# COMMISSIONER OF INCOME-TAX, BOMBAY & ANOTIIER l v. ISIIWARLAL BHAGWANDAS AND omERS

- **Citation:** [1966] 1 S.C.R. 190
- **Court:** Supreme Court of India
- **Decided:** 1965-05-01
- **Bench:** P. B. Gajendragadkar, K. N. Wanchoo, J. c. SHAH. J. R. MUDllOLKAR, S. M. Sikri
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/commissioner-of-income-tax-bombay-anotiier-l-v-isiiwarlal-bhagwandas-and-omers-3523
- **Pages:** 20

## Headnote

Constitution of India,
1950, Art.
133(1 )(c)-"Civi/ Proceeding",
Meaning of.
Income-tax Act (II of 1922), <. 18A(6}, provise>-Scope of.
The respondents filed under s. 18A(2) of the Income-tax Acl, 1922,
estimates of their income for the assessment year
1948, 1948-49 and
made advance payments of tax.
On 31st March 1953 the regular as,,.,,._
ment was made, but the lncome·tax Officer omitted to charge penal interest as required by s. 18A(6) even though the tax paid was less than
80% of the tax determined. The error was discovered during audit and
the Income-tax Officer rectified the error after notice in 1956, under s. 35
of the Act.
When the notice demanding interest was issued, the respon·
dents challenged tho order before the Commissioner on the ground that
die omission to charge penal interest could not be considered a mistake
apparent from the record, in view of the proviso to s. 18A(6), which was
introduced on 24th May 1953 but was made retrospective from 1st April
1952, giving power to the Income-ta' Officer to reduce or waive the interest payable by the ao;scssee.
The Commissioner did not accept
the
contention. The respondents then moved the High Court under Art. 226
of the Constitution and the High Court qua.shed the notice of demand.
In hi.s appeal to this Court, the CommiS>ioner contended that: (i) no
retrospective operation was effectively given to the proviso. because the
rules, which alone could render that discretion operative, \Vere framed only
in December 1953, and (ii) there was nothing to show that the Incometax Officer had purported to exercise hi.s discretion when he passed the
order of assessment but did not impose penal interest under .s. 18A(6).
The respondent raised a preliminary objeotion that the appeal was incompetent because (a) tbe High Court had no power under Art. 133 to certify
the appeal •• a proceeding under Art. 226 wa• not a civil proceeding
within the meaning of Art. 133, and (b) even if some proceedings under
Art. 226 could be treated as civil proceeding, when relief is sought against
the levy of a tax, the proceeding could not be so treated as it comes under
"other proceeding" as contrasted with a civil proceeding, referred lo in
Art. 132(1 ).
HELD: (i) (by Foll Court) : There is no ground for restricting the
expression "civil proceeding" only to thooe proceedings which arise out of
civil suits or p·roceedio~ which are tried as civil suits, nor is there any
rational basis for excluding from its purview proceedings instituted
and
tried in the High Court in exercise of its
jurisdiction under Art. 226,
where the aggrieved party seeks relief a~ainst infringement of civil rights
by authorities purporting to act in exercise of the powers conferred upon
them by revenue statutes. [200 B-D)
(Per P. B. Gajendragadkar,
C. J., K. N. Wanchoo, J. C. Shah and
S. M. Sikri, JJ) : The expression "civil proceeding" covers all proceedings
in which a party assert~ the existence of a
civil right
conferred
by
the civil law or by statute, and claims relief for breach thereof.
It is one
in which a person seeks to enforce by appropriJte relief the alleged inB
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C.I.T. V. JSHWARLAL
191
fringement of his civil rights against another person or the State and
which, if the claim is proved, would result in the declaration express
or implied of the right claimed and relief such as
payment of debt,
damages, compensation, delivery of specific property, enforcement of personal rights, determination of status, etc. By a petition for a writ under
Art. 226, extraordinary jurisdiction, which is undoubtedly special and
exclusive of the High Court is invoked. But on that account the nature
of the proceeding in which it is exercised is not altered. The character
of a proceeding depends, not upon the nature of the Tribunal which is invested with authority to grant relief but upon the nature of the right
violated and the appropriate relief which may be claimed. [!96B, G, H;
197H]
There is no warr

## Text

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190
COMMISSIONER OF INCOME-TAX, BOMBAY & ANOTIIER
..l
v.
ISIIWARLAL BHAGWANDAS AND omERS
May 1, 1965
[P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, J. c. SHAH.
J. R. MUDllOLKAR AND S. M. SIKRI, JJ.]
Constitution of India,
1950, Art.
133(1 )(c)-"Civi/ Proceeding",
Meaning of.
Income-tax Act (II of 1922), <. 18A(6}, provise>-Scope of.
The respondents filed under s. 18A(2) of the Income-tax Acl, 1922,
estimates of their income for the assessment year
1948, 1948-49 and
made advance payments of tax.
On 31st March 1953 the regular as,,.,,._
ment was made, but the lncome·tax Officer omitted to charge penal interest as required by s. 18A(6) even though the tax paid was less than
80% of the tax determined. The error was discovered during audit and
the Income-tax Officer rectified the error after notice in 1956, under s. 35
of the Act.
When the notice demanding interest was issued, the respon·
dents challenged tho order before the Commissioner on the ground that
die omission to charge penal interest could not be considered a mistake
apparent from the record, in view of the proviso to s. 18A(6), which was
introduced on 24th May 1953 but was made retrospective from 1st April
1952, giving power to the Income-ta' Officer to reduce or waive the interest payable by the ao;scssee.
The Commissioner did not accept
the
contention. The respondents then moved the High Court under Art. 226
of the Constitution and the High Court qua.shed the notice of demand.
In hi.s appeal to this Court, the CommiS>ioner contended that: (i) no
retrospective operation was effectively given to the proviso. because the
rules, which alone could render that discretion operative, \Vere framed only
in December 1953, and (ii) there was nothing to show that the Incometax Officer had purported to exercise hi.s discretion when he passed the
order of assessment but did not impose penal interest under .s. 18A(6).
The respondent raised a preliminary objeotion that the appeal was incompetent because (a) tbe High Court had no power under Art. 133 to certify
the appeal •• a proceeding under Art. 226 wa• not a civil proceeding
within the meaning of Art. 133, and (b) even if some proceedings under
Art. 226 could be treated as civil proceeding, when relief is sought against
the levy of a tax, the proceeding could not be so treated as it comes under
"other proceeding" as contrasted with a civil proceeding, referred lo in
Art. 132(1 ).
HELD: (i) (by Foll Court) : There is no ground for restricting the
expression "civil proceeding" only to thooe proceedings which arise out of
civil suits or p·roceedio~ which are tried as civil suits, nor is there any
rational basis for excluding from its purview proceedings instituted
and
tried in the High Court in exercise of its
jurisdiction under Art. 226,
where the aggrieved party seeks relief a~ainst infringement of civil rights
by authorities purporting to act in exercise of the powers conferred upon
them by revenue statutes. [200 B-D)
(Per P. B. Gajendragadkar,
C. J., K. N. Wanchoo, J. C. Shah and
S. M. Sikri, JJ) : The expression "civil proceeding" covers all proceedings
in which a party assert~ the existence of a
civil right
conferred
by
the civil law or by statute, and claims relief for breach thereof.
It is one
in which a person seeks to enforce by appropriJte relief the alleged inB
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C.I.T. V. JSHWARLAL
191
fringement of his civil rights against another person or the State and
which, if the claim is proved, would result in the declaration express
or implied of the right claimed and relief such as
payment of debt,
damages, compensation, delivery of specific property, enforcement of personal rights, determination of status, etc. By a petition for a writ under
Art. 226, extraordinary jurisdiction, which is undoubtedly special and
exclusive of the High Court is invoked. But on that account the nature
of the proceeding in which it is exercised is not altered. The character
of a proceeding depends, not upon the nature of the Tribunal which is invested with authority to grant relief but upon the nature of the right
violated and the appropriate relief which may be claimed. [!96B, G, H;
197H]
There is no warrant for the view that from the category of civil proceedings, it was intended to exclude proceedings relating to or which seek
relief against enforcement of taxation laws of the State. If a person is
called upon to pay tax which the State is not competent to levy, or which
is not imposed in accordance with the law which permits imposition of
the tax, or in the levy, 11&5essrnent and collection of which rights of the
tax-payer are infringed in a manner not warranted by the statute, a proceeding to obtain relief, whether it is from the tribunal set up by the taxing statute or from the civil court, would be regarded as a civil proceed·
mg. The words "other proceeding" in Art. 132( 1) refer only to proceedings which may be neither civil nor criminal, such as, proceedings,
for contempt of court and for exercise of disciplinary jurisdiction against
professionals. It is not because a reiference under s. 256 of the Incometax Act to the High Court is not a civil proceeding that a certificate under
Art. 133 may not be granted, necessita,ting the enactment of •.
261
for granting such a certificate. but, because of the advisory character of
the jurisdiction exercised by the High Court, the High Court's opinion ;.,
not a judgement, decree or order within the meaning of Art. 133. [196
D-G; !97E]
(ii)
(By Full Court) : It is true that the proviso operates only in
respect of cases and under circumstances as may be prescribed by the
rules, but as soon as the rules were framed which effectuate the purpose
for which the proviso was enacted, the proviso
and
the rules became
effective retrospectively from !Sit April 1952. [202E]
T. Caiee v. U. Jormanik Siem, [1961] 1 S.C.R. 750, distinguished.
·. M. K. Venkatachalam 1.1'.0. v. Bombay Dyeing and Manufacturing
Co. Ltd. [1959] S.C.R. 703, applied.
(iii) (Per P. B. Gajendragadkar, C. J., K. N. Wanchoo, J. C. Shah
and S. M. Sikri, JJ.) :
The High Court was right in setting aside the
order passed by the Commissioner without considering the provi'So (5) to
s. 18A(6) which was clearly applicable to the case of
the1
assessee.
f205E]
The Income-tax Officer, on the language of s. 18A(6) on the date of
making the assessment order, was bound to impose liability for payment
of penal interest.
But by reason of the retrospective operation given to
the proviso added in 1953, the Officer must be deemed to have possessed
discretion to reduce or waive interest payable by the assessee, on the date
on which he made the a'8essment order. The order which did not take
note of the law deemed to be in force must be regarded as defective; and
~e fact that the Offi~cr could not in making tlte assessment have adjusted
his approach to the '.Jroblem before him in the light of those provisions
is irrelevant in considering the legality of hio order. [202A, C; 205 B-CJ
Per Mudholkar, J. (dissenting) : Even though the proviso and the
rule must be deemed to have been in force on 1st April 1952, 1the omi-
I 92
SUPRBME
COURT
REPORTS
[1966J I S.C.R.
:-;!>ion to chat go: pl.'nal in{cr-2!-'. at the tim~ of 111akin-:. 1he regul;:r ;i.,.\c.,:-.n1cnt
could not be asC"ribe<l to th~ exercise of discretion by the Incornc-:ax Oflicer.
In fact, when he made the assc-;sment. he had no discretion and was
bout:d hy la\\' to charge penal interest.
Hi-s omission to do so must be
a-;cnbed to an oversight and not to di:liberateness.
He 'Nas competent to
rectJly the n1istakc under s. 35 ;ind \Yhcn he exercised his po"cr under
the section he him-self acceptcJ the po,ition that \\'h:tt he did earlier \Vas
through mi•:akc. [209 C-E. GJ
Ovu. APPF!.LATE JuR1so;cT10N: Ci,·il Appeals No,.
1003
and l 004 of 1963.
Appeals from the judgment anJ order; dated Nol'cmbcr 13,
I 95~ of the Bombay High Court in Miscellaneous Petition No.
217 and 218 of 1958.
B
C. K. Daphtary, Attorney-Ge11era/, R. Ganapaihy Iyer and
C
B. R. G. K. Achar, for the appellants (in both the aP.peals).
A. V. Viswa11atha Sastri, C. A. Ramachandran, J. B. Dadachanji. 0. C. Mlllh11r and Ravinder Narain, for the respondent (in
both the appeals).
The Judgment of Gajendragadkar, C.J., Wanchoo, Shah, and
Sil.:ri, JJ. was delivered by Shah, J. Mudholkar, J. delivered a
dissenting Opinion.
due notice to the assessee".
Shah, J.
The I st Income-tax Ofliccr. C-11 Ward. Bomhay
served a notice under s. 18-A( l) of the Indian Income-tax Act,
1922 calling upon Bhagwandas Kevaldas-who will hereinafter be
called 'the assessee'-to pay in four equal instalments Rs. 25,973/5
as advance-tax for the assessment year 1948-49. On September 17,
1947 the assessee filed an estimate of his income under s. 18-A (2)
I>
E
and of the tax payable by him. and on January 10, 1948 he
filed a revised estimate.
An order under s. 23-B of the Act proF
visionally assessing the income was made by the Income-tax
Officer and pursuant thereto on August 23, 1950 the asscssee paid
the tax so assessed.
Regular assessment of the income of the
assessee was made on March 31, 1953 by the Income-tax Officer,
and it was found that the tax paid on the basis of the estimate of
tl1e assessee was less than eighty per cent of the tax determined as
a result of the regular assessment.
But the Income-tax Officer
made no charge for inlerest under sub-s. ( 6) of s. 18-A of the
Income-tax Act.
G
The departmental auditor raised an objection in auditing
accounts of C-11 Ward that a mistake was committed
by the
Income-tax Officer in failing to charge interest in making the order H
of assessment against the asses.see.
On September 21, 1956 the
Income-tax Officer served a notice upon the assessee requiring him
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C.I.T. V. ISHWARLAL (Shah, /.)
193
A to show cause why the mistake in not levying interest be not rectified and why he should not be directed to pay "penal interest"
under s. 18-A(6). On October 4, 1956 the Income-tax Officer
recorded the following order :
B
"During the internal checking of C-II Ward,
the
Auditor has pointed out a mistake in not charging penal
interest under s. 18-A ( 6). As this mistake is apparent
from record the same is rectified under s. 35 after giving
due notice to the assessee",
and served a notice of demand calling upon the assessee to
pay Rs. 14,929/10 as interest due under s. 18-A(6) for the
C period January 1, 1948 to July 22, 1950.
In exercise of his powers under s. 33-A, by order dated February .!;. 1958, the Commissioner of Income-tax confirmed the
order of the Income-tax Officer rectifying the original order of
assessment and imposing liability to pay interest, subject to the
D modification that interest be paid only till June 13, 1950 .
The assessee then moved the High Court of Judicature at
Bombay by a petition under Art. 226 of the Constitution for issue
of a writ certiorari summoning the record of the case and for an
order quashing or setting aside the order passed under s. 33-A (2)
by the Commissioner of Income-tax and the order passed by
E the Income-tax Officer under s. 35 and the notice of demand
pursuant to that order. The High Court of Bombay following its
earlier judgment in the case of Shanti/al Ravji v. M. C. Nair, IV
Income-tax Officer, 'G' Ward, Bombay and Another(') directed
that the orders passed by the Income-tax Officer and by the
Commissioner of Income-tax be quashed.
Against the
order
F
passed by the High Court the Commissioner of Income-tax and
the Income-tax Officer have, with certificate granted by the High
Court, appealed to this Court.
'
· At the hearing of this appeal counsel for the assessee raised an
objection in limine that the appeal tiled by the Commissioner and
G the Income-tax Officer was incompetent. because the High Court
had no power under Art. 133 of the Constitution to certify a
proposed appeal against an order in a proceeding commenced by
a petition for the issue of a writ under Art. 226 of the Constitution.
It was urged that the proceeding before the High Court was not
"a civil proceeding" within the meaning of Art. 133. Article 133
H of the Constitution, insofar as it is material, by the first clause
provides:
(I) (1958) 34 I.T.R. 439.
194
SUPllEMB
COUllT
llEPORTS
[ 1966] I S.C.R.
"An appeal shall lie to the Supreme Court from any
A
judgment, decree or final order in a civil proceeding of
a High Court in the territory of India if the High Court
certifies-
( a) that the amount or value of the subject-matter of the
dispute in the court of first instance and still in dispute on appeal was and is not less than twenty
thousand rupees•••; or
( b) that the judgment, decree or final order involves
directly or indirectly some claim or question respecting property of the like amount or value; or
( c) that the case is a fit one for appeal to the Supreme
Court;
..
B
c
The power to issue a certificate under Art. 133 may be exercised only in respect of a judgment, decree or final order of a High
Court in a civil proceeding, and the order passed oy the High
D
Court disposing of the petition filed by the assessee for the issue
of a writ under Art. 226 is a judgment. But Mr. ""A. V. Vishwanath Sastri for the asses'ee contended in the first instanee that the
expression "civil proceeding" in Art. 133 only means a proceeding in the nature of or triable as a civil suit and a petition for the
issue of a high prerogative writ not being such a proceeding,
i;
against the order passed by the High Court no appeal lay to this
Court with certificate under Art. 133. In the alternative, counsel
contended that even if a proceeding for the issue of a writ under
Art. 226 of the Constitution may in certain cases be treated as a
civil proceeding. it cannot be so treated when the party aggrieved
F
seeks relief against the levy of taX or revenue claimed to be due
to the State.
This Court is invested by the Constitution with appellate jur~
diction of great amplitude exercisable over all courts
and
tribunals in India. The jurisdiction may be exercised in respect of
any judgment, decree, determination, sentence or order in
any
G
cause or matt.er passed by any court or tribunal other than a judgment, determination, sentence or order made or passed by any
court or tribunal under any law relating to the Armed Forces :
Art. 136.
Exercise of this power depends solely upon the di'-
cretion of the Court. Appeals lie to this Court also from orders
passed in certain classes of cases when certified by the High
H
Courts.
An :tppeal lies from the judgment, decree or final order
of a High Court in a civil, criminal or other proceeding, if the
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C.I.T. V. ISHWARLAL (Shah, J.)
195
A.
High Court certifies that the case involves a substantial question
of law as to the interpretation of the Constitution: Art. 132 ( 1).
An appeal also lies from any judgment, decree or final order in a
civil proceeding of a High Court if the High Court certifies that
the case satisfies the conditions in els. (a), (b) or (c) of Art.
133(1), or from any judgment or final order or sentence in a
B criminal proceeding of a High Court, if the case falls within the
description of els. (a) & (b) of Art. 134, or if the High Court
certifies that the case is a fit one for appeal. It is clear that under
Art. 136 against the adjudications of all courts and tribunals
(subject to the exception already noticed) whatever be the character of the proceeding, appeals lie with leave to this Court. An appeal
C
lies against the adjudication of a High Court as a matter of right,
whatever the nature of the proceeding, with certificate that it involves a substantial question of law as to the interpretation of the
Constitution, and in civil proceeding with certificate of the nature
set out in els. (a), (b) or (c) of Art. 133, and in criminal proceedings in conditions mentioned in els. (a) and (b) and with
iD
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certificate under cl. ( c) of Art. 134.
Counsel for the assessee said that proceedings instituted in
the High Court in exercise of its jurisdiction--0riginal or appellate
-may be broadly classified as (i) proceedings civil, (ii) proceedings criminal, and (iii) proceedings revenue, and where the case
does not involve a substantial question as to the interpretation of
the Constitution, from an order passed in a proceeding civil, an
appeal lies to this Court with certificate granted under Art. 133
of the Constitution, and from a judgment, final order or sentence
in a criminal proceeding an appeal lies with certificate granted
'I' under Art. 134 of the Constitution, but from an order passed in a
proceeding relating to revenue the right of appeal may be exercised only with leave of this Court. Counsel seeks support for
this argument primarily from the phraseology used in Art. 132 of
the Constitution. That Article, by its first clause, provides :
~H
"An appeal shall lie to the Supreme Court from any
judgment, decree or final order of a High Court in the
territory of India, whether in a civil, criminal or other
proceeding, if the High Court certifies that the case involves a substantial question of law as to the interpretation of this Constitution."
Counsel relies upon the classification of proceeding made in Art.
132(1) and seeks to contrast it with the phraseology used in Arts.
133(1) & 134(1). He says that "other proceeding" in Art. 132(1)
1%
SuPRP.ME COURT
RF.PORTS
[1966] I S.C.R.
falls within the residuary
class
of proceedings
other
than
civil or criminal, and such a proceeding includes a revenue pro·
ceeding.
The expression "civil proceeding" j, not defined in the
Constitution, nor in the General Clauses Act. The expression in
our judgment covers all proceedings in which a party asserts the
existence of a civil right conferred by the civil law or by statute,
and claims relief for breach thereof.
A criminal proceeding on
the other hand is ordinarily one in which if carried to its conclu·
sion it may result in the imposition of sentences such as death.
imprisonment, fine or forfeiture of property. It also includes proceedings in which in the larger interest of the State. orders to
prevent apprehended breach of the peace, orders to bind dov:n
persons who are a danger to the maintenance of peace and order,
or orders aimed at preventing vagrancy are contemplated to be
passed. But the whole area of proceedings, which reach the High
Courts is not exhausted by classifying the proceedings as civil and
criminal. There are certain proceedings which may be regarded
as neither civil nor criminal.
For instance, proceeding for con·
tempt of Court and for exercise of disciplinary jurisdiction against
lawyer or olher professionals, such as chartered accountants
may not fall within the classification of proceedings, civil or
criminal. But there is no warrant for the view that from the cate·
gory of civil proceedings. it was intended to exclude proceedings
relating to or which seek relief against enforcement of taxation
laws of the State. The primary object of a taxation statute is to
collect revenue for the governance of the State or for providing
specific services and such laws directly affect the civil rights of
the tax-payer.
If a person is called upon to pay tax which the
S1ate is not competent to levy, or which is not imposed in accordance with the law which permits imposition of the tax, or in the
levy, assC'sment and collection of which rights of the tax-payer
are infringed in a manner not warranted by the statute. a proceeding to obtain relief whether it is from the tribunal 'et up by the
taxing statute. or from the civil court would be regarded as a civil
proceeding.
The character of the proceeding, in our judgment,
depends not upon the nature of the tribunal which is invested
with authority to grant relief but upon the nature of the right
violated and the appropriate relief which may be claimed. A civil
proceeding is therefore one in which a person seeks to enforce by
appropriate relief the alleged infringement of his civil
rights
against another person or the State, and which if the claim is
proved would result in the declaration express or implied of the
right claimed and relief such as payment of debt, damages, comA
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C.I.T. v. !SHWARI.AL (Shah, J.)
197
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pensation, delivery of specific property, enforcement of personal
rights, detem1ination of status etc.
There is therefore under the Constitution a right of appeal to
this Court with special leave from the adjudications of all courts
and tribunals (except tribunals constituted by or under laws
B relating to Armed Forces). An appeal also lies to this Court
against all adjudications by a High Court from judgments, decrees
and orders in cases in which a substantial question as to the
interpretation of the Constitution is involved, whatever the nature
of the proceeding.
Appeals from criminal proceedings lie as a
matter of right in cases falling within els. (a) and (b) of Art. 134,
C
and in cases certified as fit for appeal under cl. ( c) of Art. 134,
and from civil proceedings of the nature certified by the High
Court under Art. 133(1) els. (a), (b) or (c).
For reasons already stated, .a proceeding for relief against infringement of civil right of a person is a civil proceeding even if
D the infringement be in purported enforcement of a taxing statute .
S;;ction 261 of the Income-tax Act 1961
under which
an
appeal lies to this Court from any judgment delivered on a reference made under s. 256 in any case which the High Court certifies
to be a fit one for appeal to this Court is not an exception to that
rule. It is not because the reference is not a civil proceeding that
E a certificate under Art. 133 may not be granted: it is because of
the advisory character of the jurisdiction exercised by the High
Court under s. 25 6 that the opinion delivered by the High Court
in a reference under s. 256 is not a judgment, order or decree within the meaning of Art. 133. Similarly the enactment of s. 54 of
the Land Acquisition Act which expressly provides for an appeal
F
to this Court, subject to the provisions contained in s. 110 of the
Code of Civil Procedure, from an award, or from any part of the
award made by the Court is easily appreciated, if regard be had
to the character of the adjudication, which is in the nature of an
award in an arbitration : see Rangoon Botatoung Company Ltd.
v. The Collector, Rangoon(').
G
By a petition for a writ under Art. 226 of the Constitution,
extraordinary jurisdiction of the High Court to issue high prerogative writs granting relief in special cases to persons aggrieved by
the exercise of authority-statutory or otherwise--by public
officers or authorities is invoked. This jurisdiction is undoubtedly
H special and exclusive, but on that account the nature of the proceeding in which it is exercised is not altered. Where a revenue
(I) L.R. 39 I.A. 197.
198
SUPREME
COURT
REPORTS
[1966] l S.C.R
authority seeks to levy tax or threatens action in purported exercise
A
of powers conferred by an Act relating to revenue, the primary impact of such an act or threat is on the civil rights of the party
aggrieved and when relief is claimed in that behalf it i' a civil
proceeding, even if rdi.ef is claimed not in a suit but by resort to
the extraordinary jurisdiction of the High Court to issue writs.
It is not easy to attribute to the expression "revenu.: preceding'' any precise connotation, and in interpreting Arts. 132 ( l J and
133 it would be difficult to project the somewhat anomalous provision contained in s. 226 of the Government of India Act, 1935
under \'hich, for historical reasons, it was enacted that unle,,s
otherwise provided by the appropriate legislature, no High Court
shall have any original jurisdiction in any matter concerning the
revenue, or concerning any act ordered or done in the colloction
thereof according to the usage and practice of the country or the
law for the time being in force.
This section barred the High
Court from exercising original jurisdiction in matters concerning
revenue.
There was no such bar against subordinate courts, nor
against the exercise of appellate jurisdiction by the High Courts
in matters concerning revenue instituted in subordinate courts.
No provision has been made in the Constitution similar to s. 226
of the Government of India Act, and the~ is no reason to think
that it was intended to deprive the Hiih Court of its power to
certify cases concerning revenue, by enacting that the High Court
may certify a case in a ci\'.il proceeding. No ground is suggested
for acceptance that while removing the ban against the High
Court'> original jurisdiction in matters concerning revenue, the
Constitution imposed another ban against the exercise of power
to certify cases decided by the High Court in the appellate as well
as original juri,dictivn when the cases concerned revenue.
We have already set out our reasons for holding that a procecd'ng taken for recovery of a tax is not "other proceeding"
under Art. 132 ( 1) : such a proceeding is a civil proceeding within the meaning of Art. 133 (I). The object of referring
to
"other proceeding" in that clause is merely to emphasize that
adjudications made in proceedings which are not included in the
description civil or criminal would still attract the provision.~ of
Art. 132 (I) in case they raise a substantial question of law as
to the interpretation of th~ Constitution. A proceeding in which
relief is claimed against action of revenue authorities is included
in the civil proceeding and not in "other proceeding" within the
meaning of Art. 132( 1 ), and an aggrieved party's right to appeal
!o this Court from orders in those proceedings is exercisable in
B
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D
E
F
G
H
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C.l.T. V. !SHWARLAL (Shah, J.)
199
A the same manner as it would be in the case of a decree, order or
judgment in any other civil proceeding.
A large number of cases have arisen before the J_Iigh Courts
in India in which conflicting views about the meamng of ~
expression "civil proceeding" were expressed.
In some cases it
B was held that the expression "civil proceeding" excludes a proceeding instituted in the High Court for the issuei of a writ whatever may be the nature of the rigl!t infringed and the
relief
claimed : in other cases it has been held that a proceeding
resulting from an application for a writ under Art. 226 of the
Constitution may in certain cases be deemed to be a "civil proC ceeding", if the claim made, the right infringed and the relief
sought warrant that inference : in still another set of cases it has
been held that even if a proceedinz commenced by a petition for
a writ be generally categorised as a civil proceeding, where the
jurisdiction which the Higl! Court exercises relates to revenue,
the proceeding is not civil. A perusal of the reasons given in the
D cases prompt the following observations. There are two preliminary conditions to the exercise of the power to grant certificate :
(a) there must be a judgment, decree or final order, and that
judgment, decree or final order must be made in a civil proceeding. An advisory opinion in a tax reference may not be appealed
from with certificate under Art. 133, because the opinion is not
E a judgment, decree or final order, and (b) a proceeding does. not
cease to be civil, when relief is claimed for enforcement of civil
rights merely because the proceeding is not tried as a civil suit.
In a large majority of the cases in which the jurisdiction of the
High Court to certify a case under Art. 133(1) was negatived it
F appears to have been assumed that the expression "other proceeding" used in Art. 132 of the Constitution is or includes a
proceeding of the nature of a revenue proceeding, and therefore
the expression "civil proceeding" in Art. 133 (1) does not include
a re:venue proceeding. This assumption for reasons already set
out 1s erroneous.
G
We do not think that any useful purpose will be served oy
entering upon a detailed analysis of the cases to which our attention was invited in which the view has been expressed that in a
petition under Art. 226 of the Constitution where relief is claimed
in respect of action sougl!t to be taken by the revenue authorities,
the Higl! Court has no power to issue a certificate under Art. 133
H
of the Constitution.
Express prescription of two
independent
conditions by the Constitution on the existence of which alone the
jurisdiction of the Higl! Court may be invoked, has in some cases
200
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(1966] l S.C.R.
,been obliterated, and the ground that from an order in a reference
in a case concerning revenue for opinion, a certificate may nofbe
granted under Art 133, because there is no judgment, decree or
final order has been projected into a ground for denying fnat
proceeding the character of a civil proceeding.
On a careful review of the provisions of the Constitution, we
are of the opinion that there is no ground for restricting the expression "civil proceeding" only to those procedings which arise
,out of civil suits or proceedings which are tried as civil suits, nor
is there any rational basis for excluding from its purview proceedings instituted and tried in the High Court in exercise of its
jurisdiction under Art, 226, where the aggrieved party seeks
relief against infringement of civil rights by authorities purporting to act in exercise of the powers conferred upon them
by
revenue statutes.
The preliminary objection raised by counsel
for the assessee must therefore faiL
A
B
c
D
We may now turn to the question which is raised on the
'f
merits in this appeaL
Section 18-A which was added by the
Indian Income-tax (Amendment) Act 11 of 1944 for imposing
liability for advance payment of tax enacts by the first sub-section,
,,_
insofar as it is material, that where there is no provision made for
deduction of income-tax at the time of payment, the Income-tax E
Officer may on or after the commencement of any financial year,
by order in writing, require an assessee to pay quarterly to the
credit of the Central Government the income-tax and super-tax
payable on so much of such income as is included in his total
income of the latest previous year in respect of which he has been
assessed. Contrary to the two basic concepts of tlie scheme of the F
Indian Income-tax Act under which tax is charged upon the
income of the previous y.~ar and not the income of the assessment
year, and liability does not arise until the annual Finance Act is
passed charging income to tax, s. 18-A introduces within the
scheme of the Act the principle of advance payment of tax and
.authorises collection of advance tax before the assessment year
G
commences and before even the Finance Act which imposes
liability is enacted. But this tax is advance tax which is to be
adjusted against tax payable on the income of the financial year
in the light of the total income which may be computed and also
in the light of the Finance Act which may be passed. Assessment
. and d~mand for advance payment of tax are therefore provisional.
H
If ultunately the ~dvance tax paid is in excess of the tax finally
.assessed, refund will be granted to the assessee; if the advance tax
•
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C.I.T. v. ISHWARLAL (Shah, J.)
201
A paid is less than what is payable, the balance beco~es payab!e on
the final assessment.
With the object of enforcmg compliance
with the provision for payment of advance tax effectively, and at
the same time to protect the assessee from avoidable harassment,
the Legislature made a provision under sub-s. (2) of s. 18-A enabling the assessee before the last instalment is due to intimate his
B own estimate of the income of the previous year to the Income-tax
Officer and the tax payable by him calculated in the manner laid
down in sub-s. ( 1) and to pay such amount as accords with his
estimate. Provision is also made for submitting revised estimate
of income. The Legislature by sub-s. ( 6) also on the other hand
penalises an assessee who seeks to evade liability to pay advance
C tax by underestimating his income by providing that if in any year
an assessee paid tax under sub-s. ( 2) or ( 3) on the basis of his
own estimate and the tax so paid is less than eighty per cent of ·
the tax determined on the basis of the regular assessment, so far
as such tax relates to income to which the provisions of s. 18 do
D not apply and so far as it is not due to variations in the rates of
tax made by the Finance Act enacted for the year for which the
regular assessment is made, simple interest at the rate of six
per cent per annum from the 1st day of January in the financial
year in which the tax was paid up to the date of the said regular
assessment shall be payable by the assessee upon the amount by
E
which the tax so paid falls short of the said eighty per cent. Subsection ( 6) as originally enacted left no iliscretion to the Incometax Officer: if the estimate fell below the prescribed limit, the
Income-tax Officer was obliged to direct payment of interest. But
by Act 25 of 1953 which was enacted with retrospective operation
from April 1, 1952, the following proviso wa& added as the fifth
F provisotos.18-A(6):
"Provided further that in such a case and under such
circumstances as may be prescribed, the Income-tax
Officer may reduce or waive the interest payable by
the assessee."
G The amendment authorised the Income-tax Officer to reduce or
waive th.e interest payable by the assessee in such cases and under
such circumstances as may be prescribed. It was given retrospective operation from April 1, 1952, and the discretion conferred
upon the Income-tax Officer became, by fiction of law, exercisable
as from April l, 1952, even though the Act came into force from
H
May 24, 1953, and the cases in which and circumstances under
which the discretion was to be exercised were prescribed by the
Central Government by r. 48 in December 1953.
202
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(1966] l S.C.R.
The Income-tax Oflicer in the present case, on the language A
used in the statute as it stood on the date of making the order of
assessment, was bound to impose liability for payment of interest
under sub-s. (6). But for some reason which cannot be ascenained
from the record he did not impose that liability. It was only when
in the course of audit this lacuna was pointed out, that the lncometax Officer commenced proceeding under s. 35 of the Income-tax
Act for rectification of the order of assessment. There was at the
date of the original assessment an absolute obligation imposed
upon the assessee to pay interest under s. 18-A ( 6), but by reason
of the retrospective operation given to the fifth proviso added to
sub-s. ( 6) by Act 25 of 1953, the Income-tax Officer was invested
with the discretion to reduce or waive interest payable by the
assessee, this power the Income-tax Officer must, in view of the
retrospective amendment, be deemed in law to have possessed on
the date on which the order of assessment was made in this case.
The Attorney-General appearing on behalf of the Commissioner contended that to the fifth proviso to s. 18-A ( 6) no retrospective operation could effectively be given, because the rules
which alone could render the discretion operative were framed
for the first time in December 1953. We are unable to agree with
that view.
The Legislature has expressly given operation to the
fifth proviso to s. 18-A (6), from April I, 1952. It is true that
the proviso operates only in respect of cases and under circumstances as may be prescribed, but as soon as the rules were framed
which effectuate the purposes for which the proviso was enacted,
the proviso and the rules became effective retrospectively from
April I, 1952.
B
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E
Mr. Sastri appearing on behalf of the asscssec contended that
II
this Coun has laid down in T. Cajee v. U. lormanik Siem and
Anr( 1 ) that where powe:r is conferred upon an authority and it is
made exercisable in the manner provided by subsidiary legislation,
failure to enact such subsidiary legislation will not defeat the
power: the power will be exercisable without the restrictions
which may be, but are not imposed, and therefore once the power
G
of the Income-tax Officer came into being that power became
exercisable immediately without restrictions or limitations until
the Central Government chose to frame rules defining those restrictions. We do not th.ink that the case cited by counsel for the
asses'ee has any application. That was a case in which a District
Council was constituted for the Jaintia Hill District under
the
H
Sixth Schedule to the Constitution.
Under the Sixth Schedule,
(I) [l96IJ I S.C.R. 750.
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C.I.T. V. !SHWARl.AL (Shah, J.)
203
A the District Council was empowered to make laws, intel' alia, for
administration of the District, and appointment or succession of
chiefs or Headmen, but the District Council made no rules regulating the appointment and succession of chiefs and Headmen. It
was held by this Court that the District Council being an administrative and legislative body, it could, so long as no law was
B made, exercise its administrative powers to determine the appoin!-
ment of Chiefs or Headmen. After the law was made, the administrative powers could be exercised subject to the l'.lw. The case
has no application to the present case. The Sixth Schedule vested
in the District Council a general administrative power which was
c capable of being restricted by law, but until so restricted the power
was absolute. In the case before us, however, the discretion to
reduce or waive interest can only be exercised in cases and under
circumstances to be prescribed. There was no absolute power in
which the Income-tax Officer was invested to reduce or waive
interest; his power could be exercised only in prescribed cases
D within the limits of the authority conferred upon him. He could
not reduce or waive interest except in cases and in circumstances
prescribed. But once the rules are framed, they by reason of the
retrospective operation of Act 25 of 1953 become operative as
from the date on which the Act has become operative.
E
This Court in M. K. Venkatachalam /.T.O. and Another v.
Bombay Dyeing and Manufacturing Company Ltd(') held
in
dealing with a case arising under the second proviso to s. 18-A
(5) (which was also inserted by Act 25 of 1953 with retrospective operation from April 1, 1952) that the Income-tax Officer
has power under s. 35 of the Act to rectify a mistake in the a1sessF ment, even though the mistake was the result of a legal fiction arising from the retrospective operation given to the amending Act.
In Venkatachalam's case(') on October 9, 1952 the Income-tax
Officer assessed the tax-payer for the assessment year 1952-53
and gave him credit for certain amount as representing interest on
tax paid in advance under s. 18-A (5). Thereafter on May 24,
G 1953 the Indian Income-tax (Amendment) Act 25 of 1953 came
into force which added a proviso to s. 18-A ( 5) that the assessee
was entitled to interest not on the whole of the advance tax paid
by him, but only on the difference between the payment made
and the amount assessed. This amendment being retrospective as
from April 1, 1952 the Income-tax Officer acting under s. 35 of
H the Act rectified the assessment order and directed that the assessee
be given credit for a smaller amount by way of interest on tax paid
(I} [1959] S.C.R. 703.
LSSop./65-14
204
SUPRBMB
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[1966] l S.C.R.
in advance, and issued a notice of demand against the assessee for
A
the balance remaining due by him. The assessee filed a petition
in the High Court of Bombay praying for a writ prohibiting the
Commissioner of Income-tax and the Income-tax Officer from
enforcing the rectified order and notice of demand.
The High
Court issued the writ prayed for, holding that s. 35 was not applicable to the case as the mistake could not be said to be apparent
B
from the record and the question must be judged in the light of
the Jaw as it stood on the day when the order was passed.