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Gangadhar Vishwanath Ranade (No. 1) and Others Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberSpecial Civil Application No. 959 of 1974
Judge
Reported in[1989]177ITR163(Bom)
Acts Income Tax Act, 1961 - Sections 116, 124, 131, 132, 133, 134, 135, 136, 246, 281 and 293
AppellantGangadhar Vishwanath Ranade (No. 1) and Others
Respondentincome-tax Officer
Excerpt:
- - 2, 4 and 5 as well as petitioner no. those debts of the transferees incurred by the transferor were satisfied by the transfers. even if it ultimately results in some of the creditors being left without any property from which they could recover their debts, the transfer itself does not become bad. an additional return, therefore, was filed an in that return, in para 2, it is stated that provisions of section 281, clearly indicate that it is for the authority concerned first to come to the conclusion as to whether a particular transfer made during the pendency of proceedings under the act has been effected by the assessee with an intention to defraud the revenue. , attachment and sale of movable as well as immovable property of the debtor-assesse or by appointment of a receiver to.....tulpule, j.1. this petition raises a question as to the scope, validity and operation of section 281 of the income-tax act.2. the setting in which this question is raised can be briefly stated to be as follows. petitioner no. 1, hereinafter referred to as 'gangadhar', was an assessee liable to pay income-tax and was doing business since about the year 1950. he was a partner in 'united capital construction co.,' which was a firm, till about the year 1960 and was also carrying on business as a contractor. he was assessed to income-tax right from the commencement of his business. the assessment for the years 1062-63, 1963-64 and 1965-66 of the firm of which gangadhar was a partner was first completed on november 6, 1964. it appears that this assessment was reopened by the commissioner of.....
Judgment:

Tulpule, J.

1. This petition raises a question as to the scope, validity and operation of section 281 of the Income-tax Act.

2. The setting in which this question is raised can be briefly stated to be as follows. Petitioner No. 1, hereinafter referred to as 'Gangadhar', was an assessee liable to pay income-tax and was doing business since about the year 1950. He was a partner in 'United Capital Construction Co.,' which was a firm, till about the year 1960 and was also carrying on business as a contractor. He was assessed to income-tax right from the commencement of his business. The assessment for the years 1062-63, 1963-64 and 1965-66 of the firm of which Gangadhar was a partner was first completed on November 6, 1964. It appears that this assessment was reopened by the Commissioner of Income-tax on November 4, 1966, and a fresh assessment order was passed against Gangadhar for the years 1962-63 to 1964-65 and he was assessed to income-tax on a sum of Rs. 50,570 for the year 1962-63, Rs. 42,599 for the year 1963-64 and Rs. 75,000 for the year 1964-65. This assessment for the aforesaid years became final on August 7, 1967, there having been no appeal filed against that assessment order.

3. The transactions which the petitioner, Gangadhar, entered into-and the fact that he entered into these transactions is an admitted position-are as follows. The first of these transactions is a mortgage for a sum of Rs. 75,000 to the bank of Maharashtra, which mortgage was executed on December 2, 1967. On February 21, 1969, the petitioner, Gangadhar, declared a trust in respect of the said property in favour of his wife and other persons as beneficiaries of the trust. The trust property was subsequently transferred to the beneficiaries on February 27, 1969. In April and May 1969, the petitioner, Gangadhar, transferred shares which he held in certain companies in favour of petitioners Nos. 4 and 5 who are his nephews. He also transferred another batch of shares on August 2, 1969, in favour of these nephew. On January 27, 1972, some of the properties belonging to or standing in the name of the petitioner, Gangadhar, were attached by a prohibitory order. That was in respect of four insurance policies on the life of Gangadhar. Notice came to be issued to Gangadhar on October 23, 1972. The house property which was mortgaged by Gangadhar in favour of the Bank of Maharashtra also came to be attached.

4. Subsequent to this attachment, it appears that a show cause notice was issued under section 281 dated January 21, 1974. The petitioner, Gangadhar, showed cause to that notice. The concerned Income-tax Officer, it appears, then held an enquiry and solicited certain information from the assessee, Gangadhar, and also recorded evidence of witness who were summoned, namely, petitioners Nos. 2, 4 and 5.

5. He then passed an order which is the impugned order in the present case on May 9, 1974. The three items of property which he dealt with were the shares, house property and the insurance policies. Concluding. he stated that he had every reasons to believe that the conduct and the behaviour of the assesse petitioner in hurrying to transfer during the pendency of the proceedings under the Income-tax Act was with the intention to defraud the Revenue. He, therefore, proceeded to hold that these transfers were void as against the Department under section 281 of the Income-tax Act. His decision, however, specifically excluded the insurance policies which were the subject-matter of a decision before the Supreme Court. The present petition challenges this order and prays that the order dated May 9, 1974, passed under section 281 by the Income-tax Officer be quashed. A stay was also prayed for of further proceedings. This court, while issuing rule, granted interim stay of these proceedings which stay was continued by the order of this court on June 18, 1974. Since then, these proceedings pursuant to section 281 are still pending. Though the property, viz., house property, is attached on October 23, 1972, no further steps have been taken. We are not aware and it is not known whether any notice under section 226 is issued with regard to the shares transferred in favour of the petitioners Nos. 4 and 5. With regard to the four policies which were the subject-matter of a decision of the Supreme Court, we have only two days ago decided that matter in Petitioner No. 1248 of 1977 in Gangadhar v. L.I.C.

6. We will first set out section 281 of the Income-tax Act. This section was first placed on the statute book in the Income-tax Act of 1961, and was not there in the Indian Income-tax Act of 1922. Since the section has subsequently undergone a change in the year 1975 and inasmuch as it is the amended section which was applicable at the time when these proceedings were started, we may set out that section which reads thus:

'281. Where, during the pendency of any proceeding under this Act, any assessee creates a charge on or parts with the possession by way of sale, mortgagee, exchange or any other mode of transfer whatsoever, of any of his assets in favour of any other person with the intention to defraud the Revenue, such charge or transfer shall be void...'

7. There cannot be any dispute that it is this section which was applicable when the Income-tax Officer, in the year 1974, issued notice and also passed his order on May 9, 1974.

8. Three submissions were place before us by Shri Natu. Shri Natu firstly contended that the Income-tax Officer had no jurisdiction or authority to pass an order of this kind under section 281. It was Shri Natu's contention that the section, in terms, does not confer any such power or jurisdiction upon the Income-tax Officer. Shri Natu emphasised that the respondent, in his return, has described what was done in pursuant of the notice dated January 21, 1974, as the proceedings. The order passed by the Income-tax Officer, it was his submissions, if he had no jurisdiction to pass such an order and is not an authority named thereunder, them, for that short reason, the order must be struck down.

9. The second contention which was urged before us by Shri Natu was that it is not clear from the Act as to which of the several officers can take action under section 281 in the hierarchy of the officials who are entrusted with the duty of discharging the functions under the Income-tax Act. He submitted that there are several officers and any one of whom can discharge those functions right from the Income-tax Inspector to the Board of Revenue. In such a case, therefore, the Income-tax Officer would not be justified in holding and enquiry of this kind. Since there was that the Income-tax Officer could not usurp the ordinary jurisdiction of the civil court to decide whether a transfer is fraudulent. Shri Natu referred to section 53 of the Transfer of Property Act, 1882, and sections 53 and 55 of the Provincial Insolvency Act, 1920, and the Presidency Towns Insolvency Act. To illustrate his argument and to further support it, it was pointed out that in the Insolvency is indicated No such forum is indicated or authority designated in the Transfer of Property Act. Therefore, under the Transfer of Property Act, and in cases where a transfer is fraudulent so as to defraud any of the creditors, it is the ordinary court which has jurisdiction. The jurisdiction of the civil court is not ousted merely because section 281 finds a place in the Income-tax Act.

10. As a corollary and ancillary submission to the aforesaid submission under section 281, Shri Natu submitted that the proceedings before the income-tax authorities cannot be termed as proceedings. Further, if they were to be treated as proceedings, they would debar the assessee from any remedy except the one under the Constitution. The Income-tax Act provides for appeals, further appeals and reference to the High Court through the tribunals under that Act. Section 281 is not

11. included in the list of appellate orders under section 246. The assessee has, therefore, no remedy at all once the Income-tax Officer choose to pass an order under section 281. On the other hand, if civil suit had been filed, the assessee would have been able to challenge the decrees or the decision of the civil court by an appeal and a second appeal too. That right or remedy is deprived of, where the Income-tax Officer decides to proceed under section 281. It was Shri Natu's further submission, and in furtherance of the aforesaid, that there are two remedies provided, of which one is more onerous, then, under article 14 of the Constitution, the more onerous remedy shall be struck down where if does not provide for any corresponding machinery for vindication of the grievance of the persons concerned. If there are no guidelines for an officer, if there are circumstances indicating in which of the cases the more onerous remedy can be availed of. The concerned officer being free at his discretion to choose between one of the two in which of the cases the more onerous remedy can be availed of, the concerned officer being free at his discretion to choose between one of the two remedies, the onerous remedy cannot stand. This would amount to discrimination and, therefore, would offend article 14.

12. An argument based upon limitation and the provisions of the Limitation Act was also pressed into service in this connection. It was urged that these transfer were effected. As we stated, between the years 1967 and 1969 No suit to declare these transfers void could have been laid in the year 1974, as the limitation to do so had already expired. By resource, therefore, to the provisions of section 281, the assesse petitioner cannot be deprived of a valuable right which had accrued to him, namely, that of limitation. The third contention which was urged by Shri Natu before us was that since the order passed by the Income-tax Officer was a judicial order or a quasi-judicial order and determines that the transfer are fraudulent leaving no remedy to the assesse petitioner to challenge that declaration, the order itself, if examined, cannot be found to be sustainable as no reasons have been given by the Income-tax Officer while coming to the conclusion which he did, Shri Natu made a serious grievance that petitioner Nos. 2, 4 and 5 as well as petitioner No. 3 who is the beneficiary under the trust were not noticed at all. No order can be passed against them in their absence and without any opportunity having been given to them to defend the transaction in their favour, as that violates the primary principles of natural justice. A decision which is, therefore, against the persons who were not parties to the proceedings and which decision is untenable on the basis of the material which was placed before the Income-tax Officer, Shri Natu contended, cannot be sustained. It was urged that the very gist of section 281 was that the transfers must be with an intention to defraud the Revenue, it was pointed out that the impugned order does not say that they were so effect with a view to defraud the Revenue. It does not take into account the various circumstances and facts which were placed before the Income-tax Officer showing that the assessee. They were also unwary of any proceedings against the assessee. The two conditions which are necessary for attracting the operation of section 281 are the pendency of proceedings and an intention to defraud the Revenue. If these conditions do not exist, then it was urged, the very basis for passing an order under section 281 does not exist.

13. Thirdly, in this context, it was urged that, at the most, what might emerge from the evidence which was adduced before the Income-tax Officer was that the assessee was indebted to the transferee. Those debts of the transferees incurred by the transferor were satisfied by the transfers. Therefore, it can, at the most, be preference of one creditor leaving other creditors without any asset to realise. A transfer to satisfy debts, it was his submission, cannot be said to be to defraud the Revenue. It is only in cases arising under section 54 of the Provincial Insolvency Act, 1920, where there is a fraudulent

14. preference, that transfers in favour of some of the creditors can be assailed. The Income-tax Officer, however, did not consider whether the transferee were the creditors of the assessee or otherwise. Such transfer in favour of creditors is not a fraudulent transfer at all. Even if it ultimately results in some of the creditors being left without any property from which they could recover their debts, the transfer itself does not become bad. Shri Natu relied upon a number of decisions in support of his contention.

15. It appears that this petition was heard at some length before another Bench of this court. An order was passed on November 10, 1980, adjourning the petition to enable the Income-tax Officer concerned or his successor to file an additional return. It appears that certain submissions were made before that Bench which heard this petition earlier and the court thought that it would be more appropriation for the respondents to state their submissions which they advanced in writing before the court. An additional return, therefore, was filed an in that return, in para 2, it is stated that provisions of section 281, 'clearly indicate that it is for the authority concerned first to come to the conclusion as to whether a particular transfer made during the pendency of proceedings under the Act has been effected by the assessee with an intention to defraud the Revenue. If the authority on the available material finds that the transfer in question comes under section 281, he declares his intention of treating such transfer as void and not acceptable. This is done as a manifestation of his intention recover the tax or other dues of the Revenue by proceedings against the property in question.' The return further proceeded so say that the assessee's remedies are not barred either under the Act or otherwise. During the course of submissions made before us also, it was urged section 281, and the exercise of the power which is conferred under section 281 and the intention to do so, operate as mere declaration of the Revenue to proceed against the property in the manner in which recover proceedings are to be taken under the Income-tax Act. Action under section 281 can be taken by an overt act. It can also be taken by prior recording of an already transferred by an assessee, the intention of the Revenue to treat the transfer as fraudulent and coming within the mischief of section 281 is manifest by the Act itself. However, the said intention to treat the transfer as one coming within the mischief of section 281 may also be expressly recorded in the record of the case in writing. The object of recording such an intention of the Revenue does not amount to any decision, Learned counsel for the respondent submitted that this expression of an intention is a mere preliminary and prior step to proceed against the property. It is not an adjudication so that the right of the parties are in any way determined, those rights, he submitted, are available both under the ordinary law and also under the provisions of the Second Schedule to the Income-tax Act. An order passed under section 281 cannot be, in the proper sense of the terms, called an order as it does not decide anything. It seems to be his submission that it is not an order in the sense that it adjudicates the rights of the parties. It merely says, demonstrates and records and intention on the part of the Revenue to proceed against the property which in its opinion was transferred during the pendency of proceedings to defraud the Revenue. It is nothing but a declaration or express of an opinion on the part of the Revenue to take action and to treat the properties as available to the Revenue under section 281. This would mean, according to learned counsel for the respondent. That the Department may choose any of the remedies which are available to it either under the Income-tax Act or otherwise, the parties may also choose such remedies as they have under the Act or otherwise de hors the Act. All that the declaration serves, though described as an order, is to be the starting point or a preliminary stage for further action. It was urged that it was nothing but an expression of an intention or declaration of an intention by the authority which was entitled to entertain such an opinion to proceed to recover the tax from the property which, in its opinion, was so fraudulently transferred. Looked at from this point of view, it was urged that most of the arguments urged on behalf of the petitioners lose their force.

16. We are inclined to accept this submission and statement made on behalf of the respondent-Union of India with regard to section 281, in view of the further reasons which we shall presently set out. In view of what we have said above and in the view which we take of the provisions of section 281, it is unnecessary for us to refer further to the return and other submission made on behalf of the Union Of India. We would now revert to section 281 once again.

17. We may state that section 281 is on the statute book since the year 1961, there appears to have been very few cases which have arisen under that section. We may firstly refer to the Second Schedule in the Income-tax Act which provides for the procedure of recovery of tax. The Income-tax Act which provides for the procedure for recovery of tax, the relevant rules which may be referred to are rules 2, 3, 4, 9 and 11 along with sub-rules. The procedure for recovery of tax, as laid down in these rules, is that where a certificate is received from the Income-tax Officer by the Tax Recovery Officer of the Income-tax Department, he has to issue a show cause notice on the defaulter akin him to make payment of the sums specified in the certificate. When the amount is not paid within the period allowed in the notice, then the Tax Recovery Officer is entitled to period allowed in the notice. Then the Tax Recovery Officer is entitled to proceed against the defaulter by any of the four methods laid down in rule 4, viz., attachment and sale of movable as well as immovable property of the debtor-assesse or by appointment of a receiver to manage his movable and immovable properties.

18. Where property is this attached by the Tax Recovery Officer and any claim is preferred to him in that behalf, then the rules provide for investigation of such claims. The procedure for preferring an objection and its disposal is to be found on a combined reading of rules 9 and 11. We do not propose to refer to these rules in detail except to sub-rule (6) of rule 11 which provides as follows:

'Where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a civil court to establish the right which he claims to the property in dispute; but, subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive.'

19. Sub-rule (4) of rule 11 lays down:

'Where, upon the said investigation, the Tax Recovery Officer is satisfied that, for the reason stated in the claim or objection, such property was not, at the said date, in the possession of the defaulter or of some person in trust for him or in the occupancy of a tenant or other person paying rent to him, or that, being in the possession of the defaulter at the said date, it was so in his possession, not on his own account or as his own property. But on account of or in trust for some other person, or partly on his own account and partly on account of some other person, the Tax Recovery Officer shall make an order releasing the property, wholly or to such extent as he thinks fit, from attachment or sale.'

20. We may mention that the provisions of sub-rules (1) to (6) of rule 11 of the Second Schedule are analogous to the provisions of Order 21 and rules 58 to 63 of the Civil Procedure Code.

21. It will thus be seen that where property is attached by the Tax Recovery Officer, the procedure contemplated by the Income-tax Act contemplates filing of objections by the claimant who claims that the property does not belong to the defaulter but belongs to him. The claim or objection can be preferred apparently both to the attachment as well as sale as sub-rule (1) of rule 11 indicates, once the claimants make an objection and claim the property as belonging to them, the Tax Recovery Officer has to decide that objection and record his conclusion. Whereupon, under sub-rule (6), the parties would be entitled to take out proceedings as contemplated therein. We may not e that in sub-rule (6), the words 'the party against whom the order is made' clearly connote and are capable of embracing both the Revenue as well as the claimant. Therefore, where the Tax Recovery Officer records a finding against the Department, it is the Department which would be entitled to institute a suit in the civil court. On the other hands, where the finding is against the claimant, the claimant would be entitled to files a suit.

22. Adverting to section 281 once again, it is clear that section 281 does not indicate by itself as to which is the authority and what is the forum for a decision as to whether the impugned transfer was to defraud the Revenue. It was pressed before us that section 281 is a provision which is similar to the provision under section 53 of the Transfer of Property Act. It is a section which is a substantive statement of law and does not indicate a procedure for enforcing that provision of law. It does not also name the authorities or forum which would be entitled to apply these provisions and to decide in accordance there with. Shri Natu pointed out that section 116 of the Income-tax Act names the authorities who are entitled to function under the Income-tax Act Section 124 of the Income-tax Act speaks of the jurisdiction of the Income-tax Officers while sections 131 to 136 speak of powers of the Income-tax Officer. The substance of his submission is that even if it were to be held that the Income-tax Officers being persons entrusted with the duty of discharge of functions or exercise of functions under the Income-tax Act, section 116 would indicate that there are a number of such authorities down to the Income-tax Inspector. Section 281 does not say as to which of the authorities would exercise that function. Even assuming that the Income-tax Officer being entrusted with the duty to exercise functions and discharge of functions under the Act can be said to be entrusted also with the duty of performing his obligation under section 281, still. It does not lay down guidelines to the Income-tax Officer or any of the authorities under the Act. As to in what circumstances he will proceed under section 281 and in what circumstances he will proceed by way of ordinary suit is left to him. He has an unlimited discretion in the matter. Shri Natu's contention was that section 281 by itself does not bar a suit like the provision under section 293. Under section 293, an assessment order is barred from the cognizance of the civil court. His submission, therefore, was that a finding as to whether the transfer is made during the pendency of proceedings under the Income-tax Act and effected with the intention to defraud the Revenue is not a matter which is barred under the Officer, therefore, could arbitrarily and according to his discretion or whim, choose in a given case to go to the civil court to obtain a declaration as contemplated in section 281 and in another case proceed himself and make a declaration as he has done in the present case. It is in this context that he invoked article 14 and contended that since this discretion would operate in a discriminatory manner, article 14 is attracted and section 281, being offensive to the principle of equality of law, capable of discrimination in the applicability of law to similarly circumstances people, must be struck down.

23. If we read section 281 and section 53 of the Transfer of Property Act, it will be seen that those two sections are pari materia. So far as section 53, sub-section (1) of the Transfer of Property Act is concerned. The transfer is voidable at the option of any creditor so defeated or delayed. We do not think that that makes any difference so far as both the sections are concerned. In both the cases, it is only the creditor or the Revenue so defeated or defrauded that a transfer is fraudulent, where the creditor or the Revenue is not defeated, there is no question of their proceeding to get the transfer declared as effected for the purpose of defrauding the Revenue. A transfer which is otherwise not fraudulent may become fraudulent in certain circumstances. Nether section 281 of the Income-tax Act nor section 53, sub-section (1) of the Transfer of Property Act declares a transfer to be void abilities so that the title of the transferee is gone. It merely says what the law is. It is, therefore, really a substantive declaration of what the law of the land is In the absence of section 281, recourse could certainly be had to the provisions of section 53, sub-section (1) of the Transfer of Property Act. But, as is clear, that would apply only in cases of transfers of immovable property. The Legislature, in its wisdom, thought it necessary to introduce section 281 in the Income-tax Act. The question, however, is whether by introducing section 281 in the Income-tax Act, 1961, the Legislature wanted to confer a power and jurisdiction which was exclusive upon the income-tax authorities or otherwise. In other words, the question is whether section 281 as found in the Income-tax Act which is pari material with section 53(1) of the Transfer of Property Act only declares what the law is or whether section 281, by its placement in the Income-tax Act. Provides a complete adjudicatory machinery for the Income-tax Department to declare a transfer as fraudulent, whether of movable or immovable property. We are unable to think that section 281, in the form in which it was, or in the form in which it is after its amendment in the year 1975, does anything further, except saying as to what the law is in the year 1975, does anything further, except saying as to what the law is in respect of transfer effected during the pendency of any proceedings under the Income-tax Act, which come within the mischief and circumstances laid down in section 281. It does not thereby say that any conclusion or declaration by an authority entrusted with the functions to be performed under the Income-tax Act will operate as conclusive or adjudicatory. It merely has the character of an expression of an intention or opinion on the part of such authority, that it intends to treat the transfers as affected by section 281 and, therefore, not standing in the way of recovery proceedings to be taken by the Tax Recovery Officers, we think that the jurisdiction of the Tax Recovery Officer as contemplated by rule 11 is not taken away by the expression of any opinion or intention by the Income-tax Officer expressed under or purporting to act under section 281. That adjudicatory process still survives and can be availed of by the claimant to claim that the transfer was not made either during the pendency of proceedings or in cases prior to 1975 'with intention to defraud the Revenue'. The effect of the 1975 amendment is to do away with the necessity of an intention to defraud the Revenue being found or thought (sic) before the transfer can be held to be not affecting the rights of the Revenue to recover the money from the property of the defaulter. Section 281, therefore, in our opinion, like section 53 of the Transfer of Property Act merely declares what the law of the land is. Therefore, in view of what we have held and pointed out, the expression of an intention on the part of the Income-tax Officer to act or proceed under section 281 does not take the character of any adjudication as to the nature of the transfer. It is merely a step to recover the dues of the State from the defaulter.

24. Shri Natu conceded that if we take that view of section 281 of the Income-tax Act, then his challenge under articles 19(1)(f) or for that matter the former articles 31 of the Constitution fails and would not be of any avail to him. For the reasons which we have given above, we find that section 281, and any expression of an intention, or action which may be described by the label of an order, does not mean anything further than that the Department had decided to proceed against the property as being available to it, and the transfer being void so far as the claim of the Revenue was concerned. It then is subject to the recovery procedure laid down under the Act and the attendant procedures which follow therefrom. In a given case, the Department may also, instead of resorting to the provisions of the Second Schedule, go to the civil court to obtain a declaration to that effect. We do not think that section 281 precludes the Income-tax Department from filing a suit. In our opinion, merely upon the express of an opinion or intention on the part of the Income-tax Officer to proceed against the property of the persons concerned, their right to file a declaratory suit before the civil court is not taken away. We may, in this connection, also refer to section 53 of the Insolvent Act which also goes to show and indicate that the transfer made by an insolvent before his adjudication as an insolvent, within two years before the filing of the petition for adjudication in voidable only at the option of the receiver, though a declaration in court and the authority to do so is indicated in section 53. But the action or the intention to do so clearly of the receiver. The intention may be manifested in any way permissible to the receiver, either by making an application to the court which is hearing the insolvency proceedings, or with the permission of the court, by filing a suit.

25. In the view which we have taken, it is unnecessary to refer in detail to the authorities which have been relied upon and cited before us. Shri Natu relied upon the decision in S. C. Prashar v. Vasantsen Dwarkadas : [1963]49ITR1(SC) , and a number of decisions in the same volume which follow that decision. We may only refer to some of the observations made by justice Hidayatulla, as he then was, in the majority judgment. It was pointed out firstly (at p. 55), 'that the liability to the State is independent of any consideration of time and, in the absence of any provision restricting action by a time-limit, it can be enforced at any time.' There the question was as to whether the limitation to reopen an assessment after the limitation period has passed confers a right which cannot be taken away by an amendment to the Act. Such a question does not arise before us. But his Lordship after referring to the limitation Act as the 'Statute of Repose' observed that 'there is no repose till the tax cannot be collected.'

26. Dealing with the contention of the violative character of the amendment and the attack based upon articles 14, it was pointed out that in the approach to the question of discrimination and the violation of the guarantee of equality, one must first find out the object of the impugned provision and compare it with the topic of legislation and then try to discover it there is a connection between the two, and a reasonable basis for making a difference between classes of persons affected by the law. As we have pointed out and in the view which we have taken, we do not think that upon the interpretation of section 281 which we have placed, there is or there can be any scope for the attack based on discrimination under article 14.

27. We may then briefly mention the other two decisions upon which Shri Natu placed reliance, viz., Umar Sait v. Union of India : [1967]63ITR122(Mad) and Inayat Hussain v. Union of India : [1980]122ITR227(Bom) . Since we have held that the proceedings which may be taken pursuant to the declaration or expression of an opinion by the Income-tax Officer or authority under section 281 are a mere prelude to the procedure for recovery of tax and that the rights of the parties are in no way affected, we do not think that it is in any way necessary to refer to the decision in these two case. We do not think that the y are, in the present case, applicable in any way. The results, therefore, is that the petition fails and will have to be dismissed. It is turn that this matter has been pending for a long time and the property of the assessee is under attachment since the year 1972. A grievance was made that the proceedings are not being brought to an end early. We do not think that there is much force in this contention for the simple reasons that the petitioner himself in the year 1974 obtained a stay order form this court relating to further proceedings. Nevertheless. We do fell that the proceedings are already inordinately delayed and we direct that the Income-tax Officer concerned shall dispose of those proceedings with speed and within as short a time as possible. As we have indicated, it does not appear that, after the attaching, the properties ar being put to sale as rule 11, sub-rule (1) permits. The petitioners other than petitioner No. 1 would be entitled to make their claims and objections before the Income-tax Officer who shall, if such claims are made, decide them in accordance with law. We direct the Income-tax Officer concerned to do so within three months of the receipt of objects, if any. Rule discharged. No order as to costs.


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