Judgment

DUA, J.:- The Colaba Land and Mills Co., Ltd., (in liquidation) was ordered by the Bombay High Court on October 7, 1959 to be wound up under the provisions of the Companies Act, 1 of 1956 and the Official Liquidator was appointed its liquidator. Earlier on May 1, 1959 the Official Liquidator had been appointed by the High Court its provisional liquidator. On August 23, 1966 the Income-tax Officer (Companies Circle) concerned issued six different notices under S.148 of the Income-tax Act, 1961 proposing to reopen the assessment of the Company and to re-assess it in respect of the assessment years 1950-51 to 1955-56. On December 31, 1966, the Income-tax Officer served further notices under S. 142(1) of the Income-tax Act upon the official Liquidator calling upon him to produce accounts and documents specified at the back of the notices and to furnish any information called for by the said officer. At the foot of the said notices it was stated that failure on the part of the official Liquidator to comply with the terms of those notices would not only result in ex parte assessment against the Company but might also entail penalty under S. 271 of the Income-tax Act. Certain negotiations followed between the Official Liquidator and the Inspecting Assistant Commissioner of Income-tax but they were infructuous. On an application made by the Official Liquidator in the High Court questioning the jurisdiction of the Income-tax Officer to issue the said notices or to proceed with the re-assessment of the Company without the leave of the High Court winding up the Company, Vimadalal J., on 28th September, 1967 held that the income-tax authorities were not entitled to commence the assessment or reassessment proceedings contemplated against the Colaba Land and Mills Co., Ltd., or to continue the same without obtaining leave of the Court under S.446 (1) of the Companies Act, 1956 (Act No.1 of 1956) (hereinafter called the Act). The learned Judge on this view granted an injunction restraining the Income-tax Officer from assessing or re-assessing the said Company for the assessment years 1950-51 to 1955-56.

2. On appeal by the Income-tax Officer and the Union of India before the appellate bench of the High Court against the order of injunction, the Division Bench (Modi and Desai JJ.) reversed the order of the learned single Judge and set aside the injunction issued by him. Before the appellate bench two contentions were raised on behalf of the Income-tax Officer: (1) that notices for re-assessment issued under S.148 were not legal proceedings within the meaning of that phrase as used in S.446 (1) of the Act, and (2) that, assuming the re-assessment proceedings started under the said notices to be legal proceedings, leave of the Company Court under S.446 (1) of the Act was not necessary because the Income-tax Officer had exclusive jurisdiction to make re-assessment and to determine the tax liability. The proceedings by way of assessment before the Income-tax Officer according to the contention, were outside the pale of jurisdiction of all civil courts including the Company Court. The appellate bench did not consider it necessary to decide the first contention because, on the authority of Damji Valji Shah v. Life Insurance Corporation of India, AIR 1966 SC 135, the second contention deserved to be accepted and that was considered sufficient to conclude the appeal.

3. The Official Liquidator, after securing a certificate of fitness from the High Court under Art. 133 (1) (c) of the Constitution has appealed to this Court and the only question which requires consideration here is, if it is necessary for the Income-tax Officer to obtain leave of the liquidation court when he wants to re-assess the company for escaped income in respect of past years.

Section 446 of the Act reads:

"(1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced,