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The Chief Commissioner of Income Tax (Board of Revenue) Vs. the North Anantapur Gold Mines, Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai
Decided On
Reported inAIR1921Mad524; (1921)41MLJ177
AppellantThe Chief Commissioner of Income Tax (Board of Revenue)
RespondentThe North Anantapur Gold Mines, Ltd.
Cases ReferredVide Vestry of St. John Hampsted v. Cotton
Excerpt:
.....officer is a proceeding against him within the meaning of the section appears to be settled by the high authority of bowen and kay, l. consequently, independently of section 106 of the government of india act, section 52 of the income tax act prohibits among other things, any application against the chief revenue authority under section 45 of the specific relief act in respect of anything done by him in good faith. that the words 'anything done' in an act of this kind include also anything omitted to be done is also well settled. ' 7. there is no suggestion of any want of good faith on the part of the chief revenue commissioner in the present case, and therefore, the present proceeding is in my opinion prohibited by the express terms of section 52 of the act itself. the effect of section..........officer is a proceeding against him within the meaning of the section appears to be settled by the high authority of bowen and kay, l. jj. in in re onward building society 1891 2 q.b. 463 where an application against a liquidator of a company directing him to register shares was held to be within the prohibition in section 87 of the companies' act against proceeding with any 'suit action or other proceedings against the company'. lord justice bowen said ' the question whether a proceeding under section 35 is a proceeding against the company appears to me to admit of but one answer viz. that it is. that section gives a summary mode of enforcing rights which might have been prosecuted by a suit in chancery or possibly by an action for a mandamus at common law. it would be impossible to say.....
Judgment:

John Wallis, C.J.

1. This is an appeal from ara order passed by Kumaraswami Sastri, J. under Section 45 of the Specific Relief Act directing the Chief Commissioner of Income-tax to make a reference to the High Court under Section 51 of the Indian Income Tax Act 1918, and raises questions of importance as to, the jurisdiction of the High Court to make such an order. The case has been very fully argued before us by the learned Advocate-General for the appellant and by Mr. Aiyangar for the respondent and we also heard Mr. A. Krishnaswami Ayyar for other persons who have applications of a similar nature pending.

2. The powers conferred on a High Court by Section 45 of the Specific Relief Act are in lieu of the power to issue the writ of mandamus inherited from the Supreme Court which is taken away by Section 50, and Clause (b) of the proviso makes it clear that. the section does not authorise the making of 'any order which is otherwise expressly excluded by any law for the time being in force.' The Advocate-General contended that the order under appeal is excluded by Section 106 of the Government of India Act 1915, and also relied on the provisions of Section 52 of the Indian Income Tax Act which apparently were not brought to the notice of the learned Judge. The Government of India Act is a consolidating statute which in Section 106 has re-enacted the prohibition which was expressly imposed upon the Supreme Court of Bengal in 1780 after the well-known conflict with Warren Hastings and was applied by reference to the Supreme Courts of Madras and Bombay when they were erected in the early part of last century. The prohibition as contained in Section 8 of the East India Company Act 17 SO was in the following terms ' the said Supreme Court shall not have or exercise any jurisdiction in any matter concerning the revenue or concerning any act or acts ordered or done in the collection thereof according to the usage and practice of the country, or the regulations of the Governer-General in Council,' and a very wide construction was put upon the section by the Privy Council in Spooner v. Juddow 4 M.I.A. 353. This prohibition never applied to the Company's Courts, and, when the Supreme Court and the Sudder Courts were superseded by the High Courts under the Act of 1861 and the Letters Patent issued pursuant thereto, a question arose in Collector of Sea Customs v. P. Chidambaram (1875) I.L.R. 1 . Mad. 89 as to whether the prohibition still attached to the High Court in the exercise of the original jurisdiction conferred upon it. Morgan, C. J. thought it did. Inncs and Kernan, jj. thought it did not, though -for dillrent -'reasons. The trainers of the Government of India Act 191.5 were obviously of the same opinion as Morgan, C.J.. as they treated the prohibition as still in force and reenacted it in Section 1.06 of the Government of India Act as follows:

3. 'The High Courts have not and may not exercise any original jurisdiction in any matter concerning the revenue, or concerning any act ordered or done in the collection thereof according to the usage and practice of the country or the law for the time being in force.' The only difference is that whereas the Act of 1780 said that the Supreme Court should not have or exercise any jurisdiction, the new Act says the High Court has not and may not exercise any original jurisdiction in any matter concerning the revenue.

4. Now, the issuing of the writ of Mandamus to secure the performance of a public duly where no adequate remedy existed bv action or otherwise was, it seems to me, clearly an exercise of original jurisdiction. It was a proceeding originating in the court issuing it, and might be directed in a proper case to any class of public officer, executive or judicial. It must also be regarded as having been within orginal jurisdiction of the Supreme Court because that court had no appellate jurisdiction. Similarly I think that the substitued jurisdistion to issue orders under Section 45 of the Specific Relief Act is original jurisdiction. It may in terms be directed to any person holding a public office and to any corporation as well as to any inferior court of judicature. The nature of the jurisdiction exercised is the same in each case, and must in my opinion be considered an exercise of original jurisdiction. If this be so, I am unable, with great respect, to agree with the learned Judge that in making the order prayed for, we should not be exercising original jurisdiction ' in matter concerning the revenue'. The case appears to me to come within the plain meaning of the section, and this was not very seriously disputed. The learned Judge has referred to some observations of Sir Thomas Strange in Venkata Runga Pillai v. The East India Coy.1 Strange 153 , but his attention does not appear to have been called to the very wide interpretation put upon the section by the Privy Council in Spooner v. Juddow 4 M.I.A. 453 .

5. As already observed the effect of the proviso to Section 45 was to leave the old statutory restriction in full force. This, however was not one of the statutory provisions which the Indian Legislature was prohibited from altering under the Indian Councils Act, 1861, and Section 131(3) of the Government of India Act, 1915, and the fifth schedule thereto expressly recognises, the power of the Indian Legislature to repeal or alter the provisions of Section 106. Now, these provisions have been to some extent altered by Section 51 of the Indian Income Tax Act, 1918, which obviously confers jurisdiction on the High Court to proceed on a reference from a revenue authority under the provisions of the section. That section not only enables the Revenue Authority to make a reference to the High Court but requires it to do so ' unless it is satisfied that the application is frivolous or that the reference is unnecessary.'

6. The question then is whether we have any jurisdiction to issue any order to the Chief Revenue authority under Section 45 of the Specific Relief Act with a view to enforcing the due discharge of the duty imposed upon it by the section, and in dealing with this question we have to' consider, not only Section 106 of the Government of India Act, but also the provision of Section 52 of the Income-Tax Act itself which provides that ' no prosecution suit or other proceeding shall lie against any Government Officer for anything in good faith done or intended to be done under this Act'. That an application for an order under Section 45 of the Specific Relief Act against the Chief Revenue Officer is a proceeding against him within the meaning of the section appears to be settled by the high authority of Bowen and Kay, L. JJ. in In re Onward Building Society 1891 2 Q.B. 463 where an application against a liquidator of a company directing him to register shares was held to be within the prohibition in Section 87 of the Companies' Act against proceeding with any 'suit action or other proceedings against the company'. Lord Justice Bowen said ' The question whether a proceeding under Section 35 is a proceeding against the company appears to me to admit of but one answer viz. that it is. That section gives a summary mode of enforcing rights which might have been prosecuted by a suit in Chancery or possibly by an action for a mandamus at common law. It would be impossible to say that, if the circuitous proceeding would have been a proceeding against the company, that the compendions one is not so also.' Kay, L. J. also uses language showing that he'regarded an application for a mandamus as a proceeding against a company. Consequently, independently of Section 106 of the Government of India Act, Section 52 of the Income Tax Act prohibits among other things, any application against the Chief revenue authority under Section 45 of the Specific Relief Act in respect of anything done by him in good faith. That the words ' anything done' in an act of this kind include also anything omitted to be done is also well settled. See Jolliffe v. Wallasoyo 1891 2 Q.B. 463 and Revd. Williams In re (1873) L.R. 9 C.P. 62 and the provision in Section 3(2) of the General clauses Act, 1897 that 'words which refer to acts done extend also to illegal omissions.'

7. There is no suggestion of any want of good faith on the part of the Chief Revenue Commissioner in the present case, and therefore, the present proceeding is in my opinion prohibited by the express terms of Section 52 of the Act itself. The effect of Section 52 is to extend to subordinate courts and to the High Court in the exercise of its appellate jurisdiction tjie prohibition imposed upon the High Court in the exercise of its original jurisdiction by Section 106 of the Government of India Act as regards acts done by the revenue authority in good faith. Further, as at present advised I am not satisfied that there are any sufficient grounds for holding that the effect of Section 51 is to partially repeal Section 106 even to the limited extent of allowing the High Court to exercise Original Jurisdiction when there are allegations of bad faith. It is however unnecessary to decide this question.

8. Much argument has been addressed to us as to the nature of the duty imposed on the Chief Revenue Authority and as to the meaning of the words 'frivolous' and 'unnecessary'. In particular it has been argued that, unless he is satisfied that the application is frivolous, he is bound to make the reference, unless the point in his opinion either does not arise or has already been decided. The ordinary legal meaning of the word 'necessary' as appears from Stroud's Judicial Dictionary is ' reasonably required for the disposal of the case', and I am not satisfied that it was intended to use the word in the section in any more restricted sense. In England the assessee can ordinarily cla'Ti to have a case stated as of right, but 5 and 6 Geo. 5 Ch. 89, Section 42, dealing with the Excess Profits Tax, provides that the Commissioners ' unless they are of opinion that the application is frivolous or vexatious or relates to a matter already decided by the Board of Referees' shall refer the case to a Board. I think it is very likely that this part of Section SI was modelled on that section, and that the legislature substituted the word ' necessary' with the intention of giving the Revenue Authority a wider discretion.

9. As regards this particular case I will only say that, while the Commissioner has rightly based his decision on the language of the Indian section whch differs materially from the corresponding section of the English Act, he has fallen into error in supposing that in Imambandi v. Mutsaddi (1918) 45 I.A. 73 the Privy Council deprecated the practice of referring to 'English decisions which are the basis of so much of our law in India. The decisions in question were American decisions and were correctly described as foreign, an adjective which is inapplicable and would tcertainly not have been applied by the Privy Council to the decisions of the English courts. As regards Income Tax the indian Act generally follows the lines of the EngHsh Act, and where the provisions are similar English decisions are the best guide to their meaning. The Revenue Authority no doubt may not always find it easy to apply them, and that is one reason why the Act empowers and requires it to make a reference to the High Court in appropriate cases. The appeal must be allowed and the application dismissed with costs throughout.

Oldfield, J.

10. I agree with the judgment just delivered and as regards the application of Section 106 Government of India Act, 1915, have nothing to add.

11. The alternative ground, on which the judgment under appeal has been supported, is that under Section 51(1) Act VII of 1918 the making of.the reference asked for is in the words of the proviso to Section 45 Specific Relief Act clearly incumbent on the Chief Revenue authority, against whom an order under the latter section is claimed; and it is thus necessary to consider the wording of the former closely, since it is on it and not on any general rule as to the duties imposed by other statutes in different or wider terms on public officers or public or associated bodies tha't our conclusion must rest. So far moreover as the numerous well known cases, which have been laid before us require adherence, whatever the nature of the duty to be performed or procedure to be employed, to the principle of natural justice and an honest exercise of the discretion conferred, they are not in point, because their requirements were clearly fulfilled in the present case, the commissioner of Income Tax, the authority concerned, having, as his order shows, heard counsel and having dealt adequately with the English decisions relied on.

12. It accordingly is not material that, after distinguishing these decisions, he further, in order to fortify his position relied on the reference to foreign decisions in the judgment of the Judicial Committee in Imambandi v. Mutsoddi L.R. 45 IndAp 73 as justifying a general refusal to follow those of the English courts. In doing so he was. perhaps influenced by the interpretation placed on that reference in one of the judgments in Seeni Nadan v. Mnthusami Pillai () I.L.R. 42 Mad. 821. But in view of the context and of the practice of the Judicial Committee I agree that the word 'foreign' cannot have been used by it in the sense proposed and that the decisions of English Courts must, subject to all necessary exceptions, continue to afford guidance in India. In particular, where, as in the present case, a new Statute expressed in exacter language and, it would appear, administered in a stricter manner than the former law is in question, the assistance afforded by English authorities on the construction of what are, due allowance made for different wording and local conditions, in many respects similar statutes, cannot safely be rejected; and, further, as in cases, in which a reference to this Court is found necessary that assistance will presumably be accepted here, the same foundation must be adopted for our decisions and those of the revenue authorities, if a consistent system of Income Tax administration is to be reached.

13. To return to the section, decisions directly relevant to its construction have not been cited; and their absence is natural, because the right conferred by it on the assessee corresponds with nothing in the previous Indian Income Tax Act and there is, so far as we have been shown, no provision in any other statute in the same or equivalent terms, by which any similar, duty is imposed. We have therefore in the absence of 'any thing to modify, anything to alter, anything to qualify the language to. construe it in its ordinary and natural sense'. Vide Vestry of St. John Hampsted v. Cotton (1886) 12 A.C. 6 and the construction proposed before us by the Assessee seems to be inconsistent with o'ur doing so. The material part of Section 51(1) runs:

14. The Chief Revenue Authority shall refer any question on the application of the assessee, unless it is satisfied that the application is frivolous or that a reference is unnecessary;' and it is with the latter alternative that we are directly concerned. For the assessee before us contends that 'unnecessary' means only 'unrelated to any issue arising necessarily in the course of assessment' and that the court is to determine whether the issue in question is of that nature. There are two fundamental objections to this, which I think, are valid; firstly that it refuses effect to the requirement that the Revenue Authority shall be satisfied, substituting as the test of the necessity for the reference that this Court shall be so; and secondly that it restricts the meaning of 'unnecessary' inconsistently with the ordinary use of the word. On the first of these there is no reason for assuming that frivolous applications excepted, this Court has been given an unrestricted jurisdiction, where previouly it had none; on the second, it is the reference, not a determination of the question referred, which is described as unnecessary and there is no reason for excluding from the class of questions under contemplation those, which the Revenue Authority in fact does determine unaided. Shortly the Assessee's argument would be justified, unless if the section simply made a reference obligatory, unless it were unnecessary; and it could, if that had been the intention, have easily been worded in that way with a provision for an absolute right to appeal or to have a case stated. On the other hand, if we leave to the Revenue authority, which is entrusted with the assessment, the duty of deciding whether and to what extent it requires assistance in making it, we give full effect to each part of the language employed.Accepting the latter alternative, I concur in allowing the appeal and in the order proposed.


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