L. HAZARI MAL KUTHIALA versus THE INCOME-TAX OFFICER, SPECIAL CIRCLE, AMBALA CANTT.

HIDAYATULLAH J.-The appellant firm, L. Hazarimal Kuthiala of Kapurthala, moved the High Court of Punjab under Art. 226 of the Constitution for writs of prohibition, certiorari, quo warranto etc., against the Income-tax Officer, Special Circle, Ambala and the Commissioner of Income-tax, Punjab (1), Himachal Pradesh, Bilaspur and Simla in respect of reassessment of the income of the firm for the account year, 1945-1946. The High Court dismissed the petition, but granted a certificate under Arts. 132 and 133 of the Constitution, and this appeal has been filed on that certificate.

p. 894

The firm carried on business as forest lessees and timber merchants at Dhilwan in the former Kapurthala State: In that State, an Income-tax law was in force, and prior to the integration of the State, on April 10, 1947, the income of the firm for the account year 1945-1946 (Sam vat. 2002) was duly assessed, and the tax was also paid. Subsequently, political changes took place, Kapurthala integrated into what was known as Pepsu, and the Rajpramukh issued two Ordinances in Samvat. 2005, by which all laws in force in Kapurthala including the Income-tax law ceased to be operative from August 20, 1948. The two Ordinances instead applied laws in force in the Patiala State to the area of the new State which included Kapurthala, and the Patiala Income-tax Act, 2001, came into force. Later still, the Indian Finance Act, 1950 (26 of 1950), applied the Indian Income-tax Act to the Part B States, which had emerged as a result of political changes. Section 13 of the Indian Finance Act, 1950, repealed the Income-tax laws obtaining in the area of the Part B States except for the purposes of levy, assessment and collection of i'ncome-tax and per- tax in respect of the pC'riod defined therein.

pp. 894–895

On March 12, 1955, the Income· tax Officer, Special . · Circle, Ambala, issued a notice purporting to be under s. 34 of the Patiala Income-tax Act of Sam vat. "2001 to the appellant firm calling upon it to file a return of its income and total )VOrld income, because he had reason to believe that the income had been under. assessed. Previous to this, on November 4, 1953, the Commissioner of Income-tax, Punjab(!), Himachal Pradesh, Bilaspur and Simla, purporting to act under s. 5, sub-ss. (5) and (7 A) of the Indian Income-tax Act, ordered that the assessment of the appellant firm would be done by the Income- tax Officer, Special Circle, Ambu.la and "not by the Income-tax Officer, B-Ward, Patiala, who ordinarily would be the competent authority nuder s. 64 of the Indian Income-tax Act to assess the appellant firm. The appellant firm raised objections, but failed; and then filed the petition under Art. 226 of the Constitution, out of which the present appeal arises. ·

p. 895

Numerous objections were taken in respect of the competency of the proceedings before the taxing authorities, but some of them are no longer· pressed. An argument under Art. 14 of the ConHtitution has now been abu.ndoncd, though it figured at earli~: stages of the present ca.se. A second point tl;_.t the reassessment cannot be made under the P ,ciala Income-tax Act is not in dispute, because ·;he respondents before us stated that the reassess,.ient, if any, would have to be done in accordance w.' ch the Kapurthala law, as it existed in the assessm• nt year (Sam. vat. 2002). A third argument, name] ', that the words of s. 13 of the Indian Finance Act, ·.q50, did not include reassessment., has also been abaudoned, in view of the decisions of this' <Jourt in La'cshmana Shenoy v. The Income.tax OJficer, Ernakulam (') and The Income-tax Officer, Bangalore v. K. 1-. Guruswamy ('). Only one point has been pressed be'orc us, and it is that the Income-Tax Officer, Special Circle, Ambala, had no jurisdicticn to issue a notice under s. 34, and that only the Income-tax Officer, B- \\Tard, Pa.tiala., was the competent authority. Reliance is placed in this conne.ction upon the provisions of s. 64(1) of the Indian Income-tax Act, under which the locally situa.ted Income-tax Officer would have had jurisdiction in this case. The transfer of the ca.so by t.he Commissioner of Income-tax by his order dated November 4, 1953, is characterised as ultra vi res and incompetent, and it is this argument a.lone to which we need address ourselves in this appeal.

pp. 895–896

The Pa.tie.la. Income-tax Act contained provisions almost similar to ss. 5(5) and 5(7 A) of the Indian Income-tax Act. Sub-section (5) differed in this that the Commissioner of Income-tax was required to consult the Minister-in-charge before ta.king action under that sub-section. The only substantial difference in the latter sub-section was that the Explanation which was added to s. 5(7 A) of the Indian Income-tax Act as a. result of the decision of this Court in Bidi Supply Co. v. Union of India(') did not find place in the Pa tie.- Ia Act. The Commissioner, when he transferred this c.lse, referred not to the Patia.Ia. Income-tax Act, but to the Indian Income-tax Act, and it is contended that if the Patia.la. Income-tax Act was in force for purposes of reassessment, action should have been taken under bha.t Act and not the Indian Income-tax Act. This argument, however, loses point, because the E>xercise of a. power will be referable t-0 a jurisdiction which confers validity upon it and not to a jurisdiction under which \twill be nugatory. This principle is wellsettled. See l'itamber Vajirshet v. Dhandu Navlapa(').

p. 896

The difficulty however, does not end there. The Commissioner, it) acting under s. 5(5) of the Pa.tiala. Income- tax Act. was required to consult the Ministerin-cha.rge. It is contended that the Central Boa.rd of Revenue which, under the Indian Finance Act, 1950, ta.keE the place of the Ministor-in.charge was not consulwd, and proof against the prosumptio11 of regularity of official acts is said to be furnished by the fa.ct that under the Indian law no such consultation was necessary, and the Commissioner, having purported to act under the Indian law, could not have felt the need of consultation with any higher authority. This, perhaps, is correct.. If the Commissioner did not act under the Patiala law at all, which enjoined consultation with the Minister-in-charge and purported to act only under the Indian law, his mind would not be drawn to the need for consultation with the Central Board of Revenue. Even so, we do not think that the failure to commit the Central Board of Revenue renders the order of the Commissioner ineffective. The provision about consultation must be treated as directory, on the principles accepted by this Court in State of U. P. v. Manbodhan Lal Srivastava(') and K. S. Srinivasan v. Union of India('). In the former case, this Court dealt with the provisions of Art. 320(3)(c) of the Constitution, under which consultation with the Union Public Service Commission was necessary. This Court relied upon the decision of the Privy Council in Montreal Street Railway Company v. Normandin ( where it was observed as follows :

pp. 896–897

" ...... The question whether provisions in a statute are directory or imperative ha_s_ very frequently arisen in this country, but it has been said that no general rule can be laid down, and that in every case the object of the statute must be looked at. The cases on the subject will be found collected in Maxwell on Statutes, 5th Ed., p. 596 and the following pages. When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience, or injustice to persons who have no control over those entrusted with the duty, and at the same time would not promote the main object of the Legislature, it has been the practice to hold such prov.isions to be directory only, the neglect of them, though punishable, not affecting the validity of 'the acts done." The principle of the Privy Council case was also applied by the Federal Court in Biswanath Khemka v. The King Emperor ( and there, as pointed out by this Court, the words of the provision were even more emphatic a.nd of a prohibitory cha.ra.cter. The essence of the rule is tha.t wherP consultation has to be ma.de <luring the performance of a. public duty and an omission to do so occurs, the action cannot be regarded a.s altogether void, a.nd the direction for consultation may be treated as director.v a.nd its neglect, a.s of no consequence to the result. In view of what has been said in these ca.ses, t.he failure to consult t-he Central Board of }{eYenue does not destroy the effect iveneRs of the order passed by the Commissioner, however wrong it might be from the administrative point of view. The power which the Commissioner ha.d, was entrusted to him, a.nd there was only a duty to consult the Central Boa.rd of Hevenue. The failure to conform to the duty did not rob the Commissioner of the power which he exercised, and the exercise of the power cannot, therefore, be questioned by the a.ssesscc on the ground of failure to consult the Central Board of R11venue, provision regarding which must be regarded as laying down administrative control and as being irect-0ry.

pp. 897–898

Learned counsel, however, contends that even if a.II this be decided a.ga.inst him, he is still entitled to show tha.t the tra.nsfor of the ca.so ca.n only take place under sub-s. (7A) of s. 5 and not under sub·B. (5). According to him, tho former sub-section deals with the transfer of individual ca.ses, a.nd that inasmuch a.s there wa.s no pending ca.seat the time, then, a.s wa.s ruled by this Court in the Bidi Supply case ('), the tra.nsfor could not be va.lid. In the absence of a.n Expla.na.tion similar to the one a.dded to tho Indian Income-tax Act, he contends that a case which wa.s not pending, could not be transferred under sub-s. (7 A). He contends a.lso that snb-s. (5) deals not with the transfer of individual ca.sea but with the distribution of work.

p. 898, margin D

Tbe two sub-sections of s. 5 of the Pa.tia.la. Incometax Act read-a.s follows :

p. 898, margin D

"(5) Income-tax officers shall perform their functions in respect of such persons or classes of persons or of such incomes or classes of income or in respect of such areas as the Commissioner of Income-tax may in con'sultation with the Minister Incharge direct, and, w.here such directions have assigned to two or more {111.come-tax Officers, the same persons or classes of persons or the same incornes o_r classes of income or t.he same area, in accordance with any orders which tbe Commissioner of Income-tax may in consultation with the Minister Incharge make for the distribution and allocation of work to be performed. The Minister In charge may, with the previous approval of the Ijlasi-Khas, by general or special order in writing, direct that the powers conferred on the Income-tax Officer by or under this Act shall, in respect of any specified case or class of cases, be. exercised by the Commissioner, and, for ·the purposes of any case in respect of which such order applies, references in this Act or in any rules made hereunder to the Income- tax Officer shall be deemed to be references to the Commissioner.

pp. 898–899, margin D

(7 A) The Commissioner of Income-tax may transfer -any case from one Income-tax Officer subordinate to him to another, and the Minister Incharge . may transfer any case from any one Income-tax Officer to another .. Such transfer may be made at any stage of the proceedings, and shall not render neces- · sary the re-issue of any notice already issued by the Income-tax Officer from whom the case is transferred."

p. 899

There can be _no doubt that sub-s. (7 A) authorises the Commissioner to transfer individual cases. The words "any case from one Income-tax Officer subordinate to him to another ", " such tmnsfer may be made at any stage of the. proceedings " etc., clearly indicate this. Sub-section (7 A) is, however, not applicable here, because in respect of the cognate sub-section of the Indian Income-tax Act it was ruled by this Court that it could apply to a pending .case only. It was to overcome this lacuna that the Explanation was added by the Indian Parliament. This amendment came in 1956, and the Patiala Act did not include a simihi.r Explanation, because prior to 1956 the question had not arisen. There is one other difie'rence between the Patiala Act and the Indian Act. Whereas· sub-s. (7 A) was introduced in the Indian Act by an amendment, the corresponding sub-section was enacted at the same time as tho rest of the Patia.la Act.

pp. 899–900

Now, it is quite clear that a case which was not pending at the time of transfer could not be trans. ferrNI under sub-~. (7 A) of s. 5 of the P:>t iala Act The same reasoning must br- applied to that. sul~< section, as it was applied to the Indian Act. Lea.rnf·d counsel reforred us to an affidavit hv the Under Secretary, Central Board of Rcvenm., rep;·oduccd in Pa1malal Binjraj v, Union of India ( which stated the reason for the introduction of sub.s. (7 A). It is a little difficult to accept the affidavit as an aid to find out the intention why a particular law or amendment w1~s enacted, more so where the affidavit concerns quite another Act of a different legislature. It is, however, pertinent to remember that sub-s. (7 A) expressly ga. ve the power to transfer pending cases, but said nothing a.bout ca.se8 which were not pending. The power to transfer such ca.see before they came into being must, therefore, be found in some other enactment. The Department contends that it would fall within sub-s. (5) of s. 5, and points out that this Court was not required to consider that sub-section, br)cause the transfer of the cases dealt with in tho Bidi Supply case(') was by an authority not named in sub-s. (5) and therefor!' the transfer in those instances could not be held to be undor that sub-section. The Department contends that the Commissioner of Income-tax is mentioned both in sub-s. (5) and eub-s. (7 A) and could derive his power from one or the other or both.

p. 900

The short question thus is whether an individual case which was not a. pending case could be transferred from one Income-tax Officer to another under sub-s. (5) of s. 5 of the Patia.la Act, which was kept alive for assessment and reassessments relating to previous a.sseBBment yearn. Mr. Pa.lkhivala. a_rgues that the words of the sub-section " such persons or classes of persons or of such incomes or classes of income or in respect of such areas" denote, by the plural employed, a. <lealing with a group rather than an individual case. He further contends that if individual cases were held to be included in sub-s. (5), then sub-s. (7 A) would be unnecessary and otiose. He ·argues that harmonious construction thus requires that the two sub-sections must be taken to cover different situations.

pp. 900–901

The last argument is hardly open aftrr the decision of this Court adverted to a1ready. If pending cases alone were within sub.s. (7 A), those cases which were not pending could not be said to have been provided for, there. There is thus no overlapping at least in so far as cases not pending were concerned. An arrangement hr their disposal would be a subject of distribution of work and nothing much turns upon the employment of the p"!ural number, because the plural includeH the singular. Indeed, a single case might well be in a class separate from others. Duplication of powers is sometimes noticeable in statutes, and does not destroy the effectiveness of the powers conferred. Section 24 of the Civil Procedure Code dealing with tmnsfers of cases and the provisions of the Letters Pat mt of the High Court are instances in point. If a p uticular action is valid under one section, it cannot be rendered invalid because the identical action can also be taken under another section, and it makes no difference if the two empowering provisions are in the same statute. In any event, sub-s. (7 A) wonld cut down sub-s. (5) only to the extent the formL'r provides, and it has been held that it was confined to pending cases only. Sub-secti(\ll (5) was thus available for cases which were not pending, and the case which was the subject-matter of the Commissioner's order was not a pending case.

p. 901

Mr. Palkhivala contends that sub-s. (5) merely enables distribution of work, and does not deal with transfers. But where a case is not pending, an order relating to it may take the form of transfer or an arrangement for its disposal. There is nothing to prevent the Commissioner, acting under sub-s. (5), to arrange that the case of an assessee shall be disposed of by a particular Income.tax Officer. The words of sub-s. (5) that "Income-tax Offic<•rs shall perform their functiorrn in respect of such persons ...... as Commi~Hioner ...... may ...... direct" <inly show that CommiAsioner mn.y direct that one Income-tax Officer Ahall not and !!notlwr lncomr-t-Rx Cfficer sl1all, perform the functions in respect of such and such pnson or per80lls. The plural i11cluding the singular, order of thu Commissio11cr waH valid, becausu he arra11ged aud distrilrnted work, and <lid not- se"k transfer any ca~e. It is, however, contemlcd this renders suL-s. (7 A) otioso. In opi11iu11, it nut. Special 1irovisiu11 for transfer of pe11ding <'ases is ·~JI that provided there, aud if ouch a transfer takes pla<'e, the proviBions of sub-s. (7A) will be invoked. Tho8P provisions are to be rllad as 11ut judicing the g<'11eral powers granted b) sub-s. (5) vice versa.

pp. 901–902

For these reasons, tlie appeal fails, r.nd will ho missed with eusts.

p. 902

Appeal dismi.ssed.

p. 902

BURMAH SHELL OIL STORAGE AN'D DISTRIBUTING CO., OF INDIA, LTD, AND ANOTHER

p. 902

v. THE COMMERCIAL TAX OFJ.<'JCER AND

p. 902

OTHERS

p. 902

(A~D CONNECTgD APPEAL) (S. K. M. K. C. Ihs J.C. and X. ,JJ.)

p. 902

Sales Tax-Sale of motor spirit for aviation purposes "' Ai"rport-Exemption from taxation-_Sale outside ---'J.t'hether State--A.viatio1i sp;rit loaded aircraft taken out of cotrnlry-lf exported-" ", meamng of -Bengal Motor Spint Taxation Act, 1y41 5 of 1941),

p. 902

amcnded-Co11slitutio11 of hidia, Art 286(1)(a)(b). nation.

p. 902