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HIGH COURT OF CALCUTTA
S.K. SEN, N.K.SEN, JJ.
Ajit Kumar Ganguli - Appellant
Versus
Union Of India – Respondent
Appeal No : Civil Rule No. 3286 of 1960
Decided on : July 18, 1961
PUBLIC DEMANDS RECOVERY ACT - Certificate - Validity - Substantial compliance with prescribed form - Identification of public demand - Defects or irregularities - Validation of Certificates and Notices Act, 1961 (W.B. Act XI of 1961) - Whether assent of President required - Assessment of discontinued unregistered firm - Certificate under s. 46(2) of the IT Act - Fresh certificate after reduction of demand - Fresh demand notice under s. 29 of the IT Act - Scope of interference under Art. 227 of the Constitution.
Fact of the Case:
The petitioner, a partner of a defunct firm, challenged the validity of a certificate filed against the firm for recovery of arrears of income-tax and penalty under the Public Demands Recovery Act, 1913 (Bengal Act III of 1913). The certificate was filed on the basis of a certificate issued by the Income-tax Officer (ITO) under s. 46(2) of the Income-tax Act, 1922 (IT Act). The petitioner contended that the certificate was invalid because it did not mention the period for which the demand was due, did not separately specify the tax demand and the penalty, and did not mention that the assessment was in respect of undisclosed income. The petitioner also contended that the assessment of the discontinued firm was invalid, and that the ITO failed to issue a fresh certificate under s. 46(2) of the IT Act after the demand was reduced by the Tribunal.
Finding of the Court:
The Court held that the certificate was valid despite the defects or irregularities, as it substantially complied with the prescribed form and enabled the petitioner to identify the public demand. The Court also held that the Validation of Certificates and Notices Act, 1961 (W.B. Act XI of 1961) validated the certificate and that the assent of the President was not required for the enactment of the Act. The Court further held that the assessment of the discontinued firm was not invalid, as the partners of the firm were jointly and severally liable for the tax and penalty. The Court also held that the ITO was not required to issue a fresh certificate under s. 46(2) of the IT Act after the demand was reduced by the Tribunal, as a fresh demand notice under s. 29 of the IT Act was not necessary. The Court also held that it could not interfere with the order of the Board of Revenue under Art. 227 of the Constitution, as the Board was acting within its authority and the order was not unjust.
Issues: 1. Whether the certificate filed against the defunct firm was valid despite the defects or irregularities. 2. Whether the Validation of Certificates and Notices Act, 1961 (W.B. Act XI of 1961) validated the certificate and whether the assent of the President was required for the enactment of the Act. 3. Whether the assessment of the discontinued firm was invalid. 4. Whether the ITO was required to issue a fresh certificate under s. 46(2) of the IT Act after the demand was reduced by the Tribunal. 5. Whether the Court could interfere with the order of the Board of Revenue under Art. 227 of the Constitution.
Ratio Decidendi: 1. A certificate filed under the Public Demands Recovery Act, 1913, is valid if it substantially complies with the prescribed form and enables the debtor to identify the public demand. Defects or irregularities in the certificate that do not affect the validity of the certificate can be cured by the Validation of Certificates and Notices Act, 1961 (W.B. Act XI of 1961). 2. The Validation of Certificates and Notices Act, 1961 (W.B. Act XI of 1961) is a valid enactment and does not require the assent of the President. 3. The assessment of a discontinued unregistered firm is not invalid, as the partners of the firm are jointly and severally liable for the tax and penalty. 4. The ITO is not required to issue a fresh certificate under s. 46(2) of the IT Act after the demand is reduced by the Tribunal, as a fresh demand notice under s. 29 of the IT Act is not necessary. 5. The Court cannot interfere with an order of the Board of Revenue under Art. 227 of the Constitution if the Board is acting within its authority and the order is not unjust.
Final Decision: The rule issued by the Court was discharged, and no order was made as to costs.
SISIR KUMAR SEN, J.
1. This revisional application under Art. 227 of the Constitution is directed against an order passed in revision by the Board of Revenue, West Bengal, reviving Certificate Case No. 300 IT of 1948-49 against M/s H. and A.K. Ganguli, represented by the petitioner, Ajit Kumar Ganguli and his partners. The petitioner, Ajit Kumar Ganguli, was a partner of the firm styled "M/s H. and A.K. Ganguli" which had its office at 17/19 R.G. Kar Road, Calcutta. According to the petitioner, the said partnership firm discontinued business w.e.f. 8th Aug., 1942, the assets and liabilities of the firm, with the right to use the firm name "M/s H. and A.K. Ganguli" in respect of existing tenders and contracts being taken over by M/s Ganguli and Sons Ltd., having its office at No. 17, R.G. Kar Road. On 23rd March, 1948, the ITO District I(2), Calcutta, assessed the income of the firm "M/s H. and A.K. Ganguli" for the asst. yr. 1943-44 Rs. 1,62,000 and by a notice under s. 29 of the IT Act, dt. 5th April, 1948, demanded Rs. 83,111-15-0 on account of income-tax and surcharge and super-tax and surcharge for the said year, the demand being payable by 30th April, 1948. Further, the ITO by an order dt. 30th June, 1948, imposed under s. 28(1)(b) of the IT Act a penalty of Rs. 81,527-10-0 on the firm, and served a notice of demand under s. 29 of the Act, dt. 9th July, 1948, making the amount payable by 25th July, 1948. Neither of the two amounts demanded having been paid, the ITO on 4th Feb., 1949, signed and forwarded a certificate under s. 46(2) of the IT Act to the Collector, 24-Parganas, and Certificate Case No. 300 IT of 1948-49 was started thereon, for recovery of the sum of Rs. 1,64,639-9-0, representing the sum of the two demands; the certificate under s. 4 of the Public Demands Recovery Act being filed on 10th Feb., 1949, and notice under s. 7 of the Act being issued on the same date.
2. The petitioner in the meantime appealed against the assessment of tax and imposition of penalty on the defunct firm, M/s H. and A.K. Ganguli, but the appeal was dismissed by an order dt. 30th May, 1949. The petitioner filed a second appeal before the Tribunal, Calcutta, and the Tribunal by its order dt. 28th Feb., 1950, modified the order of the ITO determining the income of the firm at Rs. 1,13,750 and reducing the demand on account of income-tax with surcharge and super-tax with surcharge to Rs. 51,666-11-0 and the penalty to Rs. 50,100. The partners of the defunct firm paid Rs. 10,000 towards the tax demand on 29th March, 1950, to the Income-tax office. Thereafter, a fresh notice of demand under s. 29 of the IT Act dt. 28th April, 1950, was issued on the defunct firm, requiring payment of Rs. 41,666-11-0 on account of the tax (Rs. 51,666-11-0 less Rs. 10,000 paid) by 15th May, 1950. No further amount being paid into the Income-tax office the ITO, District I(2), Calcutta, wrote a letter dt. 12th April, 1951, to the Certificate Officer, 24-Parganas, informing him that the demand had been reduced to Rs. 51,666-11-0 on account of tax and surcharge, and Rs. 50,100 on account of penalty, and that the certificate filed on 10th Feb., 1949, might be corrected accordingly, and the certificate case proceeded with. It was also intimated that Rs. 10,000 out of the reduced demand had been paid into the Income-tax office. The certificate filed on 10th Feb., 1949, was amended accordingly, and steps for realisation of the amount were taken : the certificate case had remained stayed till then, awaiting the result of the appeals by the petitioner or his firm. After resumption of proceedings in the certificate case, the petitioner with his partners paid a total sum of Rs. 54,500 into the certificate Court, in some instalments, so that the amount paid comes to Rs. 64,500 and a balance of Rs. 37,266-II-0 remained due. The petitioner tried to obtain remission of that amount by applying to the Central Board of Revenue. Being unsuccessful, the petitioner file
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