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HIGH COURT OF ALLAHABAD
N.D. OJHA, A.N. DIKSHITA, JJ.
Sridhar (Decd.) (By Lrs. Narendra Dhar) - Appellant
Versus
Commissioner Of Wealth-Tax - Respondent
Civil Miscellaneous Application 2359 of 1985 Wealth-tax Reference No. 54 of 1983
Decided on : Mar 15, 1985
Inherent Power - Jurisdiction of High Court under Section 27 of the W.T. Act - CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589, Venkataraman and Co. (P.) Ltd. v. State of Madras [1966] 60 ITR 112 (SC), Sarathy Mudaliar v. CIT [1966] 62 ITR 576, Rameshwar Prasad Bagla v. CIT [1973] 87 ITR 421 - Jaipur Mineral Development Syndicate v. CIT [1977] 106 ITR 653, Lakshmi Industries and Cold Storage Co. (P.) Ltd., In re [1980] 124 ITR 828 (All) - ITO v. Mohammed Kunhi [1969] 71 ITR 815, Baleshwar Dayal v. State of U.P. [1971] ALJ 1074; AIR 1972 All 12 - CIT v. Greaves Cotton and Co. Ltd. [1968] 68 ITR 200 (SC), CIT v. Indian Molasses Co. P. Ltd. [1970] 78 ITR 474, CIT v. George Henderson and Co. Ltd. [1967] 66 ITR 622 (SC) - Waryam Singh v. Amarnath, AIR 1954 SC 215, Nagendra Nath Bora v. Commissioner of Hills Division, AIR 1958 SC 398, Shaikh Md. Umarsaheb v. Kadalaskar, AIR 1970 SC 61, Dwarka Prasad Bajaj v. CIT [1980] 126 ITR 219 (Cal), Nathmal Tolaram v. Superintendent of Taxes [1961] 12 STC 9, Shiromani Gurdwara Parbandhak Committee v. Raja Shiv Rattan Dev Singh AIR 1955 SC 576 - Polisetti Narayana Rao v. CIT [1956] 29 ITR 222, Thanthi Trust v. CIT [1983] 141 ITR 101 (Mad), Bansi Dhar and Sons v. CIT [1978] 111 ITR 330
Fact of the Case:
The assessee-applicant appealed against an assessment order passed by the WTO for the assessment year 1975-76. The appeal was allowed by the AAC and remanded to the WTO for a fresh assessment. The applicant then challenged the order before the Income-tax Appellate Tribunal, which dismissed the appeal. The Tribunal referred two questions to the court for its opinion. The applicant sought a stay on the reassessment proceedings pending the disposal of the reference.
Finding of the Court:
The court found that its jurisdiction under Section 27 of the W.T. Act was purely advisory and did not include the power to pass interim orders. It held that the inherent power of the court while hearing a reference under Section 27 was limited to the procedure about the hearing of the reference and passing orders ancillary or incidental to the advice given while answering the questions referred by the Tribunal. The court dismissed the application for a stay on the reassessment proceedings.
Issues: The main issue was the maintainability of the application for a stay on the reassessment proceedings under Section 27 of the W.T. Act. The court also considered the nature and extent of its jurisdiction and inherent power while hearing a reference under Section 27.
Ratio Decidendi: The court's decision was based on the limited advisory nature of its jurisdiction under Section 27 of the W.T. Act and the scope of its inherent power. It held that the inherent power of the court while hearing a reference under Section 27 was confined to the procedure about the hearing of the reference and passing orders ancillary or incidental to the advice given while answering the questions referred by the Tribunal.
Final Decision: The court dismissed the application for a stay on the reassessment proceedings, stating that it did not have the inherent power to pass interim orders restraining the orders passed by the AAC or the Tribunal from being given effect to.
Ojha, J.
1. An appeal was preferred by the asses see-applicant against an order of assessment passed by the WTO in regard to the assessment year 1975-76 before the AAC of Wealth-tax. This appeal was allowed by the AAC and the matter was remanded to the WTO for passing a fresh order of assessment. The applicant did not feel satisfied with the order of the AAC and challenged the said order in appeal before the Income-tax Appellate Tribunal, Delhi Bench "E", Delhi. The Tribunal dismissed the appeal. However, on an application made by the applicant under Section 27(1) of the W.T. Act (hereinafter referred to as " the Act"), the Tribunal drew up a statement of case and referred two questions to this court for its opinion. This reference has been numbered as Wealth-tax Reference No. 54 of 1983. It is in this reference that the present application has been made with the prayer that the reassessment proceedings under the orders of the AAC may be stayed pending disposal of the reference in this court.
2. A preliminary objection has been raised by Shri Bharatji Agarwal, senior standing counsel appearing for the Revenue, regarding the maintainability of this application. It has been urged that this court while hearing a reference under Section 27 of the Act acts only in an advisory jurisdiction and, consequently, the prayer contained in this application cannot be allowed. According to him, while hearing a reference under Section 27 of the Act, this court cannot as an interim measure issue an order either of stay or of injunction.
Shri R.K. Gulati, appearing for the assessee-applicant, has, however, urged in reply to the said preliminary objection that even though Section 27 of the Act does not specifically confer any power on this court to pass an interim order such as prayed for in the present application, this court being a court has an inherent power to grant the relief prayed for. In the alternative, it has been urged that the prayer contained in this application can be granted even under Article 227 of the Constitution.
3. We shall first consider the nature of the jurisdiction which this court exercises while hearing a reference under Section 27 of the Act. Section 66 of the Indian I.T. Act, 1922, and Section 256 of the I.T. Act, 1961, dealing with reference are in pari materia with Section 27 of the Act. Consequently, cases dealing with the nature of the jurisdiction and the extent and the scope of the power of this court under Section 66 of the Indian I.T. Act, 1922, or under Section 256 of the I.T. Act, 1961, would obviously be relevant for determining the nature of the jurisdiction and the extent and the scope of the power of this court while hearing a reference under Section 27 of the Act. In CIT v. Scindia Steam Navigation Co. Ltd. [1961] 42 ITR 589, it was held by the Supreme Court that the High Court, hearing a reference under Section 66 of the Indian I.T. Act, 1922, does not exercise any appellate or revisional or supervisory jurisdiction over the Tribunal. It acts purely in an advisory capacity.
4. In Venkataraman and Co. (P.) Ltd. v. State of Madras [1966] 60 ITR 112 (SC), it was held by the Supreme Court that the jurisdiction conferred upon the High Court by Section 66 of the Indian I.T. Act, 1922, is a special advisory jurisdiction and its scope is strictly limited by the section conferring the jurisdiction.
In Sarathy Mudaliar v. CIT [1966] 62 ITR 576, it was held by the Supreme Court that the High Court in a reference under Section 66 of the Indian I.T. Act, 1922, exercises only an advisory jurisdiction. It does not sit in appeal over the judgment of the Tribunal. If a question is raised by the Tribunal and referred to it, it is the function of the High Court to answer that question. The Tribunal will thereafter give effect to the opinion of the High Court.
5. In Rameshwar Prasad Bagla v. CIT [1973] 87 ITR 421, it was held by the Supreme Court that the High Court and the Supreme Court, in an appeal against the
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