TaxTMI 
TaxTMI 
1974 (12) TMI 72
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....rant of the relief to him would result in injustice ? The petition raising these questions is filed by the petitioner who belonged to the former Indian Civil Service, was a former Chief Justice of a High Court and is now a retired judge of the Supreme Court on the following facts : The petitioner took a loan of Rs. 65,000 from his provident fund as a non-refundable advance in 1958-59 and spent it along with his own Rs. 13,000 in buying and reconstructing a house at Allahabad. He sold the said house in 1967 for Rs. 1,25,000 without obtaining the prior permission of the Government. As the petitioner parted with the possession of the house contrary to rule 7-E(1) of the Indian Civil Service Provident Fund Rules (hereafter called " the Rules " in short), the sum withdrawn by him became payable together with interest thereon amounting to Rs. 27,932 by him as the subscriber to the fund under rule 7-E(2). The petitioner paid the amount with interest to his fund accordingly. In calculating income-tax payable on " capital gains " under section 48 of the Act, the petitioner deducted from the sale proceeds of the house the interest of Rs. 27,932, as expenditure incurred wholly and exclu....
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....p; (1) No income has escaped assessment within the meaning of section 147 of the Act because the interest paid by the petitioner on the loan taken from his provident fund was paid to the Government. It became a part of the Consolidated Fund of India, that is, the property of the Government. It was, therefore, expenditure incurred wholly and exclusively in connection with the transfer of the house within the meaning of section 48(1). (2) Even if the interest was paid into the petitioner's own account in the provident fund and thus continued to belong to the petitioner without becoming the property of the Government, this information was known to the Income-tax Officer at the time of the assessment. It did not become known to him subsequently. The said officer thus had no jurisdiction to make the reassessment under section 147(b) of the Act. Both these contentions were repelled in the defence. It was pointed out that : " (1) The interest paid by the petitioner did not become the property of the Government and did not become a part of....
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....nt to the Consolidated Fund of India. The Income-tax Officer, out of regard to the petitioner, made the assessment solely relying on the representation and the return made by the petitioner. The information that the interest was paid to the fund and not to the Government was not given by the petitioner to the Income-tax Officer. It is true that the Income-tax Officer could have himself found out from rule 7-E whether the interest was really paid to the fund. The fact remains, however, that this vital information was not apparent to the Income-tax Officer at the time of the assessment. The affidavit of the Income-tax Officer further states that subsequently " the true and correct interpretation of rule 7-E was brought to the notice of the Income-tax Officer by the Revenue Audit authorities as well as by the Ministry of Law ". This would mean that these two authorities pointed out to the Income-tax Officer that on a true meaning of rule 7-E the interest went to the fund and continued to belong to the petitioner. It was not, therefore, an expenditure by the petitioner. It is a mixed question of law and fact whether the interest paid by the petitioner was expenditure. The questio....
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.... not able to ascribe the information about the law given to him subsequent to the assessment to any person whatever. It would then be difficult to know whether it was his own rethinking or it really came to him from some person who either had the power or the duty to give such information in the form of an opinion to the Income-tax Officer. The externality of the source of the information has to be understood in this manner with a view to achieve the object of section 147(b). Bhagwati C. J. attempted to circumscribe the externality of the source of the income in the following words at page 193 of the report : " It must be, as already stated by us, a statement or expression of the correct state of the law by a person, body or authority competent and authorised to pronounce upon the law, so that it is invested with some definiteness and authority. " With respect, we think that this test, unless narrowly construed, is not materially different from the test of power and/or duty suggested by us above. It is in the light of this test that we have to decide whether the information coming....
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....w has, therefore, the power and/or duty to give advice on questions of law for the guidance of the income-tax department. The opinion of the Ministry of Law becomes the opinion of the Government in view of these rules of business. The Income-tax Officer has, therefore, to pay due regard to the said opinion. Under article 148 of the Constitution, the Comptroller and AuditorGeneral of India is appointed as an independent authority not removable from office except in the manner and on the grounds as a judge of the Supreme Court would be removed. It is well-known that his department is divided into two parts, namely, accounts and audit. The function of the auditors is to examine and check the work of the Government officers, point out mistakes, if any, committed by them and lay down instructions for their correct working. The report of the Comptroller and AuditorGeneral of India on the functioning of the departments of the Government is submitted to the President under article 151 and is laid before each House of Parliament. The Public Accounts Committee of Parliament sees to it that this report is complied with by the Government as far as possible. The revenue audit is a part of th....
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....ly three elements, namely, * revenues received by the Government of India, ** loans raised by that Government by the issue of treasury bills, loans or ways and means advances, and *** all moneys received by that Government in repayment of loans. Learned counsel for the petitioner argued that the repayment of a loan taken from the provident fund along with interest on it would come under the last element of the Consolidated Fund of India. This argument ignores not only the true interpretation of article 266 but also of the other connected provisions of the Constitution. Under article 284 all moneys received by or deposited with (a) any officer connected with the affairs of the Union or of a State in his capacity as such, other than revenues or public moneys raised or received by the Government of India or the Government of the State, as the case may be, or (b) any court within the territory of India to the credit of any cause, matter, account or persons, shall be paid into the public account of India or the public account of the State, as the case may be. It is to be noted that as contrasted with the Consolidated Fund of India, the public account of India contains moneys which are r....
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....hat a provident fund is constituted would show that the fund is different from the Consolidated Fund or the Contingency Fund. As the Government has to keep the custody of the money and manage it, the provident fund formed part of the public account of the Government. (3) A person subscribes to the provident fund or contributes to it. He does not give away his money thereby. (4) The money and the interest on it is credited into the fund. (5) Such money is credited to the account of the subscriber. (6) Such money may be withdrawn by the subscriber ordinarily on his retirement or be paid to his nominees or heirs on his death or in certain circumstances even earlier but in all events it remains his money payable to him or his nominees or heirs. (7) The language of the Indian Civil Service Provident Fund Rules shows that the money continued to belong to the subscriber and does not vest in the Government. The Provident Funds Act, 1925, is applicable to this as well as other provident funds. It defines " compulsory deposit " in section 2(a) as one which is not " repayable on demand ". But for this provision, the money would have been repayable on the demand of the subscr....
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....d payment. The finding of law is that the payment into the petitioner's account in the provident fund does not amount to a payment to the Government and is not an expenditure incurred in connection with the transfer of his house within the meaning of section 48 of the Act. The finding on this second question means that even if it is assumed for the sake of argument that our finding on the first question is incorrect and section 147(b) does not cover the proposed reassessment, still the court would have the discretion to refuse relief to the petitioner. The law is well-settled that the issue of a writ or order in the nature of certiorari by this court under article 226 is not of course. It does not follow as soon as some legal infirmity is shown by the petitioner in the impugned order. This court has the discretion to abstain from interference if : (a) the conduct of the petitioner is such as to disentitle him to the relief, (b) he has not suffered any injustice, or (c) that the grant of the relief to him would result in injustice. All these three reasons are present in this case. The deduction was allowed to the petitioner without further inquiry because of his statement ....
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....tan v. State of Bihar (Civil Appeal No. 140 of 1964 decided on September 22, 1964) as follows : " It is well-settled that under article 226, the power of the High Court to issue an appropriate writ is discretionary. There can be no doubt that if a citizen moves the High Court under article 226 and contends that his fundamental rights have been contravened by any executive action, the High Court would naturally like to give relief to him ; but even in such a case, if the petitioner has been guilty of laches, and there are other relevant circumstances which indicate that it would be inappropriate for the High Court to exercise its high prerogative jurisdiction in favour of the petitioner, ends of justice may require that the High Court should refuse to issue a writ. There can be little doubt that if it is shown that a party moving the High Court under article 226 for a writ is, in substance, claiming a relief which under the law of limitation was barred at the time when the writ petition was filed, the High Court would refuse to grant any relief in its writ jurisdiction. No hard and fast rule can be laid down as to....