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Petitioner: Syed GHULAM ABBASS SHAH VS Respondent: INCOME-TAX OFFICER, MIRPUR and 2 others
Court Name: High Court of Azad Jammu and Kashmir Judge(s): Raja Muhammad Akram Khan Title: Syed GHULAM ABBASS SHAH vs INCOME-TAX OFFICER, MIRPUR and 2 others Case No.: Writ Petitions Nos. 7 and 8 of 1984 Date of Judgment:1985-02-16 Reported As: 1985 CLC 1582 Result: Petitions allowed
JUDGMENT
JUDGMENT ' These two writ petitions i.e. Writ No. 7 of 1984 and 8 of -1984 have been directed against the Recovery certificates No. 9419, dated 14-12-1981 and No. 8341, dated 29-11-1981 whereby the petitioner was asked to pay the Income-tax imposed upon him including the additional tax upto dates mentioned in the said Recovery certificates. The Deputy Commissioner, Mirpur to whom these Certificates were sent started the proceedings for the recovery of Rs.3,586 including the penalty upto 24-11-1981 in the Writ No. 7 of 1984 and Rs.18,391 including penalty upto 29-11-1981, in Writ Petition No. 8 of 1984. 2. Both the Writ Petitions have got some common law points, therefore, both the Writ Petitions are being disposed of by this single order. 3. As far as the the Writ Petition No. 7/1984 is concerned, through this writ petition, the validity of Recovery Certificate No. 9491, dated 24-12-1981 is challenged. This Recovery Certificate is Annexure Ill attached with the writ petition and reads as under:- ' Certificate under section 45(2) of Income-tax Act, 1922 as adapted in Azad Government of the State of Jammu and Kashmir. No. 9419/Tax/GIR, dated 24-12-1981. ' The Deputy Commissioner, Mirpur District. This is to ,certify that the sum of Rs. 3,586 in words -" Ls' L ) which is due from A,- son of................................................ residence is of I.A-on account of Income-tax and penalty is in arrear. With reference to the provisions of subsection (2) of section 16 of the Income-tax Act, 1922 you are hereby requested to recover the same as if it were an arrear of land revenue:-
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{{TABLE}} Year DC No. Date Total A/T Total 1963-64 308 31-7-1966 165 242 407 1964-65 348 31-7-1968 245 327 572 1965-66 - 31-7-1966 305 431 736 1966-67 464 30-6-1967 365 481 844 1967-68 435 30-6-1968 445 582 1,027 3,558 Sd/- Income-tax Officer, Mirpur 4. As far as the Writ Petition No. 8 of 1984 is concerned, the certificate reads as under:- Certificate under section 45(2) of Income-tax Act, 1922 as adapted in Azad Government of the State of Jammu and Kashmir. No. 8341-Tax/GIR, dated 29-11-1981. The Deputy Commissioner, Mirpur, District Mirpur. This is to certify that the sum of Rs.18,391 in words oft:d1 which is due from Ly---? son of............................................ residence is of................................. '..... on account of Income-tax and penalty is in arrear. With reference to the provisions of subsection (2) of section 16 of the Income-tax Act, 1922 you are hereby requested to recover the same as if it were an arrear of land revenue:- [TABLE] Year DC No: Date I.Tax S/C P.O. A/T Total 1962-63 338 31-7-1966 - - - 17 17 1963-64 309 31-7-1966 228 - - 3,371 5,652 1965-66 183 31-12-1966 756 - - 1,084 1,840 1966-67 437 30-6-1967 552 727 1,279 1967-68 457 30-7-1968 2,958 - - 3,899 6,857 1968-69 51 30-11-1972 154 - 147 30 1969-70 52 30-11-1972 84 88 173 1970-71 537 30-6-1976 1,350 922 2,272 18,391 Sd. Income-tax Officer, Mirpur. 5. The Writ Petition No. 7/84 arises out of the following facts:- (a) That the father of the petitioner Syed Badi-uz-Zaman died in England on 6-2-1979. The deceased was running a business of Petrol Pump in the Old Mirpur Town. The respondent No. 1 (Income-tax Officer) passed an assessment order under section 23 (4) of the Income-tax Act of 1922 for the assessm ent years 1963-64 to 1967-68 during the lifetime of the deceased Syed Badi- uz-Zaman; (h) That the Income-tax imposed was Rs. 1,525 but the additional tax rose to Rs. 2,061 upto 24-12- 1961 (the date of issuance of the Recovery Certificate No. 8419 (impugned order) and the recovery was to be made through the Deputy Comissioner, Mirpur from Syed Badi-uz-Zaman deceased, through his son, the petitioner; (c) When the petitioner came to know on 30-9-1982 about the Recovery Certificate No. 9419, he filed a revision petition against that order of the Income-tax Officer before the learned
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Commissioner Income-tax who rejected the revision petition on the main ground that it was hopelessly time-barred. The order of the learned Commissioner Income-tax was passed on 20-11- 1983; (d) As there was no legal remedy available under law against the said revision petition, hence the Writ Petition No. 7 was filed on 7-2-1984 after about two months and seventeen days; (e) That the revision petition was filed before the learned Commis sioner Income-tax within 90 days under section 138(c) of the Income-tax Ordinance of 1979 which was adapted by the Azad Jammu and Kashmir Government in 1979. The section 138(c) of the said Ordinance corresponds to section 33-A of the Old Income-tax Act of 1922. The contention of the learned counsel for the petitioner is that the order of the Income-tax Officer was not appealable, hence he filed a revision petition before the learned Commissioner Income-tax. 6. As far as the Writ Petition No. 8/1984 is concerned, the assessee in this case was also M/s. Abbass Bus Service, Mirpur. The assessm ent years in this case are 1962-63 to 1967-68. The business for which the Income-tax was imposed in this case was run by "Abbass Bus Service" which appears to be an Association of Persons (A.O.P.) and was running a Transport Business. The Income-tax Officer made assessm ent of Income-tax for 10 years which are Annexures II/10 in this case. The Recovery Certificate No. 8341, dated 29-11-1981 was issued by the Income-tax Officer-respondent No. 1 to the Deputy Commissioner, Mirpur for the recovery of Rs. 18,391 in which the Income-tax was Rs. 6,547 but the additional tax was Rs. 11,844. In this Recovery Certificate, the defaulter was mentioned as Abbass Bus Service and no Certificate was issued to any individual person or to the individual persons who were running the Transport Business. The certificate was issued under section 46(2) of the Income-tax Act of 1922. Section 94 of the Income-tax Ordinance of 1979 the Certificate to the Collector of the District. ' The Annexure 11/10 has got a "depreciation chart" which shows that the following 21 Buses were being plied by the said A.O.P.:- AJK 820, AJK 694, AJK 695, AJK 697, AJK 702, AJK 704, AJK 708, AJK 715, AJK 720, AJK 721, AJK 843, AJK 1012, AJK 1010, AJK 1046, AJK 1054, AJK 1131, AJK 1132, AJK 1133, AJK 1134, AJK 1167 and AJK 1186. ' It appears that the owner of these 21 buses had formed an Association of Persons known as Abbass Bus Service. 7. The legal heirs of the deceased assessee Syed Badi-uz-Zaman are mentioned Annexure R/C provided by the respondent No. 1 Income-tax Officer/Commissioner wherein the following persons appear to be the legal heirs of the deceased Syed Badi-uz-Zaman Shah who was said to be running the Business:- (1) Mst. Iqbal Begum (now deceased). (2) Mst. Khurhsid Begum 'Widows of Syed Badi-uz-Zaman. (3) Surraya Begum. (4) Sahujhat All Shah (son of the deceased). (5) Saeeda Riaz Akhtar (deceased daughter of Syed Badi-uz-Zaman Shah. Riaz Akhtar has got two heirs: Syed Iftikhar Hussain Kazmi (her husband) and (2) Syed Murtaza Haider (her son). 8. It appears that Mst. Khurhsid Begum and Mst. Surraya Begum are the widows of the late Syed Badi-uz-Zaman Shah and they are not on good terms with the petitioner due to the fact that perhaps they are his stepmothers. 9. Now I would like to revert to the Writ Petition No. 7 of 1984. This Writ Petition assails the Recovery Certificate regarding the Income-tax and the additional Tax levied on the business of the Petrol Pump of the Old Mirpur Town. Income-tax in this case was assessed to the tune of Rs. 1,525 but the additional Tax rose to Rs.2,061 upto 24-12-1981. 10. The learned counsel for the petitioner Ch. Muhammad Afzal, Advocate, has impeached the issuance of the Recovery Certificate No. 9419 on the following grounds:-
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(a) That the impugned Certificate was passed against a dead person and hence it was a nullity in the eye of law, and therafter, it cannot be enforced or implemented; (b) That the Recovery Certificate was issued by the Income-tax Officer to the Deputy Commissioner, Mirpur against law because under section 46(2) of the Income-tax Act of 1922, section 94 of the Income-tax Ordinance of 1979, the Deputy Commissioner figures nowhere; (c) That the impugned Certificate which should have been addressed to the District Collector, Mirpur under law has got no value, whatsoever; (d) That under law, all the legal representatives of the original assessee should have been brought on the record and the "Demand Notice" under section 29 of the Old Income-tax Act of 1922. Section 85 of the Income-tax Ordinance of 1979 should have been issued and served upon those legal representatives before the issuance of the impugned Recovery Certificate. He has referred to the following authorities from the Indian Jurisdiction on this point:- 1963 I.T.R. 55 (Mysore High Court); 1963 I.T.R. 99 (Kerala High Court) and 1968 I.T.R. 401 (Madras High Court). ' The learned counsel for the petitioner has submitted that according to the above-mentioned authorities, no Recovery Certificate can be issued until and unless a "Demand Notice" is first issued to the legal heirs of a deceased assessee and hence the legal heirs are not liable to pay for more than their share which they inherit from the deceased. Moreover, the said Certificate cannot be issued for more than the liability of a legal heir. ' The following authorities were cited from the Pakistan jurisdiction: (i) 1970 SCMR 226(229) A (Demand Notice is a must). (ii) 1980 PTD 26 (Sind High Court Karachi) (Default in payment of Tax whether accrues only after a notice of Demand is issued to an assesse-held-yes); (iii) 1981 SCMR 1192 (Supreme Court of Pakistan under section 24-B, subsection (3) read with section 29 of the Income-tax Act of 1922, the recovery of the Income-tax from the successors of the deceased without Demand Notice was held illegal); (iv) That the "Additional Tax" is a Tax on Tax which is ultra vires under 3rd Schedule of the Interim Constitution Act of 1974 (refer page-54-Item No. 42 which reads "Taxes on income other than agricultural income". The precise argument of the learned counsel for the petitioner is that the Tax on Income cannot be levied even by the Azad Jammu and Kashmir Council which is competent to legislate on the Income-tax. This "Additional Tax" is actually "A Tax on the Income-tax" and hence it is actually unconstitu tional. In other words, the provisions of section 45-A of the Income-tax Act of 1922, section 89 of the Income-tax Ordinance of 1979 which empower the Income-tax Officer to impose additional Tax on Tax, are in conflict which Schedule III, Item No. 42 of the Azad Jammu and Kashmir Interim Constitution Act of 1974. The following authorities have been cited by the learned counsel for the petitioner:- (i) 1959 P.T.D. 605 (Dacca High Court); (ii) Unreported case of the Supreme Court of A J & K M/s. Zia Younis Forest Company and others v. Income-tax Officer and others Civil Petition for Leave to Appeal No. 36 of 1982 whereby the question of the imposition of a tax under section 145-A of the Old Act and under section 89 of the New Ordinance was held to be a question of Public Importance and of first impression in the Supreme Court, and therefore, the leave was granted in that case. The leave was granted on 3-11-1982 by the Supreme Court of Azad Jammu and Kashmir; (v) That the liability of a legal heir in no case exceeds more than the property he inherits from the deceased, if any. Reference was made in this connection to section 24-B of the Old Income-tax Act of 1922 which corresponds to section 74(4) of the Income-tax Ordinance of 1979; (vi) That the petitioner has already paid up Rs. 1,18,250 as the liability of the deceased, therefore, his blood should not be further squeezed by any Shylock. The affidavit of the petitioner dated 7-2-1984
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attached with the Writ Petition was referred to by the learned counsel for the petitioner in this case. This affidavit was filed in the High Court and is said not to have been controverted from the other side. The details of this payment are given in Annxure IV which is on the Revision file No. C.I.T. 13/1982. The legal heirs of the deceased assessee of Syed Badi-uz-Zaman Shah are mentioned in Annexure R/C, already referred to above. 11. Replying to the point whether there is an alternate remedy. Ch. Muhammad Afzal Advocate has referred to me section 30 of the Income-tax Act of 1922 = Section 129 of the Income-tax Ordinance of The appealable orders are mentioned in this section. The impugned order does not fall under this section, and, therefore, the learned counsel for the petitioner has submitted that he filed a Revision Petition before the learned Commissioner Income-tax and when the learned Commissioner Income-tax rejected the said revision petition, there was no other remedy available to him, and therefore, he knocked at the doors of the High Court and invoked its constitutional jurisdiction under section 44 of the Azad Jammu and Kashmir Interim Constitution Act of 1974. 12. Replying to another preliminary point raised by Mr. B.A. Sheikh, the learned counsel for the respondents, Ch. Muhammad Afzal, the learned counsel for the petitioners has submitted that the warrants of arrest were issued by the Tehsildar under the Land Revenue Act and this fact is mentioned in para. 6 of his Writ Petition itself. As the Writ Petition is supported by an affidavit which stands uncontroverted from the other side, therefore, he submitted that it is wrong to say that he was guilty of acquiescence in the light of the threat of arrest, the petitioner paid Rs. 1,525 as the original Income-tax on 10-2-1984. 13. When the learned counsel for the parties were put a question from the Court as to whether the Supreme Court of Pakistan has decided the conflict of opinion between two High Courts as regards to the validity or otherwise of the imposition of additional tax whether it is constitutional or unconstitutional the learned Advocates for the parties submitted that the Supreme Court of Pakistan had not decided the controversy as yet. I have been informed by both the learned counsel for the parties that both the Supreme Court of Pakistan and the Azad Jammu and Kashmir Supreme Court have not decided as to whether the imposition of additional tax was constitutional or unconstitutional and that an appeal was sub judice before one Supreme Court. 14. Now I come to the Writ Petition No. 8 of 1984 in which the Recovery Certificate No. 8341 was issued by the Income-tax Officer on 29-11-1981, whereby the respondent No. 1 required the Deputy Commissioner, Mirpur to recover Rs. 18,391 (Income-tax was Rs. 6,547 and the additional tax was Rs. 11,844). The defaulter here was "Abbass Bus Service". The learned counsel for the petitioner in this case has raised the main points which he raised in the Wirt Petition No. 7 of 1984 and the following additional points were argued before me:- (a) That no Certificate was issued to any individual person or against the members of the Abbass Bus Service who had formed the Association of Persons for transport purposes. He has referred to section 46(2) of the Income-tax Act of 1922 which reads as follows: - "The Income-tax Officer may forward to the Collector of the District in which the Office of the Income-tax Officer is situated or the District in which the assessee resides, or owns property or carries on business or profession, a certificate under his signature specifying the amount of arrears due from an assessee, and the Collector, on receipt of such certificate, shall proceed to recover from such assessee the amount specified therein as if it were an arrear of land revenue: ' Provided that without prejudice to any other powers of the Collector in this behalf, he shall for the purpose of recovering the said amount have the powers which under the Code of Civil Procedure, 1908, a civil Court has for the purpose of the recovery of an amount due under a decree. (2-A) The Income-tax Officer may, at any time, recall from a Collector a certificate forwarded to him under subsection (2) and, upon a certificate being so recalled, all proceedings commenced in pursuance thereof shall abate:
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' Provided that the recall of a certificate shall not affect any recoveries made by the Collector before its recall as if the certificate hat not, to the extent of such recovery, been recalled nor shall the recall of a certificate issued at any time, including a certificate issued before the first day of July, 1967, prevent the recovery, by the issue of a fresh certificate, of any amount which was recoverable at the time the cartificate so recalled was issued." ' The word "assessee" is defined in section 2(2) of the Income-tax Act of 1922 which reads as follows:- "Assessee" means a person by whom income-tax or any other sum of money is payable under this Act, and includes every person in respect of whom any proceeding under this Act, has been taken for the assessm ent of his income or of the loss sustained by him or of the amount of refund due to him and every person who is required to file a return of income under section 22." ' Therefore, all the owners of 21 buses should have been issued first "Demand Notices" and then the "Recovery Certificates" should have followed:- (b) That the Demand Notices and the Recovery Certificate should have been issued to the legal heirs of the concerned Bus Owner or Owners who has/have died; (c) That the assessee petitioner had paid up the basic income-tax of Rs. 6,845 under the threat of auction of his property on 10-2-1984 (Annexure 7/2), hence there was not lathes, delay or waiver on the part of the petitioner. There was no alternate remedy as he had already exhausted all the available remedies under law. For instance, the petitioner filed a revision petition against the Recovery Certificate issued on 29-11-1981 to the Commissioner Income-tax on 22-6-1982 when he came to know about the said Recovery Certificate through the Tehsildar concerned on 30-5-1982. The learned Commissioner Income-tax rejected the revision petition on the ground that the said revision petition was filed after "eleven years" and was hopelessly time-barred. The learned counsel for the petitioner submitted that revision petition was rejected on 20-11-1983 and the writ petition was filed by the petitioner on 7-2-1984. Another notice for recovery of the arrears was issued under No. 3785-90/82, dated 19-6-1982 to Mst. Surraya Begum; (d) That the issuance of Recovery Certificate for Income-tax of 5 years from the assessment years 1962-63 to 1966-67 was made against the deceased individually and afterwards, for the rest 4 years starting from 1967-68 to 1970-71 the assessment was made against the Association of Persons (A.O.P) which is known as Abbass Bus Service without any justification on law and facts; (e) That during the year 1967-68, the petitioner Ghulam Abbass Shah had no Bus at all. During the three assessm ent years of 1968-69 to 1970-71, the petitioner had only one Bus No. A.J.K. 1285. Therefore, this aspect of the case was not considered by the Income-tax Commissioner, hence the impugned certificate is illegal and based on no evidence at all; (f) That the Association known as Abbass Bus Service was dissolved in the year 1972-73 and thereafter the business of this Association came to an end. This fact has not been denied by the non-petitioners; (g) That 21 buses, the details whereof have been given in a document referred to above were owned by the deceased during the two assessment years; 1964-65 and 1965-66 only; (h) That all the grounds taken up and agitated by the petitioner before the learned Commissioner Income-tax were not discussed and decided by him, therefore, he has refused to exercise the legal jurisdiction vested in him. In this respect, reference was made to the following authorities:- (i) M/s. Ch. Abdul Karim son of Karim Ellahi, Bangtal Hotel Mirpur v. Commissioner Income-tax decided by the High Court of AJ&K on 12-2-1983; (ii) The United Builders v. Commissioner Income-tax 1984 PTD 137 this objection appears in para. No. 7 of the writ petition before us; 15. The learned Counsel for the petitioner has prayed that accepting both the Writ Petitions, the impugned certificates should be quashed being illegal and issued without legal authority.
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16. On the other hand, Mr. B.A. Sheikh, the learned counsel for the respondents has raised the following preliminary points in both the petitioners: - (i) That both the writ petitioners are badly hit by laches; (ii) That adequate remedy had not been availed of by the petitioner in both the cases; (iii) That the part payment of the Income-tax has been made without any protest; (iv) That the petitioner came to the Court with sullied hands as he has suppressed certain material facts. 17. Mr. Basharat Ahmed Sheikh, the learned counsel for the respondents, while discussing the Writ No. 7 of 1984 has submitted the following points : - ( a ) That the Recovery Certificate is perfectly valid in law as it was issued under section 64(2) of the Old Income-tax Act of 1922 which corresponds to section 94 of the Income-tax Ordinance of 1979; (b) That the Recovery Certificate issued under section 46(2) of the Old Act = Section 94 of the said Ordinance is appealable by virtue of section 30 of the Old Act which corresponds to section 29 of the New Ordinance. As no appeal was preferred against the Recovery Certificate, hence no Writ lies; (c) That it is written in the judgment of the Commissioner Income-tax No. Tax CIT/4949/83, dated 20-11-1983 that similarly there are two applications from the petitioner placed on the file dated 16- 7-1981 and 2-11-1981 addressed to Income-tax Officer, Mirpur requesting for the certified copies of the assessm ent orders and recovery certificate, respectively and therefore the petitioner's contention that he had no knowledge of these arrears is nothing but a misstatment of fact." ' The arguments of Mr. B.A. Sheikh the learned counsel for the respondents is that the petitioner got the knowledge of the Recovery Certificate on 2-11-1981, and, therefore, his Revision Petition moved on 22-6-1982 was time-barred because it was moved much after 90 days; (d) That there is a finding of fact, that the petitioner had the knowledge as it is evident from his application for obtaining the copies, moved on 16-7-1981 and 2-11-1981. This finding of fact has not been challenged nor there is any explanation that the copies applied for were never furnished to him; (e) That the C.P.C. does not apply to the income-tax proceedings and, therefore, it is not necessary that the legal representatives of a dead person (deceased) should be impleaded. In this case, it is mentioned in the certificate itself that Syed Badi-uz-Zaman Shah was dead and he is to be proceeded against his liability through Syed Abbass Ali Shah the petitioner. At the best, it is a minor error and is not an error of law. The Recovery Certificate was issued against the petitioner and not against the deceased Syed Badi-uz-Zaman Shah; (f) That the Recovery Certificate can be issued against a dead person and there is no illegality if the legal representatives of the deceased "assessee" are not impleaded as a party because the legal representatives continue to be termed as an "assessee"; (g) That a more misdiscripation of an officer does not vitiate an order. The Recovery Certificate does not become illegal and invalid in law if the same officer is vested with powers under some other statute. Therefore, the Recovery Certificate issued to the Deputy Commissioner, Mirpur can be considered to be issued to the Collector as the same person holds the charge of the Collector of the District; (h) That the petitioner is capable of paying the Income-tax and the additional tax because under the "Shia law" the widows do not get the landed property. A valuable plot and a fleet of buses is owned by him and this fact is proved from Annexures R/B, R/C, R/D, R/E and R/F, which documents are attached with the written statement filed by the non-petitioner/respondents. Therefore, the Income-tax authorities were justified to issue the Recovery Certificates and press for the recovery
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of all the arrears of Income-tax and the additional Income-tax against the petitioner who enjoys all the fruits of the property left by his father. 18. Replying to the Writ Petition No. 8 of 1984, Mr. B.A. Sheikh Advocate, submitted:- (a) That the Income-tax Authorities are empowered under law to proceed against the Association of Persons (A.O.P.) which was dissolved in…
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