{"id":202721,"date":"1965-05-07T00:00:00","date_gmt":"1965-05-06T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-ishwarlal-bhagwandas-and-others-on-7-may-1965"},"modified":"2018-09-14T22:09:36","modified_gmt":"2018-09-14T16:39:36","slug":"commissioner-of-income-tax-vs-ishwarlal-bhagwandas-and-others-on-7-may-1965","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-ishwarlal-bhagwandas-and-others-on-7-may-1965","title":{"rendered":"Commissioner Of Income-Tax, … vs Ishwarlal Bhagwandas And Others on 7 May, 1965"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Commissioner Of Income-Tax, … vs Ishwarlal Bhagwandas And Others on 7 May, 1965<\/div>\n
Equivalent citations: 1965 AIR 1818, \t\t 1966 SCR (1) 190<\/div>\n
Author: S C.<\/div>\n
Bench: Gajendragadkar, P.B. (Cj), Wanchoo, K.N., Shah, J.C., Mudholkar, J.R., Sikri, S.M.<\/div>\n
           PETITIONER:\nCOMMISSIONER OF INCOME-TAX, BOMBAY & ANOTHER\n\n\tVs.\n\nRESPONDENT:\nISHWARLAL BHAGWANDAS AND OTHERS\n\nDATE OF JUDGMENT:\n07\/05\/1965\n\nBENCH:\nSHAH, J.C.\nBENCH:\nSHAH, J.C.\nGAJENDRAGADKAR, P.B. (CJ)\nWANCHOO, K.N.\nMUDHOLKAR, J.R.\nSIKRI, S.M.\n\nCITATION:\n 1965 AIR 1818\t\t  1966 SCR  (1) 190\n CITATOR INFO :\n R\t    1966 SC1445\t (9)\n RF\t    1966 SC1888\t (4)\n F\t    1968 SC1227\t (3)\n RF\t    1986 SC1272\t (100)\n\n\nACT:\nConstitution   of   India,   1950,   Art.   133(1)(c)-\"Civil\nProceeding\",  Meaning of.\nIncome-tax Act (11 of 1922), s. 18A(6), proviso-Scope of.\n\n\n\nHEADNOTE:\nThe respondents filed under s. 18A(2) of the Income-tax Act,\n1922,  estimates  of their income for  the  assessment\tyear\n1948,  1948-49\tand made advance payments of tax.   On\t31st\nMarCh 1953 the regular assessment was made, but the  Income-\ntax Officer omitted to charge penal interest as required  by\ns. 18A(6) even though the tax paid was less than 80% of\t the\ntax  determined.  The error was discovered during audit\t and\nthe  Income-tax Officer rectified the error after notice  in\n1956,  under  s. 35 of the Act.\t When the  notice  demanding\ninterest  was issued, the respondents challenged  the  order\nbefore\tthe Commissioner on the ground that the omission  to\ncharge\tpepal  interest could not be  considered  a  mistake\napparent  from\tthe  record, in view of the  proviso  to  s.\n18A(6),\t which was introduced on 24th May 1953 but was\tmade\nretrospective  from  1st  April 1952, giving  power  to\t the\nIncome-tax  Officer to reduce or waive the interest  payable\nby  the\t assessee.   The Commissioner  did  not\t accept\t the\ncontention.  The respondents then moved the High Court under\nArt. 226 of the Constitution and the High Court quashed\t the\nnotice of demand.\nIn his appeal to this Court, the Commissioner contended that\n:  (i) no retrospective operation was effectively  given  to\nthe  proviso,  because the rules, which alone  could  render\nthat  discretion  operative, were framed  only\tin  December\n1953, and (ii) there was nothing to show that the Income-tax\nOfficer\t had  purported to exercise his discretion  when  he\npassed\tthe  order of assessment but did  not  impose  penal\ninterest   under   s.  18A(6).\t Me  respondent\t  raised   a\npreliminary  objection\tthat  the  appeal  was\t incompetent\nbecause\t (a) the High Court had no power under Art.  133  to\ncertify the appeal as a proceeding under Art. 226 was not  a\ncivil  proceeding  within the meaning of Art. 133,  and\t (b)\neven if some proceedings under Art. 226 could be treated  as\ncivil proceeding, when relief is sought against the levy  of\na  tax, the proceeding could not be so treated as  it  comes\nunder  \"  other\t proceeding\"  as  contrasted  with  a  civil\nproceeding, referred to in Art. 132(1).\nHELD  :\t (i)  (by  Full Court) :  There\t is  no\t ground\t for\nrestricting the expression \"civil proceeding\" only to  those\nproceedings  which arise out of civil suits  or\t proceedings\nwhich  are tried as civil suits, nor is there  any  rational\nbasis for excluding from its purview proceedings  instituted\nand tried in the High Court in exercise of its\tjurisdiction\nunder  Art.  226, where the aggrieved  party  seeks  -relief\nagainst\t  infringement\tof  civil  rights   by\t authorities\npurporting  to act in exercise of the powers conferred\tupon\nthem by revenue statutes. [200 B-D]\n(Per P. B. Gajendragadkar, C. J., K. N. Wanchoo, J. C.\tShah\nand S.\t  M. Sikri, JJ) : The expression \"civil\t proceeding\"\ncovers all proceedings in     which  a\tparty  asserts\t the\nexistence of a civil right conferred by the civil law or  by\nstatute, and claims relief for breach thereof.\tIt is one in\nwhich  a person seeks to enforce by appropriate\t relief\t the\nalleged in-\n191\nfringement of his civil rights against another person or the\nState and which, if the claim is proved, would result in the\ndeclaration  express  or implied of the\t right\tclaimed\t and\n-relief\t such  as payment of  debt,  damages,  compensation,\ndelivery  of  specific\tproperty,  enforcement\tof  personal\nrights,\t determination of status, etc.\tBy a petition for  a\nwrit  under Art. 226, extraordinary jurisdiction,  which  is\nundoubtedly  special  and  exclusive of the  High  Court  is\ninvoked.   But on that account the nature of the  proceeding\nin which it is exercised is not altered.  The character of a\nproceeding  depends,  not upon the nature  of  the  Tribunal\nwhich  is invested with authority to grant -relief but\tupon\nthe nature of the right violated and the appropriate  relief\nwhich may be claimed. [196B, G, H; 197H]\nThere  is no warrant for the view that from the category  of\ncivil  proceedings, it was intended to\texclude\t proceedings\nrelating  to  or which seek relief  against  enforcement  of\ntaxation  laws of the State.  If a person is called upon  to\npay  tax which the State is not competent to levy, or  which\nis  not\t imposed in accordance with the\t law  which  permits\nimposition  of\tthe  tax, or in\t the  levy,  assessment\t and\ncollection of which rights of the tax-payer are infringed in\na  manner  not\twarranted by the statute,  a  proceeding  to\nobtain relief, whether it is from the tribunal set up by the\ntaxing statute or from the civil court, would be regarded as\na  civil proceeding.  The words \"other proceeding\"  in\tArt.\n132(1) refer only to proceedings which may be neither  civil\nnor criminal, such as, proceedings for contempt of court and\nfor   exercise\t of   disciplinary   jurisdiction    against\nprofessionals. it is not because a reference under s. 256 of\nthe  Income-tax\t Act  to  the High  Court  is  not  a  civil\nproceeding  that  a certificate under Art. 133\tmay  not  be\ngranted, necessitating the enactment of s. 261 for  granting\nsuch  a certificate, but, because of the advisory  character\nof  the jurisdiction exercised by the High Court,  the\tHigh\nCourt's\t opinion is not a judgement, decree or order  within\nthe meaning of Art. 133. [196 D-G; 197E]\n(ii) (By Full Court) : It is true that the proviso  operates\nonly  in respect of cases and under circumstances as may  be\nprescribed  by\tthe  rules, but as soon as  the\t rules\twere\nframed\twhich effectuate the purpose for which\tthe  proviso\nwas  enacted,  the proviso and the  rules  became  effective\nretrospectively from 1st April 1952. [202E]\nT.   Cajee  v.\tU.  Jormanik  Slem,<\/a>  [1961]  1\tS.C.R.\t750,\ndistinguished.\nM.   K.\t  Venkatachalam\t  I.T.0.  v.   Bombay\tDyeing\t and\nManufacturing Co.  Ltd. [1959] S.C.R. 703, applied.\n(iii)\t  (Per P. B. Gajendragadkar, C.J., K. N. Wanchoo, J.\nC. Shah and S. M. Sikri, JJ.) : The High Court was right  in\nsetting\t aside the order passed by the Commissioner  without\nconsidering  the proviso (5) to s. 18A(6) which was  clearly\napplicable to the case of the, assesse. [205E]\nThe Income-tax Officer, on the language of s. 18A(6) on\t the\ndate  of  making the assessment order, was bound  to  impose\nliability  for payment of penal interest.  But by reason  of\nthe  retrospective operation given to the proviso  added  in\n1953,\tthe  Officer  must  be\tdeemed\tto  have   possessed\ndiscretion  to\treduce\tor waive  interest  payable  by\t the\nassessee, on the date on which he made the assessment order.\nThe order which did not take note of the law deemed to be in\nforce  must be regarded as defective; and the fact that\t the\noffered could not in making the assessment have adjusted his\napproach  to  the problem before him in the light  of  those\nprovisions is irrelevant in considering the legality of\t his\norder. [202A, C; 205 B-C]\nPer Mudholkar, J. (dissenting) : Even though the proviso and\nthe  rule must be deemed to have been in force on 1st  April\n1952, the omi-\n192\nssion  to  charge penal interest at the time of\t making\t the\nregular assessment could not be ascribed to the exercise  of\ndiscretion by the income-tax Officer.  In fact, when he made\nthe assessment, he had no discretion and was bound by law to\ncharge\tpenal  interest.   His omission to  do\tso  must  be\nascribed to an oversight and not to deliberateness.  He\t was\ncompetent  to  rectify the mistake under s. 35 and  when  he\nexercised  his power under the section he  himself  accepted\nthe  position that what he did earlier was through  mistake.\n[209 C-E, G]\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos. 1003\t and
\n1004 of 1963.\n<\/p>\n
Appeals from the judgment and orders dated November 13, 1958
\nof  the Bombay High Court in Miscellaneous Petition No.\t 217
\nand 218 of 1958.\n<\/p>\n
C.   K. Daphtary, Attorney-General, R. Ganapathy Iyer and
\nB.   R.\t G.  K.\t Achar,\t for the  appellants  (in  both\t the
\nappeals).\n<\/p>\n
A.   V.\t Viswanatha Sastri, C. A. Ramachandran, J. B.  Dada-
\nchanji, 0. C. Mathur and Ravinder Narain, for the respondent
\n(in both the appeals).\n<\/p>\n
The  Judgment  of Gajendragadkar, C.J., Wanchoo,  Shah,\t and
\nSikri, JJ. was delivered by Shah, J. Mudholkar, J. delivered
\na dissenting Opinion.\n<\/p>\n
due notice to the assessee”.\n<\/p>\n
Shah,  J.  The\t1st Income-tax Officer,\t C-11  Ward,  Bombay
\nserved\ta notice tinder s. 18-A(1) of the Indian  Income-tax
\nAct,   1922  calling  upon  Bhagwandas\t Kevaldas-who\twill
\nhereinafter  be called ‘the assessee’-to pay in\t four  equal
\ninstallments Rs. 25,973\/5 as advance-tax for the  assessment
\nyear  1948-49.\tOn September 17, 1947 the assessee filed  an
\nestimate  of  his  income under s. 18-A(2) and\tof  the\t tax
\npayable\t by him, and on January 10, 1948 he filed a  revised
\nestimate.   An order under S. 23-B of the Act  provisionally
\nassessing the income was made by the Income-tax Officer\t and
\npursuant  thereto on August 23, 1950 the assessee  paid\t the
\ntax  so assessed.  Regular assessment of the income  of\t the
\nassessee  was  made  on March 31,  1953\t by  the  Income-tax
\nOfficer, and it was found that the tax paid on the basis  of
\nthe  estimate of the assessee was less than eighty per\tcent
\nof the tax determined as a result of the regular assessment.
\nBut the Income-tax Officer made no charge for interest under
\nsub-s. (6) of S. 18-A of the Income-tax Act.
\nThe  departmental  auditor raised an objection\tin  auditing
\naccounts  of C-11 Ward that a mistake was committed  by\t the
\nIncome-tax  Officer in failing to charge interest in  making
\nthe order of assessment against the assessee.  On  September
\n21,  1956  the Income-tax Officer served a notice  upon\t the
\nassessee requiring him
\n193<\/span>
\nto show cause why the mistake in not levying interest be not
\nrectified  and why he should not be directed to\t pay  “penal
\ninterest’ under s. 18-A(6).  On October 4, 1956 the  Income-
\ntax Officer recorded the following order :\n<\/p>\n
\t      “During  the internal checking of\t C-11  Ward,
\n\t      the  Auditor has pointed out a mistake in\t not
\n\t      charging penal interest under s. 18-A(6).\t  As
\n\t      this mistake is apparent from record the\tsame
\n\t      is  rectified  under s. 35  after\t giving\t due
\n\t      notice to the assessee”,
\nand  served a notice of demand calling upon the assessee  to
\npay  Rs. 14,929\/10 as interest due under s. 18-A(6) for\t the
\nperiod January 1, 1948 to July 22, 1950.\n<\/p><\/blockquote>\n
In exercise of his powers under s. 33-A, by order dated Feb-
\nruary 1, 1958, the Commissioner of Income-tax confirmed\t the
\norder  of  the Income-tax Officer  rectifying  the  original
\norder of assessment and imposing liability to pay  interest,
\nsubject to the modification that interest be paid only\ttill
\nJune 13, 1950.\n<\/p>\n
The  assessee  then moved the High Court  of  Judicature  at
\nBombay by a petition under Art. 226 of the Constitution\t for
\nissue of a writ certiorari summoning the record of the\tcase
\nand for an order quashing or setting aside the order  passed
\nunder  s. 33-A(2) by the Commissioner of Income-tax and\t the
\norder  passed by the Income-tax Officer under s. 35 and\t the
\nnotice of demand pursuant to that order.  The High Court  of
\nBombay\tfollowing  its\tearlier\t judgment  in  the  case  of
\nShantilal  Ravji v. M. C. Nair, IV Income-tax  Officer,\t ‘G’
\nWard, Bombay and Another(1) directed that the orders  passed
\nby the Income-tax Officer and by the Commissioner of Income-
\ntax be quashed.\t Against the order passed by the High  Court
\nthe  Commissioner of Income-tax and the\t Income-tax  Officer
\nhave,  with certificate granted by the High Court,  appealed
\nto this Court.\n<\/p>\n
At  the\t hearing  of this appeal counsel  for  the  assessee
\nraised\tan objection in liming that the appeal filed by\t the
\nCommissioner  and  the Income-tax Officer  was\tincompetent.
\nbecause\t the High Court had no power under Art. 133  of\t the
\nConstitution  to certify a proposed appeal against an  order
\nin  a proceeding commenced by a petition for the issue of  a
\nwrit under Art. 226 of the Constitution.  It was urged\tthat
\nthe  proceeding\t before\t the High Court was not\t ”  a  civil
\nproceeding” within the meaning of Art. 133.  Article 133  of
\nthe  Constitution, insofar as it is material, by  the  first
\nclause provides
\n(1)  (1958) 34 I.T.R. 439.\n<\/p>\n
194<\/span><\/p>\n
\t      “An appeal shall lie to the Supreme Court from
\n\t      any judgment, decree or final order in a civil
\n\t      proceeding of a High Court in the territory of
\n\t      India if the High Court certifies-\n<\/p><\/blockquote>\n
\t      (a)   that the amount or value of the subject-
\n\t      matter  of the dispute in the court  of  first
\n\t      instance\tand still in dispute on\t appeal\t was
\n\t      and   is\t not  less  than   twenty   thousand
\n\t      rupees***; or\n<\/p><\/blockquote>\n
\t      (b)   that the judgment, decree or final order
\n\t      involves directly or indirectly some claim  or
\n\t      question\trespecting  property  of  the\tlike
\n\t      amount or value; or\n<\/p><\/blockquote>\n
\t      (c)   that the case is a fit one for appeal to
\n\t      the Supreme Court;\n<\/p><\/blockquote>\n
The power to issue a certificate under Art. 133 may be exer-
\ncised  only in respect of a judgment, decree or final  order
\nof a High Court in a civil proceeding, and the order  passed
\nby  the\t High Court disposing of the petition filed  by\t the
\nassessee  for  the  issue  of a writ under  Art.  226  is  a
\njudgment.  But Mr. A. V. Vishwanath Sastri for the  assessee
\ncontended  in the first instance that the expression  “civil
\nproceeding”  -in  Art. 133 only means a\t proceeding  in\t the
\nnature of or triable as a civil suit and a petition for\t the
\nissue\tof  a  high  prerogative  writ\tnot  being  such   a
\nproceeding,  against the order passed by the High  Court  no
\nappeal\tlay to this Court with certificate under  Art.\t133.
\nIn  the\t alternative,  counsel\tcontended  that\t even  if  a
\nproceeding  for\t the issue of a writ under Art. 226  of\t the
\nConstitution  may  in certain cases be treated\tas  a  civil
\nproceeding, it cannot be so treated when the party aggrieved
\nseeks  relief against the levy of tax or revenue claimed  to
\nbe due to the State.\n<\/p>\n
This  Court is invested by the Constitution  with  appellate
\njurisdiction of great amplitude exercisable over all  courts
\nand  tribunals in India.  The jurisdiction may be  exercised
\nin respect of any judgment, decree, determination,  sentence
\nor  order  in  any cause or matter passed by  any  court  or
\ntribunal  other than a judgment, determination, sentence  or
\norder made or passed by any court or tribunal under any\t law
\nrelating  to the Armed Forces: Art. 136.  Exercise  of\tthis
\npower  depends\tsolely\tupon the discretion  of\t the  Court.
\nAppeals lie to this Court also from orders passed in certain
\nclasses\t of  cases when certified by the  High\tCourts.\t  An
\nappeal\tlies from the judgment, decree or final order  of  a
\nHigh Court in a civil, criminal or other proceeding, if the
\n195<\/span>
\nHigh  Court certifies that the case involves  a\t substantial
\nquestion of law as to the interpretation of the Constitution
\n:  Art.\t 132(1).   Am appeal also lies\tfrom  any  judgment,
\ndecree or final order in a civil proceeding of a High  Court
\nif  the\t High Court certifies that the\tcase  satisfies\t the
\nconditions  in cls. (a), (b) or (c) of Art. 133(1), or\tfrom
\nany  judgment  or  final order or  sentence  in\t a  criminal
\nproceeding  of\ta High Court, if the case falls\t within\t the
\ndescription  of cls. (a) & (b) of Art. 134, or if  the\tHigh
\nCourt  certifies that the case is a fit one for appeal.\t  It
\nis  clear that under Art. 136 against the  adjudications  of
\nall  courts and tribunals (subject to the exception  already
\nnoticed)  whatever  be\tthe  character\tof  the\t proceeding,
\nappeals\t lie  with  leave to this  Court.   An\tappeal\tlies
\nagainst\t the  adjudication of a High Court as  a  matter  of
\nright,\t whatever  the\tnature\tof  the\t  proceeding,\twith
\ncertificate  that it involves a substantial question of\t law
\nas  to the interpretation of the Constitution, and in  civil
\nproceeding  with certificate of the nature set out  in\tcls.\n<\/p>\n
(a), (b) or (c) of Art.. 133, and in criminal proceedings in
\nconditions   mentioned\tin  cls.  (a)  and  (b)\t  and\twith
\ncertificate under cl. (c) of Art. 134.\n<\/p>\n
Counsel for the assessee said that proceedings instituted in
\nthe High Court in exercise of its jurisdiction–original  or
\nappellate  may\tbe  broadly classified\tas  (i)\t proceedings
\ncivil,\t(ii)  proceedings criminal,  and  (iii)\t proceedings
\nrevenue,  and where the case does not involve a\t substantial
\nquestion as to the interpretation of the Constitution,\tfrom
\nan  order  passed in a proceeding civil, an appeal  lies  to
\nthis  Court with certificate granted under Art. 133  of\t the
\nConstitution,  and from a judgment, final order or  sentence
\nin  a  criminal proceeding an appeal lies  with\t certificate
\n(,ranted  under\t Art. 134 of the Constitution, but  from  an
\norder  passed in a proceeding relating to revenue the  right
\nof  appeal may be exercised only with leave of\tthis  Court.
\nCounsel\t seeks support for this argument primarily from\t the
\nphraseology  used  in Art. 132 of  the\tConstitution.\tThat
\nArticle, by its first clause, provide-,
\n\t      “An appeal shall lie to the Supreme Court from
\n\t      any judgment, decree or final order of a\tHigh
\n\t      Court in the territory of India, whether in  a
\n\t      civil,  criminal or other proceeding,  if\t the
\n\t      High Court certifies that the case involves  a
\n\t      substantial   question  of  law  as   to\t the
\n\t      interpretation of this Constitution.”\n<\/p>\n
Counsel relies upon the classification of proceeding made in
\nArt.  132(1) and seeks to contrast it with  the\t phraseology
\nused  in  Arts.\t 133(1)\t &  134(1).   He  says\tthat  “other
\nproceeding” in Art. 132(1)
\n196<\/span>
\nfalls  within the residuary  class  of\t proceedings   other
\nthan  civil  or criminal, and such a proceeding\t includes  a
\nrevenue\t proceeding.  The expression “civil  proceeding”  is
\nnot defined in the Constitution, nor in the General  Clauses
\nAct.  The expression in our judgment covers all\t proceedings
\nin  which  a party asserts the existence of  a\tcivil  right
\nconferred by the civil law or by statute, and claims  relief
\nfor breach thereof.  A criminal proceeding on the other hand
\nis  ordinarily one in which if carried to its conclusion  it
\nmay  result  in the imposition of sentences such  as  death,
\nimprisonment,  fine  or\t forfeiture  of\t property.  It\talso
\nincludes proceedings in which in the larger interest of\t the
\nState,\torders\tto prevent apprehended breach of the  peace,
\norders\tto  bind  down\tpersons who  are  a  danger  to\t the
\nmaintenance   of  peace\t and  order,  or  orders  aimed\t  at
\npreventing  vagrancy are contemplated to be passed. But\t the
\nwhole  area of proceedings, which reach the High  Courts  is
\nnot  exhausted by classifying the proceedings as  civil\t and
\ncriminal.   There  are\tcertain\t proceedings  which  may  be
\nregarded  as  neither  civil nor  criminal.   For  instance,
\nproceeding  for\t contempt  of  Court  and  for\texercise  of
\ndisciplinary   jurisdiction   against\tlawyer\t or    other
\nprofessionals,\tsuch  as chartered accountants may not\tfall
\nwithin\t the  classification  of  proceedings,\t  civil\t  or
\ncriminal. But there is no warrant for the view that from the
\ncategory  of civil proceedings, it was intended\t to  exclude
\nproceedings  relating  to  or  which  seek  relief   against
\nenforcement  of\t taxation laws of the  State.\tThe  primary
\nobject\tof a taxation statute is to collect revenue for\t the
\ngovernance  of the State or for providing specific  services
\nand  such laws directly affect the civil rights of the\ttax-
\npayer.\t If  a person is called upon to pay  tax  which\t the
\nState  is not competent to levy, or which is not imposed  in
\naccordance with the law which permits imposition of the tax,
\nor in the levy, assessment and collection of which rights of
\nthe tax-payer are infringed in a manner not warranted by the
\nstatute,  a proceeding to obtain relief whether it  is\tfrom
\nthe tribunal set up by the taxing statute, or from the civil
\ncourt  would  be  regarded  as\ta  civil  proceeding.\t The
\ncharacter  of the proceeding, in our judgment,\tdepends\t not
\nupon  the  nature  of the tribunal which  is  invested\twith
\nauthority  to grant relief but upon the nature of the  right
\nviolated and the appropriate relief which may be claimed.  A
\ncivil proceeding is therefore one in which a person seeks to
\nenforce\t by appropriate relief the alleged  infringement  of
\nhis  civil  rights against another person or the State,\t and
\nwhich if the claim is proved would result in the declaration
\nexpress\t or implied of the right claimed and relief such  as
\npayment of debt, damages, com-\n<\/p>\n
197<\/span><\/p>\n
pensation,  delivery  of specific property,  enforcement  of
\npersonal rights, determination of status etc.
\nThere is therefore under the Constitution a right of  appeal
\nto, this Court with special leave from the adjudications  of
\nall courts and tribunals (except tribunals constituted by or
\nunder  laws relating to Armed Forces).\tAn appeal also\tlies
\nto this Court against all adjudications by a High Court from
\njudgments,   decrees  and  orders  in  cases  in   which   a
\nsubstantial  question  as  to  the  interpretation  of\t the
\nConstitution  is  involved,  whatever  the  nature  of\t the
\nproceeding.   Appeals  from criminal proceedings  lie  as  a
\nmatter of right in cases falling within cls. (a) and (b)  of
\nArt. 134, and in cases certified as fit for appeal under cl.\n<\/p>\n
(c)  of Art. 134, and from civil proceedings of\t the  nature
\ncertified by the High Court under Art. 133(1) cls. (a),\t (b)
\nor (c).\n<\/p>\n
For reasons already stated, a proceeding for relief  against
\ninfringement  of  civil\t right\tof  a  person  is  a   civil
\nproceeding   even  if  the  infringement  be  in   purported
\nenforcement of a taxing statute.  Section 261 of the Income-
\ntax  Act 1961 under which an appeal lies to this Court\tfrom
\nany  judgment delivered on a reference made under s. 256  in
\nany case which the High Court certifies to be a fit one\t for
\nappeal\tto this Court is not an exception to that rule.\t  It
\nis not because the reference is not a civil proceeding\tthat
\na  certificate\tunder  Art. 133 may not be  granted:  it  is
\nbecause\t of  the  advisory  character  of  the\tjurisdiction
\nexercised  by the High Court under s. 256 that\tthe  opinion
\ndelivered  by the High Court in a reference under s. 256  is
\nnot  a judgment, order or decree within the meaning of\tArt.\n<\/p>\n
133.   Similarly  the  enactment  of  s.  54  of  the\tLand
\nAcquisition  Act which expressly provides for an  appeal  to
\nthis Court, subject to the provisions contained in s. 110 of
\nthe Code of Civil Procedure, from an award, or from any part
\nof  the\t award made by the Court is easily  appreciated,  if
\nregard be had to the character of the adjudication, which is
\nin  the\t nature of an award in an arbitration:\tsee  Rangoon
\nBotatoung Company Ltd. v.     The Collector, Rangoon(1).
\nBy a petition for a writ under Art. 226 of the Constitution,
\nextraordinary  jurisdiction of the High Court to issue\thigh
\nprerogative  writs  granting  relief  in  special  cases  to
\npersons aggrieved by the exercise of authority-statutory  or
\notherwise-by  public  officers or  authorities\tis  invoked.
\nThis jurisdiction is undoubtedly special and exclusive,\t but
\non that account the nature of the proceeding in which it  is
\nexercised is not altered.  Where a revenue
\n(1)  L.R. 39 I.A. 197.\n<\/p>\n
198<\/span><\/p>\n
authority seeks to levy tax or threatens action in purported
\nexercise of powers conferred by an Act relating to  revenue,
\nthe primary impact of such an act or threat is on the  civil
\nrights of the party aggrieved and when relief is claimed  in
\nthat  behalf  it is a civil proceeding, even  if  relief  is
\nclaimed\t not  in a suit but by resort to  the  extraordinary
\njurisdiction of the High Court to issue writs.
\nIt  is\tnot  easy to attribute to  the\texpression  “revenue
\nproceeding”  any  precise connotation, and  in\tinterpreting
\nArts.  132 (1) and 133 it would be difficult to project\t the
\nsomewhat  anomalous  provision contained in s.\t226  of\t the
\nGovernment  of India Act, 1935 under which,  for  historical
\nreasons,  it was enacted that unless otherwise\tprovided  by
\nthe  appropriate legislature, no High Court shall  have\t any
\noriginal jurisdiction in any matter concerning the  revenue,
\nor  concerning\tany act ordered or done\t in  the  collection
\nthereof\t according to the usage and practice of the  country
\nor the law for the time being in force.\t This section barred
\nthe  High  Court from exercising  original  jurisdiction  in
\nmatters\t concerning revenue.  There was no such bar  against
\nsubordinate  courts, nor against the exercise  of  appellate
\njurisdiction  by  the  High  Courts  in\t matters  concerning
\nrevenue instituted in subordinate courts.  No provision\t has
\nbeen  made  in\tthe Constitution similar to S.\t226  of\t the
\nGovernment  of\tIndia Act, and there is no reason  to  think
\nthat it was intended to deprive the High Court of its  power
\nto  certify cases concerning revenue, by enacting  that\t the
\nHigh  Court  may certify a case in a civil  proceeding.\t  No
\nground\tis suggested for acceptance that while removing\t the
\nban  against  the  High\t Court’s  original  jurisdiction  in
\nmatters concerning revenue, the Constitution imposed another
\nban  against the exercise of power to certify cases  decided
\nby  the\t High  Court in the appellate as  well\tas  original
\njurisdiction when the cases concerned revenue.
\nWe have already set out our reasons for holding that a\tPro-
\nceeding\t  taken\t for  recovery\tof  a  tax  is\tnot   “other
\nproceeding’  under  Art. 132 (1) : such a  proceeding  is  a
\ncivil  proceeding  within the meaning of Art.  133(1).\t The
\nobject of referring to “other proceeding” in that clause  is
\nmerely\tto emphasize that adjudications made in\t proceedings
\nwhich are not included in the description civil or  criminal
\nwould  still attract the provisions of Art. 132 (1) in\tcase
\nthey  raise  a\tsubstantial  question  of  law\tas  to\t the
\ninterpretation\tof the Constitution.  A proceeding in  which
\nrelief\tis claimed against action of revenue authorities  is
\nincluded   in  the  civil  proceeding  and  not\t in   “other
\nproceeding”  within  the  meaning of  Art.  132(1),  and  an
\naggrieved party’s right to appeal to this Court from  orders
\nin those proceedings is exercisable in
\n199<\/span>
\nthe  same  manner as it would be in the case  of  a  decree,
\norder or judgment in any other civil proceeding.
\nA  large number of cases have arisen before the High  Courts
\nin India in which conflicting views about the meaning of the
\nexpression “civil proceeding” were expressed.  In some cases
\nit was held that the expression “civil proceeding”  excludes
\na proceeding instituted in the High Court -for the issue  of
\na  -writ whatever may be the nature of the  right  infringed
\nand the relief claimed: in other cases it has been held that
\na proceeding resulting from an application for a writ Linder
\nArt. 226 of the Constitution may in certain cases be  deemed
\nto  be\ta “civil proceeding”, if the claim made,  the  right
\ninfringed and the relief sought warrant that inference :  in
\nstill  another set of cases it has been held that even if  a
\nproceeding  commenced by a petition for a writ be  generally
\ncategorised  as a civil proceeding, where  the\tjurisdiction
\nwhich  the  High  Court exercises relates  to  revenue,\t the
\nproceeding is not civil.  A perusal of the reasons given  in
\nthe cases prompt the following observations.  There are\t two
\npreliminary conditions to the exercise of the power to grant
\ncertificate : (a) there must be a judgment, decree or  final
\norder, and that judgment, decree or final order must be made
\nin  a  civil  proceeding.   An advisory\t opinion  in  a\t tax
\nreference  may not be appealed from with  certificate  under
\nArt.  133, because the opinion is not a judgment, decree  or
\nfinal  order,  and  (b) a proceeding does not  cease  to  be
\ncivil,\twhen  relief  is claimed for  enforcement  of  civil
\nrights merely because the proceeding is not tried as a civil
\nsuit.\tIn  a  large  majority of the  cases  in  which\t the
\njurisdiction of the High Court to certify a case under\tArt.
\n133(1)\twas negatived it appears to have been  assumed\tthat
\nthe  expression “other proceeding” used in Art. 132  of\t the
\nConstitution is or includes a proceeding of the nature of  a
\nrevenue\t proceeding,  and therefore  the  expression  “civil
\nproceeding”  in\t Art.  133(1) does  not\t include  a  revenue
\nproceeding.  This assumption for reasons already set out  is
\nerroneous.\n<\/p>\n
We  do not think that any useful purpose will be  served  by
\nentering upon a detailed analysis of the cases to which\t our
\nattention  was invited in which the view has been  expressed
\nthat in a petition under Art. 226 of the Constitution  where
\nrelief\tis claimed in respect of -action sought to be  taken
\nby  the revenue authorities, the High Court has no power  to
\nissue  a  certificate under Art. 133  of  the  Constitution.
\nExpress\t prescription of two independent conditions  by\t the
\nConstitution   on   the\t existence  of\t which\t alone\t the
\njurisdiction  of the High Court may be invoked, has in\tsome
\ncases
\n200<\/span>
\nbeen  obliterated,  and the ground that from an order  in  a
\nreference  in  a  case concerning  revenue  for\t opinion,  a
\ncertificate may not be granted under Art. 133, because there
\nis  no\tjudgment, decree or final order has  been  projected
\ninto a ground for denying that proceeding the character of a
\ncivil proceeding.\n<\/p>\n
On  a careful review of the provisions of the  Constitution,
\nwe  are\t of  the  opinion  that\t there\tis  no\tground\t for
\nrestricting the expression “civil proceeding” only to  those
\nproceedings  which arise out of civil suits  or\t proceedings
\nwhich  are tried as civil suits, nor is there  any  rational
\nbasis for excluding from its purview proceedings  instituted
\nand tried in the High Court in exercise of its\tjurisdiction
\nunder  Art.  226,  where the aggrieved\tparty  seeks  relief
\nagainst infringement of civil rights by authorities purport-
\ning to act in exercise of the powers conferred upon them by
\nrevenue statutes.   The\t preliminary  objection\t raised\t  by
\ncounsel for the assessee must therefore fail.
\nWe may now     turn to the question which is raised on the
\nmerits in this appeal.\tSection 18-A which was added by the
\nIndian\tIncome-tax (Amendment) Act 11 of 1944  for  imposing
\nliability  for\tadvance payment of tax enacts by  the  first
\nsub-section, insofar as it is material, that where there  is
\nno provision made for deduction of income-tax at the time of
\npayment,  the  Income-tax  Officer  may\t on  or\t after\t the
\ncommencement  of  any financial year, by order\tin  writing,
\nrequire\t an assessee to pay quarterly to the credit  of\t the
\nCentral\t Government the income-tax and super-tax payable  on
\nso much of such income as is included in his total income of
\nthe  latest previous year in respect of which, he  has\tbeen
\nassessed.  Contrary to the two basic concepts of the  scheme
\nof the Indian Income-tax Act under which tax is charged upon
\nthe  income of the previous year and not the income  of\t the
\nassessment  year,  and liability does not  arise  until\t the
\nannual Finance Act is passed charging income to tax, s. 18-A
\nintroduces  within  the scheme of the Act the  principle  of
\nadvance payment of tax and authorises collection of  advance
\ntax before the assessment year commences and before even the
\nFinance\t Act which imposes liability is enacted.   But\tthis
\ntax  is\t advance  tax which is to be  adjusted\tagainst\t tax
\npayable on the income of the financial year in the light  of
\nthe total income which may be computed and also in the light
\nof  the\t Finance Act which may be  passed.   Assessment\t and
\ndemand for advance payment of tax are therefore provisional.
\nIf  ultimately the advance tax paid is in excess of the\t tax
\nfinally\t  assessed, refund will be granted to the  assessee;
\nif the advance tax
\n\t\t\t    201<\/span>
\npaid  is  less\tthan what is payable,  the  balance  becomes
\npayable\t on  the  final\t assessment.   With  the  object  of
\nenforcing  compliance  with  the provision  for\t payment  of
\nadvance tax effectively, and at the same time to protect the
\nassessee  from avoidable harassment, the Legislature made  a
\nprovision under sub-s. (2) of s. 18-A enabling the  assessee
\nbefore\tthe  last  instalment is due  to  intimate  his\t own
\nestimate  of the income of the previous year to the  Income-
\ntax  Officer  and the tax payable by him calculated  in\t the
\nmanner\tlaid  down in sub-s. (1) and to pay such  amount  as
\naccords\t with  his  estimate.  Provision is  also  made\t for
\nsubmitting  revised estimate of income.\t The Legislature  by
\nsub-s. (6) also on the other hand penalises an assessee\t who
\nseeks\tto   evade   liability\tto  pay\t  advance   tax\t  by
\nunderestimating his income by providing that if in any\tyear
\nan assessee paid tax under sub-s. (2) or (3) on the basis of
\nhis own estimate and the tax so paid is less than eighty per
\ncent  of  the  tax determined on the basis  of\tthe  regular
\nassessment,  so far as such tax relates to income  to  which
\nthe provisions of s. 18 do not apply and so far as it is not
\ndue  to variations in the rates of tax made by\tthe  Finance
\nAct enacted for the year for which the regular assessment is
\nmade, simple interest at the rate of six per cent per  annum
\nfrom  the 1st day of January in the financial year in  which
\nthe  tax  was  paid  up to the date’  of  the  said  regular
\nassessment shall be payable by the assessee upon the  amount
\nby which the tax so paid falls short of the said eighty\t per
\ncent.\t Subsection  (6)  as  originally  enacted  left\t  no
\ndiscretion  to the Income-tax Officer: if the estimate\tfell
\nbelow  the  prescribed\tlimit, the  Income-tax\tOfficer\t was
\nobliged\t to  direct payment of interest.  But by Act  25  of
\n1953  which  was enacted with retrospective  operation\tfrom
\nApril 1, 1952, the following proviso was added as the  fifth
\nproviso to s. 18-A(6):\n<\/p>\n
\t      “Provided\t further  that in such\ta  case\t and
\n\t      under such circumstances as may be prescribed,
\n\t      the Income-tax Officer may reduce or waive the
\n\t      interest payable by the assessee.”\n<\/p><\/blockquote>\n
The amendment authorised the Income-tax Officer to reduce or
\nwaive the interest payable by the assessee in such cases and
\nunder such circumstances as may be prescribed.\tIt was given
\nretrospective\toperation  from\t April\t1,  1952,  and\t the
\ndiscretion conferred upon the Income-tax Officer became,  by
\nfiction\t of  law, exercisable as from April  1,\t 1952,\teven
\nthough\tthe Act came into force from May 24, 1953,  and\t the
\ncases in which and circumstances under which the  discretion
\nwas   to  be  exercised\t were  prescribed  by  the   Central
\nGovernment by r. 48 in December 1953.\n<\/p>\n
202<\/span><\/p>\n
The Income-tax Officer in the present case, on the  language
\nused  in the statute as it stood on the date of\t making\t the
\norder  of  assessment,\twas bound to  impose  liability\t for
\npayment\t of interest under sub-s. (6).\tBut for some  reason
\nwhich  cannot  be  ascertained from the record\the  did\t not
\nimpose\tthat liability.\t It was only when in the  course  of
\naudit  this  lacuna  was pointed out,  that  the  Income-tax
\nOfficer\t commenced proceeding under S. 35 of the  Income-tax
\nAct for rectification of the order of assessment.  There was
\nat   the  date\tof  the\t original  assessment  an   absolute
\nobligation  imposed upon the assessee to pay interest  under
\ns.  18-A(6),  but by reason of the  retrospective  operation
\ngiven to the fifth proviso added to sub-s. (6) by Act 25  of
\n1953,\tthe  Income-tax\t Officer  was  invested\t  with\t the
\ndiscretion  to\treduce\tor waive  interest  payable  by\t the
\nassessee, this power the Income-tax Officer must, in view of
\nthe  retrospective  amendment,\tbe deemed  in  law  to\thave
\npossessed  on the date on which the order of assessment\t was
\nmade in this case.\n<\/p>\n
The Attorney-General appearing on behalf of the Commissioner
\ncontended that to the fifth proviso to s. 18-A (6) no retro-
\nspective  operation could effectively be given, because\t the
\nrules which alone could render the discretion operative were
\nframed\tfor the first time in December 1953.  We are  unable
\nto  agree  with that view.  The\t Legislature  has  expressly
\ngiven  operation to the fifth proviso to s. 18-A  (6),\tfrom
\nApril  1, 1952.\t It -is true that the proviso operates\tonly
\nin  respect  of\t cases and under  circumstances\t as  may  be
\nprescribed,  but  as  soon as the rules\t were  framed  which
\neffectuate  the purposes for which the proviso was  enacted,
\nthe  proviso and the rules became effective  retrospectively
\nfrom April 1, 1952.\n<\/p>\n
Mr.  Sastri  appearing on behalf of the\t assessee  contended
\nthat  this  Court has laid down in T. Cajee v.\tU.  Jormanik
\nSiem  and  Anr<\/a>(1)  that where power  is\t conferred  upon  an
\nauthority and it is made exercisable in the manner  provided
\nby subsidiary legislation, failure to enact such  subsidiary
\nlegislation  will  not defeat the power: the power  will  be
\nexercisable  without the restrictions which may be, but\t are
\nnot imposed, and therefore once the power of the  Income-tax
\nOfficer\t came  into  being  that  power\t became\t exercisable
\nimmediately  without restrictions or limitations  until\t the
\nCentral Government chose to frame rules defining those\tres-
\ntrictions.   We do not think that the case cited by  counsel
\nfor  the  assesee has any application.\tThat was a  case  in
\nwhich  a  District Council was constituted for\tthe  Jaintia
\nHill District under the Sixth Schedule to the  Constitution.
\nUnder the Sixth Schedule,
\n(1)  [1961] 1 S.C.R. 750.\n<\/p>\n
\t\t\t    203<\/span><\/p>\n
the District Council was empowered to make laws, inter alia,
\nfor  administration  of\t the District,\tand  appointment  or
\nsuccession  of chiefs or Headmen, but the  District  Council
\nmade  no rules regulating the appointment and succession  of
\nchiefs\tand  Headmen.  It was held by this  Court  that\t the
\nDistrict  Council being an administrative,  and\t legislative
\nbody,  it  could, so long as no law was made,  exercise\t its
\nadministrative powers to determine the appointment of Chiefs
\nor  Headmen.   After the law was  made,\t the  administrative
\npowers could be exercised subject to the law.  The case\t has
\nno  application\t to the present case.\tThe  Sixth  Schedule
\nvested\tin  the District Council  a  general  administrative
\npower  which  was capable of being restricted  by  law,\t but
\nuntil  so  restricted the power was absolute.  In  the\tcase
\nbefore\tus,  however,  the discretion  to  reduce  or  waive
\ninterest   can\tonly  be  exercised  in\t cases\t and   under
\ncircumstances to be prescribed.\t There was no absolute power
\nin  which the Income-tax Officer was invested to  reduce  or
\nwaive  interest;  his  power  could  be\t exercised  only  in
\nprescribed   cases  within  the\t limits\t of  the   authority
\nconferred  upon him.  He could not reduce or waive  interest
\nexcept\tin cases and in circumstances prescribed.  But\tonce
\nthe  rules are framed, they by reason of  the  retrospective
\noperation  of  Act 25 of 1953 become operative as  from\t the
\ndate on which the Act has become operative.
\nThis  Court  in M. K. Venkatachalam I.T.O.  and\t Another  v.
\nBombay\tDyeing\tand  Manufacturing Company  Ltd<\/a>(1)  held  in
\ndealing\t with a case arising under the second proviso to  s.
\n18-A  (5)  (which was also inserted by Act 25 of  1953\twith
\nretrospective operation from April 1, 1952) that the Income-
\ntax  Officer has power under s. 35 of the Act to  rectify  a
\nmistake\t in the assessment, even though the mistake was\t the
\nresult\tof  a legal fiction arising from  the  retrospective
\noperation  given  to the amending  Act.\t in  Venkatachalam’s
\ncase(1)\t on October 9, 1952 the Income-tax Officer  assessed
\nthe  tax-payer for the assessment year 1952-53 and gave\t him
\ncredit\tfor certain amount as representing interest  on\t tax
\npaid  in  advance under s. 18-A (5). Thereafter on  May\t 24,
\n1953  the Indian Income-tax (Amendment) Act 25 of 1953\tcame
\ninto  force  which added a proviso to s. 18-A (5)  that\t the
\nassessee  was entitled to interest not on the whole  of\t the
\nadvance tax paid by him, but only on the difference  between
\nthe  payment made and the amount assessed.   This  amendment
\nbeing  retrospective  as from April 1, 1952  the  Income-tax
\nOfficer\t acting\t under\ts.  35\tof  the\t Act  rectified\t the
\nassessment  order  and directed that the assessee  be  given
\ncredit for a smaller amount by way of interest on tax paid
\n(1) [1959] S.C.R. 703.\n<\/p>\n
sup.\/65-14
\n204<\/span>
\nin  advance,  and  issued a notice  of\tdemand\tagainst\t the
\nassessee for the balance remaining due by him.\tThe assessee
\nfiled  a petition in the High Court of Bombay praying for  a
\nwrit  prohibiting  the Commissioner of\tIncome-tax  and\t the
\nIncome-tax  Officer from enforcing the rectified  order\t and
\nnotice\tof  demand.  The High Court issued the\twrit  prayed
\nfor,  holding that S. 35 was not applicable to the  case  as
\nthe mistake could not be said to be apparent from the record
\nand  the question must be judged in the light of the law  as
\nit  stood on the day when the order was passed.\t This  Court
\nreversed  the order of the High Court and held that in\tview
\nof  the retrospective operation given to the newly  inserted
\nprovision  in S. 18-A(5) of the principal Act as from  April
\n1,  1952 the order passed by the Income-tax  Officer  before
\nthe  date on which the amending Act came into operation\t was
\nincompatible  with  the\t provisions  of\t that  proviso\t and
\ndisclosed a mistake apparent from the record.  The Court  in
\nthat case relied upon the observations made by Lord  Asquith
\nof  Bishopstone in East End Dwellings Co. Ltd.\tv.  Finsbury
\nBorough Council(1) “if you are bidden to treat an  imaginary
\nstate of affairs as real, you must surely, unless prohibited
\nfrom  doing  so, also imagine as real the  consequences\t and
\nincidents  which, if the “putative state of affairs  had  in
\nfact  existed,\tmust inevitably have flowed from  or  accom-
\npanied\tit.” In Venkatachalam’s case (2 ) by virtue  of\t the
\nretrospective  operation of the amendment, the assessee\t was
\nentitled  to interest which was less than what\thad  already
\nbeen  allowed  to him in the course of assessment.   On\t the
\ndate on which the order of assessment was made, the assessee
\nwas entitled to that amount. but by virtue of the  amendment
\nwhich\twas  retrospective,  his  right\t was   substantially
\nrestricted.   It was held by this Court that in exercise  of
\nthe  powers under s. 35 of the Indian Income-tax Act on\t the
\napplication of the retrospective amendment, it must be\theld
\nthat, there was a mistake apparent on the face of the order.
\nIn  the present case the position is reversed, but  on\tthat
\naccount\t the  principle is not\tanytheless  applicable.\t  By
\nvirtue\tof  the retrospective amendment in s. 18-A  (6)\t the
\norder  which was made by the Income-tax Officer on the\tdate
\nof  assessment and which was plainly inconsistent  with\t the
\nterms  of the section as it then stood became one  which  he
\nwas competent to pass in exercise of his power.
\nThe  Attorney-General  contended  that in  any\tevent  there
\nnothing to show that the income-tax officer had purported to
\nexercise  his  discretion  when\t he  passed  the  order\t  of
\nassessment and
\n(1)  [1952] AC. 109,132.\n<\/p>\n
\t\t   (2) (1959) S.C.R. 703.\n<\/p>\n
\t\t\t    20 5
\ndid  not impose any liability for payment of interest  under
\ns. 18-A (6).  That may be so.  But the case of the  assessee
\ndid  fall  within the terms of r. 48(1) and  the  Income-tax
\nOfficer\t must  in law be bound to consider  whether  he\t was
\nentitled to reduction or waiver of interest tinder the fifth
\nproviso.   The\tamendment  and the  rules  which  came\tinto
\noperation later must in view of the retrospective  operation
\nbe  deemed to be then extant, and the fact that the  Income-
\ntax Officer could not in making the assessment have adjusted
\nhis approach to the problem before him in the light of those
\nprovisions is irrelevant in considering the legality of\t his
\norder,\tThe  order of the Income-tax Officer which  did\t not
\ntake note of the law deemed to be in force must be  regarded
\nas   defective.\t   The\tmatter\twas   brought\tbefore\t the
\nCommissioner  of Income-tax and it is unfortunate  that\t the
\nCommissioner in considering the matter under s. 33-A assumed
\nthat  the  amending  Act 25 of\t1953  had  no  retrospective
\noperation  and\trejected the claim of the  assessee  on\t the
\nground\tthat at the (late when the order of  assessment\t was
\nmade,  Act 25 of 1953 had not come into operation, and\tthat
\nthe  Act  became effective as from December  1953  when\t the
\nrules\twere  framed.\tIn  so\tholding,  the\tCommissioner
\ncommitted  an  error  of law apparent on  the  face  of\t the
\nrecord.\t The High Court was therefore right in setting aside
\nthe  order  which  was passed by  the  Commissioner  without
\nconsidering the proviso to s. 1\t   A  (6) which was  clearly
\napplicable to the case of the assessee\tand in the light  of
\nr. 48 which was enacted in pursuance of that proviso.
\nThe  Attorney-General contended that the petition  filed  by
\nthe  assesse did not expressly seek to plead the case  which
\nwas ultimately made out by the High Court.  It is .rue\tthat
\nthe  petition is somewhat vague in setting out the  material
\nparticulars which have a bearing on the plea which  appealed
\nto  the\t High Court.  But it cannot be said,  having  regard
\nspecially  to paragraph-6 cl. (iii) of the petition that  in
\ngranting  relief to the assessee a new case was made out  by
\nthe High Court.\n<\/p>\n
The appeal fails and Is dismissed with costs.  There will be
\none hearing fee in Civil Appeals Nos. 1003 of 1961 and\t1004
\nof 1963.\n<\/p>\n
Mudholkar J. I agree with  my learned brother Shah J.,\tthat
\nthe  expression\t “civil proceeding” in Art. 133 (1)  of\t the
\nConstitution cannot be restricted to proceedings which arise
\nout of civil suits or proceedings.  A proceeding before\t the
\nHigh  Court  under Art. 226 or Art. 227 in which  relief  is
\nsought in respect of liability to
\n206<\/span>
\npay  tax  or penalty levied by a  revenue  authority  would,
\naccordingly,  be  a civil proceeding.  The High\t Court\twas,
\ntherefore,  competent  to grant a certificate in  this\tcase
\nunder Art. 133(1).\n<\/p>\n
On  the\t merits my learned brother has held  that  the\tHigh
\nCourt  was  right in quashing the order\t of  the  Income-tax
\nCommissioner, Bombay, by which he confirmed the order of the
\nFirst Income-tax Officer, C-II Ward,, Bombay, dated  October
\n4,  1956 rectifying under s. 35 of the Income-tax Act,\t1922
\nthe  regular assessment made by him on March 31, 1953.\t The
\nsequence  of the relevant events which have occurred  is  as
\nfollows.  On September 17, 1947 the respondents filed  under
\ns. 18-A(2) an estimate of their income and on September\t 27,
\n1947  they made an advance payment of tax on its basis.\t  On
\nJanuary 10, 1948 they filed a revised estimate in  pursuance
\nof which they made a further advance payment towards the tax
\non  January 17, 1948.  On August 23, 1950 they paid the\t tax
\nin pursuance of the -provisional assessment made on July 22,
\n1950  under  s.\t 23-B.\tAll this was  with  respect  to\t the
\nassessment   year   1948-49.   While  making   the   regular
\nassessment on March 31, 1953 the Income-tax Officer  omitted
\nto  charge penal interest as required by s. 1 8-A(6) of\t the
\nIncome-tax  Act.  It is not disputed that according  to\t the
\nlaw as it stood on the date on which the regular  assessment
\nwas  made the Income-tax Officer was bound to  charge  penal
\ninterest.   By Act 25 of 1953 which came into force  on\t May
\n24, 1953 the following proviso was added to s. 18-A(6)
\n\t      “Provided\t further  that in such\ta  case\t and
\n\t      under such circumstances as may be prescribed,
\n\t      the Income-tax Officer may reduce or waive the
\n\t      interest payable by the assessee.”\n<\/p>\n
In order to give effect to the proviso the Central Board  of
\nRevenue framed rule 42 and notified it on December 14, 1953.
\nThe rule read as follows :\n<\/p>\n
\t      “The  Income-tax Officer may reduce  or  waive
\n\t      the interest payable under section 18-A in the
\n\t      case  and\t under the  circumstances  mentioned
\n\t      below, namely :\n<\/p><\/blockquote>\n
\t      (1)   Where   the\t  relevant   assessment\t  is
\n\t      completed\t  more\tthan  one  year\t after\t the
\n\t      submission   of  the  return,  the  delay\t  in
\n\t      assessment  not  being  attributable  to\t the
\n\t      assessee.\n<\/p><\/blockquote>\n
\t      (2)   Where  a  person  is  under\t section  43
\n\t      deemed to be an agent of another person and is
\n\t      assessed upon the latter’s income.<\/p><\/blockquote>\n
\n\t\t\t    207<\/span>\n\t      (3)   Where  the assessee has income  from  an\n\t      unregistered    firm  to which the  provisions\n\t      of clause (b) of subsection    (5) of  section\n\t      23 ire applied.\n\t      (4)   Where   the\t 'Previous  year'   is\t the\n<\/pre>\n
\t      financial\t year or any year ending near  about
\n\t      the  close  of the financial  year  and  large
\n\t      profits  are made after the 15th of March,  in
\n\t      circumstances which could not be foreseen.
\n\t      (5)   Any\t  case\tin  which   the\t  Inspecting
\n\t      Assistant\t Commissioner  considers  that\t the
\n\t      circumstances  are  such that a  reduction  or
\n\t      waiver  of the interest payable under  section
\n\t      18-A(6) is justified.”\n<\/p><\/blockquote>\n
\t      On October 4. 1956 the Income-tax Officer made
\n\t      the following order under s. 35 of the Act :
\n\t      “During  the interest checking of\t C-II  Ward,
\n\t      the  Auditor has pointed out a mistake in\t not
\n\t      charging\tpenal  interest tinder\tsection\t 18-
\n\t      A(6).   As  this\tmistake\t is  `apparent\tfrom
\n\t      record the same is rectified under section  35
\n\t      after giving due notice to the assessee.\n<\/p><\/blockquote>\n
Revised notice of demand to be issued.”\n<\/p>\n
Thereafter a notice demanding Rs. 14,929-10-0 was issued  to
\nthe  respondents.   The respondents  challenged\t this  order
\nbefore\tthe  Commissioner of Income-tax, Bombay.   The\tmain
\ncontention raised before him was that the omission to charge
\npenal  interest at the time of regular assessment cannot  be
\nconsidered to be a mistake apparent from the record in\tview
\nof  proviso to s. 18-A(6) and the Rules made thereunder\t and
\ntherefore  the\tIncome-tax  Officer could  not\trectify\t the
\nregular\t assessment  by resort to s. 35 of  the\t Act.\tThis
\ncontention was not accepted by the Income-tax  Commissioner.
\nHe, however, directed that in the circumstances of the\tcase
\nthe  respondents would be liable to pay penal interest\tonly
\nfor  the period between January 1, 1948 and June  13,  1950.
\nBeing dissatisfied with this decision the respondents  moved
\nthe High Court for a writ under Art. 226 of the Constitution
\nand succeeded in having the notice of demand quashed.
\nThe  ground upon which the High Court -ranted relief to\t the
\nrespondents was that the Amending Act of 1953 which  enacted
\nthe last proviso to s. 18-A(6) was made, retrospective\tfrom
\nApril  1,  1952;  that,\t therefore,  that  proviso  must  be
\nregarded  as being on the statute book on the date on  which
\nthe regular assessment was
\n208<\/span>
\nmade, that, according to the -High Court, being the position
\nthe conclusion to be reached was that the Income-tax Officer
\nhad  vested  in\t him a discretion to  reduce  or  waive\t the
\ninterest  payable by the assessee notwithstanding  the\tfact
\nthat the proviso was not there on the statute book when\t the
\nassessment  order was made.  After referring to the  earlier
\ndecision of the High Court in Shantilal Rayji v. M. C. Nair,
\nIV  Income-tax\tOfficer, E.  Ward, Bombay  and\tanr.(1)\t the
\nlearned Judges observed
\n\t      “In  our judgment in that case we referred  to
\n\t      the decision of the Supreme Court in the State
\n\t      of Bombay v. Pandurang Vinayak<\/a>(2) where  their
\n\t      lordships of the Supreme Court pointed out the
\n\t      effect  of a deeming provision being  inserted
\n\t      in  any statute and being given  retrospective
\n\t      operation.  We also referred to a passage from
\n\t      the  judgment  of\t Lord Asquith  in  East\t End
\n\t      DWellings\t  Co.  Ltd.  v.\t  Finsbury   Borough
\n\t      Council(1) in which the learned Law Lord\tvery
\n\t      forcibly\tbrought out the full effect  of\t the
\n\t      legal  fiction.  The view which we  ultimately
\n\t      took  of\tthe matter was that  the  Income-tax
\n\t      Officer had no jurisdiction to pass the  order
\n\t      of   rectification.   By\toperation  of\ttile
\n\t      deeming  provision which was retrospective  in
\n\t      it,,,  operation,\t it was to  be\tassumed\t and
\n\t      taken  that on the date on which he  made\t the
\n\t      assessment order he had jurisdiction and power
\n\t      to  reduce  or waive the\tamount\tof  interest
\n\t      payable  by  the\tassessee.   The\t  Income-tax
\n\t      Officer not having done so, the only inference
\n\t      possible was that he had decided to waive\t the
\n\t      amount of interest and in those  circumstances
\n\t      he bad no jurisdiction subsequently to rectify
\n\t      that  order  on the ground that there  was  an
\n\t      error on the face of the record.”\n<\/p>\n
There  is  no doubt that by making the proviso\tin  question
\nretrospective  as  from April 1, 1952  the  legislature\t has
\ncreated\t a  fiction  and because of  that  fiction  we\tmust
\nproceed\t on  the footing that the proviso was  in  existence
\nwhen  the regular assessment was made The  learned  Attorney
\nGeneral,  however, contended before us that though that\t was
\nthe  position the proviso could not be given effect to\ttill
\nthe  Central Board of Revenue prescribed the class of  cases
\nand  circumstances  in which an Income-tax  authority  could
\nexercise  the  discretion  conferred  by  the  proviso.\t  He
\npointed\t out  that  r. 48 framed by  the  Central  Board  of
\nRevenue\t which\tprescribes these matters does  not  make  it
\nretrospective and, therefore, it should be
\n(1)  (1958) 34 I.T.R. 439.\n<\/p>\n
(2) (1953) S.C.R. 773.\n<\/p>\n
(3) (1952) A.C. 109.\n<\/p>\n
209<\/span><\/p>\n
deemed to be only prospective in its application.  I find it
\ndifficult  to accept this argument.  The proviso was  itself
\nmade  retrospective as from April 1, 1952.  Rule 48 as\tsoon
\nas  it was framed was to be read alone with the proviso\t and
\nas the proviso is retrospective the rule must also be deemed
\nretrospective.\t  It  is  a  well  accepted   principle\t  of
\nconstruction of statutes that even if a provision of law may
\nnot  have  been\t expressly made retrospective  it  could  be
\ndeemed\tto be so if the circumstances justify the  inference
\nthat   the   legislature   intended  that   it\t should\t  be
\nretrospective.\tSuch an intention is evident in this case.
\nEven though the proviso and the rule must be deemed to\thave
\nbeen in force on April 1, 1952, 1 find it difficult to agree
\nwith  the High Court that omission to charge penal  interest
\nat  the\t time  of  making the  regular\tassessment  must  be
\nascribed  to  the exercise of discretion by  the  Income-tax
\nOfficer.   Let\tit not be forgotten that when he  made\tthat
\nassessment,  in point of fact, be passed no discretion\tand,
\ntherefore,  he\twas bound by law to charge  penal  interest.
\nHis  omission  to do so must, therefore, be ascribed  to  an
\noversight  and not to deliberateness.  By an omission to  do
\nwhat  he  was  bound by law to\tdo  the\t Income-tax  Officer
\ncommitted an error and that error appears on the face of the
\nrecord.\t  He was, therefore, competent to rectify  under  s.\n<\/p>\n
35.  Indeed, if instead of on March 31, 1953 the  Income-tax
\nOfficer\t had made the regular assessment on March  31,\t1952
\ncould  there  have been any scope for the surmise  that\t his
\nomission  to charge penal interest was attributable  to\t the
\nexercise  of  any discretion ? At any rate  without  further
\nmaterial we cannot even assume that while making the regular
\nassessment on March 31, 1953 the Income-tax Officer, upon an
\nerroneous  view of law, came to the conclusion that  he\t had
\ndiscretion under s. 18-A(6) to reduce or waive any  interest
\nand   that,  therefore,\t he  purported\tto   exercise\tthat
\ndiscretion.  At least prima facie the Income-tax Officer  in
\nomitting  to  charge penal interest made  a  mistake.\tThis
\nwould appear to be home out by the fact that on October\t 14,
\n1956  when  he made good the omission by  resorting  to\t the
\npower conferred by s. 35 he accepted the position that\twhat
\nhe  did earlier was through mistake.  In the  circumstances,
\ntherefore,  agreeing, with the Income-tax  Commissioner\t but
\ndisagreeing with the High Court, I hold that the Income.-tax
\nOfficer was competent to rectify the mistake under s. 35.
\nI would, therefore, allow the appeals and quash the order of
\nthe  High Court but in the circumstances of the\t case  would
\nmake no order as to costs.\n<\/p>\n
Appeals dismissed.\n<\/p>\n
210<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Commissioner Of Income-Tax, … vs Ishwarlal Bhagwandas And Others on 7 May, 1965 Equivalent citations: 1965 AIR 1818, 1966 SCR (1) 190 Author: S C. Bench: Gajendragadkar, P.B. (Cj), Wanchoo, K.N., Shah, J.C., Mudholkar, J.R., Sikri, S.M. PETITIONER: COMMISSIONER OF INCOME-TAX, BOMBAY & ANOTHER Vs. RESPONDENT: ISHWARLAL BHAGWANDAS AND OTHERS DATE […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-202721","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nCommissioner Of Income-Tax, ... vs Ishwarlal Bhagwandas And Others on 7 May, 1965 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/commissioner-of-income-tax-vs-ishwarlal-bhagwandas-and-others-on-7-may-1965\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Commissioner Of Income-Tax, ... vs Ishwarlal Bhagwandas And Others on 7 May, 1965 - 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