ORDER
Transfer Petition (Civil) No. 338 of 1998
1. Issue notice
2. Mr. D.P. Gupta, Sr. Adv. and Mr. B.K. Prasad, Adv. accept notice.
3. With the consent of the parties, the transfer petition is allowed. The High Court is directed to transmit the records at the very earliest.
C.A. No. 5225 of 1995 and other connected appeals
4. One of the contentions which has been raised is that the Special Court can go into the question whether the amount claimed by the Income Tax Department on the basis of the assessment should be paid to it or not. It is submitted that the position of the Special Court is analogous to that of an Insolvency Court and relying upon a Constitution Bench decision of this Court in The State of Punjab vs. S. Rattan Singh, and a 3-Judge Bench decision in Official Receiver, Kanpur and Another vs. Abdul Shakur and Others, , it has been contended that even though the orders of assessment made by the Income Tax Officer may be binding on the assessees, i.e., the notified persons in the present case, the said orders of assessment cannot bind the creditors and it is open to them to try to persuade and show to the Special Court that the amount claimed by the Income Tax Department on the basis of those assessment orders should not be paid to the Department in whole or in part. Mr. D.P. Gupta, Sr. Adv., however, disputes the applicability of the decisions of this Court in S. Rattan Singh (supra) and Abdul Shakur (supra) in the present matters, but we need not go into this aspect at this stage.
5. Our attention has been drawn to a 2-Judge Bench decision of this Court in Assistant Commissioner of Income Tax vs. A.K. Menon and Others, , where in para 4, it has been observed as follows:- “It is clear that the Special Court has no power to sit in appeal over or overrule the orders of the tax authorities, the Income Tax Appellate Tribunal or the courts in regard to the tax liabilities of notified persons. The only power of the Special Court is to determine the priorities in which claims upon the property under attachment shall be paid. The claims relating to the tax liabilities of a notified person are, along with revenues, cesses and rates entitled to be paid first in the order of priority and in full, as far as may be. In relation to a claim for payment of the tax liability of a notified person, the Special Court has, therefore, only the limited power to determine what having regard to the funds available, can be paid; that is to say, whether the claim can be satisfied in full or only in part. If a particular tax claim cannot at any time be paid in full, provision would have to be made for the balance, so far as may be, so that it is not jeopardised.”
6. While making the aforesaid observations, the attention of this Court in A.K. Menon’s case was not drawn to the decisions of this Court in S. Rattan Singh and Abdul Shakur.
7. Looking at the importance of the matter and the wide ramification which the decision on the point in issue will have, in our opinion it is appropriate that C.A. No. 5225 of 1995 and the connected matters are heard by a larger Bench. We, accordingly direct that the papers of these matters be laid before Hon’ble the Chief Justice for constituting a larger Bench to hear these matters. Parties are at liberty to make a request for early disposal of these matters.
8. The interim applications be listed in court for disposal after four weeks in case these appeals are not listed for hearing.