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Tax Recovery Officer and ors. Vs. Md. Ismail and anr. and Mussamet Zulekha Begum - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberF.M.A. Nos. 626 and 634 of 1976
Judge
Reported in84CWN601,[1980]125ITR735(Cal)
ActsIndian Income Tax Act, 1922 - Section 46; ;Income Tax Act, 1961 - Section 297(2); ;General Clauses Act, 1897 - Section 6; ;Bengal Public Demands Recovery Act, 1913
AppellantTax Recovery Officer and ors.
RespondentMd. Ismail and anr. and Mussamet Zulekha Begum
Appellant AdvocateB.L. Pal, ;N.L. Pal and ;N. Saha, Advs.
Respondent AdvocateD. Pal, ;Pronab Pal and ;Siddhartha Chatterjee, Advs.
Cases ReferredAct. In Union of India v. Jnanada Prasanna Chakravartti
Excerpt:
- .....by the certificate officer and additional district magistrate, 24-parganos, under rule 46 of the bengal public demands recovery act, 1913, in respect of three certificate cases, for the sale of premises nos. 14/7 and 14/8, jhowtola road, calcutta, for recovery of arrears of income-tax of the certificate-debtor, one sheikh mohammed yaqoob. on november 7, 1960, the respondents filed three petitions of objections to the sale of the said two properties claiming the same to belong to them and not to the certificate-debtor. the certificate officer directed the ito to submit a report on the said claim petitions. it appears that by his order dated may 27, 1961, the certificate officer extended the time for the submission of the report by the ito by three months. the ito did not, however,.....
Judgment:

M.M. Dutt, J.

1. In this appeal, the revenue has challenged the propriety of the judgment of Sabyasachi Mukharji J., whereby the learned judge made the rules nisi obtained by the respondents on their applications under Article 226 of the Constitution absolute.

2. On September 2, 1960, a sale proclamation was issued by the Certificate Officer and Additional District Magistrate, 24-Parganos, under Rule 46 of the Bengal Public Demands Recovery Act, 1913, in respect of three certificate cases, for the sale of premises Nos. 14/7 and 14/8, Jhowtola Road, Calcutta, for recovery of arrears of income-tax of the certificate-debtor, one Sheikh Mohammed Yaqoob. On November 7, 1960, the respondents filed three petitions of objections to the sale of the said two properties claiming the same to belong to them and not to the certificate-debtor. The Certificate Officer directed the ITO to submit a report on the said claim petitions. It appears that by his order dated May 27, 1961, the Certificate Officer extended the time for the submission of the report by the ITO by three months. The ITO did not, however, submit any report. Ultimately, on September 20, 1961, the Certificate Officer allowed the said claim petitions of the respondents and released the said properties.

3. After such release, the respondents sold the properties on October 12, 1961, and May 2, 1962. On March 29, 1962, the respondents purchased both the ownership right and the leasehold interest of premises No, 50A, Phears Lane, Calcutta. It appears that on September 30, 1962, another sale proclamation was issued by the Certificate Officer and AdditionalDistrict Magistrate, 24-Parganas, under Rule 46 of the Bengal Public Demands Recovery Act, 1913, for the sale of the said premises No. 50A, Phears Lane, Calcutta, and two other premises being premises Nos. 21 and 22, Colootala Street, Calcutta, for the recovery of the certificate debt of the said certificate-debtor. Again, the respondents filed three petitions of objections under the Bengal Public Demands Recovery Act claiming the said three properties to belong to them and not to the certificate-debtor. When these claim cases were pending, on August 30, 1962, the ITO made an application for review before the Certificate Officer under Section 54 of the Bengal Public Demands Recovery Act praying for setting aside of the ex parte order dated September 20, 1961, whereby the claim cases of the respondents relating to the premises Nos. 14/7 and 14/8, Jhowtola Road, were allowed and the said properties were released. It was alleged by the ITO that he did not receive any notice fixing the date of hearing of the claim cases on September 20, 1961. By his order dated September 10, 1963, the said review application was rejected by the Certificate Officer. Being aggrieved by the said order, the Union of India preferred an appeal to the Presidency Divisional Commissioner who allowed the same with a direction to the Certificate Officer to rehear the matter on the issue whether the notice was served on the I.T. dept. or not. On August 16, 1965, the Certificate Officer set aside the ex parte order dated September 20, 1961, and fixed the hearing of the claim petitions. Against the said order dated August 16, 1965 of the Certificate Officer, the respondents preferred an appeal before the Presidency Divisional Commissioner on the ground that the Certificate Officer had been directed by the Commissioner to hear the matter only on the point of service of notice and he had no jurisdiction to set aside the order dated September 20, 1961. The Presidency Divisional Commissioner, however, dismissed the appeal and directed the matter to be heard on merits.

4. Thereafter, on January 9, 1970, the claim petitions of the respondents were heard by the TRO who dismissed the said claim petitions of the respondents. The respondents preferred three appeals to the Presidency Divisional Commissioner against the said order dated January 9, 1970, of the TRO. The said appeals were, however, dismissed by the Presidency Divisional Commissioner by three orders, all dated April 20, 1971, on the ground that no appeal lay under Rule 86 of the Second Schedule to the I.T. Act, 1961. The respondents filed three applications for a review of the said orders which were also dismissed by the Presidency Divisional Commissioner by his orders dated January 20, 1971.

5. The respondents being aggrieved by the impugned orders, namely, the orders dated April 20, 1971, and the orders dated January 20, 1971, movedthis court under Article 226 of the Constitution and obtained a rule nisi. The learned judge took the view that as the proceedings were under the Bengal Public Demands Recovery Act and not under the I.T. Act, 1961, which came into force during the pendency of the said proceedings, an appeal lay to the Presidency Divisional Commissioner under the Bengal Public Demands Recovery Act. In that view of the matter, the learned judge quashed the impugned orders and directed the Presidency Divisional Commissioner to hear the appeals preferred by the respondents on merits and in accordance with law. Hence this appeal.

6. In view of the provision of Section 46(2) of the Indian I.T. Act, 1922, hereinafter referred to as 'the old Act', the certificate proceedings were started under the provisions of the Bengal Public. Demands Recovery Act, 1913.

7. It is not disputed that appeals lay to the Presidency Divisional Commissioner under the Bengal Public Demands Recovery Act. It is not also disputed that the Certificate Officer and Additional District Magistrate was also the Tax Recovery Officer. According to the revenue, the order dated January 9, 1970, having been passed by the TRO under the I.T. Act, 1961, hereinafter referred to as ' the new Act ', and the new Act not having made any provision for appeal, no appeal lay. It is contended that the proceedings under the Bengal Public Demands Recovery Act were transformed into proceedings under the new Act after the same were taken over by the TRO by dismissing the claim petitions of the respondents on January 9, 1970. The question, therefore, is whether the proceedings started under the Bengal Public Demands Recovery Act, by virtue of the provisions of the old Act, were transformed into proceedings under the new Act.

8. The new Act has made provisions for the recovery of the tax dues of an assessee. These provisions are contained in the rules under the Second Schedule to the new Act. The proceedings were started under the Bengal Public Demands Recovery Act, in accordance with the provisions of Section 46(2) of the old Act. Under the old Act, read with the provisions of the Bengal Public Demands Recovery Act, the arrears of tax are recovered as arrears of land revenue. Under the new Act, however, it is not recovered as an arrear of land revenue. After a certificate is filed and a notice thereof is served upon the certificate-debtor under Section 8 of the Bengal Public Demands Recovery Act, the certificate-debtor has the right to file a petition of objection denying his liability for the certificate dues. There is no such provision under the new Act. It is apparent that the procedure prescribed by the Public Demands Recovery Act is different from the procedure under the new Act.

9. The old Act was repealed by Section 297(1) of the new Act. The question that necessarily arises is whether the provisions of Section 6 of the General Clauses Act will apply. Section 6 provides as follows ;

' 6. Effect of repeal.--Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made then, unless a different intention appears, the repeal shall not-

(a) revive anything not in force or existing at the time at which the repeal takes effect; or

(b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed ; or

(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed ; or

(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture, or punishment as aforesaid;

and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed. '

10. There can be no doubt that Section 6 will not apply if a different intention appears in the repealing Act. It is contended by Mr. Balai Pal, learned advocate appearing on behalf of the revenue, that a different intention appears from Clause (j) of Sub-section (2) of Section 297 of the new Act. Clause (j) provides as follows :

' (2), Notwithstanding the repeal of the Indian Income-tax Act, 1922 (XI of 1922), (hereinafter referred to as the repealed Act),--......

(j) any sum payable by way of income-tax, super-tax, interest, penalty or otherwise under the repealed Act may be recovered under this Act, but without prejudice to any action already taken for the recovery of such sum under the repealed Act. '

11. The provision of Section 297(2)(j) permits the recovery under the new Act of income-tax, super-tax, etc., payable under the old Act, but it should be without prejudice to any action already taken under the old Act. Clause (j) has not prohibited the recovery under the old Act. It has only enabled the revenue to proceed under the provisions of the new Act for the purpose of recovery of any sum payable under the old Act. The expression 'but without prejudice to any action already taken for the recovery of such sum under the repealed Act' is significant. It means that although the recovery can be made under the new Act of any sum payable under the old Act it shall be without prejudice to the action already taken under the old Act for such recovery. In our opinion, Clause (j) is an enabling provision and it has not debarred the revenue from proceeding under theold Act by virtue of Section 6 of the General Clauses Act. We do not think that any contrary intention has been expressed under the provision of Clause (j) making the provision of Section 6 inapplicable. It is true that the revenue can proceed under the new Act for the purpose of recovery of any sum payable under the old Act, but for that only it is difficult to hold that Clause (j) is retrospective in operation so as to exclude by necessary implication the provisions of the old Act relating to recovery of arrears of income-tax, super-tax, etc., read with the provisions of Section 6 of the General Clauses Act. The decision of the Judicial Committee of the Privy Council in Zainal bin Hashim v. Government of Malaysia [1979] 2 All ER 241; [1980] 2 WLR 136, relied on by Mr. Pal has no application to the facts of the present case, for, in our opinion, Clause (j) is not retrospective in operation.

12. Much reliance has been placed on behalf of the revenue on a decision of the Supreme Court in Kalawati Devi Harlalka v. CIT [1970] 66 ITR 680. In that case, it has been observed that Section 6 of the General Clauses Act will not apply to the repeal of the old Act, because in Section 297(2) of the new Act, Parliament has clearly evidenced a contrary intention by providing for so many matters, some in accord with what would have been the result under Section 6 of the General Clauses Act and some contrary to what would have been the result under that section. The principle as laid down in Kalawati Devi's case : [1967]66ITR680(SC) has been relied on by the Supreme Court in a later decision in Third ITO v. M. Damodar Bhat : [1969]71ITR806(SC) . In that case, it was observed that the procedure of the new Act would apply mutatis mutandis to cases contemplated by Section 297(2)(j) of the new Act. In a subsequent decision of the Supreme Court in T.S. Baliah v. T. S. Rangachari : [1969]72ITR787(SC) , the Supreme Court has in considering the applicability of the provisions of Section 6(e) of the General Clauses Act to the institution of a prosecution under the old Act, observed that whenever there is a repeal of an enactment, the consequences laid down in Section 6 of the General Clauses Act will follow unless, as the section itself says, a different intention appears in the repealing statute. In the case of a simple repeal there is scarcely any room for the expression of a contrary opinion. But when the repeal is followed by fresh legislation on the same subject the court would undoubtedly have to look to the provisions of the new Act, but only for the purpose of determining whether they indicate a different intention. The question is not whether the new Act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them. Section 6 of the General Clauses Act, therefore, will be applicable unless the new legislation manifests an intention incompatible with or contrary to the provisions of the section. Such incompatibility would have to be ascertained from a consideration of all the relevant provisions of the new statute and the mere absence of a savingclause is by itself not material. In other words, the provisions of Section 6 of the General Clauses Act will apply to a case of repeal even if there is a simultaneous reenactment unless a contrary intention can be gathered from the new statute. It has been further observed that though there is no express sub-clause in Section 297(2) of the new Act, which provides for the continuation of such proceedings. Parliament did not intend Section 297(2) to be completely exhaustive and in regard to such matters as are not expressly saved by Section 297(2), the provisions of Section 6(e) of the General Clauses Act will apply. In making the said observation, the Supreme Court noticed its earlier decision in Kalawati Devi Harlalkas' case : [1967]66ITR680(SC) and Damodar Bhat's case : [1969]71ITR806(SC) .

13. In our opinion, Section 297(2)(j) does not manifest an intention to destroy the old rights and liabilities. It is, however, contended on behalf of the revenue with reference to Clauses (a), (b) and (d) of Section 297(2) that whenever the Legislature had intended to save the pending proceedings, it had expressly and specifically provided for the same and that, accordingly, it follows that Section 297(2)(j) should be construed as not having kept alive the pending proceedings under the old Act. We are unable to accept this contention. In view of the decision of the Supreme Court in T.S. Baliah's case : [1969]72ITR787(SC) , each clause of Section 297(2) has to be considered separately. There is nothing in Section 297(2)(j) to show the manifestation of a different intention so as to justify an inference that the proceedings for recovery of tax dues under the old Act have not been kept alive. On the contrary, in our opinion, Section 297(2)(j) has by necessary implication kept alive the proceedings under the old Act subject to this that the revenue may also proceed under the new Act for the recovery of any sum payable under the old Act, but without prejudice to any legal action that has been already taken. As already stated, the provision of Section 297(2)(j) is an enabling provision and the revenue may take resort to the provision of the new Act for the purpose of recovering any sum payable under the old Act but in so doing it should not prejudice any action that has been taken under the old Act.

14. The proceeding was started under the Public Demands Recovery Act read with Section 46(2) of the old Act. Take a case where during the pendency of a petition of objection under Section 9 of the Public Demands Recovery Act, the new Act comes into force. The question is whether the procedure laid down under the new Act can be followed. If the procedure under the new Act is followed, in that case, the TRO will not be entitled to dispose of any application under Section 9 of the Public Demands Recovery Act, for, the new Act has not made any provision for the filing of a petition of objection. The introduction of the procedure under the new Act into the pending proceeding will undoubtedly prejudice the action already taken.In the circumstances, in view of Section 297(2)(j), such procedure cannot be adopted. But when a certificate has been filed under the Bengal Public Demands Recovery Act, at that stage the procedure under the new Act can be adopted, for such adoption will not prejudice the action already taken. In Segu Butchaiah Setty v. ITO : [1970]76ITR607(KAR) , it has been held by the Supreme Court that Section 297(2)(j) of the new Act does not require that there should be another certificate under Section 222 of the new Act preceded by a notice of demand under Section 156 of the new Act.

15. It is urged on behalf of the revenue that in the instant case when the TRO disposed of the claim petition of the respondents by dismissing the same, the proceedings under the Public Demands Recovery Act became transformed into proceedings under the new Act. We are unable to accept this contention. In our opinion, Section 297(2)(j) does not make any provision for transformation of proceedings under the old Act into proceedings under the new Act. In Union of India v. Jnanada Prasanna Chakravartti : [1970]77ITR782(Cal) , the following observation has been made by a Division Bench of this court:

' Mr. Pal points out that the Tax Recovery Officer may be the certificate officer himself (vide Section 2(44) of the Income-tax Act, 1961) and, as certificate officer, he will have power to make recovery under the Public Demands Recovery Act. It is not clear, however, from the record, whether in the instant case, the Tax Recovery Officer in question was also the certificate officer. Further, the relative or relevant recovery proceedings in the instant case from the moment they were taken over by the Tax Recovery Officer appear to be proceedings under the Income-tax Act, 1961 (vide Schedule II of the Act), and not under the Public Demands Recovery Act, and, as a matter of fact, the appeal to the Commissioner was filed under the said Schedule, and so Section 16(a) of this latter Act (Public Demands Recovery Act) would not apply. '

16. The above observation was relied on by the revenue before the learned judge. It has been observed by the learned judge that the contention that the TRO, when he was deciding the question, was not deciding as TRO but as a certificate officer under the Bengal Public Demands Recovery Act, was not urged before the Division Bench. Further, whether in fact there were proceedings under the Public Demands Recovery Act or not was not an issue before the Division Bench in that case. In our opinion also, the learned judge has rightly distinguished the said Bench decision from the instant case. The question that has been raised before us was not specifically raised before the Division Bench in that case. In these circumstances, that decision will not apply to the case before us. As has been stated already, Section 297(2) or, for the matter of that, Section 297(2)(j) has not made any provision either expressly or by necessary implication forthe transformation of the proceedings under the Bengal Public Demands Recovery Act into proceedings under the new Act. Although the claim petition of the respondents was sought to be disposed of by the TRO, he was really disposing of the same as a certificate officer under the Public Demands Recovery Act, As has been noticed earlier, the certificate officer and the Additional District Magistrate was also the Tax Recovery Officer. It will not, in our opinion, make any difference if the officer who disposed of the said claim petition described himself as the Tax Recovery Officer.

17. We may consider the question from another point of view. An appeal lay to the Presidency Divisional Commissioner from the order passed by the certificate officer in view of Section 51 of the Bengal Public Demands Recovery Act. When the claim petitions were filed, a right of appeal accrued to the respondents. It is not disputed that a right of appeal is a substantive right and unless it is taken away, either expressly or by necessary implication by a subsequent enactment, it subsists. There is nothing in Section 297(2)(j) to hold that it has taken away the vested right of appeal of the respondents. In this connection, we may point out a significant fact. It has been stated already that when the application for review of the ITO was dismissed by the certificate officer and the Additional District Magistrate, an appeal was preferred by the Union of India to the Presidency Divisional Commissioner. In that appeal, the Presidency Divisional Commissioner set aside the orders of the certificate officer and of the Additional District Magistrate and directed him to rehear the application for review. If the contention of the revenue is accepted, in that case, it cannot but be held that the proceedings under the Bengal Public Demands Recovery Act became converted into proceedings under the new Act and, consequently, no appeal lay against the order of the certificate officer and the Additional District Magistrate to the Presidency Divisional Commissioner. The order of the Presidency Divisional Commissioner setting aside that of the certificate officer and the Additional District Magistrate should be held to be a nullity and, accordingly, the said order of the certificate officer and the Additional District Magistrate would stand. In the circumstances, we are unable to hold that any such transformation of the proceedings took place after the new Act had eome into force or by the disposal of the claim petitions by the certificate officer and the Additional District Magistrate describing him as the Tax Recovery Officer. For these reasons, the appeals which have been preferred by the respondents to the Presidency Divisional Commissioner are quite maintainable.

18. In view of the foregoing discussion, we affirm the judgment of the learned judge and dismiss this appeal, but there will be no order for costs.

F.M.A. No. 634 of 1976

19. The points involved in this appeal are identical with those involved in F.M.A. No. 626 of 1976, which is just now disposed of by us. In view of our judgment in F.M.A. No. 626 of 1976 and for the same reasons, this appeal is also dismissed. There will, however, be no order for costs.

Sharma, J.

20. I agree.

M.M. Dutt, J.

21. Mr. Nandalal Pal, learned advocate appearing on behalf of the appellants in both the appeals, prays for certificate for appeal to the Supreme Court under Article 134A of the Constitution. The prayer could not be made by Mr. Pal immediately after the judgment was delivered on account of some unavoidable circumstances. Be that as it may, we do not think that the cases involve a substantial question of law of general importance so that the same may be decided by the Supreme Court. In the circumstances, the oral application for certificates is disallowed. There will be no order for costs.

Sharma, J.

22. I agree.


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