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Petitioner: S. A. L. NARAYAN ROW VS Respondent: ISHWARLAL BHAGWANDASHonorable Justice SHAHC. K. Dophtary,A. V. Viswanatha Sastri
1968 P T D 645
1968 P T D 645
[Supreme Court (India)]
Present: P. B. Gajendragadkar, C. J., K. N. Wanchoo, J. C. Shah, J. R. Mudholkar and S. M. Sikri, JJ
S. A. L. NARAYAN ROW AND ANOTHER
Versus
ISHWARLAL BHAGWANDAS AND ANOTHER
AND
N. D. MEHROTRA AND ANOTHER
Versus
VRAJLAL KEWALDAS
Civil Appeals Nos. 1003 and 1004 of 1963, decided on 7th May 1965.
(a) Income-tax Act, 1922 (XI of 1922) - Ss. 18-A(6) (as amended in 1953), 23, 35 read with Income-tax Rules, 1922, r. 48 (as amended in 1953)-Advance tax-Interest - Tax paid less than 80 percent. of assessed tax - Assessment not inclusive of interest - Rectification, order passed charging interest after amendment of rule 48 of Income-tax Rules, giving retrospective effect-Discretion to reduce or waive interest under amended rule not exercised-Rectification order, held, not valid in law.
(b) Supreme Court---Appeal-Writ petition in High Court against income-tax proceedings and proceedings for recovery of tax-Civil proceeding-High Court competent to issue certificate of fitness for appeal to Supreme Court.
M. K. Venkatachalam, Income-tax 0fricer v. Bombay Dyeing and Manufacturing Co. Ltd. (1958) 34 I T R 143 rel.
Cajee v. Jormanik Stem (1961) 1 S C R 750 ; East End Dwellings Co. Ltd. v. Finsbury Borough Council (1952) A C 109 ; Rangoon Botatoung Co. Ltd. v. Collector, Rangoon (1912) L R 39 I A 197 ; Shantilal Rawji v. M. C. Nair (1958) 34 I T R 439 and State of Bombay v. Pandurang Vinayak (1953) S C R 773 ref.
C. K. Dophtary, Attorney-General for India (R. Ganapathy Iyer and B. R. G. K. Achar with him) for Appellants.
A. V. Viswanatha Sastri, Senior Advocate (T. A. Ramach andran, J. B. Dadachanji, O. C. Mathur and Ravinder Narain of J. B. Dadachanji & Co. with him) for Respondents.
JUDGMENT
SHAH, J.-(Civil Appeal No. 1003 of 1963).-The 1st Income-tax Officer C-II Ward, Bombay, served a notice under section 18-A(1) of the Indian Income-tax Act, 1922, calling upon Bhagwandas Kevaldas who will hereinafter be called "the assessee" to pay in four equal instalments Rs. 25,973-5-0 as advance tax for the assessment year 1948-49. On September 17, 1947, the assessee filed an estimate of his income under Section 18-A(2) and of the tax payable by him, and on January 10, 1948, he filed a revised estimate. An order under Section 23-B of the Act provisionally assessing the income was made by the Income-tax Officer and pursuant thereto on August 23, 1950, the assessee paid the tax so assessed. Regular assessment of the income of the assessee was made on March 31, 1953, by the Income-tax Officer, and it was found that the tax paid on the basis of the estimate of the assessee was less than eighty percent. of the tax determined as a result of the regular assessment. But the Income-tax Officer made no charge for interest under subsection (6) of Section 18-A of the Income-tax Act.
The departmental auditor raised an objection in auditing accounts of C-II Ward that a mistake was committed by the Income-tax Officer in failing to charge interest in making the order of assessment against the assessee. On September 21, 1956, the Income-tax Officer served a notice upon the assessee requiring him to show cause why the mistake in not levying interest be not rectified and why he should not be directed to pay "penal interest" under Section 18-A(6). On October 4, 1956, the Income-tax Officer recorded the following order : "During the internal checking of C-II Ward the auditor has pointed out a mistake in not charging penal interest under section 18-A(6). As this mistake is apparent from record the same is rectified under section 35 after giving due notice to the assessee" ; and served a notice of demand calling upon the assessee to pay Rs. 14,929-10-0 as interest due under section 18-A (6) for the period January 1, 1948, to July 22, 1950.
In exercise of his powers under section 33-A, by order dated February 1, 1958, the Commissioner of Income-tax confirmed the order of the Income-tax Officer rectifying the original order of assessment and imposing liability to pay interest, subject to the modification that interest be paid only till June 13, 1950.
The assessee then moved the High Court of Judicature at Bombay by a petition under Article 226 of the Constitution for issue of a writ of certiorari summoning the record of the case and for an order quashing or setting aside the order passed under section 33-A(2) by the Commissioner of Income-tax and the order passed by the Income-tax Officer under section 35 and the notice of demand pursuant to that order. The High Court of Bombay, following its earlier judgment in the case of Shantilal Rawji v. M. C. Nair, IV Income-tax Officer, "E" Ward, Bombay ((1958) 34 I T R 439) directed that the orders passed by the Income-tax Officer and by the Commissioner of Income-tax be quashed. Against the order passed by the High Court the Commissioner of Income-tax and the Income-tax Officer have, with certificate granted by the High Court, appealed to this Court.
At the hearing of this appeal for the assessee raised an objection in limine that the appeal filed by the Commissioner, and the Income-tax Officer was incompetent, because the High Court had no power under Article 133 of the Constitution to certify a proposed appeal against an order in a proceeding commenced by a petition for the issue of a writ under Article 226 of the Constitution. It was urged that the proceeding before the High Court was not a "civil proceeding" within the meaning of Article 133. Article 133 of the Constitution, in so far as it is material, by the first clause provides:
"An appeal shall lie to the Supreme Court from any judgment, decree or final order in a civil proceeding of a High Court in the territory of India if the High Court certifies-
(a) that the amount or value, of the subject-matter of the dispute in the Court of first instance and still in dispute on appeal was and is not less than twenty thousand rupees . ; or
(b) that the judgment, decree or final order involves directly or indirectly some claim or question respecting property of the like amount or value ; or
(c) that the case is a fit one for appeal to the Supreme Court . . ."
The power to issue a certificate under Article 133 may be exercised only in respect of a judgment, decree or final order of a High Court in a civil proceeding, and the order passed by the High Court disposing of the petition filed by the assessee for the issue of a writ under Article 226 is a judgment. But Mr. A. V. Viswanatha Sastri for the assessee contended in the first instance that the expression "civil proceeding" in Article 133 only means a proceeding in the nature of or triable as a civil suit and a petition for the issue of a high prerogative writ not being such a proceeding, against the order passed by the High Court no appeal lay to this Court with certificate under Article 133. In the alternative, counsel contended that even if a proceeding for the issue of a writ under Article 226 of: the Constitution may in certain cases be treated as a civil proceeding, it cannot be so treated when the party aggrieved seeks relief against the levy of tax or revenue claimed to be due to the State.
This Court is invested by the Constitution with appellate jurisdiction of great amplitude exercisable over all Courts and tribunals in India. The jurisdiction may be exercised in respect of any judgment, decree, determination, sentence or order in any cause or matter passed by any Court or tribunal other than a judgment, determination, sentence or order made: or passed by any Court or tribunal under any law relating to the Armed Forces: Article 136. Exercise of this power depends solely upon the discretion of the Court. Appeals lie to this Court from orders passed in certain classes of cases when certified by the High Courts. An appeal lies from the judgment, decree or final order of a High Court in a civil, criminal or other proceeding, if the High Court certifies that the case involves a substantial question of law as to the interpretation of the Constitution: Article 132(1). An appeal also lies from any judgment, decree or final order in a civil proceeding of a High Court if the High Court certifies that the case satisfies the conditions in clause (a), (b) or (c) of Article 133(1) or from any judgment or final order or, sentence in a criminal proceeding of a High Court, if the case falls within the description of clauses (a) and (b) of Article 134, or if the High Court certifies that the case is a fit one for appeal: It is clear that under Article 136 against the adjudications of all Courts and tribunals subject to the exception already noticed, whatever be the character of the proceeding, appeals lie with leave to this Court. An appeal lies against the adjudication of a High; Court as a matter of right, whatever the nature of the proceeding, with certificate that it involves a substantial question of law as to the interpretation of .the Constitution, and in civil proceeding with certificate of the nature set out in clause (a), (b) or (c) of Article, 133 and in criminal proceedings in conditions mentioned in clauses (a) and (b) and with certificate under clause (c) of Article 134.
Counsel for the assessee said that, proceedings instituted in the High Court in exercise of its jurisdiction original or appellate-may be broadly classified as (i) proceedings civil, (ii) proceedings criminal, and (iii) proceedings revenue, and where the case does not involve a substantial question as to the interpetation of the Constitution, from an order passed in a proceeding civil, an appeal lies to this Court with certificate grant ed under Article 133 of the Constitution, and from a judgment, final order or sentence in a criminal proceeding an appeal lies with certificate granted under Article 134 of the Constitution; but from an order passed in a proceeding relating to revenue the right of appeal may be exercised only with leave of this Court. Counsel, seeks support for this argument primarily from the phraseology used in Article 132 of the Constitution. That article, by its first clause, provides :
"An 'appeal shall lie to the Supreme Court from any judg ment, decree or final order of a High Court in the territory of India, whether in a civil, criminal or other proceeding, if the High Court certifies that the case involves a substantial ques tion of law as to the interpretation of this Constitution."
Counsel relies upon the classification of proceeding made in. Article 132(1) and seeks to contrast it with the phraseology used in Articles 133(1) and 134(1). He says that `other proceeding" in Article 132(1) falls within the residuary class of proceedings, other than civil or criminal, and such a proceeding includes al revenue proceeding. The expression "civil proceeding" is note defined in the Constitution, nor in the General Clauses, Act.
The expression in our judgment covers all proceedings in which a party asserts the existence of a civil right conferred by the civil law or by statute, and claims relief for breach thereof. A criminal proceeding on the other hand is ordinarily one in which if carried to its conclusion it may result in the imposition of sen tences such as death, imprisonment, fine or forfeiture of property. It also includes proceedings in which in the larger interest of the State, orders to prevent apprehended breach of the peace, orders to bind down persons who are a danger to the maintenance of peace and order or orders aimed at preventing vagrancy are contemplat ed to be passed. But the whole area of proceedings, which reach the High Courts is not exhausted by classifying the proceedings as civil and criminal. There are certain proceeding which may be regarded as neither civil nor criminal. For instance, proceed ing for contempt of Court, and for exercise of disciplinary jurisdiction against lawyers or other professionals, such as chartered accountants, may not fall within the classification of proceedings, civil or criminal. But there is no warrant for the view that from the category of civil proceedings, it was intended to exclude proceedings relating to or which seek relief against enforcement of taxation law of the State. The primary object of a taxation statute is to collect revenue for the governance of the State or for providing specific services and such laws directly affect the civil rights of the tax-payer. If a person is called upon to pay tax which the State is not competent to levy, or which is not imposed in accordance with the law which permits imposition of the tax, or in the levy, assessment and collection of which rights of the tax-payer are infringed in a manner not warranted by the statute, a proceeding to obtain relief whether it is from the tribunal set up by the taxing statute, or from the civil Court would be regarded as a civil proceeding. The character of the proceeding, in our judgment depends not upon the nature of the tribunal which is invested with authority to grant relief, but upon the nature of the right, violated and the appropriate relief which may be claimed. A civil proceeding is therefore one in which a person seeks to enforce by appropriate relief the alleged infringement of his civil rights against another person or the State, and which if the claim is proved would result in the declaration express or implied of the right claimed and relief such as payment of debt, damages, compensation, and delivery of specific property, enforcement of personal rights, determination of status, etc.
There is therefore under the Constitution a right of appeal to this Court with special leave from the adjudications of all Courts arid tribunals except tribunals constituted by or under laws relating to Armed Forces. An appeal also lies to this Court against all adjudications by a High Court from judgments, decrees and orders in cases in which a substantial question as to the interpretation of the Constitution is involved, whatever the nature of the proceeding. Appeals from criminal proceedings lie as a matter of right in cases falling within clauses (a) and (b) of Article 134, and in cases certified as fit for appeal under clause (c) of Article 134 and from civil proceedings of the nature certified by the High Court under Article 133(1), clause (a), (b) or (c).
For reasons already stated, a proceeding for relief against infringement of civil right of a person is a civil proceeding even if the infringement be in purported enforcement of a taxing statute. Section 261 of the Income-tax Act, 1961, under which an appeal lies to this Court from any judgment delivered on a reference made under section 256 in any case which the High Court certifies to be a fit one for appeal to this Court is not an exception to that rule. It is not because the reference is not a civil proceeding that a certificate under Article 133 may not be granted : it is because of the advisory character of the jurisdiction exercised by the High Court under section 256 that the opinion delivered by the High Court in a reference under section 256 is not a judgment, order or decree within the meaning of Article 133. Similarly, the enactment of section 54 of the Land Acquisition Act which expressly provides for an appeal to this Court subject to the provisions contained in section 110 of the Code of Civil Procedure, from an award, or from any part of the award made by the Court is easily appreciated, if regard be had to the character of the adjudication, which is in the nature of an award in an arbitration : see Rangoon Botatoung Co. Ltd. v. Collector, Rangoon (1912 L R 39 I A 197).
By a petition for a writ under Article 226 of the Constitution, extraordinary jurisdiction of the High Court to issue high prerogative writs granting relief in special cases to persons aggrieved by the exercise of authority statutory or otherwise by public otlicer.4 or authorities invoked. This jurisdiction is undoubtedly special and exclusive, but on that account the nature of the proceeding in which it is exercised is not altered. Where a revenue authority seeks to levy tax or threatens action in purported exercise of powers, conferred by an Act relating to revenue, the primary impact of such an act or threat is on the civil rights of the party aggrieved and when relief is claimed in that behalf it is a civil proceeding, even if relief is claimed not in a suit but by resort to the extraordinary jurisdiction of the High Court to issue writs.
It is not easy to attribute to the expression "revenue proceed ing" any precise connotation, and in interpreting Articles 132(1) and 133 it would be difficult to project the somewhat anomalous provision contained in section 226 of the Government of India Act, 1935, under which, for historical reasons, it was enacted that unless otherwise provided by the appropriate legislature, no High Court shall have any original jurisdiction in any matter concern ing the revenue, or concerning any act ordered or done in the collection thereof according to the usage and practice of the country of the law .for the time being in force. This section barred the High Court from exercising original jurisdiction in matters concerning revenue. There was no such bar against subordinate Courts nor against the exercise of appellate jurisdic tion by the High Courts in matters concerning revenue instituted in subordinate Courts. No provision has been made in the Cons titution similar to section 226 of the Government of India Act, and there is no reason to think that it was intended to deprive the High Court of its power to certify cases concerning revenue, by enacting, that the High Court may certify a case in a civil ; proceeding. No ground is suggested for acceptance that while removing the ban against the High Court's original jurisdiction in matters concerning revenue, the Constitution imposed another ban against the exercise of power to certify cases decided by the High Court in the appellate as well as original jurisdiction when the cases concerned revenue.
We have already set out our reason for holding that a proceeding taken for recovery of tax is not "other proceeding" under Article 132(1) : such a proceeding is a civil proceeding within the meaning of Article 132(1). The object of referring to "other proceeding" in that clause is merely to emphasize that adjudications made in proceedings which are not included in the description civil or criminal would still attract the provisions of Article 132(1) in case they raise a substantial question of law as to the interpretation of the Constitution. A proceeding in which relief is claimed against action of revenue authorities is included in the civil proceeding and not in "other proceeding" within the meaning of Article 132(1), and an aggrieved party's right to appeal to this Court from orders in those proceedings is exercisable ill the same manner as it would be in the case of a decree, order or judgment in any other civil proceeding:
A large number of, cases have arisen before the High Courts in India in which conflicting views about the meaning of the expression "civil proceeding" were expressed. In some cases it was held that the expression "civil proceeding" excludes a proceed ing instituted in the High Court for the issue of a writ whatever may be the nature of the right infringed and the relief claimed in other cases it has been held that a proceeding resulting from an application for a writ under Article 226 of the Constitution may in certain cases be deemed to be a "civil proceeding", if the claim made the right infringed and the relief sought warrant that inference : instill another set of cases it has been held that even if a proceeding commenced by a petition for a writ be generally categorised as a civil proceeding, where the jurisdiction which the High Court exercises relates to revenue, the proceeding is not civil. A perusal of the reasons given in the cases prompt the following observations. There are two preliminary conditions to the exercise of the power to grant certificate: (a) there must be a judgment, decree or final order, and that judgment, decree or final order must be made in a civil proceeding. An advisory opinion in a tax reference may not be appealed from with certificate under Article 133, because the opinion is not a judgment, decree or final order, and (b) a proceeding does not cease to be civil, when relief is claimed for enforcement of civil rights merely because the proceeding is not tried as a civil suit. In a large majority of the cases in which the jurisdiction of the High Court to certify a case under Article 133(1) was negatived it appears to have been assumed that the expression "other proceeding" used in Article 132 of the Constitution is or includes a proceeding of the nature of a Revenue proceeding, and therefore the expression "civil proceeding" in Article 133(1) does not include a revenue proceeding. This assumption for reasons already set out is erroneous.
We do not think that any useful purpose will be served by entering upon a detailed analysis of the cases to which our atten tion was invited in which the view has been expressed that in a petition under Article 226 of the Constitution where relief is claimed in respect of action sought to be taken by the revenue authorities, the High Court has no power to issue a certificate under Article 133 of the Constitution. Express prescription of two independent conditions by the Constitution on the existence of which alone the jurisdiction of the High Court may be invoked, has in some cases been obliterated, and the ground that from an order in a reference in a case concerning revenue for opinion, a certificate may not be granted under Article 133, because there is no judgment, decree or final order has been projected into a ground for denying that proceeding the character of a civil proceeding.
On a careful review of the provisions of the Constitution, we are of the opinion that there is no ground for restricting the expression "civil proceeding" only to those proceedings which arise out of civil suits or proceedings which are tried as civil suits, not is there any rational basis for excluding from its purview proceedings instituted and tried in the High Court in exercise of its jurisdiction under article 226, where the aggrieved party seeks relief against infringement of civil rights by authorities purporting to act in exercise of the powers conferred upon them by revenue statutes. The preliminary objection raised by counsel for the assessee must therefore fail.
We may now turn to the question which is raised on the merits in this appeal. Section 18-A which was added by the Indian Income-tax (Amendment) Act 11 of 1944, for imposing. liability for advance payment of tax enacts by the first subsection, in so far as it is material, that where there is no provision made for deduction of income-tax at the time of payment, the Income-tax. Officer may on or after the commencement of any financial year, by order in writing, require an assessee to pay quarterly to the credit of the Central Government the income-tax and super tax payable on so much of such income as is included in his total income of the latest previous year in respect of which he has been assessed. Contrary to the two basic concepts of the scheme of the Indian Income-tax Act under which tax is charged upon the income of the previous year and not the income of the assessment year and liability does not arise until the annual Finance Act is passed charging income to tax, section 18-A introduces within, the scheme of the Act the principle of advance payment of tax and authorises collection advance tax before the assessment year commences and before even the Finance Act which imposes liability is enacted. But this tax is advance tax which is to be adjusted against tax payable on the income of the financial year, in the light of the total income which may be computed and also in the light of the Finance Act which may be passed. Assessment and demand for advance payment of tax are therefore provisional. If ultimately the: advance tax paid is in excess of the tax finally assessed, refund will be granted to the assessee ; if the advance tax paid , is less than what is payable, the balance becomes payable on the final assessment. With the object of enforcing compliance with the provision for payment of advance tax effectively, and at the same time to protect the assessee from avoidable harassment, the Legislature made a provision under subsection (2) of section 18-A enabling the assessee before the last instalment is due to intimate his own estimate of the income of the previous year to the Income-tax Officer and the tax payable by him calculated in the manner laid down in subsection (1) and to pay such amount as accords with his estimate. Provision is also made for submitting revised estimate of income. The Legislature by subsection (6) also on the other hand…
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