or order in the nature of mandamus directing the respondents, not to give effect to the third paragraph of the aforesaid communication/letter, dated November 25, 1997 (Annexure-2). (iii) issue a writ, direction or order in the nature of mandamus restraining the Commissioner of Income-tax, Kanpur (respondent No.3), from reopening or reviewing the certificates which have already been granted under the provisions of the scheme. (iv) issue a writ, order or direction in the nature of mandamus directing respondent No.3 to grant certificates in respect of declarations which already been submitted to him without taking into account the contents of para.3 of the impugned communication. Dated November 25, 1997 (Annexure-2),
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(v) issue a writ, direction or order in the nature of mandamus directing the respondents to accept the declarations made as clarified by means of D.O., dated October 3, 1997. (vi) issue a writ, direction or order in the nature of mandamus extending the last date of submitting the declaration, viz., December 31, 1997, in the event the relief is not granted by this Court on such date and in such time that no time is left to the clients of members of petitioner No. 1 and of petitioner No.2 to make the declaration under the scheme which they have been inhibited from doing because of the 'impugned communication dated November 25, 1997 (Annexure-2)." When the writ petition came up for admission, a preliminary objection was raised about maintainability of this writ petition for the aforesaid reliefs at the instance of the practitioners. We, therefore, heard learned counsel for the parties on this preliminary question about locus standi of the petitioners. Disturbed by the unabated generation and flow of black money and with a view to bring that money into the main stream of the economy and raise revenue for the Government, the Government of India introduced a Voluntary Disclosure of Income Scheme (VDIS) by enacting sections 62 to 78 in the Finance Act, 1997. Under the scheme any person could make a declaration of his -income for any year and pay tax at the rate of 35 percent. If it is a company or a firm, and at the rate of 30 percent. If he is a person other ;than a company or a firm. The declaration has to be made in the prescribed form and the income declared may represent either cash or an asset in any form whatsoever. For explaining the provisions of the scheme and for clearing doubts raised, the Government issued some circulars. A specific provision has been made in the scheme in section 73 that the value of the jewellery or bullion declared under the scheme shall be taken to be its market value as on April 1, 1987, where the disclosure is made in respect of an assessment year earlier than the assessm ent year 1987-88 and for the purpose of this scheme "jewellery" shall have the same meaning assigned to it in Explanation 1 to clause (viii) of subsection (1) of section 5 of the Wealth Tax Act, 1957. By a circular dated October 3; 1997, it was clarified that disclosure of silver utensils and other. Articles which are not covered by the definition of jewellery like gold/silver coins, watches can also be made as the law does not prohibit their declaration and that the declaration can be made at the value at which they were acquired. The circular further stated that in all such cases the assessee should be asked to file an affidavit indicating the period of acquisition of those articles and also the number/weight of these articles and on receipt of this affidavit, declaration should be accepted and certificate should be issued as per law. The impugned letter, dated November 25, 1997, copy of which is Annexure "2" to the writ petition makes a change in the aforesaid clarifications and the impugned paragraph 3 of this letter stated as under: "(3) The matter has been reconsidered by the Government. It is now decided that in all such cases of unusual declaration of silver articles, utensils, gold or silver coins, watches, etc., it should be treated as if they have been acquired in the current year unless the declarant is able to produce credible and satisfactory evidence about the year of acquisition. 'A simple affidavit would not suffice. Where such evidence is not produced, the value as on April 1, 1997, would be treated as value for declaring income under the VDIS-1997. In cases where certificates have already been issued, the Commissioners concerned should call the declarants and ask them to produce credible and satisfactory evidence of the year of acquisition, failing which the Commissioner should take steps to review the certificates. " It is stated in the writ petition that the change made through the impugned letter, dated November 25, 1997, is illegal being against the earlier clarification contained in the letter, date October 3, 1997, inasmuch as it places an extra burden on the declarant o produce credible and satisfactory evidence about the year of acquisition in place of a simple affidavit that was required earlier and inasmuch as in the absence of such evidence it provides that the value of this type of assets would be taken as on April 1, 1997. It is further claimed that the direction that even in respect of persons
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who have made the declaration before the issue of letter, dated November 25, 1997, they should be required to produce credible and satisfactory evidence and the certificate issued earlier should also be reviewed, is illegal. Regarding the justification for the present petitioners to file this writ petition which patently is not for their personal benefit but is intended to serve the persons who have made disclosure of undisclosed income under the scheme or who intend to make the declarations till the currency of the scheme, it is stated that the Central Board of Direct Taxes had sent messages to the tax practitioners all over the country asking them to help disclosure of income under the scheme and sought their cooperation in making the scheme a success. In this connection, a copy of the letter addressed by the aforesaid Sri A. K. Batabyal to the tax practitioners has been annexed as annexure "7" to the writ petition. It is stated that it was envisaged under the scheme that the disclosures would be made through the tax practitioners in general. It is averred that the scheme giants certain immunity to the declarant and on the, payment of tax prescribed under the scheme, the Commissioner of Income-- tax has to issue a certificate to the declarant. The declarations are to be treated as confidential and the provisions have been made in the scheme that no Court or any other authority is entitled to require any public servant or the declarant to produce before it any such declaration or part thereof or to give any evidence before it in respect thereof. Under section 76 of the scheme the Central Government is entitled to make any order' not inconsistent with the provisions of the scheme as may be necessary to remove any difficulty in the implementation thereof. It is claimed that many clients of the members of petitioner No. 1 and of petitioner No.2 have made declarations under section 64(1) of the scheme and in view of the confidentiality and secrecy which is contemplated under the provisions of the scheme, the members of petitioner No. 1, and petitioner No.2 ace enjoined not to disclose the names of those clients. In paragraph 29 of the writ petition, it is stated that the grievance of such clients, which has necessitated the filing of this writ petition is stated in the following paragraphs. The petition then states that the income disclosed under scheme represented gold and silver utensils gold and silver coins, watches and other articles which were not covered by the definition of "jewellery". The value thereof was disclosed to be the same as was the quantum of the voluntarily disclosed income of the assessm ent year for which the income was disclosed and the declarant made payment of income-tax at the rate provided therein and submitted proof of payment thereof as required under the scheme. In some of the cases, the Commissioner of Income-tax granted certificates to all the clients who had made declarations up to November 18, 1997. It is averred that the scheme does not contemplate any enquiry about the disclosed income or the assets or about the assessment year for which the income was disclosed. Reference is made to the clarification, dated October 3, 1997, copy of which is Annexure "6" to the writ petition which provided that only an affidavit, indicating the period of acquisition may be filed. It is claimed that still a very large number of clients of the petitioners intend to make disclosures under the scheme and they want also to disclose not only the income in the year of assessm ent to which it relates but also the assets which are represented by that income. Such assets, according to the information given to the petitioners are in the form of gold and silver utensils/coins, watches and other assets which are not covered by the definition of the expression "jewellery". It is claimed that great difficulty has arisen amongst the aforesaid clients of the members of petitioner No. I and petitioner No.2 because of the communication dated November 25, 1997, which places additional burden on the declarant and has instructed the Commissioner even to review cases in which certificates have already been issued. It is claimed that the names of the persons who have already made their declarations as well as the names 'of persons who are intending to make declaration cannot be disclosed because of the obligation of confidentiality and secrecy. According to the petitioners, the additional conditions prescribed through the letter dated November 25, 1997, are contrary to and ultra vires the scheme and are
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wholly arbitrary. It is claimed that since the Government itself requested the tax practitioners to help in the implementation of the scheme, the petitioners are directly .Interested in the cause of their clients and are entitled to espouse their cause and are under an obligation to do the same (see paragraph 44 of the writ petition). It is claimed that the petitioners are practising on the taxation side and their profession is directly connected with proper and valid enforcement of the taxation laws. On a perusal of the aforesaid averments made in the writ petition, it is clear that it is a case where the petitioners have no direct personal interest in the matter and they are according to their .Own showing espousing the cause of their clients. Therefore, the question arose whether the petitioners have the locus standi to do so. " Learned counsel for the petitioners Sri S. P. Gupta, Senior Advocate, with his usual rhetoric, contended that this writ petition has been filed in public interest and the purpose is to see that the scheme as contained in the provisions of the Finance Act,- 1997 is properly implemented and serves its purpose fully of bringing into the main stream the hidden undisclosed income and at the same time raise proper revenue for the State which is to be spent for the benefit of the nation. The writ pet' ion, therefore, is intended to serve a large public interest and, therefore, e petitioners who are practising on the taxation side are deeply concerned and involved in the proper implementation of the scheme. He placed reliance on S. P. Gupta v. President of India, AIR 1982 SC 149, which according to him is the Bible of the law about public interest litigation and about the question of locus standi. That was a case in which Sri S. P. Gupta (who coincidently is also counsel for the present petitioners) and some others challenged, inter alia, a circular letter issued by the then Law Minister to the Chief Ministers requesting them to: "(a) Obtain from all the Additional judges working in the High Court of your State their consent to be appointed as permanent Judges in any other High Court in the country. They could, in addition, be requested to name three High Courts, in order of preference, to which they would prefer to be appointed as permanent Judges; and (b) Obtain from persons who have already been or may in the future be proposed by you for initial appointment their consent to be appointed to any other High Court in the country along-with a similar preference for three High Courts." The substance of their claim was that it was an attack on the independence of judiciary and as members of the legal profession they were entitled to resist such attempts and were entitled to file various writ petitions. A question was raised about their locus standi to maintain the petitioner. The Supreme Court on a review of-the extensive literature available on the subject observed as follows (pages 185, 188): " 14. The traditional rule in regard to locus standi is that judicial redress is available only to a person who has suffered a legal injury by reason of violation of his legal right or legally protected interest by the impugned action of the State or a public authority or any other person 'or who is likely to suffer a legal injury by reason of threatened violation of his legal right or legally protected interest by any such action. .The basis of entitlement of judicial redress is personal injury to property, body mind or reputation arising from violation, actual or threatened, of the legal right or legally protected interest of the person seeking such redress. This is a rule of ancient vintage and it arose during an era when private law dominated the legal scene and public law had not yet been born .... 17. It may, therefore, now be taken as well-established that where a legal wrong or a legal injury is caused to a person or to a determinate class of persons by reason of violation of any Constitutional or legal right or any burden is imposed in contravention of any constitutional or legal provision or without authority of law or any such legal wrong or legal injury or illegal burden is threatened and such person or determinate class of persons is by reason of poverty, helplessness or disability or socially or economically -disadvantaged position, unable to approach the Court for
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relief, any member of the public can maintain an application for an appropriate direction, order or writ in the High Court under Article 226 and in case of breach of any fundamental right of such person or determinate class of persons, in this Court under Article 32 seeking judicial. Redress for the legal wrong or injury caused to such person or determinate class of persons. Where the weaker sections of the community are concerned, such as under-trial prisoners languishing in jails without a trial, inmates of the Protective Home in Agra or Harijan workers engaged in road construction in the Ajmer District, who are living in poverty and destitution, who are barely eking out a miserable existence with their sweat and toil, who are helpless victims of an exploitative society and who do not have easy access to justice, this Court will not insist on a regular writ petition to be filed by the public spirited individual espousing their cause and seeking relief for them. This Court will readily respond even to a letter addressed by such individual acting pro bono publico. It is true that there are rules made by this Court prescribing the procedure for moving this Court for relief under Article 32 and they require various formalities to be gone through by a person seeking to approach this Court. But it must not be forgotten that procedure is but a handmaiden of justice and the cause of justice can never be allowed to be thwarted by any procedural technicalities. The Court would, therefore, unhesitatingly and without the slightest qualms of conscience cast aside the technical rules of procedure in the exercise of its dispensing power and treat the letter of the public minded individual as a writ petitioner and act upon it ..... 22. We would, therefore, hold that any member of the public having sufficient interest can maintain an action for judicial redress for public injury arising from breach of public duty or from violation of some provision of the Constitution or the law and seek enforcement of such public duty and observance of such constitutional or legal provision. This is absolutely essential for maintaining the rule of law, furthering the cause of justice and accelerating the pace of realisation of the constitutional objective .... 23. But, we must be careful to see that the member of the public, who approaches the Court in cases of this kind, is acting bona fide and not for personal gain or private profit or political motivation or other oblique consideration. The Court must not allow its process to be abused by politicians and others to delay legitimate administrative action or to gain a political objective." The Supreme Court concluded as under (page 195): "25. If we apply these principles to determine the question of locus standi in the writ petition of Iqbal Chagla and Others in which alone this question has been sharply raised, it will be obvious that the petitioners had clearly and indisputably locus standi to maintain their writ petition. The petitioners are lawyers practising in the High Court of Bombay. The first petitioner is the member of the Bombay Bar Association, petitioners Nos.2 and 3 are members of the Advocates Association of Western India and petitioner No.4 is the President of the Incorporated Law Society. There can be no doubt that the petitioners have a vital interest in the independence of the judiciary and if an unconstitutional or illegal action is taken by the State or any public authority which has the effect of impairing the independence of the judiciary, the petitioners would certainly be interested in challenging the constitutionality or legality of such action. The profession of lawyers is an essential and integral part of the judicial system and lawyers may figuratively be described as priests in the temple of justice. They assist the Court in dispensing justice and it can hardly be disputed that without their help, it would be well nigh impossible for the Court to administer justice. They are really and truly officers of the Court in which they daily sit and practice. They have, therefore, a special interest in preserving the integrity and independence of the judicial system and if the integrity or independence of the judiciary is threatened by any act of the State or any public authority, they would naturally be concerned about it because they are equal partners with the Judges in the administration of justice. Iqbal Chagla and others cannot be regarded as mere bystanders or meddlesome interlopers in filing the writ petition. The complaint of the petitioners in
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the writ petition was that the circular letter issued by the Law Minister constituted a serious threat to the independence of the judiciary and it was unconstitutional and void and if the complaint be true, and for the purpose of determining the standing of the petitioners to file the writ petition, we must assume this complaint to be correct the petitioners already had locus standi to maintain the writ petition. The circular letter, on the averments made in the writ petition, did not cause any specific legal injury to an individual or to a determinate class or group of individuals, but it caused public injury by prejudicially affecting the independence of the judiciary. The petitioners being lawyers had sufficient interest to challenge the constitutionality of the circular letter and they were, therefore, entitled to file the writ petition as a public interest litigation. They had a clear concern deeper than that of a busy-body and they cannot be told off at the gates. We may point out that this was precisely the principle applied by this Court to uphold the standing of the Fertilizer Corporation Kamgar Union to challenge the sale of a part of the undertaking by the Fertilizer Corporation of India in Fertilizer Corporation Kamgar Union v. Union of India, AIR 1981 SC 344. Justice Krishna Iyer pointed out that if a citizen 'belongs to an organisation which has special interest in the subject --matter, if he has some concern deeper than that of a busy-body, he cannot be told off at the gates, although whether the issue raised by him is justifiable may remain therefore, hold that Iqbal Chagla maintain their writ petition. What writ petition of Iqbal Chagla and others must apply equally in relation to the writ petitions of S. P. Gupta and J. C. Kalra and others. So far as the writ petition of V. M. Tarkunde is concerned, Mr. Mridul, learned Advocate appearing on behalf of the Law Minister, did not contest the maintainability of-that writ petition since S. N. Kumar to whom, according to the averments made in thewrit petition, a specific legal injury was caused, appeared in the writ petition and claimed relief against the decision of the Central Government to discontinue him as an Additional Judge. We must, therefore, reject the preliminary objection raised by Mr. Mridul challenging the locus standi of the petitioners in the 'first group of writ petitions." A perusal of the above observations would show that the petitioners in the aforesaid case who were Advocates were held entitled to maintain a writ petition in relation to a matter touching the independence of the judiciary because as lawyers they had a vital interest in the independence of the judiciary and the impugned circular was conceived by the petitioners as unconstitutional or illegal action that had the effect of impairing the independence of the judiciary. It was observed that the profession of lawyers is an essential and integral part of the judicial system and they are really and truly officers of the Court in which they daily sit and practice and, therefore, they have a special interest in preserving the integrity and independence of the judicial system. Sri Gupta, learned counsel for the petitioners, contended that the present case also has a similar characteristic and the petitioners who are tax practitioners have a special interest in the proper administration of the scheme under consideration and, therefore, they can challenge the impugned instructions which are contrary to the content and tenor of the scheme and are likely to deter an unsanctified number of prospective declarants. Sri Bharat Ji Agarwal, Senior Advocate, learned counsel for the respondents, on the other hand, contended that this writ petition cannot be equated with public interest litigation and is a writ petition intended to serve the interest of a few unscrupulous citizens, who admittedly have evaded tax in the past and are attempting to take undue advantage of the scheme by asserting that they acquired gold and silver coins, ornaments, etc., in very old days when their value was thirty or more times less than their present value and thereby making a scope for, converting such alleged assets into cash by showing that they have sold the assets now and thus achieving the purpose by paying just one or two percent. Tax as against 30 percent. Contemplated by the scheme. He also pointed out that the impugned instruction contained in paragraph 3 of the communication, dated November 25, 1997, is intended to plug the hole in the scheme inasmuch as while gold and silver bullion and jewellery could not be declared at a value prior to April 1, 1987, in respect of coins and
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utensils, etc., the scheme and did not provide any limitation of time and they could be declared to have been acquired at any time even as far back as 1923. He pointed out that while the instruction does not debar such declarations it only requires satisfactory evidence of the period of acquisition to be furnished so that the scheme is not misused. He placed reliance on a later Supreme Court judgment in Janata Dal v. H.…
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