Patna High Court
Raja Bahadur Kamakshya Narain Singh vs Income-Tax Officer And Ors. on 19 March, 1969
Equivalent citations: [1969]74ITR563(PATNA)
JUDGMENT Untwalia, J.
1. Raja Bahadur Kamakshya Narain Singh, the sole petitioner in this case, has obtained a rule from this court, on his application filed under Articles 226 and 227 of the Constitution of India, against the Income-tax Officer, Hazaribagh (respondent No. 1), Certificate Officer, Ranchi (respondent No. 2), Certificate Officer, Hazaribagh (respondent No. 3), Commissioner, Bhagalpur Division (respondent No. 4) and Board of Revenue, Bihar Pahi (respondent No. 5) to show cause why appropriate writ be not issued to quash the order, dated the 5th December, 1960, of the second respondent, the order, dated the 28th February, 1963, of the Deputy Commissioner, Ranchi (who is not a party respondent to the application), the order, dated the 3rd March, 1966, made by the fourth respondent and the resolution, dated the 20th February, 1967, passed by the fifth respondent and further to show cause why the said respondent be not restrained from realising the amount in question from the petitioner. Respondent No. 1 has shown cause by filing a counter-affidavit and Mr. Ugra Singh has appeared on behalf of the income-tax department to oppose the making of the rule absolute. Mr. Tarkeshwar Prasad has appeared in support of the rule.
2. The petitioner's case, as stated in the writ application, is that, for the assessment year 1945-46, he was assessed to income-tax and demand notice was issued on the 25th March, 1946. Eventually, the Income-tax Appellate Tribunal passed an order in his appeal, arising out of the said assessment proceeding, on the 6th April, 1953, and the order of the Tribunal was received by the petitioner on the 3rd June, 1953. On the 20th March, 1955, ("20-3-53" mentioned in paragraph 4 is admittedly a mistake), a certificate proceeding was started at Calcutta at the instance of the Income-tax Officer, Calcutta, who had made a fresh computation of the tax payable by the petitioner, in pursuance of the appellate order of the Tribunal made on the 6th April, 1953. The fresh computation was made on the 18th September, 1954, and a revised chalan, on the basis of the said computation, was received on the 16th October, 1954, by the petitioner to deposit the amount of tax as imposed by the income-tax authorities. His case further is that he moved the Supreme Court of India in a petition under Article 32 of the Constitution, which was numbered as Petition No. 427 of 1955. The Supreme Court held that the order, dated the 18th August, 1952, made by the Central Board of Revenue, New Delhi, purporting to act under Section 5(7A) of the Income-tax Act, 1922 (hereinafter called "the Act"), transferring the case of the petitioner from the Income-tax Officer, Special Circle, Ranchi, to the Income-tax Officer, Central Circle II, Calcutta, constituted an infraction of the petitioner's fundamental right. The petition before the Supreme Court succeeded, and the order aforesaid of the Central Board of Revenue was set aside. The Board was restrained from giving effect to the said order and from realising any money on the assessment order passed by the Income-tax Officer, Central Circle, Calcutta. As a result of the order of the Supreme Court, the certificate proceeding started at Calcutta at the instance of the Income-tax Officer of that place was dropped. It is then stated in the sixth paragraph of the writ petition that the Central Board of Revenue, by its letter dated the 21st March, 1956, directed the file of the petitioner to be sent to the territorial Income-tax Officer ; but the Commissioner of Income-tax, Bihar and Orissa, wrongly transferred the file to the Special Circle, Ranchi, who started the certificate proceeding sought to be quashed by the present writ application. The certificate proceeding was started to recover a sum of Rs. 54,08,189-4-0, said to be the tax demand due in respect of the year 1945-46, as also in respect of the years 1948-49 to 1951-52. It may be made clear here that in the amount of Rs. 54,00,000 and odd were included two demands in respect of the year 1945-46, one of Rs. 7,79,461-8-0, on the basis of the original assessment made by the Income-tax Officer, Hazaribagh, for which a demand notice had been issued on the 25th March, 1946, and another sum of Rs. 1,90,736-12-0 assessed upon the petitioner under Section 34 of the Act. The Income-tax Officer, Ranchi, sent a requisition to the Certificate Officer, Ranchi, on the 25th March, 1957, and the latter signed the certificate and started certificate Case No. 42 of 1956-57. Later on, by an order dated the 8th May, 1957, passed by the Commissioner of Income-tax, Patna, the income-tax file of the petitioner was transferred to the Income-tax Officer, Hazaribagh. The said officer directed amendment of the certificate by reducing the recoverable amount in respect of the years 1948-49 to 1950-51, but leaving the certificate proceeding to go on for realisation of the two amounts of 1945-46 and the tax demand for the assessment year 1951-52. The petitioner filed his objection under Section 9 of the Bihar and Orissa Public Demands Recovery Act, 1914 (B. & O. Act 4 of 1914) before the Certificate Officer, Ranchi, denying his liability on several grounds, only two out of which have been pressed in this court, which will be stated " ereinafter. The Certificate Officer rejected the objections of the petitioner by his order dated the 5th December, 1960, a copy of which is annexure "A" to the writ application, The petitioner's appeal to the Deputy Commissioner, Ranchi, was dismissed by him on the 28th February, 1963. A copy of his order is annexure "B". The petitioner preferred a revision before the Commissioner of Chotanagpur at Ranchi. He got his revision application transferred from Ranchi to Bhagalpur, as he did not like it to be heard by Mr. T. C. Puri, the then Commissioner of Ranchi. The revision application was dismissed by the Commissioner of Bhagalpur Division, on the 3rd March, 1966. A copy of his order is annexure "C". During the pendency of the revision application before the Commissioner, the demand in respect of the year 1945-46 assessed under Section 34 of the Act, as also the entire demand in respect of the year 1951-52 were withdrawn. The result was that the impugned certificate proceeding was confined to the recovery of a sum of Rs. 7,79,461-8-0, the amount assessed under Section 23 of the Act for the year 1945-46, The petitioner filed a second revision before the Board of Revenue, which was rejected by the Board's resolution dated the 20th February, 1967 (annexure "D").
3. The petitioner challenged the certificate proceeding against him for realisation of the tax demand in respect of the year 1945-46 by urging three grounds in this court. They are the following :
(i) The Income-tax Officer, Ranchi, had no jurisdiction to issue the certificate for realisation of the tax in question.
(ii) The certificate was issued not only for recovery of the tax in respect of the assessment year 1945-46, but also in respect of the other years, which, subsequently, by an amendment of orders of withdrawal, are knocked down under the orders, or at the instance of the Income-tax Officer, Hazaribagh, who had no jurisdiction to do so in respect of a certificate proceeding pending before the Certificate Officer, Ranchi. That being so, the whole certificate proceeding, as it stands soon after amendment, is without jurisdiction.
(iii) The certificate proceeding was barred by time under Section 46(7) the Act.
4. I may state a few facts more with reference to the counter-affidavit by respondent No. 1 and the affidavit-in-reply filed by the petitioner, as also with reference to a Bench decision of this court in Rajah Bahadur Kamakhya Narain Singh v. Union of India, [1964] 51 I.T.R. 596. Appeals preferred against the said decision of this court dated 30th August, 1962, being Civil Appeals Nos. 488 to 490 of (sic) in passing of a consent order on the 10th October, 1963, in the Supreme Court, a plain copy of which order was produced by learned advocate for the petitioner during the hearing of this writ application. He has also relied upon certain facts mentioned in the judgment of the High Court in the case referred to above. Strictly speaking, the petitioner was not justified in referring to the facts from the decision of the Patna High Court and the consent order made by the Supreme Court in relation thereto, as no reference to them was made by him in his writ application, or the affidavit-in-reply, nor does it appear from the order of the Commissioner or the Board that these decisions were referred to before them. Be that as it may, ignoring the technicalities, we have thought it advisable to refer to some facts from the decision of this court as also from the consent order at the persuasion of the petitioner's counsel.
5. In the counter-affidavit of respondent No. 1, it is stated that the fresh computation was made by the Income-tax Officer, Central Circle II, Calcutta, on the basis of the order of the Income-tax Appellate Tribunal, dated the 6th April, 1953, on the 18th September, 1954, and the said officer, by his letter dated the 20th September, 1954, asked the petitioner to deposit the amount by the 15th November, 1954. As the petitioner did not deposit the demand, a certificate under Section 46(2) of the Act was issued on the 16th March, 1955, to the Collector, 24 Parganas, Alipur, by the Income-tax Officer, Central Circle II, Calcutta. I may indicate here that the requisition by the Income-tax Officer, Calcutta, seems to have been issued on the 16th March, 1955, because, as stated in Annexure "A" (the order of the Certificate Officer, Ranchi), the petitioner, in pursuance of the demand of the Income-tax Officer, Calcutta, appeared and got adjournment for payment of the tax till the 16th March, 1955. As a result of the decision of the Supreme Court given on the 20th March, 1956, a copy of which is annexure "I" to the counter-affidavit, it appears from the counter-affidavit that the certificate proceeding at Calcutta was not dropped ; rather, the matters reverted back to the Income-tax Officer, Special Circle, Ranchi. Under the affidavit-in-reply filed on behalf of the petitioner the order sheet of the certificate case of the Certificate Officer, 24 Parganas, has been filed to show that the certificate proceeding in Calcutta was actually cancelled or dropped in pursuance of the letter of the Income-tax Officer requesting the Certificate Officer to close the proceeding.
6. It appears from some of the facts stated in the judgment of this court in Raja Bahadur Kamakhya Narain Singh v. Union of India to which facts reference was made on behalf of the petitioner, that his income-tax file was transferred from the Income-tax Officer, Hazaribagh, to the Income-tax Officer, Special Circle, Patna, as the cases of his assessees were dealt with by the Special Circle. A Special Circle was later on created at Ranchi and, therefore, the petitioner's case was transferred to the Income-tax Officer, Special Circle, Ranchi, by an order of the Commissioner of Income-tax made on the 2lst April, 1951. In the judgment of the Supreme Court, a copy of which is Aunexure "I" to the counter-affidavit, it is stated that the petitioner's case was transferred from Special Circle, Patna, to Special Circle, Ranchi, at his instance, although this fact was being challenged in the first appeals which were decided by this court on the 30th August, 1962. The Central Board of Revenue, however, transferred the income-tax file of the petitioner from Ranchi to Calcutta by its order dated the 18th August, 1952, which was challenged before the Supreme Court, as stated above, and was set aside by it on the 20th March, 1956. Notices under Section 22(2) of the Act had been issued by the Income-tax Officer, Special Circle, Patna, asking the petitioner to file his returns for the assessment years 1948-49 to 1950-51. He had filed the returns also before him. Further steps were taken and were being taken by the Income-tax Officer, Special Circle, Ranchi, and thereafter by the Income-tax Officer, Central Circle II, Calcutta. After the decision of the Supreme Court dated the 20th March, 1956, however, and on transfer of the petitioner's file to the Income-tax Officer, Special Circle, Ranchi, the said officer proceeded to assess the petitioner in respect of the three years aforesaid by issuing notices under Section 34 of the Act. When his file was again transferred to the Income-tax Officer, Hazaribagh, on the 8th May, 1957, by an order of the Commissioner of Income-tax to be effective from the 15th May, 1957, the Income-tax Officer, Hazaribagh, proceeded to take steps to complete the assessment of the petitioner on the proceeding initiated by the Income-tax Officer, Special Circle, Raachi, under Section 34 of the Act. The petitioner then filed three suits to challenge the proceedings in respect of the three years, namely, 1948-49 to 1950-51 on several grounds, one of which was that the petitioner's file had not been validly transferred to the Income-tax Officer, Special Circle, Ranchi. The suits were dismissed by the trial court. The petitioner's three first appeals in this court were dismissed by a Bench of this court on the 30th August, 1962, the decision of which is, as stated above, in Raja Bahadur Kamakhya Narain Singh v. Union of India. It would appear from the decision of this court that the assessment proceedings are challenged on several grounds. The grounds of attack were repelled and a decision was given against the petitioner. He filed three appeals before the Supreme Court. After the decision of this court, the assessments in respect of all these three years were completed by the Income-tax Officer, Hazaribagh, on the 29th September, 1962. The appeals before the Supreme Court were disposed of by a consent order made on the 10th October, 1963, whereby the decree made by the High Court in the three first appeals was set aside and was substituted by a consent decree to the effect that the assessments made on the 29th September, 1962, by the Income-tax Officer, Hazaribagh, for the assessment years 1948-49 to 1950-51 be set aside. The assessment proceedings for the said years before him were declared to be properly pending, and he was directed to complete them by proceeding in accordance with law from the stage of the returns filed before the Income-tax Officer, Special Circle, Patna, subject to some other further conditions. On the facts stated in the petition, the petitioner had no case to substantiate his first point. No reference was made in the petition to the transfer of his income-tax file by the Commissioner by his order dated the 21st April, 1951. His order transferring the file of the petitioner to the Special Circle, Ranchi, was attacked merely on the ground that the Central Board of Revenue, by its order dated the 21st March, 1956, had directed him to send the file to the territorial Income-tax Officer. A copy of the Board's order was, however, not filed with the writ application, and it is not known as to what were the terms of the Board's order dated the 21st March, 1956. The matter is crystal clear, on the facts as they emerge on the basis of the petitions and the affidavits, that at the time the petitioner's file was transferred to Calcutta by the Central Board of Revenue, it was pending before the Income-tax Officer, Special Circle, Ranchi. The order of the Board was set aside by the Supreme Court. The usual and the natural consequence of it was that the file had to be sent back to the Income-tax Officer, Special Circle, Ranchi, as the order of the Income-tax Officer, dated the 21st April, 1951, transferring the petitioner's file to Ranchi was never challenged before the Supreme Court, when the order of the Central Board of Revenue transferring his file from Ranchi to Calcutta was challenged. In my opinion, therefore, the Commissioner of Income-tax committed no mistake or error when, as a result of the Supreme Court decision and being directed by the Central Board of Revenue, even assuming, as is the case of the petitioner, to transfer his income-tax file to the territorial Income-tax Officer, he transferred it to the Income-tax Officer, Special Circle, Ranchi. The Income-tax Officer, Special Circle, Ranchi, in pursuance of the general order, made by he Commissioner earlier under Section 5(5) of the Act, had territorial jurisdiction, if I may use that expression, to deal with the petitioner's case, who is a resident of Hazaribagh, within Chotanagpur Division.
7. Great stress, however, was laid by the petitioner's counsel, in support of his first point, on the fact of challenge of the order of transfer dated the 21st April, 1951, in the Patna High Court in the three first appeals decided on the 30th August, 1962, resulting in the passing of a consent order in the Supreme Court. What is the effect of this ? The order of transfer of the petitioner's income-tax file was unsuccessfully challenged before this court. The challenge was specially in relation to the assessment proceedings of only three years 1948-49 to 1950-51.
8. It was not only on the ground of transfer of the petitioner's file to the Income-tax Officer, Special Circle, Ranchi, but on several other grounds. It is not known which of the grounds would have succeeded before the Supreme Court, if the case would have been decided on a judgment delivered by that court. It is not known what reasons induced the income-tax department to enter into a compromise in the Supreme Court. By the consent order, the decree of this court was set aside--not its decision on all the points. The assessment proceedings, at the time the consent order was made, had been concluded by the Income-tax Officer, Hazaribagh. To avoid the complication as a result of any infirmity which might have been there in the proceedings initially started by the Income-tax Officer, Special Circle, Patna, and continued thereafter by the Income-tax Officers of Ranchi and Calcutta and eventually by the Income-tax Officer, Hazaribagh, a compromise was entered into and the consent order was obtained from the Supreme Court. It is difficult to accept the contention put forward on behalf of the petitioner that the result of the consent order was the setting aside, or declaring as void of the order of the Commissioner of Income-tax, either passed on the 21st April, 1951, or subsequently in the year 1956 or 1957, as a result of the decision of the Supreme Court made on the 20th March, 1956. Nothing of the kind is possible to be spelt out from the consent order dated the 10th October, 1963. Shorn of complications of the other points involved in relation to the assessment proceedings for the three years, or the infirmities therein, if any, suffice it to say, for the disposal of the present application, that the order of the Commissioner of Income-tax passed on the 21st April, 1951, under Section 5(5) of the Act, was very much different in character and was passed in exercise of a wider and more general power of transfer conferred upon the Commissioner, than conferred either upon him or upon the Central Board of Revenue under Section 5(7A) of the Act, the order dated the 18th August, 1952, passed under which provision of law by the Central Board of Revenue was successfully challenged by the petitioner before the Supreme Court. Under Section 5(5) of the Act, the Commissioner had very wide powers to transfer the income-tax file of the petitioner. As a matter of fact, as it appears from the judgment of this court in Raja Bahadur Kamakhya Narain Singh v. Union of India not only the file of the petitioner, but by a general order, income-tax files of many such assessees were transferred from Patna, Special Circle, to Ranchi, Special Circle. The Commissioner of Income-tax, consequently, committed, as I have said, no error or mistake in retransferring the petitioner's file to Special Circle, Ranchi, after his success in the Supreme Court in his application under Article 32 of the Constitution in which, as stated above, he challenged the order of transfer of the Central Board of Revenue, and not of the Commissioner of Income-tax. I am rather inclined to think, as I have said above, that the natural consequence of the decision of the Supreme Court was that the income-tax file of the petitioner came back to the Special Circle, Ranchi, and later on by a valid order again made by the Commissioner on the 8th May, 1957, it was transferred to the Income-tax Officer, Hazaribagh. The impugned certificate proceeding against the petitioner was filed by the Income-tax Officer, Special Circle, Ranchi, on the 25th March, 1957, when the petitioner's file was pending before him, prior to its re-transfer to the Income-tax Officer, Hazaribagh, by order of the Commissioner on the 8th May, 1957. The first point, therefore, must be rejected as being without substance.
9. The second point urged on behalf of the petitioner has to fail not only on the ground that it was not taken before any of the revenue authorities, as it does not appear from the order (annexnres "A" to "D"), to have been taken, but also on the ground that it is wholly without substance. When the amount in the certificate proceeding in Certificate Case No. 42 of 1956-57 was amended under the orders of the Income-tax Officer, Hazaribagh, and considerably reduced, the income-tax file of the petitioner was pending before him. In my opinion, he was the proper authority to direct the reduction of the amount. He had made the assessments in respect of the throe years 1948-49 to 1950-51. He could withdraw them as he liked.
10. It was urged on behalf of the petitioner that, under Section 46(2) of the Act, the Income-tax Officer may forward to the Collector a certificate under his signature for recovery of the arrears of tax due from an assessee, but such a certificate must be sent to the Collector of the district wherein is situated the office of the particular Income-tax Officer forwarding the certificate. Hence, counsel for the petitioner submitted that the Income-tax Officer, Hazaribagh, had no jurisdiction to amend the certificate upon which the certificate case had been started at Ranchi. In support of this contention, reliance was placed upon a decision of a learned single judge of the Kerala High Court in T. R. Subramania lyer v. Income-tax Officer, [1957] 32 I.T.R. 582. The facts of that case are substantially different. There, the Income-tax Officer of New Delhi, who had made the assessment upon the basis of which the arrears of tax were due, had requested another Income-tax Officer in the State of Travancore to forward the certificate to the Collector for realisation of the arrears. It was pointed out that the procedure to be followed in such a case was indicated in Sections 3 and 5 of the Revenue Recovery Act, under which Act the proceedings were taken in that case. A corresponding provision in the Bihar and Orissa Public Demands Recovery Act to the one under Section 3 of the Revenue Recovery Act is to be found in Section 13. Section 5 of the Bihar and Orissa Act, however, does not incorporate the condition mentioned in Section 5 of the Revenue Recovery Act, namely, that where any sum is recoverable as an arrear of land revenue by any public officer other than a Collector, the Collector of the district in which the office of that officer is situate shall, on the request of the officer, proceed to recover the sum as if it were an arrear of land revenue. No such words of limitation are to be found in Section 46(2) of the Act or Section 5 of the Bihar and Orissa Act. I am, therefore, inclined to think that the Income-tax Officer of any place in Bihar is competent to forward a certificate under Section 46(2) of the Act to any Collector of this State, if he proceeds to realise the arrears of tax by institution of proceedings under the Bihar and Orissa Act, and not under the Revenue Recovery Act, 1890 (Central Act 1 of 1890). Even assuming that the view which I have expressed in this regard is not quite correct, the second point urged on behalf of the petitioner must fail on the simple ground that at the time the amendment in the certificate case was made, he had jurisdiction to do so, and, even at his instance, the Certificate Officer of Ranchi could reduce the amounts which were reduced to the advantage of the petitioner, and not to his disadvantage. To challenge the proceeding which is not pending for realisation of Rs. 7,00,000 and odd as arrears tax for the assessment year 1945-46, the second ground urged on behalf of the petitioner seems to be wholly misconceived.
11. Coming to the third and the last point urged on behalf of the petitioner, it is to be pointed out that Section 46(7) of the Act provides :
"(7) Save in accordance with the provisions of Sub-section (1) of Section 42, or of the proviso to Section 45, no proceedings for the recovery of any sum payable under this Act shall be commenced after the expiration of one year from the last day of the financial year in which any demand is made under this Act :
Provided that the period of one year herein referred to shall-
(i) where an assessee has been treated as not being in default under Section 45 as long as his appeal is undisposed of, be reckoned from the date on which the appeal is disposed of ;
(ii) where recovery proceedings in any case have been stayed by any order of a court, be reckoned from the date from which the order is withdrawn ;
(iii) where the date of payment of tax has been extended by an income-tax authority, be reckoned from the date up to which the time for payment had been extended ;
(iv) where the sum payable is allowed to be paid by instalments, from the date on which the last of such instalments was due :
Provided further that nothing in the foregoing proviso shall have the effect of reducing the period within which proceedings for recovery can be commenced, namely, after the expiration of one year from the last day of the financial year in which the demand is made.
Explanation.--A proceeding for the recovery of any sum shall be deemed to have commenced within the meaning of this section, if some action is taken to recover the whole or any part of the sum within the period hereinbefore referred to, and for the removal of doubts it is hereby declared that the several modes of recovery specified in this section are neither mutually exclusive, nor affect in any way any other law for the time being in force relating to the recovery of debts due to Government, and it shall be lawful for the Income-tax Officer, if for any special reasons to be recorded he so thinks fit, to have recourse to any such mode of recovery notwithstanding that the tax due is being recovered from an assessee by any other mode."
12. It is undisputed in this case that a fresh demand, in pursuance of the appellate order of the Tribunal was made by the Income-tax Officer from the petitioner and it was served on him on the 16th October, 1954. As stated on his behalf during the course of arguments, the Commissioner of Income-tax had stayed the realisation of the tax on the 6th July, 1946, till the disposal of the appeal before the Tribunal. The realisation of the tax at his instance was further postponed till the 16th March, 1955, as stated earlier in my judgment from the order of the Certificate Officer (annexure "A"). Counting the period of limitation, therefore, either from the 6th April, t9'53, or from the 16th October, 1954, or from the 16th March, 1955, it is manifest, and this is not disputed before us, that the certificate proceeding started at the instance of the Income-tax Officer, Calcutta, on the 20th March, 1955, was within time under Section 46(7) of the Act. Once this was in time, under the Explanation to Sub-section (7), the proceeding started by the Income-tax Officer, Special Circle, Ranchi, on the 25th March, 1957, must be held to be in time. To overcome the obvious difficulty of the Explanation appended to Sub-section (7) of Section 46 of the Act, an argument on behalf of the petitioner was advanced that the proceeding for the recovery of the arrears of tax in question can be deemed to have commenced, within the meaning of section 46(7), if some valid action was taken in accordance with law by the proper authority in a proper court to recover the amount of arrears. I am unable to accept this contention. In my opinion, the action taken by the Income-tax Officer, Calcutta, on the 20th March, 1955, was a valid action and was in accordance with law. The income-tax file of the petitioner, in pursuance of the order of the Central Board of Revenue, dated the 18th August, 1952, was pending before him. On that date, therefore, that is, on the 20th March, 1955, he had full jurisdiction to forward a certificate for realisation of arrears of tax from the petitioner under Section 46(2) of the Act. The order of the Central Board of Revenue, as appears from the judgment of the Supreme Court, dated the 20th March, 1956, was merely set aside and injunction was issued against the authorities not to give effect to that order, meaning thereby not to give effect to it any further, for it was set aside by the Supreme Court. The decision of the Supreme Court, in my judgment, had not the effect of declaring the order of the Central Board of Revenue ultra vires or a nullity for all purposes or of invalidating all orders passed by the Income-tax Officer, Calcutta, or any action taken by him during the pendency of the income-tax file of the petitioner before him. This is quite a reasonable view to take, otherwise, by just giving an example, I will illustrate the disastrous result which may follow to the Central revenue. Supposing by an order made under Section 5 of the Act, a case or a particular class of cases is transferred from the file of one Income-tax Officer to another. The order of transfer is challenged by a particular assessee. The proceeding in which the order is challenged remains pending, say, for a period of five years or more. Until the order of transfer is successfully challenged, it cannot be assumed that the Income-tax Officer, who is in seisin of the file in pursuance of the order of transfer, is to sit idle and take no action in regard to the file of a particular assessee. He takes action, finding that, unless he takes action, the realisation or recovery of the tax will be barred under Section 46 (7) of the Act. The order of transfer of the file to him is eventually set aside. If a view were to be taken that the action taken by him will be invalid within the meaning of the Explanation appended to the seventh sub-section of Section 46 of the Act, the position will be too obviously anomalous. No other Income-tax Officer, except the one before whom the file of a particular assessee was pending in pursuance of the impugned order of transfer, could forward a certificate under Section 46(2) ; and if his forwarding is accepted to be invalid because of the subsequent annulment of the order of transfer, the result will be that the Central revenue will suffer and no competent officer would be there to realise it by forwarding a certificate under Section 46(2) of the Act during the pendency of the proceeding challenging the order of transfer. To my mind, to put such an interpretation or to accept such effect of the action taken by the Income-tax Officer on the 20th March, 1955, will be too obviously wrong.
13. I may also point out that the expression "some action" in the Explanation has been liberally interpreted to mean forwarding of a certificate for arrears of tax to the Collector under Section 46(2) of the Act, and not necessarily the institution of the certificate case by the Certificate Officer concerned (vide Aruna Devi Jajodia v. Collector of Madras, [1952J 21 I.T.R. 349, Kashiram Agarwalla v. Collector of 24 Parganas, [1958] 33 I.T.R. 800, General Commercial Corporation Private Ltd. v. Second Additional Income-tax Officer, [1960] 40 I.T.R. 506 and Lal Bhan Pratap Narain Bahadur Pal v. State of Uttar Pradesh, [1962] 46 I.T.R. 247).
14. I think I can also usefully point out some distinction between the wordings of Clause 5 of Article 182 of the Limitation Act of 1908, and the expression used in the Explanation to Section 46(7) of the Act. In the former, the language is that the application for execution can be filed within three years from "the date of the final order passed on an application made in accordance with law to the proper court for execution, or to take some step in aid of execution of the decree or order." Reading the whole of the provision, it has been held by numerous authorities that step in aid of execution must mean some step in aid in accordance with law. Here, such a rigour has not been put in the language used in the Explanation to Section 46(7) of the Act. By a deeming clause, it has been provided that a proceeding for the recovery of arrears shall be deemed to have commenced if some action has been taken to recover the whole or any part of it within the period prescribed by the main provision. I am definitely of the view that the action taken by the Income-tax Officer, Calcutta, on the 20th March, 1955, was an action on the basis of which the proceeding for the recovery of the arrears of tax in question must be deemed to have commenced against the petitioner. In my considered judgment, therefore, the point of limitation urged on behalf of the petitioner must also fail as being without any substance.
15. For the reasons stated above, the application must fail. It is, accordingly, dismissed with costs. Hearing fee Rs. 250 only.
16. The rule is discharged.
B.N. Jha, J.
17. I agree.