1. Dispute over income tax assessment of interest; appeals filed against the Tribunal's refusal to state a case under Section 66(1) of the Income Tax Act. (Para 2 , 3 , 4 )
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1959 Supreme(SC) 81
SUPREME COURT OF INDIA
1st May, 1959.
S.R. DAS, C.J.I., N.H. BHAGWATI, S. JAFFER IMAM, J.L. KAPUR AND M. HIDAYATULLAH, JJ.
M/s. Chimmonlall Rameshwarlall, Appellants
Versus
Commissioner of Income-tax (Central), Calcutta, Respondent.
Civil Appeals Nos. 241 to 244 of 1956.
Advocates appeared
Mr. N. C. Chatterjee, Senior Advocate (Mr. Sukumar Ghose, Advocate, with him), for Appellants; Mr. C. K. Daphtary, Solicitor-General of India (M/s. K. N. Rajagopal Sastri and D. Gupta, Advocates, with him), for Respondent.
Advocates:
C.K.DAFTARY, D.GUTPA, K.N.RAJAGOPAL SASTRI, N.C.CHATTERJI, SUKUMAR GHOSH
C.K.DAFTARY, D.GUTPA, K.N.RAJAGOPAL SASTRI, N.C.CHATTERJI, SUKUMAR GHOSH
An appeal against a Tribunal's refusal to state a case under Section 66(1) of the Income Tax Act is not maintainable if the High Court has already ruled under Section 66(2) that no question of law arises and that order remains unchallenged.
Headnote:(A) Income Tax Act - Sections 66(1) and 66(2) - Constitution of India - Article 136 - Refusal by Tribunal to state a case - Application to High Court - Comity of Courts - Where the Tribunal refuses to state a case under Section 66(1) and the High Court subsequently discharges the rule under Section 66(2) finding no question of law, an appeal against the Tribunal's original refusal cannot be entertained if the High Court's order remains unchallenged. (Para 8)
(B) Special Leave to Appeal - Scope - While the jurisdiction under Article 136 is wide, it cannot be used to bypass normal procedural requirements or achieve indirectly the result of setting aside a High Court judgment without a direct appeal against it. (Para 8)
Facts of the case:
A Hindu undivided family challenged income tax assessments regarding interest received from a debtor's estate. The Tribunal dismissed the appeals and subsequently refused to state a case for the High Court under Section 66(1) of the Income Tax Act. The High Court, upon an application under Section 66(2), also concluded that no question of law arose. The appellants then sought special leave to appeal the Tribunal's refusal under Section 66(1) directly to the highest court, without appealing the High Court's order.
Findings of Court:
The court found that since the High Court had already delivered a considered judgment concluding that no question of law arose, and this judgment had not been appealed, it would be inappropriate to adjudicate the merits of the appeal against the Tribunal's refusal.
Issues: Whether an appeal under Article 136 of the Constitution against an order of the Tribunal refusing to state a case under Section 66(1) of the Income Tax Act is maintainable when the High Court has already dismissed an application under Section 66(2) of the Act on the same issue.
Ratio Decidendi: Adjudicating the merits of such an appeal would either confirm or contradict the High Court's existing judgment. To contradict it without a direct appeal against the High Court's order would bypass normal procedure and violate the notions of comity of courts. (Para 8)
Result: Appeals dismissed.
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2. Respondent argued that the appellants cannot challenge the Tribunal's refusal to state a case without first appealing the High Court's order under Section 66(2). (Para 5 )
3. The court found that adjudicating the merits would either confirm or contradict a standing High Court judgment, thereby bypassing normal procedure and violating comity of courts. (Para 8 )
4. An appeal against a Tribunal's refusal to state a case is not maintainable when a High Court has already determined that no question of law arises. (Para 8 )
5. Appeals dismissed; parties to bear their own costs. (Para 8 , 9 )
6. Is an appeal against a Tribunal's refusal to state a case maintainable if the High Court has already refused to compel such a statement?
No. When a High Court has already concluded under Section 66(2) of the Income Tax Act that no question of law arises, the court will not entertain an appeal against the Tribunal's refusal to state a case under Section 66(1). (Para 8 )
7. How does the principle of comity of courts apply to appeals against lower court judgments?
Comity of courts dictates that the normal procedure for challenging a High Court's decision must be followed. A higher court cannot bypass this procedure to achieve an indirect result by adjudicating a prior order. (Para 8 )
Judgment
BHAGWATI, J. : These four appeals with Special Leave granted by this Court under Article 136 of the Constitution are directed against the orders, dated the 8th June 1951, of the Income-tax Appellate Tribunal, Bombay A in Reference Applications Nos. 737, 738, 739 and 740 of 1949-50 and arise under the following circumstances :-
2. The appellants were at all material times a Hindu undivided family of which Rameshwarlal Ganeriwalla is the Karta. As a result of certain transactions which need not be detailed here Rameshwarlal Ganeriwalla became the creditor of the Nawab Bahadur of Murshidabad in a large sum of over Rs. 6,38,000 by about 1928-29. Sometime in 1933, an Act named Murshidabad Estate Administration Act, 1933 (Act XXIII of 1933) was enacted under the provisions whereof the Estate of the Nawab Bahadur was taken over by the authorized Manager. The debt due by the Nawab Bahadur to Rameshwarlal Ganeriwalla was admitted by the Board of Revenue in a sum of Rs. 5,42,173 as on 1st April 1934 and the Manager from time to time made payments by way of dividends to the appellants indicating in the covering letters how the payments were to be appropriated. The appellants for the assessment years 1938-39 to 1941-42 submitted income-tax returns in the first of which they did not mention any part of the money which they had received from the Manager and in the rest of which they mentioned certain amounts as having been received by them. When the Income Tax Officer discovered that certain money had been received by the appellants from the Manager he issued a notice under section 34 of the Income Tax Act in regard to the assessment year 1938-39. When these income-tax returns were considered by the I. T. O. he came to the conclusion that certain sums had been received by the appellants from the Manager by way of interest which were liable to assessment and he accordingly included those sums in the assessment orders which he passed for those several years. These assessment orders were passed by the Income Tax Officer on the respective dates, the 20th March 1943, 31st March 1944, 30th November 1944 and 31st October 1945. The appellants preferred appeals against these orders, being Income-tax Appeals Nos. 2/CC. II/43-44, Income-tax Appeals Nos. 8 and 22/CC-II/44-45 and Income-Tax Appeal No. 13/CC-II/45-46 and the Appellate Assistant Commissioner by his order, dated 13th June 1947 and 18th July 1947 disposed of all these four appeals confirming the orders which had been passed by the I. T. O. The appellants carried further appeals against these orders of the Appellate Assistant Commissioner to the Income Tax Appellate Tribunal being Appeals Nos. 1896, 1895, 1897 and 1898 of 1947-48. The Income Tax Appellate Tribunal by its order dated 3rd December 1949 dismissed Income Tax Appeal No. 1895 of 1947. Income Tax Appeal No. 1896 of 1947-48 was dismissed on the 7th November 1949 and the two other appeals, being Income-tax Appeals Nos. 1897 and 1898 of 1947-48, were also dismissed on the 3rd December 1949.
3. The appellants thereafter applied to the Income Tax Appellate Tribunal under section 66 (1) of the Income Tax Act requiring the said Tribunal to state cases and refer certain questions of law to the High Court at Calcutta, for its opinion. These applications were registered as Reference Applications Nos. 737 to 740 of 1949-50. These applications were dismissed by the Income Tax Appellate Tribunal by its order dated 8th June 1951.
4. The Appellants thereupon applied to the High Court under section 66 (2) of the Income Tax Act praying for a Rule upon the Respondent to show cause why the Income Tax Appellate Tribunal should not state cases relating to the above four assessment proceedings and refer certain questions of law to the High Court. Rules were issued by the High Court as prayed for. But on the Income Tax References Nos. 90, 91, 92 and 93 of 1951 coming up for hearing before it the High Court by its order dated the 15th June 1953 disch
