Commissioner
of Income Tax Bhubaneshwar & Anr Vs. Parmeshwari Devi Sultania & Ors
[1998] INSC 159 (6
March 1998)
Sujata
V. Manohar, D.P. Wadhwa D.P. Wadhwa, J.
ACT:
HEAD NOTE:
THE
6TH DAY OF MARCH, 1998 Present :
Hon'ble
Mrs. Justice Sujata V. Manohar Hon'ble Mr. Justice D.P. Wadhwa Ranbir Chandra,
C.V.S. Rao, (Ms. Shashi Kiran) Adv. for B.K. Prasad, Advs. for the appellants
N.K. Bisht, Adv (NP), for the Respondents Joseph Vellapally, Sr. Adv., and R.K.
Kapoor, Adv. with him for the Amicus Curiae appointed by the Courts.
The
following judgment of the Court was delivered:
Commissioner
of Income Tax, Bhubaneshwar and Union of India, Ministry of Finance have filed
this appeal against the judgment dated October 24, 1994 of the Orissa High
Court which the High Court dismissed their revision and affirmed the order of
the subordinate court rejecting the plea of the Revenue that a suit for
partition filed by the first respondent was not maintainable in view of the bar
of in Section 293 of the Income Tax Act, 1961 (for short, the `Act').
Respondent
No.1, as the plaintiff, filed a suit for partition against 7 defendants,
defendants 6 and 7 being respectively Union of India through Finance Secretary
and Commissioner of Income Tax, Orissa, now the appellant before us. Defendants
1 and 2 are step-brothers and defendants 3 to 5 are step-sisters of the
plaintiff. Plaintiff said that she was the daughter of Bansidhar Agarwal from
his first wife, while defendants 1 to 5 were the children of Bansidhar Agarwal
from his second wife. Defendant No. 1 is Babulal whose residential and business
premises were subjected to search and seizure assets including certain gold
ornaments, subject matter of the suit filed by the plaintiff, were seized. In
the suit the plaintiff had prayed for partition of those very gold ornaments.
Plaintiff said that her mother died in 1938 and that at that time she was
possessed of 200 tolas of gold ornaments which was her stridhan. Her mother
made a will bequeathing gold ornaments to the plaintiff and other children of Bansidhar
form his second wife in proportion to number of daughters of each of such
children to meet the dowry demand and marriage requirements of their daughters.
These ornaments were kept in the custody of father of the plaintiff who died on
February 10, 1990. After his death the ornaments came
in the custody of Babulal Agarwal, the first defendant. The family decided to
partition the ornaments. At that time there were 14 grand- daughters who were
the daughters of the plaintiff and defendants 1 to 5. Since the plaintiff had 5
daughters she was entitled to 5/14th share in the ornaments. But before the
partition could take place, Income Tax Officer raided the house of the first
defendant on March 23,
1990 and seized those
gold ornaments which weighed 2128 gms. along with other assets. Plaintiff said
that she filed a petition before the Income Tax Officer for return of the
ornaments but he refused. The plaintiff then issued a notice to the
Commissioner of Income Tax, Orissa, defendant No.7, who, it is alleged, assured
her that justice would be done to her claim and had stated that her case would
be disposed of within three months. Nothing happened in spite of the reminders
and no decision was taken. This gave cause of action to the plaintiff. She served
a notice under Section 80 of Code of Civil Procedure on Defendants 6 and 7 and
thereafter filed the suit.
From
the facts, it is quite obvious that the plaintiff would not have filed the suit
for partition as there was no dispute to her claim by other relatives but for
the fact that gold ornaments were then in the custody of the Income Tax
Department. Notices of the suit were served on Defendants 6 and 7. They filed
an application in the Court on August 7, 1992
challenging the very maintainability of the suit in view of Section 293 of the
Act. The Section is as under :
"293.
Bar of suits in civil courts.
No
suit shall be brought in any civil court to set aside or modify any proceeding
taken or order made under this Act, and no prosecution, suit or other proceeding
shall lie against the Government or any officer of the Government for anything
in good faith done or intended to be done under this Act." As to why the
suit was not maintainable, reference was made to the operations conducted under
Section 132 of the Act and the order passed in those proceedings under the Act.
Under
the authorisation issued by the Director of Income Tax (Investigation), Hyderabad under sub-section (1) of Section
132, search and seizure operations were conducted in the residence-cum-business
premises of Babulal and also at the business premises of a company of which he
was the Managing Director. Two bank lockers in the name of plaintiff would not
have filed the suit for partition as there was no dispute to her claim by other
relatives but for the fact that gold ornaments were then in the custody of the
Income Tax Department. Notices of the suit were served on Defendants 6 and 7.
They filed an application in the Court on August 7, 1992 challenging the very
maintainability of the suit in view of Section 293 of the Act. The Section is
as under :
"293.
Bar of suits in civil courts. No suit shall be brought in any civil court to
set aside or modify any proceeding taken or order made under this Act, and no
prosecution, suit or other proceedings shall lie against the Government or any
officer of the Government for anything in good faith done or intended to be
done under this Act." As to why the suit was not maintainable. reference
was made to the operations conducted under Section 132 of the Act and the order
passed in those proceedings under the Act.
Under
the authorisation issued by the Director of Income Tax (Investigation), Hyderabad under sub-section (1) of Section
132, search and seizure operations were conducted in the residence-cum-business
premises of Babulal and also at the business premises of a company of which he
was the Managing Director. Two bank lockers in the name of Babulal and his
brother Girdharilal in the Andhra Bank were also searched.
These
search operation were carried on from March 23, 1990 to March 26, 1990. Case, Jewellery, diamond ornaments, silver coins and
ingots were found and seized. Statement of Babulal was recorded under
sub-section (4) of Section 132 of the Act. In respect to cash and jewellery Babulal
admitted having concealed income of Rs. 7,00,000/- which according to him was
the value of the gold ornaments found in excess of 515 tolas which had been
disclosed by him and his family members in his wealth-tax return. He offered an
additional income of Rs. 3,50,000/- in his name and the same amount in the name
of his brother on account of undisclosed investment in acquisition of gold
ornaments. During the course of investigation, Babulal also gave written
submission, Regarding gold ornaments, his stand now was that gold ornaments
weighing 2128 gms. belonged to Mani Devi who was the first wife of his father
and as per her wished, h is father was the custodian of this jewellery on
behalf of the plaintiff who was the only daughter of his father from his first
wife and also on behalf of the children to be gotten after remarriage of his
father. His contention was that this jewellery had been kept by his father who
was now no longer alive. After completion of the investigation, the Income Tax
Officer passed an order under Section 132(5) of the Act holding that total
liabilities on account of tax, interest and penalty of Babulal came to Rs,
56,079/- as against which value of the assets seized during the course of
search and seizure operation which included the gold ornaments in question to
be retained with the Department. The Income Tax Officer disbelieved the version
of the Babulal that gold ornaments in question were owned by his step-mother
and how she wished to distribute the same among her daughter and other children
that may be born to the second wife of her husband. According to Babulal, as
per his second version, the gold ornaments remained in the custody of his
father from 1938 till 1990, when he died without these having been utilised as
per the wishes of his step-mother, natural mother of the plaintiff. The assets
retained by the order under sub-section (5) of Section 132 are to be dealt with
in accordance with the provisions of Section 132B of the Act.
An
order was passed under sub-section (5) of Section 132 of the Act can be
objected to under sub-section (11) thereof to the Commissioner of Income Tax.
We may set out Section 132, in the relevant part, as under :
"132.
Search and seizure.-
(1)...
(2)
...
(3)
...
(4)
The authorised officer may, during the course of the search or seizure, examine
on oath any person who is found to be in possession or control of any books of
account, documents, money, bullion, jewellery or other valuable article or
thing and any statement made by such person during such examination may thereafter
be used in evidence in any proceeding under the Indian Income tax Act, 1992 (11
of 1922), or under this Act.
Explanation : For the removal of doubts, it is
hereby declared that the examination of any person under this sub-section may
be not merely in respect of any books of account, other documents or assets
found as a result of the search, but also in respect of all matters relevant
for the purposes of any proceeding under the Indian Income-tax Act, 1922 (11 of
1922), of under this Act.
(4A)
Where any books of account, other documents, money, bullion, jewellery or other
valuable article or thing are or is found in the possession or control of any
person in the course of a search, it may be Presumed—
(i)
that such books of account, other documents, money, bullion, jewellery or other
valuable article or thing belong or belongs to such person;
(ii) that
the contents of such books of account and other documents are true; and
(iii)
that the signature and every other part of such books of account and other
documents which purporting to be he handwriting of any particular person or
which may reasonably be assumed to have been signed by, or to be in the
handwriting of, any particular person, are in that person's handwriting of, any
particular person, are in that person's handwriting, and in the case of a
document stamped, executed or attested, that it was duly stamped and executed
or attested by the person by whom it purports to have been so executed or
attested.
(5)
Where any money, bullion, jewellery or other valuable article or thing
hereafter in this section and in sections 132A and 132B referred to as the
assets is seized under sub-section (1) or sub- section (1A), the Income-tax
Officer, after affording a reasonable opportunity to the person concerned of
being heard and making such enquiry as may be prescribed, shall, within one
hundred and twenty days of the seizure, make an order, with the previous
approval of the Deputy Commissioner .—
(i) estimating
the undisclosed income (including the income from the undisclosed property in a
summary manner to the best of his judgment on the basis of such materials as
are available with him;
(ii) calculating
the amount of tax on the income so estimated in accordance with the provisions
of the Indian Income-tax Act, 1922 (11 of 1922), or this Act;
(iia)
determining the amount of interest payable and the amount of penalty imposable
in accordance with the provisions of the Indian Income-tax Act, 1922 (11 of
1922), or this Act, as if the order had been the order of regular assessment;
(iii)
specifying the amount that will be required to satisfy any existing liability
under this Act and any one or more of the Acts specified in clause (a) of
sub-section (1) of section 230A in respect of which such person is in default
or is deemed to be in default, and retain in his custody such assets or part
thereof as are in his opinion, sufficient to satisfy the aggregate of the
amounts referred to in clauses (ii),, (iia) and (iii) and forthwith release the
remaining portion, if any, of the assets to the person from whose custody they
were seized :
Provided
that it, after taking into account the materials available with him, the
materials available with him, the Income-tax Officer is of the view that it is
not possible to ascertain to which particular previous year or years such
income or any part thereof relates, he may calculate the tax on such income of
part, as the case may be, as if such income or part were the total income
chargeable to tax at the rates in force in the financial year in which the
assets were seized and may also determine the interest or penalty, if any,
payable or imposable accordingly :
Provided
further that where a person has paid or made satisfactory arrangements for
payment of all the amounts referred to in clause (ii), (iia) and (iii) or any
part thereof, the Income-tax Officer may, with the previous approval of the
Chief Commissioner or Commissioner, release the assets or such part thereof as
he may deem fit in the circumstances of the case.
(6)
The assets retained under sub- section (5) may be dealt with in accordance with
the provisions of section 132B.
(7) If
the Income-tax Officer is satisfied that the seized assets or any part thereof
were held by such person, for or on behalf of any other person, the Income-tax
Officer may proceed under sub- section (5) against such other person and all
the provisions of this section shall apply accordingly.
XXX XXX
XXX (11) If any person objects for any reason to an order made under sub-
section, he may, within thirty days of the date of such order, make an
application to the Chief Commissioner or Commissioner, stating therein the
reasons for such objection and requesting for appropriate relief in the matter.
132B.
Application of retained assets-- (1) The assets retained under sub- section (5)
of section 132 may be dealt with in the following manner, namely :- (i) The
amount of the existing liability referred to in clause (iii) of the said sub-
section and the amount of the liability determined on completion of the regular
assessment or reassessment for all the assessment years relevant to the
previous years to which the income referred to in clause ((i) of that sub-
section relates including any penalty levied or interest payable in connection
with such assessment or reassessment and in respect of which he is in default
or is deemed to be in default may be recovered out of such assets.
(ii)
If the assets consist solely of money, or partly of money and partly of other
assets, the Assessing Officer may apply such money in t he discharge of the
liabilities referred to in clause (i) and the assessee shall be discharged of
such liability to the extent of the money so applied.
(iii)
The assets other than money may also be applied for the discharge of any such
liability referred to in clause (1) as remains undischarged and for this
purpose such assets shall be deemed to be under distraint as if such distraint
was effected by the Assessing Officer of, as the case may be, Tax Recovery
Officer under authorisation from the Chief Commissioner under sub-section (5)
of section 226 and the Assessing Officer or, as the case may be, Tax Recovery
Officer may recover the amount of such liabilities by the sale of such assets
and such sale shall be effected in the manner laid down in the Third Schedule.
(2)
Nothing contained in sub- section (1) shall preclude the recovery of the amount
of liabilities aforesaid by any other mode lain down in this Act.
(3)
Any assets or proceeds thereof which remain after the liabilities referred in
clause (i) of sub- section (1) are discharged shall be forthwith made over or
paid to the persons from whose custody the assets were seized.
(4)(a)
The Central Government shall pay simple interest at the rate of fifteen per
cent per annum on the amount by which the aggregate of money retained under
section 132 and of the proceeds, if any, of the assets sold towards the
discharge of the existing liability referred to in clause (iii) of sub-section
(5) of that section exceeds the aggregate of the amounts required to meet the labilities
referred to in clause (i) of sub-section (1) of this section.
(b)
Such interest shall run from the date immediately following the expiry of the
period of six months from the date of the order under sub-section (5) of
section 132 to the date of the regular assessment of reassessment referred to
in clause (i) of sub-section (1) or, as the case may be, to the date of last of
such assessments or reassessments." In view of the proceedings conducted
under Section 132 of the Act and order having been passed under sub-section (5)
of Section 132 thereof and seized assets including the gold ornaments, subject
matter of the suit ordered to be retained, the Revenue objected to the
maintainability of the suit and said that it was clearly barred by Section 293 of
the Act and a civil court had no jurisdiction to try such a suit under Section
9 of the Code of Civil Procedure. Section 9 of the Code imparts jurisdiction on
a civil court to try of suits of the civil nature excepting suit of which their
cognizance is either expressly or impliedly barred.
The
Subordinate Judge framed and tried the preliminary issue on the maintainability
of the suit. He observed that Section 293 of the Act could not be a blanket bar
for all types of civil suit brought for redress against infringement of a legal
right for which no remedy was prescribed under the Act. According to him, the
claim of the plaintiff as set out in the suit had not been adjudicated by
defendant No.7 and on that account legal right of the plaintiff stood violated
and she suffered legal injury which entitled her to judicial process to file a
suit. Thus, according to the learned Subordinate Judge, there is no remedy in
the Act for redressal of the grievance of the plaintiff and the relief which
the plaintiff claimed in the suit could not be granted to her in the Act. He,
therefore, held the suit to be maintainable. Commissioner of Income Tax and
Union of India aggrieved of this order filed a revision in the Orissa High
Court. The learned Single Judge upheld the order of the Subordinate Judge and
dismissed the revision. High Court did note the fact that the plaintiff filed a
petition before the Income Tax Officer for returning the seized gold ornaments
but the prayer was refused and that thereafter she issued a notice to the
Commissioner of Income Tax and when that yielded no result, she filed the suit
for partition of the suit properties. High Court also noticed that the order
passed under sub-section (5) of Section 132 of the Act was not appealed against
and had become final and further that the assessment proceedings were still
pending before the Deputy Commissioner, Income Tax (Assessment). High Court
referred to a decision of this Court in Dulhabhai vs. State of Madhya Pradesh [(1968) 3 SCR 662 - AIR 1969 SC 78]
wherein seven principles were laid down regarding exclusion of jurisdiction of
a civil court. According to the High Court, the suit filed by the plaintiff was
not to set aside or modify the order passed by the Income Tax Officer under
Section 132(5) of the Act and had she filed suit for that purpose, the plaint
could have been rejected at the threshold in the face of the bar contained in
Section 293 of the Act. A perusal of entire provision of Section 132 would show
that it did not give finality to any order passed under sub-section (5)
thereof, though the order could be varied or modified by the Chief Commissioner
or Commissioner, as the case may be, but even that order did not give finality
under the Act. High Court said that :
"it
has to be borne in mind that section 132 of the Act relates to the
pre-assessment stage. In order to oust the jurisdiction of the civil court in
the case at hand one has to examine whether the Income tax Officer under
sub-section (11) of Section 132 would be able to grant the relief claimed by
opposite party No.1 that the seized gold ornaments are subject to partition, it
being the stridhan property of her mother who bequeathed the same in a will. As
the matter, I am of the view, neither the Income-tax Officer nor the named
authority under sub- section (11) of section 132 would be able to grant the
aforesaid relief. Opposite Party No.1 is not an assessee and she is a third
party so far as the proceeding initiated against opposite party No.2 under
Section 132 of the Act is concerned." High Court also held that although
Section 132 provided for a remedy by way of challenge before the named
authority under sub-section (11) of Section 132 of the Act, plaintiff could not
redress her grievance because the relief of partition claimed by her in the
suit could not be granted by the statutory machinery provided in the Act.
We do
not think that the High Court approached the question in its proper
perspective. It failed to consider the effect of the decree if passed in the
suit on the order under Section 132(5) of the Act or other proceedings under
Section 132B of the Act. When Section 293 originally stood, it provided that
"no suit shall be brought in any civil court to set aside or modify any
assessment or order made under this Act". The word "assessment"
was omitted and the words "proceeding taken" were inserted in its
place. This made the section more comprehensive in nature. Direct effect of the
decree in the suit would be that the gold ornaments, subject matter of this
suit, would be taken out of the order of the Income Tax Officer under Section
132 (5) of the Act and would not be available to be applied in proceedings
under Section 132B of the Act. It is immaterial if the proceeding under Section
132 gives no finality to the order passed under Section 132 (5) of 132(11) of
the Act. It is not the case of the Revenue that Income Tax Authority can grant
decree for partition. It is not also material for the decision of the case if
the will now set up by the plaintiff was genuine or not. The question that felt
squarely for consideration was the right or the plaintiff as a third party in
the proceedings under Section 132 of the Act. If we analyse the section, the
following steps are visualise :
"(1)
search is conducted under the authorisation of the named authority;
(2) seizure
of the assets, books of accounts, documents etc. in pursuance thereto;
(3) to
examine on oath any person during the course of search or seizure operations
who is found to be in possession or control of any of the assets, books of account,
documents etc.;
(4) statements
so recorded can be used in evidence in any proceeding under the Act;
(5)
there is a presumption that assets, books of account or documents found in
control of any person in the course of search belong to him and that the
contents of books of account and documents are true and that signatures, books
of account and documents which purported to be in the writing of any particular
person are signed or in the hand- writing of that particular person;
(6)
after affording a reasonable opportunity of being heard and after making
enquiry as prescribed, the Income Tax Officer is to pass an order keeping in
view the requirements of sub-section (5) of Section 132 of the Act;
(7) if
the Income Tax Officer passes order for retention of assets, these are to be
dealt with in accordance with Section 132B;
(8) if
the Income-tax Officer is satisfied that the seized assets or any part thereof
belongs to any other person, the Income-tax Officer may proceed under sub-
section (5) against any such person; and
(9) if
any person objects for any reason to the order made under sub- section (5), he
can approach the Chief Commissioner or Commissioner for redressal of his
grievance.
A
perusal of the order passed under Section 132(5) would show that the Income-tax
Officer was not satisfied that the subject gold ornaments belonged to any other
person and not to Babulal. It was, therefore, not necessary for him to proceed
under sub-section (7) of Section 132 of the Act.
However,
the plaintiff was well aware of the proceedings under Section 132 and she did
approach the Income-tax Officer, as aforesaid, who rejected her petition. In
any case, she could have approached the Chief Commissioner or Commissioner
under sub-section (11), if she had any objection for any reason to the order
made under sub-section (5) of Section 132 of the Act. We do not think
sub-section (11) is confined to only that person who was subjected to search
and seizure operation and against whom the order under sub-section 132(5) was
passed. The words "any person" appearing in sub-section (11) of
Section 132 of the Act are significant and even a third party can made an
application to the Chief Commissioner or Commissioner giving reasons for his
objection to the order and seeking appropriate relief in the matter. This
remedy the plaintiff did not avail. When the plaintiff was unable to get the
release of the seized gold ornaments, allegedly belonging to her mother, under
the provisions of the Act, she could not be filling a partition suit indirectly
get a decree to have a finding that the gold ornaments belonged to her mother
and that she had right to claim her share therein. If she succeeds in her claim
this will have direct effect of getting that order of the Income- tax Officer
under Section 132(5) of the Act set aside or modified to that extent. This
Section 293 does not permit.
The
decree if passed in a suit would not only effect 5/14th share of the plaintiff
which she was seeking on partition of the gold ornaments, but also whole of the
ornaments weighing 2128 gms would get effected and taken out of the order under
sub-section (5) of Section 132 of the Act. Mr, Vellapalli, who at out request,
appeared amicus curiae submitted that one had to see if the suit was filed
before or after the conclusion of the assessment proceedings. He said it was a
suit for title and not, in any way, for setting aside the order passed by the
Income-tax officer, even though as a consequence of an ultimate decree, it
might affect the working of that order. He said form of the suit was to be seen
if it is maintainable or not and that the jurisdiction of the civil court is
decided as to how suit is framed.
According
to Mr. Vellapalli, purpose of Income-tax proceedings is to determine the tax
liability of the assessee and if liability is created, then to recover that and
assets are to be retained but that was not an issue before the civil court. He
also referred to Schedule 2 of the Act to contend that the Act did not
altogether bar a civil suit. It is difficult to accept such submissions. We
think Section 293 is quite specific and does not admit of any ambiguity if
ultimately a suit is to result in a decree or order which sets aside or
modifies any proceeding taken or order made under the Act, that suit would not
be maintainable. We are not concerned with the frame of the suit as such but to
see the ultimate result to which the suit as such but to see the ultimate
result to which the suit would lead to. In the present case, both the
Commissioner of Income-tax and Union of India have been impleaded as
defendants. On pleadings of the parties, an issue will have to be framed on the
validity of proceedings under Section 132 of the Act which cannot be permitted
in view of the bar contained in Section 293 of the Act.
In
Raleigh Investment Co., Ltd. vs. Governor-General in Council [(1947) 15 ITR 332
(PC), a suit was filed by Raleigh Investment Company Ltd. claiming repayment of
Rs. 4, 35, 295/-, part of a larger sum paid by it under an assessment of
Income-tax made upon it. The basis of this claim was that in the computation of
assessable income, effect had been given to a provision of the Income-tax Act,
1992 which in the submission of the plaintiff was ultra vires the legislature
and that the assessment was, therefore, wrong.
One of
the contention raised was that the suit was barred by reason of Section 67 of
the Income Tax Act, 1922. Section 67 contained bar of suits in civil court.
Section 67 provided as under :
"67.
Bar of suits in Civil Court.- No suit shall be brought in any Civil Court to
set aside or modify any assessment made under this Act, and no prosecution suit
or other proceeding shall lie against any officer of the Government for
anything in good faith done or intended to be done under this Act." The
Court held that though in form the relief claimed did not profess to modify or
set aside the assessment, in substance the suit was directed exclusively to a
modification of the assessment and was barred by Section 67 of the Indian
Income-tax Act. In Kamala Mills Ltd. vs. State of Bombay [(1965) 56 ITR 643
(SC)], plaintiff, the appellant filed a suit claiming to recover certain amount
paid as sales tax on the ground that it had been illegally levied against it.
One of the questions for consideration was if Section 20 of the Bombay Sales
Tax Act, 1946 contained a bar against the suit. Section 20 is as under :
"Save
as is provided in section 23, no assessment made and no order passed under this
Act of the rules made thereunder by the Commissioner of any person appointed
under section 3 to assist him shall b e called into question in any civil
court, and save as is provided in sections 21 and 22, no appeal or application
for revision shall lie against any such assessment or order." It was
contended by the plaintiff that Section 20 had no application because the order
of assessment which the plaintiff sought to challenge had been made by the
relevant Sales Tax Authorities without jurisdiction. This Court repelled this
argument and said that an assessment based on an erroneous finding about the
character of the transaction was not an assessment made without jurisdiction
and was not outside the purview of Section 20 and that words in that section
were wide enough to take within its sweep even erroneous orders of assessment
and would be entitled to claim protection against the institution of a civil
suit.
The
court then observed:
"The
jurisdiction of a civil court can be excluded even without an express
provision. In every case, the question about the exclusion of the jurisdiction
of civil courts either expressly or by necessary implication must be considered
in the light of the words used in the statutory provision on which the plea is
statutory provision on which the pleas is rested, the scheme of the relevant
provisions, their object and their purpose." In State of Bombay (Now Gujarat) vs. Jagmohandas & Anr. [(1966) 60 ITR 206 206], the
respondent-plaintiff had filed a suit against the State of Bombay for recovery
of a certain amount which it alleged it h ad paid as advance tax on various
dates, while submitting returns for a particular period. It also claimed
interest. The State raised objection that the suit was barred by Section 13 and
20 of the Bombay Sales Tax Act, 1946. This Court held that as no assessment had
been made under the Act was called in question in the suit Section 20 of the
Act did not bar the suit. This Court also negatived the contention of the
defendant that when a registered dealer filed a return and calculated and paid
tax on the basis of the return, he, in fact, made an assessment and, therefore,
brought himself within Section 20 of the Act. The Court said :
"We
are unable to read the word `assessment' in section 20 to include a mere filing
of return and payment by a registered dealer. In our opinion, the word "assessment"
has reference to assessments made under section 11, and 11A of the Bombay Sales
Tax Act, 1946.
Therefore,
we must overrule the contention of the learned Solicitor General that section
20 expressly bars the present suit." It is not necessary for us to
consider the scope of Section 13 referred to above as that is not relevant to
the issue raised before us.
In Rangammal
& Ors. vs. Union of India & Ors. [(1963) 48 ITR 598 (Mad)], the
appellants-plaintiffs had brought a suit for a declaration that property
described in the plaint should not be either sold or could be sold if at all
only subject to a charge in favour of the sixth plaintiff for realisation of
income tax arrears due from their elder brother and for a permanent injunction
restraining the Union of India and the Collector of Coimbatore from bringing
those properties to sale for realisation of the income-tax arrears due. It was
the contention of the plaintiffs that the brothers were having their
independent business and were not having joint family businesses. However, the
Income-tax authorities treated all the businesses as joint family business and
the status of the assessee was taken as Undivided Hindu Family. In order to realise
the arrears of income-tax, the properties, subject matter of the suit, were
brought to sale. At that stage, the suit was filed. Earlier, it appeared that
the plaintiffs had filed a suit for partition of joint family estate and a
preliminary decree was passed and then final decree where some of the
properties mentioned in the plaint in the present suit were allotted to minor
plaintiffs. One of the question raised was whether the suit as such was barred
by Section 67 of the Income-tax Act, 1922. A Division Bench of the Madras High
Court, after examining the background of the case, observed that it was true
that prayer in the plaint was not couched in terms which would bar the
operation of section 67 of the Income-tax Act because the prayer was for
declaration that the properties in question were not liable to be proceeded
against for the satisfaction of the demand due under the assessment. The Court
said that merely by casting the prayer in the form a declaration, the substance
of the prayer could not b e hidden. The Court held that the substance here was
that the share of the minors in the joint family property was not liable for
the income-tax arrears because the tax was assessed on businesses which were
not joint family businesses. The court, thus, held that Section 67 of the Act
was a bar to the maintainability of the suit even though the declaration asked
for did not in terms referred to cancellation of the assessment made by the tax
authorities.
Principles
of law are, therefore, well settled where a civil court will not assume
jurisdiction. In Dulhabhai etc. vs. State of Madhya Pradesh & Anr. [(1968)
3 SCR 662 - AIR 1969 SC 78], this Court laid 7 principles for the courts to see
if the suit was barred under Section 9 of the Code or not. It is not necessary
to set out all the 7 principles as we find that the present suit would be
barred under the second principle laid by this Court which we reproduce as under
:
"Where
there is an express bar of the jurisdiction of the court, an examination of the
scheme of the particular Act to find the adequacy or the sufficiency of the
remedies provided may be relevant but is not decisive to sustain the
jurisdiction of the civil court.
Where
there is no express exclusion the examination of the remedies and the scheme of
the particular Act to find out the intendment becomes necessary and the result
of the inquiry may be decisive. In the latter case, it is necessary to see if
the statute creates a special right or a liability and provides for the
determination of the right of liability and further lays down that all
questions about the said right and liability shall be determined by the
tribunals so constituted, and whether remedies normally associated with actions
in civil courts are prescribed by the said statute or not." We have seen
above that the scope of Section 293 of the Act has been widened now even to
include any proceeding under the Act and it is not merely confined merely to
set aside or modify any order. From of suit is not relevant. It is the
substance which is to be seen. When the statute prescribed certain procedure
and proceedings thereunder are held and order passed, it is difficult to accept
a contention that proceeding and order can be modified or set aside in a civil
suit filed by a third party. Section 293 is specific and does not admit filing
of a suit which has the effect of even indirectly setting aside or modifying
any proceeding taken under the Act or order made thereunder. In the present
case, search and seizure were effected as per the provisions of the Act, assets
and documents seized and statement of Babulal recorded under sub-section (4) of
Section 132 of the Act wherein he admitted that the gold was acquired from his
and brother's undisclosed income which he was even prepared to surrender to
tax. It was thereafter in the course of further enquiry that he came up with a
version that the gold ornaments in question belonged to his step- mother who
bequeathed the same for the benefit of children of the plaintiff and other
children that would be born to the second wife of his father. This version did
not find favour with the Income-tax Officer and he was not satisfied that gold
ornaments in question did not belong to Babulal.
It
was, a therefore, not necessary for him to issue any notice under sub-section
(7) of Section 132 of the Act to the plaintiff. In any case, the plaintiff was
well aware of the proceedings before the Income-tax Officer and she could have
also filed objection to the order made by the Income- tax Officer under Section
132(5) of the Act to the Chief Commissioner or Commissioner under Section (11)
thereof which remedy she did not avail. Considering the whole gravamen of the
plaintiff in the suit and the law on the subject, we are of the opinion that
the Subordinate Judge and the High Court were not correct in rejecting the
contention of the Revenue and holding that the suit was not barred under
Section 293 of the Act.
We,
therefore, allow the appeal set aside the impugned judgment of the High Court
and of the Subordinate Judge and dismiss the suit filed by the plaintiff.
We
would like to record our appreciation of the assistance rendered by Mr. Vellapalli
and Mr. Kapur who appeared amicus curiae at our request.
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