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SUPREME COURT OF INDIA
P.B. GAJENDRAGADKAR, C.J.I., K.N. WANCHOO, J.C. SHAH, J.R. MUDHOLKAR AND S.M. SIKRI, JJ.
1. S. A. L. Narayan Row and Anr. (in C. A. No. 1003 of 1963), 2. N. D. Mehrotra and Anr. (in C. A. No. 1004 of 1963), Appellants
Versus
1. Ishwarlal Bhagwandas and Anr. (In C. A. No. 1003 of 1963), 2. Vrajlal Kewaldas (In C. A. No. 1004 of 1963), Respondents.
Civil Appeals Nos. 1003 and 1004 of 1963.
7th May 1965
Advocates appeared
Mr. C. K. Daphtary, Attorney General for India, (M/s. R. Ganapathy Iyer and B. R. G. K. Achar, Advocates with him), for Appellants; Mr. A, V. Viswanatha Sastri Senior Advocate (Mr. T. A. Ramachandran Advocate and M/s. J. B. Dadachanji, O. C, Mathur, and Ravinder Narain, Advocates of M/s. J. B. Dadachanji and Co. with him), for Respondents.
-this expression 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 - Narayan Rao v. Ishwarlal, AIR 1965 1818; Arbind Kumar v. Nand Kishore, AIR 1968 SC 1227.
-no ground to hold that it is confined only to proceedings arising out of civil suit or tried as civil suit and there is no rational basis to exclude proceedings instituted and tried by High Court under Art. 226 on question of infringement of civil rights of aggrieved parties by authorities acting purportedly in exercise of powers conferred by revenue status.
-see also decision in Arvind Kumar v. Nand Kishore, AIR 1968 SC 1227.
Key Points: - The judgment holds that "civil proceeding" includes proceedings before the High Court under Art. 226 seeking relief against infringement of civil rights by revenue authorities and is capable of certification under Art. 133(1) (!) (!) (!) . - It discusses the grounds for certifying an appeal under Article 133(1), including that the case involves a question of law as to interpretation of the Constitution, and that revenue/tax-related proceedings can be civil proceedings eligible for certification (!) (!) (!) . - It analyzes the retrospective operation of the fifth proviso to S. 18-A(6) and Rule 48, and how these affect the legality of penalties and the authority to rectify assessments under S. 35, including the view that omissions to charge interest could be rectified retroactively when the proviso and rules are considered (!) (!) (!) (!) . - The High Court’s quashing of the rectification order under S. 35 was set aside by the majority, which held the assessment could be rectified in light of the proviso and retrospective rules (!) (!) . - The appeals were dismissed with costs (majority view) regarding the certification and merits of quashing the rectification order (!) (!) . - The judgment clarifies that civil rights enforcement against revenue actions constitutes a civil proceeding for Art. 133 purposes (!) (!) .
Judgment
SHAH, J. (For himself and Gajendragadkar C.J.I. and Wanchoo and Sikri JJ.): The 1st income-tax officer, C-II Ward, Bombay served a notice under S. 18-A(1) 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. and of the tax payable by him, and on January 10, 1948 he filed a revised estimate. An order under S. 28-B of the Act provisionally assessing the income was made by the Income-tax Officer and pursuant thereto on August 28, 1950 the assessee paid the tax so assessed. Regular assessment of the income of the assessee was made on March 31, 1958 by the Income-tax Officer, and it was found that the tax paid on the basis of the estimate of the 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 interest under sub-section (6) of S. 18-A of the Income-tax Act.
2. The departmental auditor raised an objection in auditing accounts of C-II Ward that a mistake was committed by the Income-tax Officer in failing to charge interest in making the order of assessment against the assessee. On September 21, 1956 the Income-tax Officer served a notice upon the assessee requiring him 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:
"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 assesee to pay Rs. 14,929/10./ as interest due under S. 18-A(6) for the period January 1, 1948 to July 22, 1950.
3. In exercise of his powers under S. 32-A by order dated February 1, l958, 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 modification that interest be paid only till June 13, 1950.
4. 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 of 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 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 Shantilal Ravji v. M. C. Nair, 1958-34 ITR 489 (Bom) directed that the orders passed by the Income-tax Officer and by the Commissioner, of Income-tax be quashed. Against the order 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.
5. At the hearing of this appeal counsel for the assesseee raised an objection in limine that the appeal filed by the Commissioner and the Income-tax Officer was incompetent, because the High. Court had no power under Article 133 of the Constitution to certify a proposed appeal against an order in a proceeding commenced 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 of the Constitution, insofar as it is material, by the first clause provides:
"An appeal shall lie to the SC from any judgment, decree or final order in a civil proceeding of a High Court in the territory of India if the High Court certifies
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