1. This is an appeal against the judgment of a single Judge of this Court on an application under Article 226 of the Constitution. The facts briefly are that the two appellants are brothers and they own a number of firms which were registered in accordance with the provisions of the Income-tax Act. They also hold shares in a private limited company known as Messrs. Tika Ram and Sons Ltd., Aligarh.
The position in 1951 was that assessments on account of income-tax had been completed for the years 1944-45, 1945-46 and 1946-47 but the income-tax assessment proceedings for the later years were pending. On 19th May, 1951, the Ministry of Finance, Government of India issued a press notification which contained two parts. The first part dealt with concessional scheme for payment of arrears and the second part dealt with 'voluntary disclosure of income'.
This scheme was subsequently supplemented by another notification dated 18th July 1951. The purport of the first press notification issued was that the assessees who were in arrears were permitted to bring into their accounts some additional cash. The time fixed for bringing such cash was 31st July, 1951. By that time they had to file an application before the Inspecting Assistant Commissioner of Income-tax.
On receipt of such an application an agreed plan for payment of arrears by instalments was to be drawn up according to the circumstances of each case by him. This scheme was to be finalised by 31st March, 1952, If the payments were made according to the agreed plan punctually, any penalty imposed under Section 46 (1) of the Income-tax Act was to be reduced according to the circumstances of each case by the Commissioner of Income-tax.
If the payments were not made punctually according to the plan, the concession of payment In instalments was to lapse and necessary action had to be taken to recover the arrears. This scheme was to apply only to the arrears of demand assessed before 1st April, 1951. The assessee was further allowed to bring into his accounts the cash which represented the estimated 'intangible addition' to the declared income made by the Income-tax Officer in the relevant assessment and the introduction of this cash was not to attract any penalty, prosecution or further tax.
The other part of this notification was headed as 'Voluntary disclosures'. It provided that the assessee making voluntary disclosures of his concealed income before 3lst August, 1951, was tobe allowed immunity from prosecution, and imposition of further penalty.
2. The subsequent provisions of the first press note were then supplemented by the second press note, which was already been referred to above and its privileges were extended even to those assessees who were not in arrears and the latter were also permitted to bring' into their account books unaccounted for cash without any fear of penalty prosecution, or further taxation.
The cash, however, had to be brought into books before 31st August, 1951. An intimation of this amount had to be immediately sent to the Income-tax Officer concerned and the account of cash that was to' be exempt from taxation was to the extent of the 'intangible additions' made to the immediately preceding three completed assessments. The cash so introduced was to be treated on the same basis as voluntary disclosure of the amount, and if the cash exceeded the 'intangible additions' made in the immediately preceding three completed assessments. Such excess was to be treated as if it were a part or the whole as the case may be, of a voluntary disclosure and had to be assessed.
3. The appellants came to know of these press reports and they on 1-8-1951 made an application to the Inspecting Assistant Commis-sioner, Meerut, making disclosures of concealed income totalling a sum of Rs. 2,66,1017/-. The Inspecting Assistant Commissioner did not accept this disclosure and they further agreed to add another sum of Rs. 75.000/- to the already disclosed income. Thus the total disclosed income came to Rs. 3,41,101/-.
The question then had to be considered by the Inspecting Assistant Commissioner as regards the deductions which could be claimed by the appellants in respect of the 'intangible additions'. A deduction of Rs. 98,800/- was allowed thus by the Income-tax department in the income assessed on the limited company and a sum of Rs. 30,000/- with respect to the income assessed on the petitioner. Thus the total deductions amounts to a sum of Rs. 1,28,800/- and for the balance of Rs. 2,12,300/- the petitioners were to be taxed. This amount of Rs. 2,12,3007- was spread over for a period of four years namely 1947-48, 1948-1949, 1949-50, 1950-51.
Thereafter the assessments were made for these four years on different dates in 1953 and the total income tax assessed on the disclosed income as also the profits they had earned in these four years was a sum of BS. 1, 75,000/- and odd. In addition to this demand there was an arrear of about Rs, 37,000/- payable by the petitioners on account of the income tax for the years prior to 1947-48.
Demands were made from the petitioners, a very small amount was paid by them, and they applied for payment of the demand by instalments. On 21st November, 1953 a reply was sent by the Income tax department that the demand related to years 1947-48 and 1948-49 and the assessment was made about 7 or 8 months ago as a result of compromise assessment, the Commissioner refused to permit the petitioners to pay the demand in five years but they were, however, permitted to pay it in four instalments beginning from 31st December, 1953.
The petitioners did not pay the instalments and penalties totalling Rs. 2048/- were imposed. The petitioners again wrote on 12th Feb., 1954 for allowing instalments and on 19th February,1954 a reply was sent that the Commissioner was prepared to consider the request for increasingthe instalments if the petitioners paid half of the tax due before the end of the current financial year.
If the petitioners, however, failed to pay that and the petitioners did not agree to the terms then the Income Tax Officer was to proceed to collect the tax in normal course. On 24th February, 1954 the petitioners said that their financial position was very weak and they could not pay so much amount. Thereupon the petitioners approached the Central Board of Revenue for extending the period of their payment but the Board rejected it by their letter dated 24th June, 1954. They then went to the Income Tax Commissioner with a similar request, and his refusal too was communicated to them by his letter dated the 16th September, 1954. Therefore a petition was filed on 13th October, 1954 under Article 226 of the Constitution for the following reliefs:--
(i) A Writ of mandamus to the opposite party No. 2 directing him to observe the directions issued by the Ministry of Finance, Government of India and pass orders after reconsidering the position according to the concessional scheme notified on the 19th of May, 1951 and supplemented by a notification dated 18th July, 1951.
(ii) A writ of certiorari quashing the assessment orders dated 20-4-53, 25-3-53 and 9/12/53 regarding petitioner No. 1 Ved Prakash Gupta, and orders dated 30-3-53, 25-3-53 and 30/11/53 respectively regarding petitioner No. 2 Om Prakash Gupta and four other orders imposing penalty dated 5-2-54. It may be pointed out in this case that although six orders have been mentioned in the relief the petitioners have only filed two orders of assessment for the year 1948-49 and one order for the year 1950-1951.
The other orders are only notices of demand. The single Judge of this Court by his order which is under appeal rejected the petition. In our opinion, the press notifications issued by the State Government have no legal force. They do not appear to have been passed under the provisions of the Income Tax Act or any other law and consequently the petitioners are not entitled to any relief of way of mandamus directing the opposite parties to enforce the provisions of the press notifications.
Coming, however, to the relief claimed by the petitioners by way of certiorari quashing the orders of assessment for the year 1948-49, from the facts which we have already mentioned, it will appear that under the press notification scheme the petitioner disclosed certain income. These disclosures were regarded as disclosures made in the assessment years 1947-48, 1948-49, 1949-50 and 1950-51, the assessments for which were pending.
The income tax authorities allowed certain deductions from these voluntary disclosures in respect of certain amounts which they considered as intangible additions in the preceding three years. The balance on which the petitioners were assessed, was a voluntary disclosure of their income for the years 1947-48, 1948-49, 1949-50 and 1950-51 by the petitioners themselves so that it is no longer open to them to say that it was not income of those years.
Further, as we have held above, the pressnotes have no legal binding force and the petitioners cannot therefore claim that the department should be bound by them and must make deductions under those press notifications. Apartfrom it, as has been pointed out by the learned single Judge power was given to the InspectingAssistant Commissioner to allow certain deductions of intangible additions made in the preceding, three years and consequently it cannot be said that the amount arrived at by the Inspecting Assistant Commissioner was without jurisdiction so as to entitle the appellants to come to this Court under Article 226.'
This Court after such a lapse of time will not go into the question as to how much was the amount which the petitioners were entitled to deduct as intangible additions for the previous years. It was contended by Sri Ambika Prasad, who appeared for the appellants that if it is held, that the Press notification had no legal binding-force the amount of Rs. 2,12,000/- which was regarded as voluntary disclosure by the petitioners and on which they were assessed was really income of the preceding years and they can only be assessed on that amount by preceding under Section 34 of the Income Tax. Act.
There is no substance in this contention either. Section 34 Proceedings can only be taken when the assessment has been completed. This amount of voluntary disclosure of Rs. 2,12,000/-was a disclosure made by the petitioner for the-years under assessment and, therefore, they were really taxed during the current assessment period and there was no question of re-opening an assessment under Section 34.
During this period of current assessment for four years the petitioners themselves disclosed an income of Rs. 2, 18,000/- and the only amount to-which they were taxed was Rs. 2,12,000/-. It cannot, therefore, be on the face of it said that it was even income of the preceding years. There is therefore, in our opinion no force in this appeal.
4. During the pendency of this appeal the petitioners filed two writ petitions which have been connected with this appeal namely Nos. 587 of 57 and 1013 of 55. As it was stated by the counsel for the petitioners that similar points were involved in them they were directed to be connected with the appeal. In the writ petition No. 1013 of 55, the petitioners have challenged the assessment for the year 1949-50.
For the reasons which we have already given, in the special appeal this petition has no force-and must be rejected. As regards petition No. 587 of 57 the petitioners, by means of this petition, have claimed a relief of certiorari quashing the assessment order for the year 1951-52. In the affi-davit filed in support of this petition in para 10 the petitioners have given certain intangible additions which they say they were entitled to deduct.
So far as items A, B and C are concerned, they relate to the claim of the petitioners for intangible additions for the years 1944-45, 1945-46, and~ 1946-47 and for the reasons which we have already given in our order in connection with the special, appeal the Petitioners are not entitled to claim these deductions. In item D in para 10 of- the affidavit they have claimed a sum of Rs. 25,722/- as-intangible additions made to firm Sri Krishna Das Tika Ram in the year 1951-52. In our opinion the petitioners are not entitled to it on two grounds.
Firstly the petitioners in their personal capacity are not entitled to claim deductions of intangible additions made in the assessment of the firm Sri Krishna Das Tika Ram in the year 1951-52 & secondly the press notifications merely gave the right to claim deductions in respect of intangible additions made in the three years preceding theyears in which the voluntary disclosures were made and this benefit had already been granted to the petitioners in their assessments for the years 1947-48, 1948-49, 1949-50 and 1950-51.
It cannot therefore, be said that any intangible additions made in the accounts of the firm for the year 1951-52 could be claimed as deductions by the petitioners in accordance with the terms of the press notifications. There is, therefore, no force in the petition either.
5. In the result the special appeal and the writ petitions are rejected with costs. We fix the amount of costs in the special appeal to be Rs. 200/-.