Dwarkanath, Hindu Undivided Family Vs.
Income-Tax Officer, Special Circle, Kanpur  INSC 86 (29 March 1965)
29/03/1965 SUBBARAO, K.
CITATION: 1966 AIR 81 1965 SCR (3) 536
CITATOR INFO :
R 1976 SC 578 (11) RF 1980 SC1579 (25) R 1985
SC 167 (36,38) RF 1986 SC1272 (83) R 1987 SC 537 (18) F 1989 SC1607 (18)
Indian Income-tax Act (11 of 1922), s.
33A(2)-Commissioner's power of revision-If administrative or
quasi-judicial--"Deponent's own knowledge", meaning of.
Pursuant to the directions of the Income-tax
Appellate Tribunal, the Income-tax Officer, determined the assessee's capital
gains under s. 12B of the Income-tax Act, 1922. He did not, however, make any
order under s. 23(3) of the Act, nor did he issue a notice of demand under s.
29 of the Act.
The assessee filed an application before the
Commissioner of Income-tax, under s. 33A(2) of the Act, for revising the
computation made by the Income-tax Officer drawing his attention to a decision
of the Bombay High Court in Baijnath's case, (1957) 31 I.T.R 643, as to how the
capital gains should be ascertained. That decision was based upon a
consideration of the very documents which were the basis of the assessees'
claim. The Commissioner dismissed the revision petition as not maintainable, as
well as on merits, ignoring the Bombay decision. Meanwhile, the assessee filed
an application requesting the Income-tax Officer to issue a notice of demand
under s. 29, to enable him to file an appeal, but the Officer declined to do
so. The assessee filed a writ application in the High Court for issuing
appropriate writs to the Commissioner and the Income-tax Officer, but the High
Court dismissed it in limine.
In his appeal to this Court, the assessee
contended that (i) the High Court erred in holding that the affidavit filed in
support of the writ petition was not in accordance with law, and that even if
there were any defects the High Court should have given him an opportunity to
rectify them, and (ii) the High Court erred in distinguishing the Bombay
decision and in holding that there was no force in the revision filed before
the Commissioner, and that, the High Court should have directed the
Commissioner to entertain the revision and dispose of it in accordance with law
by giving suitable directions to the Income-tax Officer. The respondent raised
a preliminary objection that as the order of the Commissioner was an
administrative act, Art. 226 of the Constitution could not be invoked.
HELD:(i) As no appeal lay to the Appellate
Assistant Commissioner against the calculations made by the Income-tax Officer,
the Commissioner had powers under s. 33A(2) to revise the Income-tax Officer's
order. The jurisdiction conferred on the Commissioner by the section is a
judicial one, The nature of the jurisdiction and the rights decided carry with
them necessarily the duty to act judicially in disposing of the revision.
Further, the fact that a Division Bench of one of the High Courts in India had
taken a view in favour of the assessee, indicated that the question raised was
arguable and required serious consideration. Therefore, a writ of certiorari
quashing the order of the Commissioner dismissing the assessee's revision
petition, should be issued. [544E-G; 548D] 537 Sitalpore Colliery Concern Ltd.
v. Union of India, (1957) 32 I.T.R. 26, Additional Income-tax Officer, Cuddapah
v. Cuddapah Star Transport Co. Ltd. (1960) 40 I.T.R. 200 and Suganchand Saraogi
v. Commissioner of Income-tax, (1964) 53 I.T.R, 717, overruled.
Even if the Commissioner only made an
administrative order in refusing, to give any direction to the Income-tax
Officer, the assessee would still be entitled to approach the High Court under
Art. 226, and a writ of mandamus directing the Income-tax Officer to discharge
his statutory duty of passing the order and issuing the notice of demand in
accordance with law, should be issued. [546C-E] (ii)The affidavit filed on
behalf of the assessee was complete and compiled with the rules made by the
The affidavit spoke only of matters which
were within the deponent's own knowledge, because, the phrase "deponent's
own knowledge" is wide enough to comprehend the knowledge derived from a
perusal of relevant documents. Even if the affidavit was defective in any manner,
the High Court instead of dismissing the petition in limine should have given
the assessee, a reasonable opportunity to file a better affidavit. [547F-G, H]
(iii)The High Court was also in error in holding that the decision of the
Bombay High Court was given on different facts, for the facts in both cases
were the same and they arose out of the same transaction. [548B-C]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 62 of 1964.
Appeal by special leave from the judgment and
decree dated July 28, 1959 of the Allahabad High Court in Civil Miscellaneous
Writ No. 2071 of 1959.
A. V. Viswanatha Sastri, Rameshwar Nath, S.
N. Andley and P. L. Vohra, for the appellant.
Gopal Singh and R. N. Sachthey, for the
The Judgment of the Court was delivered by
Subba Rao, J. The facts leading up to this appeal may briefly be narrated.
Gujarat Cotton Mills Co. Ltd., hereinafter called the Company, is a limited
company having its registered office at Ahmadabad. In the year 1938 the Company
appointed Messrs. Pira Mal Girdhar Lal & Co., hereinafter called the Agency
Firm, as its Managing Agents.
On February 28, 1938, a formal agreement was
entered into between the Company and the Agency Firm. The said Agency Firm was
formed under an instrument of partnership dated February 26, 1938, with 11
partners-3 of them are compendiously described as the "Bombay Group"
and the remaining 8 of them as the "Kanpur Group". With certain
variations in the constitution of the Agency Firm, the said firm functioned as
the Managing Agents of the Company till September 1946. In September 1946
shareholding of the partners of the Agency Firm in the Company was as follows:
Kanpur Group 32,500 shares.
Bombay Group 26,362 shares.
538 Because of certain differences between
the partners, they decided among themselves to sell their shares and to
surrender their Managing Agency. On September 7, 1946, the said 11 partakers
entered into an agreement with the firm of Messrs. Chhuttu Ram & Sons of
Bihar, hereinafter called the Purchaser Firm. Under that agreement it was
provided that 65012 shares held by the 11 partners of the Agency Firm, directly
or through their nominees, should be sold to the Purchaser Firm at Rs. 65 per
share and that the Agency Firm should before November 15, 1946, resign its
'office of Managing Agency of the Company. It was a condition of the agreement
that it should have operation only after the Purchaser Firm or its nominees
were appointed as the Managing Agents of the Company. On October 30, 1946, the
Company held its General Body Meeting and accepted the resignation of the
Agency Firm and by another resolution appointed the Purchaser Firm as the
Managing Agents in its stead. In terms of the agreement, the Purchaser Firm
paid for the entire shareholding of the partners of the Agency Firm at Rs. 65
per share. The appellant is a Hindu undivided family. Its karta was one
Dwarkanath and the present karta is his son Ramji Prasad. The said family was
'one of the II partners of the Agency Firm belonging to 'the Kanpur Group. Out
of the total shareholding the appellant held 11,230 shares. It received the
price for the said shares at the rate of Rs. 65 per share. It was assessed to
income-tax for the year 1948-49 and the Income-tax Officer by his order dated
June 5, 1952. assessed the excess amount of Rs. 2,98,909 realized by the
assessee under the head "income from business", i.e., the difference
in the amount for which it purchased the shares and that for which it sold
them. On appeal, the Appellate Assistant Commissioner of Income-tax confirmed
the same. On further appeal, the Income-tax Appellate Tribunal, Delhi Bench,
held that the said receipt bad to be taxed as "capital gains" under
12B. of the Income-tax Act, 1922, and
directed the Income- tax Officer to modify the assessment in accordance with
its order. The assessee made an application under s. 35 of the Income-tax Act
to the Tribunal for further directions and the Tribunal, by its order dated
March 26, 1954, amended its previous order dated August 3, 1953, by substituting
the word "processed" in place of the word "assessed" in its
previous order. The assessee raised various contentions before the Income-tax
Officer, inter- alia, that the said income was not liable to be taxed under s.
12B of the Income-tax Act under the head "capital gains" and that in
any case in order to determine the amount of capital gains the market value of
the shares only should be taken into consideration, as the price of Rs. 65 per
share included also the consideration for the relinquishment of the managing
agency rights. The Income-tax Officer rejected the said contentions of the
assessee. He redetermined the assessable income under the heading "capital
gains" but did not issue a notice of demand as prescribed in s. 29 of the
Income-tax Act. After making an infructuous attempt to get suitable directions
539 from the Appellate Tribunal, on March 5, 1956, the assessee filed an
application before the Income-tax Officer to issue a notice of demand under s.
29 of the Income-tax Act so that it might prefer an appeal against the same to
the appropriate authority. But the Income-tax Officer refused to issue any such
notice. The assessee preferred an appeal against that order to the Appellate
Assistant Commissioner under s. 30 of the Income-tax Act and that was dismissed
on March 8, 1957, on the ground that it was not maintainable. Meanwhile on
September 27, 1956, the appellant filed an application before the Commissioner
of Income-tax under s. 33A(2) of the Income-tax Act for revising the order of
the Income-tax Officer dated September 28, 1955. On March 28, 1959, the
Commissioner dismissed the revision petition on two grounds, namely, (1) that
it was not clear whether the revision petition under s. 33A of the Income-tax
Act was maintainable, and (ii) on merits. It may be noticed that long before
the revision petition was dismissed, the appeal filed by the assessee against
the order of the Income-tax Officer to the Appellate Assistant Commissioner was
dismissed on March 8, 1957. On November 18, 1957, the attention of the
Commissioner was also drawn to the fact that the Bombay High Court in the case
of a reference to that Court at the instance of the Bombay Group held that the
market value of the shares should be taken into consideration to ascertain the
excess realized on the sale of the shares of the assessee for the purpose of
capital gains tax. The Commissioner ignored that decision in dismissing the
revision. Thereafter, on July 28, 1959, the assessee filed Writ Application No.
2071 of 1959 in the High Court of Judicature at Allahabad, inter alia, for a
writ of certiorari or any other direction or order of like nature to quash the
order of the Income.tax Commissioner, Lucknow, dated March 28, 1959, and the
Order of the Income-tax Officer dated September 28, 1955, and for a writ of
mandamus or any other order or direction of the like nature directing the
Commissioner to pass a fresh order in accordance with the decision of the
Bombay High Court and direct the Income-tax Officer to pass a fresh order in
accordance with law and to issue a notice of demand as required by s. 29 of the
Income-tax Act. The High Court dismissed the said application in limine mainly
on the following three grounds: (1) the affidavit filed in support of the writ
petition was highly unsatisfactory and on the basis of such an affidavit it was
not possible to entertain the petition; (2) the facts given in the affidavit
were incomplete and confused; and (3) even on merits, there was no force in the
revision petition Hence the appeal.
Mr. A.V. Viswanatha Sastri, learned counsel
for the appellant, contended that the affidavit filed in support of the
petition was in accordance with law, and that, even if there were any defects,
the Court should have given an opportunity to the appellant to rectify them;
and that the High Court should have held 540 that the revision against the
order of the Income-tax Officer to the Commissioner was maintainable under s.
33A of the Act, as the appeal against that order to the Appellate Assistant
Commissioner was not maintainable and that it should have directed the
Commissioner to entertain the revision and dispose of it in accordance with law
directing the Income-tax Officer to issue a notice of demand under s. 29 of the
Income-tax Act. He further contended that the High Court went wrong in holding
that the facts in the Bombay decision were different from those in the present
case, for the facts in both the cases were the same and in fact they arose out
of the same transaction, namely, the sale of the shares by the Agency Firm to
the Purchaser Firm.
Mr. Gopal Singh, learned counsel for the
Revenue, while supporting the order of the High Court raised a preliminary
objection, namely, that the order of the Commissioner under s. 33A of the
Income-tax Act was administrative act and, therefore, no writ of certiorari
would lie to the High Court to quash that order under Art.
226 of the Constitution.
We shall first take the preliminary
objection, for if we maintain it, no other question will arise for
Article 226 of the Constitution reads:
" ......... every High Court shall have
power, throughout the territories in relation to which it exercises
jurisdiction, to issue to any person or authority, including in appropriate
cases any Government, within those territories directions, orders or writs,
including writs in the nature of habeas corpus, mandamus, prohibition, quo
warranto and certiorari, or any of them, for the enforcement of any of the
rights conferred by Part III and for any other purpose." This article is
couched in comprehensive phraseology and it exfacie confers a wide power on the
High Courts to reach injustice wherever it is found. The Constitution
designedly used a wide language in describing the nature of the power, the
purpose for which and the person or authority against whom it can be exercised.
It can issue writs in the nature of prerogative writs as understood in England;
but the scope of those writs also is widened by the use of the expression
"nature", for the said expression does not equate the writs that can
be issued in India with those in England, but only draws an analogy from them.
That apart. High Courts can also issue directions. orders or writs other than
the prerogative writs. It enables the High Courts to mould the reliefs to meet
the peculiar and complicated requirements of this county. Any attempt to equate
the scope of the power of the High Court under Art. 226 of the constitution
with that of the English Courts to 541 issue prerogative writs is to introduce
the Unnecessary procedural restrictions grown over the years in a comparatively
small country like England with a unitary form of government into. a vast
country like India functioning under a federal structure. Such a construction
defeats the purpose of the article itself. To say this not to say that the High
Courts can function arbitrarily under this article.
Some limitations are implicit in the article
and others may be evolved to direct the article through defined channels.
This interpretation has been accepted by the
Court in Basappa v. Nagappa(1) and P.J. Irani v. State of Madras(2).
But we are satisfied that this case falls
directly within the confines of the certiorari jurisdiction as understood in
England. It is well settled that a writ of certiorari can be issued only to
quash a judicial or a quasi-judicial act and not an administrative act. It is,
therefore, necessary to notice the distinction between the said two categories
of acts. The relevant criteria have been laid down with clarity by Atkin, L.J.,
in King v. Electricity commissioners(3), elaborated by Lord Justice Scrutton in
Rex v. London County Council(4) and authoritatively restated in Province of
Bombay v. Kusaldas S. Advani(5). The said decisions laid down the following
conditions to be complied with: (1) The body of persons must have legal
authority; (2) the authority should be given to determine questions affecting
the rights of subjects; and (3) they should have a duty to act judicially. So
far there is no dispute. But in decided cases, particularly in India, there is
some mixing up of two different concepts, viz., administrative tribunal and
administrative act. The question whether an act is a judicial act or an
administrative one arises ordinarily in the context of the proceedings of an
administrative tribunal or authority. Therefore, the fact that an order was
issued or an act emanated from an administrative tribunal would not make it any
the less a quasi-judicial act if the aforesaid tests were satisfied. The
concept of a quasi-judicial act has been conceived and developed by English
Judges with a view to keep the administrative tribunals and authorities within
bounds. Parker, J., in R.V. Manchester Legal Aid Committee(1) brought out the
distinction between judicial and administrative acts very vividly in the
"The true view, as it seems to us, is
that the duty to act judicially may arise in widely different circumstances
which it would be impossible, and, indeed, inadvisable, to define exhaustively
....... When, on the other hand, the decision is that of an administrative body
and is actuated in whole or in part by questions of policy, the duty to act
judicially may arise in the course of arriving at that decision. Thus, if in
order to arrive at the decision, the (1)  1 S.C.R. 250.
(2)  2 S.C.R. 169.
(3)  1 K.B. 171.
(4)  2 K.B. 215.
(5)  S.C.R. 621.
(6)  2 Q.B. 413, 428.
542 body concerned had to consider proposals
and objections and consider evidence, then there is the duty to act judicially
in the course of that inquiry ...........................
Further, an administrative body in
ascertaining facts or law may be under a duty to act judicially notwithstanding
that its proceedings have none of the formalities of and are not in accordance
with the practice of a court of law ..............................
If on the other hand, an administrative body
in arriving at its decision at no stage has before it any form of his and
throughout has to consider the question from the point of view of policy and
expediency, it cannot be said that it is under a duty at any stage to act
The relevant principles have been succinctly
stated in Halsbury's Laws of England, 3rd Edn., Vol. 11, at pp. 55 and 56
thus:-- It is not necessary that it should be a court:
an administrative body in ascertaining facts
or law may be under a duty to act judicially notwithstanding that its
proceedings have none of the formalities of, and are not in accordance with the
practice of, a court of law. It is enough if it is exercising, after hearing
evidence, judicial functions in the sense that it has to decide on evidence
between a proposal and an opposition. A body may be under a duty, however, to
act judicially (and subject to control by means of these orders) although there
is no form of lis inter partes before it: it is enough that it should have to
determine a question solely on the facts of the particular case, solely on the
evidence before it, apart from questions of policy or any other extraneous
"Moreover an administrative body, whose
decision is actuated in whole or in part by questions of policy, may be under a
duty to act judicially in the course of arriving at that decision ......... If,
on the other hand, an administrative body in arriving at its decision has
before it at no stage any form of lis and throughout has to consider the
question from the point of view of policy and expediency, it cannot be said
that it is under a duty at any time to act judicially".
These are innumerable decisions of this Court
where it issued a writ of certiorari to quash a quasi-judicial act of an
administrative tribunal or authority. This Court set aside the order of the
Andhra Pradesh State Government approving the order of nationalisation of road
transport made by the Andhra Pradesh Road Transport Undertaking in Gullapalli
Nageswara Rao v. Andhra Pradesh State Road Transport Corporation(1), the order
of the Examination (1)  Supp. 1 S.C.R. 319.
543 Committee cancelling the examination
results on the ground that it did not give opportunity to the examinees to be
heard before the order was made in Board of High School and Intermediate
Education, U.P., Allahabad v. Ghanshyam Das Gupta(1), and the order of the
Revenue Board made in a revision petition against the order of the Deputy
Commissioner impounding the document without hearing the aggrieved party in The
Board of Revenue, U.P. v. Sardarni Vidyawati(2). In all these cases the
Government, the Examination Committee and the Board of Revenue were administrative
bodies, but the acts impugned were quasi- judicial ones, for they had a duty to
act judicially in regard thereto. The law on the subject may be briefly stated
thus: The provisions of a statute may enjoin on an administrative authority to
act administratively or judicially. If the statute expressly imposes a duty on
the administrative body to act judicially, it is a clear case of a judicial
act. But the duty to act judicially may not be expressly conferred but may be
inferred from the provisions of the statute. It may be gathered from the
cumulative effect of the nature of the rights affected, the manner of the
disposal provided, the objective criterion to be adopted, the phraseology used,
the nature of the power conferred or the duty imposed on the authority and
other indicia afforded by the statute. In short, a duty to act judicially may
arise in widely different circumstances and it is not possible or advisable to
lay down a hard and fast rule or an inflexible rule of guidance.
With this background let us look at the
relevant provisions of the Income-tax Act.
Section 33A(2). The Commissioner may, on
application by an assessee for revision of an order under this Act passed by
any authority subordinate to the Commissioner, made within one year from the date
of the order (or within such further period as the Commissioner may think fit
to allow on being satisfied that the assessee was prevented by sufficient cause
from making the application within that period), call for the record of the
proceeding in which such order was passed, and on receipt of the record may
make such inquiry or cause such inquiry to be made, and, subject to the
provisions of this Act, pass such order thereon, not being an order prejudicial
to the assessee, as he thinks fit.
Provided that the Commissioner shall not
revise any order under this sub-section if--- (a) where an appeal against the
order lies to the Appellate Assistant Commissioner or to the Appellate Tribunal
but has not been made, the time within which such appeal may be made has not
expired,  Supp. 3 S.C.R. 36. (2)  Supl. 3 S.C.R. 50' 544 or, in the
case of an appeal to the Appellate Tribunal, the assessee has not waived his
right of appeal, or (b) where an appeal against the order has been made to the
Appellate Assistant Commissioner, the appeal is pending before the Appellate
Assistant Commissioner, or (c) the order has been made the subject of an appeal
to the Appellate Tribunal.
Provided further that an order by the
Commissioner declining to interfere shall be deemed not to be an order
prejudicial to the assessee.
Under this sub-section an assessee may apply
to the Commissioner for revision of an order under the Act by an authority
subordinate to him. Such application shall be filed within one year from the date
of the order or within such further period as the Commissioner may think fit to
allow. On receipt of such an application the Commissioner may call for the
record of the proceeding in which such order was made and make such enquiry or
cause such enquiry to be made. After such enquiry he can make an order not to
the prejudice of the assessee but to his benefit. Such revision is not
maintainable if the time prescribed for an appeal against such an order to the
appropriate authorities has not expired or if an appeal against such an order
is pending before the appropriate authorities. The scope of the revision is,
therefore, similar to that prescribed under different statutes. Prima facie the
jurisdiction conferred under s. 33A(2) of the Act is a judicial one. The order
that is brought before the Commissioner affects the right of the assessee. It
is implicit in revisional jurisdiction that the revising authority shall give
an opportunity to the parties affected to put forward their case in the manner
The nature of the jurisdiction and the rights
decided carry with them necessarily the duty to act judicially in disposing of
the revision. The fact that the Commissioner cannot make an order to the
prejudice of an assessee does not possibly change the character of the
proceeding. Though the Commissioner may not change the order of the inferior
authority to the prejudice of the assessee, he may not give the full relief
asked for by the assessee.
But it is said that the Commissioner
exercising jurisdiction under s. 33A of the Act is only functioning as an
administrative authority and all his orders made thereunder partake that
character. Reliance is placed on the decision of the Judicial Committee in
Commissioner of Income-tax, Punjab, N.W.F. & Delhi Provinces, Lahore v.
Tribune Trust, Lahore(1). There, the Judicial
Committee held that the assessments, which were duly made by the Income-tax
(1947) L.R. 74 I.A. 306. 317, 318.
Officer in the proper exercise of his duty,
were not a nullity, but were validly made and were effective until they were
set aside; and that a reference to the High Court did not lie from an order
under s. 33 of the Act unless that order was prejudicial to the assessee in the
sense that he was in a worse position than before the order was made. But the
Board incidentally made the following observations:
"On the contrary, s. 33 follows a number
of sections which determine the rights of the assessee and is itself, as its
language clearly indicates, intended to provide administrative machinery by
which a higher executive officer may review the acts of his subordinates and
take the necessary action on such review. It appears that, as a matter of
convenience, a practice has grown up under which the commissioner has been
invited to act "of his own motion", under the section, and where this
occurs a certain degree of formality has been adopted. But the language of the
section does not support the contention, which lies at the root of the third
question and is vital to the respondent's case, that it affords a claim to
Continuing the same idea that Board observed:
"The Commissioner may act under s. 33
with or without invitation of the assessee: if he does so without invitation,
it is clear that, if he does nothing to worsen the position of the assessee,
the latter can acquire no right: the review may be a purely departmental matter
of which the assessee knows nothing. If, on the other hand, the commissioner
acts at the invitation of the assessee and again does nothing to worsen his
position, there is no justification for giving him a new right of appeal".
These observations were made in the context
of a question whether a reference would lie to the High Court against an order
of the Commissioner. But the question whether the order of the Commissioner
under s. 33 of the Act was a judicial or a quasi-judicial act subject to the
prerogative writ of certiorari was neither raised nor decided in that case:
that question was not germane to the enquiry before the Board, for the appeal
did not arise out of any order made in a writ of certiorari. Section 33, which
was considered by the Privy Council was repealed by the Amending Act of 1939;
but by Act XXIII of 1941 the revisional powers of the Commissioner were
restored. Section 33-A took the place of s. 33 with certain modifications.
Sub-section (1) of s. 33A provided for the Commissioner acting suo motu; and
sub-s. (2)thereof, on the application of the assessee. Under this section the
Commissioner can exercise the revisional jurisdiction subject to the conditions
While s. 33 only provided for the suo motu
exercise of the jurisdiction, s. 33A enables an assessee to apply to the
Commissioner to revise the order of his subordinate officer.
546 Some of the High Courts, under the
impression that the Privy Council held that the act of the Commissioner was an
administrative one, ruled that a writ of certiorari. would not lie to quash the
order of the Commissioner under s. 33A of the Act: see Sitalpore Colliery
Concern Ltd. v. Union of India(1); Additional Income-tax Officer, Cuddapah v. Cuddapah
Star Transport Co. Ltd.(2); and Suganchand Saraogi v. Commissioner of
Income-tax, Calcutta(3). They did not consider the scope of the revision before
the Commissioner and whether the orders made thereunder satisfied the well
settled tests of "judicial act" laid down by this Court. In our view,
for the reasons mentioned by us earlier, the said judgments were decided
That apart, on the assumption that the order
of the Commissioner under s. 33-A of the Act was an administrative one, the
respondent would not be in a better position. What the appellant complains is
that the Income-tax Officer in terms of s. 29 of the Act is under an obligation
to issue a demand notice. If the said contention was correct, he did not
discharge the duty imposed on him by the statute. If the Commissioner only made
an administrative order in refusing to give any direction to the Income-tax
Officer, it would not exonerate the said officer from discharging his statutory
duty. In that event the assessee would certainly be entitled to approach the
High Court under Art. 226 of the Constitution for the issue of a writ of
mandamus or other appropriate direction to the Income-tax Officer to discharge
his statutory duty. We, therefore, reject the preliminary objection of the
The High Court mainly dismissed the writ
petition on the ground that the affidavit flied in support of the writ petition
was highly unsatisfactory and that on the basis of such an affidavit it was not
possible to entertain the petition. In exercise of the powers conferred by Art.
225 of the Constitution and of other powers enabling it in that behalf the High
Court of Allahabad framed the Rules of Court. Chapter XXII thereof deals with the
procedure to be followed in respect of a proceeding under Art. 226 of the
Constitution other than a writ in the nature of habeas corpus. The relevant
rule is sub-r. (2) of r. 1 of Ch. XXII, which reads:
"The application shall set out concisely
in numbered paragraphs the facts upon which the applicant relies and the
grounds upon which the Court is asked to issue a direction, order or writ, and
shall conclude with a prayer stating clearly, so far as circumstances permit,
the exact nature of the relief sought.
The application shall be accompanied by an
affidavit or affidavits in proof of the facts referred to in the application.
Such affidavit or affidavits shall be restricted to matters which are within
the deponent's own knowledge".
(1)  32 I.T.R,. 26.
(2)  40 I.T.R. 200.
(3)  53 I.T.R. 717.
547 The application filed in the High Court
certainly complied with the provisions of sub-r. (2) of r. 1 of Ch. XXII of the
Rules of Court of the Allahabad High Court. It set out concisely in numbered
paragraphs the facts upon which the applicant relied, the grounds on which the
Court was asked to issue the direction and the exact nature of the relief
sought. But it is said that the affidavit filed in support of the application
did not speak to matters which were within the deponent's own knowledge. Dhruva
Das, the deponent of the affidavit, is a relative of the petitioner and he also
looked after the case on his behalf as his pairokar and was fully conversant
with the facts. He solemnly affirmed and swore as follows:
"I Dhruva Das, aforesaid deponent do
hereby solemnly affirm and swear that the contents of paras 1, 2, 3 and 50
partly are true to my personal knowledge, that the contents of paras. 4, 5, 6,
7, 8, 9, 10. 11,
12. 13, 14, 15, 16, 20, 21, 25, 27, 29
partly, 31, 32, 34, 37, 38.41, 42, 44 are based on 46 and 50 partly and paras
17, 18, 19, 22, 23, 24, 26, 28, 29, partly 30, 33', 35, 36, 39, 40, 43, 48
partly are based on perusal of the record, those of paras 47, 48 partly 49 and
50 partly are based on legal advice, which I believe to be true, that no part
of this affidavit is false and nothing material has been concealed in it".
In paragraphs which are based on a perusal of
the record the deponent referred to the relevant orders of the Income- tax
authorities and also to the relevant agreements and the copies of the said
orders and agreement were also annexed to the affidavit as schedules. It is not
clear from the schedules whether certified copies or the original of the orders
received by the appellant were filed. The said agreements and the orders afford
sufficient basis to appreciate the case of the appellant and for disposing of
the same. "Deponent's own knowledge" in r. 1(2) of Ch. XXII of the
Rules is wide enough to comprehend the knowledge of the appellant derived from
a perusal of the relevant documents; and the affidavit in express terms
disclosed and specified the documents, the source of the appellant's knowledge.
He swore in the affidavit that the documents annexed to the affidavit were true
copies of public documents. If they are certified copies of public documents,
they prove themselves; if they are original of the orders sent to the
appellant, the deponent, as his agent, speaks to their receipt. It is,
therefore, not correct to say that the facts stated in the affidavit are not
based on the deponent's knowledge. The other facts alleged in the affidavit are
only introductory in nature and if they are excluded the result will not be
affected. That apart, if the affidavit was defective in any manner the High
Court, instead of dismissing the petition in limine, should have given the
appellant a reasonable opportunity to file a better affidavit complying with
the provisions of r. 1 of Ch. XXII of the Rules. We cannot, therefore, agree
with the High Court that the petition was liable to be dismissed in limine in
view of the alleged defects in the affidavit.
548 Nor can we agree with the High Court that
the facts given in the affidavit are incomplete and confused. On the other
hand, a careful perusal of the affidavit, along with the documents annexed
thereto, discloses clearly the appellant's case: it gives the necessary facts
and the reliefs sought for. We do not find any missing link in the narrative of
facts or any confusion in the nature of the reliefs asked for.
We cannot also agree with the High Court that
the decision of the Bombay High Court in Baijnath Chaturbhuj v.
Commissioner of Income-tax, Bombay City 11(1)
was given on different facts and that it was impossible to contend that any
part of the money paid by Messrs. Chaturam & Sons was really compensation
for the managing agency rights. The Bombay decision was given in the context of
the dispute between the Bombay Group and the Income-tax authorities and was
based upon the consideration of the very documents which are the basis of the
appellant's claim. We do not propose to express any opinion on the correctness
or otherwise of that decision. But, the fact that a Division Bench of one of
the High Courts in India had taken the view in favour of the appellant
indicates that the question raised is, in our view, an arguable one and it
requires serious consideration.
We are satisfied that this is not a case
where the High Court should have dismissed the writ petition in limine. We find
in the decree issued by the High Court that Sri Gopal Behari appeared on behalf
of the opposite parties;
presumably he appeared as the appellant must
have issued notice in terms of r. 1(4) of Ch. XXII of the Rules. Be that as it
may, the High Court did not finally decide two important questions that really
arose 'for consideration before it, namely: (i) whether a revision lay to the
Commissioner under s. 33-A(2) of the Act against the order of the Income-tax
Officer; and (ii) whether the Income-tax Officer should have issued a demand
under s. 29 of the Act.
If a revision lay to the Commissioner, the
Commissioner should have considered the second question before dismissing it.
Therefore, the question is whether a revision lay to the Commissioner under s.
33-A(2) of the Act. A revision does not lie to the Commissioner against an
order where an appeal against that order lies to the Appellate Assistant
Commissioner but has not been made and the time within which such an appeal may
be made has not expired or where an appeal against the order has been made, it
is pending before him. It follows that if no appeal lies against the order an
officer to the Appellate Assistant Commissioner, the Commissioner can revise
that order under s. 33-A of the Act.
In the present case, pursuant to the
directions of the, Tribunal, Delhi Bench, the Income-tax Officer determined the
assessee's capital gains under s. 12-B of the Act; but the Income-tax Officer
did not make any order under s. 23(3) of the Act, nor (1957) 31/.T.R. 643.
549 did he issue a regular notice of demand
as prescribed under s. 29 of the Act. The result was, no appeal lay against the
computation made by the Income-tax Officer to the Appellate Assistant
Commissioner. Indeed, on March 8, 1957, the Appellate Assistant Commissioner
rejected the appeal filed by the appellant as being not maintainable. As no
appeal lay to the Appellate Assistant Commissioner against the calculations
made by the Income-tax Officer, the Commissioner had certainly power to revise
the said order.
On March 5, 1956, the appellant flied an
application requesting the Income-tax Officer to issue a notice of demand as
required by s. 29 of the Act. But the said Officer declined to issue the notice
of demand. The question is whether he was bound to issue a notice of demand
under s. 29 of the Act. Section 29 of the Act reads:
"When any tax, penalty or interest is
due in consequence of any order passed under or in pursuance of this Act, the
Income-tax Officer shall serve upon the assessee or other person liable to pay
such tax, penalty or interest a notice of demand in the prescribed form
specifying the sum so payable".
Under this section, if a tax is due in
consequence of an order from an assessee, the Income-tax Officer is under a
duty to serve on him a notice of demand. Pursuant to the directions given by.
the Tribunal the Income-tax Officer made fresh calculations under the head
'capital gains' and ascertained the amount due from the assessee. In the
circumstances, pursuant to the said calculation, he should have passed an order
and issued a notice of demand to the assessee. In not doing so, it must be held
that the Income-tax Officer did not discharge his duty which he was bound to do
under the Act; with the result he had become amenable to a writ of mandamus
directing him to do what he should have done under the ,Act.
In the result, the order of the High Court is
set aside and we issue a writ of certiorari quashing the order of the
Commissioner and a writ of mandarnus directing the Income- tax Officer to pass
an order and issue a notice in accordance with law. The appellant will have his