Calcutta High Court (Appellete Side)
Organisation & Anr vs Union Of India & Ors on 28 April, 2011
Author: Indira Banerjee
Bench: Indira Banerjee
4.
28.04.2011.
d.d.
W. P. No.4830 (W) of 2011
M/s. Supreme Educational Development & Charitable
Organisation & Anr.
Vs.
Union of India & Ors.
Mr. Raja Basu Chowdhury,
Mr. Sayantan Bose
...... For the Petitioners.
Md. Nizamuddin
...... For the Respondents.
An order of assessment dated 31st March, 2008 was passed by the assessing officer for the assessment year 2008-2009 adding Rs.34,60,341/- to the total income disclosed by the petitioner and demanding Rs.15,44,592/- on account of income tax.
Being aggrieved by the aforesaid order of assessment, the petitioner has preferred an appeal therefrom before the Commissioner of Income Tax (Appeals), XXXVI, Kolkata. The appeal is pending before the appellate authority.
On or about 17th February, 2011, the petitioner filed an application before the assessing officer under Section 220(6) of the Income Tax Act, 1961. Section 220(6) of the Income Tax Act provides as follows:
" (6) Where an assessee has presented an appeal under section 246 [or section 246A] the [Assessing] Officer may, in his discretion and subject to such conditions as he may think fit to impose in the circumstances of the case, treat the assessee as not being in default in respect of the amount in dispute in the appeal, even though the time for payment has expired, as long as such appeal remains undisposed of. "
By the impugned communication/order no.F.No.ACIT/CIR- 2/2010-11/645 dated 21st February, 2011, the Assessing Officer informed the petitioner no.1 that its petition for stay of demand had been rejected for the purported reasons alleged therein. The petitioners were, however, given the liberty to make further submissions in writing and/or appear for a personal hearing before the Assessing Officer within seven days of receipt of the said letter, or otherwise, to pay the demand upon intimation to the Income Tax Authorities within seven days from the receipt of the impugned communication/order, failing which, recovery proceedings would be initiated against the petitioners, without any further reference to the petitioners.
Mr. Basu Chowdhury, appearing on behalf of the petitioner, submitted that the decision rejecting the prayer of the petitioner has been taken in flagrant violation of principles of natural justice, in that, the petitioner has not been given any opportunity of hearing.
Mr. Basu Chowdhury submitted that the petitioner has been given the opportunity to make further submissions and to seek personal hearing. Mr. Basu Chowdhury, however, submitted that post-decisional hearing does not ordinarily meet the requirements of natural justice.
Mr. Nizamuddin, appearing on behalf of the department, on the other hand, contended that Section 220(6) did not cast any obligation on the assessing officer to give the assessee an opportunity of hearing.
On a comparison with Section 127, Mr. Nizamuddin submitted that where opportunity of hearing was required to be given, the statute itself expressly provided for such opportunity of hearing. Unlike Section 127 which casts an obligation on the Director General or Chief Commissioner or Commissioner to give the assessee a reasonable opportunity of hearing before transferring a case from one assessing officer to another and to record reasons for such decision, Section 220(6) did not cast any such obligation on the Assessing Officer.
Mr. Nizamuddin submitted that the issues involved in this writ application, were covered by a judgment and order dated 6th February, 1998 passed by a learned Single Bench of this Court in Debasish Moulik Vs. Deputy Commissioner of Income-tax, reported in 1998-ITR-231-737.
Mr. Nizamuddin also cited the judgment of the Supreme Court in the case of Sundarjas Kanyalal Bhathija & Ors. Vs. The Collector, Thane, Maharashtra & Ors., reported in AIR 1990 Supreme Court 261, where the Supreme Court held as follows:
" One must remember that pursuit of the law, however glamorous it is, has its own limitation on the Bench. In a multi-judge court, the Judges are bound by precedents and procedure. They could use their discretion only when there is no declared principle to be found, no rule and no authority. The judicial decorum and legal propriety demand that where a learned single Judge or a Division Bench does not agree with the decision of a Bench of co-ordinate jurisdiction, the matter shall be referred to a larger Bench. It is a subversion of judicial process not to follow this procedure.
18. Deprecating this kind of tendency of some judges, Das Gupta, J., in Mahadeolal Kanodia v. The Administrator General of West Bengal, AIR 1960 SC 936 said (at p.941) :
"We have noticed with some regret that when the earlier decision of two Judges of the same High Court in Deorajin's'case, 58 Cal WN 64 : AIR 1954 Cal 119 was cited before the learned Judges who heard the present appeal they took on themselves to say that the previous decision was wrong, instead of following the usual procedure in case of difference of opinion with an earlier decision, of referring no less than legal propriety form the basis of judicial procedure. If one thing is more necessary in law than any other thing, it is the quality of certainty. That quality would totally disappear if Judges of co-ordinate jurisdiction in a High Court start overruling one another's decision."
19. The attitude of Chief Justice, Gajendragadkar, in Lala Shri Bhagwan v. Ram Chand, AIR 1965 SC 1767 was not quite different (at p. 1773) :
" It is hardly necessary to emphasize that considerations of judicial propriety and decorum require that if a learned single Judge hearing a matter is inclined to take the view that the earlier decisions of the High Court, whether of a Division Bench or of a single Judge, need to be reconsidered, he should not embark upon that enquiry sitting as single Judge, but should refer the matter to a Division Bench or, in a proper case, place the relevant papers before the Chief Justice to enable him to constitute a larger Bench to examine the question. That is the proper and traditional way to deal with such matters and it is founded on healthy principles of judicial decorum and propriety. It is to be regretted that the learned single Judge departed from this traditional way in the present case and chose to examine the question himself. "
20. The Chief Justice Pathak, in a recent decision stressed the need for a clear and consistent enunciation of legal principle in the decisions of a Court. Speaking for the Constitution Bench (Union of India v. Raghubir Singh (1989) 2 SCC 754 : (AIR 1989 SC 1933) learned Chief Justice said (at p.766) (of SCC) : (at p. 1939 of AIR) :
" The doctrine of binding precedent has the merit of promoting a certainty and consistency in a judicial decisions, and enables an organic development of the law, besides providing assurance to the individual as to the consequence of transactions forming part of his daily affairs. And, therefore, the need for a clear and consistent enunciation of legal principle in the decisions of a Court. "
The proposition that Judges are bound by precedents and procedure is unexceptionable. The Judges are entitled to use their discretion only when there is no declared principle to be found, no rule and no authority.
There can also be no dispute that judicial propriety demands that where a Bench does not agree with the decision of a Bench of coordinate strength, the matter should be referred to a larger Bench. The question is, what is the proposition of law, which has been laid down by this Court in Debasish Moulik's case (supra).
Significantly, in Debasish Moulik's case (supra), Ansari, J set aside the order of the assessing officer, inter alia, holding that the order had been passed without application of mind and was not in conformity with law. His Lordship observed that a bare reading of the order would show that the assessee had been asked to pay the amount, that is 50% of the demand, before his request for stay was considered. Only if the assessee paid 50% of the demand, the request of the petitioner would be considered for staying the demand and not before. Ansari, J found that the stay application had not been considered and orders thereon had not been passed on the merits of the case.
This Court did not hold that a writ petition, against an order rejecting an application under Section 220(6) of the Income Tax Act, is not entertainable on the ground of existence of an alternative remedy. As observed above, Debasish Moulik's case (supra) is clearly distinguishable. It is reiterated that what was in issue in the aforesaid case was whether the appellate authority had power to grant stay of collection of tax. This Court, in effect, held that even though the statute did not expressly confer power on the appellate authority to stay collection of tax, such power was inherent to exercise of appellate powers.
A writ petition may be rejected on the ground of existence of alternative remedy only when there is a definite alternative remedy and not where the alternative remedy depends on the uncertainties of exercise of inherent power. Could a Court reject an application under Section 220(6) of the Income Tax Act on the sole ground of alternative remedy and expose the petitioner to uncertainty with the possibility of the Appellate Authority declining exercise of inherent power on the ground of there being no express statutory provision for stay of demand. The answer to the aforesaid question would necessarily have to be in the negative. A writ petition may be rejected on the ground of alternative remedy only when the alternative remedy is equally efficacious and/or, in other words, certain and definite.
It is a well-settled proposition that a judgment is a precedent for the issue of law that is decided. The issue of law so decided is binding on Benches of coordinate strength and if a Bench of coordinate strength does not agree with an earlier judgment, judicial propriety demands that the matter shall be referred to a larger Bench.
The issue of law which has been decided in Debasish Moulik's case (supra) is that the appellate authority, that is the Commissioner (Appeals) has inherent power to grant stay of collection of tax in appropriate cases. The Court held:
" Merely because power has been conferred upon the Assessing Authority under Section 220(6) of the Income Tax Act to treat an assessee as not in default, the same will not, in any way, militate against the power of the appellate authority to grant stay. "
The Court, however, set aside the order of the Assessing Authority impugned. Having regard to the facts and circumstances of the aforesaid case, Ansari, J gave liberty to the writ petitioner to apply to the Appellate Authority for stay, within the time stipulated in His Lordship's order and further directed the Appellate Authority to consider the application, if any, made by the petitioner for stay of the Assessment Order. In Debasish Moulik's case (supra), the Single Bench did not accept the contention of the learned Counsel for the petitioner, that the petitioner had no other remedy except to invoke the jurisdiction of this Court.
In this case, Mr. Basu Chowdhury has not even argued that the petitioner has no other remedy except to invoke the jurisdiction of this Court under Article 226 of the Constitution of India. There are certain well-known exceptions to the rule of alternative remedy, one of them being violation of principles of natural justice. It is the case of the petitioner that the order impugned is in violation of principles of natural justice, no opportunity of hearing having been given to the petitioner.
In view of complaint of violation of principles of natural justice, which was apparently not there in the case of the Debasish Moulik (supra), this Court is of the view that the writ application can be entertained by this Court.
It is true, as argued by Mr. Nizamuddin, that unlike Section 127, Section 220(6) of the Income Tax Act, 1961 does not expressly provide for opportunity of hearing. However, rejecting the prayer of an assessee not to be treated as in default, pending disposal of the appeal, undoubtedly has serious civil consequences. The requirement to comply with principles of natural justice is to be read into Section 220(6) of the Income Tax Act, 1961.
The next question is whether post-decisional hearing would amount to sufficient compliance with principles of natural justice. It is well settled that ordinarily pre-decisional hearing is an essential requirement of natural justice, and can only be dispensed with when there is grave urgency for action. Post-decisional hearing is never as effective as pre-decisional hearing, for once a decision has been taken, there is a tendency to uphold the decision that has been taken. Recourse may be taken to post-decisional hearing only in exceptionally emergent cases where pre-decisional hearing cannot be given. For example, when there is requirement for some kind of immediate action.
This Court is of the view that a decision under Section 220(6) has to be taken in compliance with principles of natural justice after giving the petitioner a reasonable opportunity of hearing and a reasoned order is required to be passed.
A perusal of Section 220(6) of the Income Tax reveals that power has been conferred on the assessing officer to treat an assessee as not being in default in respect of the amount in dispute in the appeal, subject to such conditions as he might think fit to impose in the circumstances of the case.
The prayer of the petitioner requesting the assessing officer to keep collection of the impugned demand in abeyance, is misconceived. The assessing officer does not have the power to stay a demand. The Assessing Officer might only treat an assessee as not being in default in respect of the amount in dispute in appeal, subject to such conditions as he might deem fit and proper. The Assessing Officer cannot stay the impugned demand or keep the impugned demand in abeyance. However, even though the prayers may not have been properly worded, it was open to the assessing officer to grant relief in accordance with the aforesaid section.
The impugned order, which is in flagrant violation of principles of natural justice, is set aside and quashed. The application of the petitioner under Section 220(6) of the Income Tax Act, 1961 shall be decided afresh upon giving the petitioner an opportunity of hearing and a reasoned decision shall be taken. The decision shall be communicated to the petitioner within a week thereof. Needless to mention that in the event the application is allowed, it will be open to the assessing officer to impose such conditions, as he might deem fit and proper. The Assessing Officer shall decide the application expeditiously. Pending disposal of the application, the petitioners are restrained from transferring, disposing of, alienating or encumbering any of their assets.
Affidavits not having been called for, the allegations in the writ petition, shall be deemed not to have been admitted.
The writ petition is disposed of.
Urgent certified photostat copy of this order, if applied for, be supplied to the parties subject to compliance of all requisite formalities.
( Indira Banerjee, J )