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Commissioner Of Income Tax … vs Parmeshwari Devi Sultania & Ors on 6 March, 1998

Commissioner Of Income Tax … vs Parmeshwari Devi Sultania & Ors on 6 March, 1998
Author: D Wadhwa
Bench: S V Manohar, D Wadhwa

PETITIONER:

COMMISSIONER OF INCOME TAX BHUBANESHWAR & ANR.

Vs.

RESPONDENT:

PARMESHWARI DEVI SULTANIA & ORS.

DATE OF JUDGMENT: 06/03/1998

BENCH:

SUJATA V. MANOHAR, D.P. WADHWA

ACT:

HEADNOTE:

JUDGMENT:

THE 6TH DAY OF MARCH, 1998

Present :

Hon’ble Mrs. Justice Sujata V. Manohar Hon’ble Mr. Justice D.P. Wadhwa

Ranbir Chandra, C.V.S. Rao, (Ms. Shashi Kiran) Adv. for B.K. Prasad, Advs. for the appellants

N.K. Bisht, Adv (NP), for the Respondents Joseph Vellapally, Sr. Adv., and R.K. Kapoor, Adv. with him for the Amicus Curiae appointed by the Courts. J U D G M E N T

The following judgment of the Court was delivered: D.P. Wadhwa, J.

Commissioner of Income Tax, Bhubaneshwar and Union of India, Ministry of Finance have filed this appeal against the judgment dated October 24, 1994 of the Orissa High Court which the High Court dismissed their revision and affirmed the order of the subordinate court rejecting the plea of the Revenue that a suit for partition filed by the first respondent was not maintainable in view of the bar of in Section 293 of the Income Tax Act, 1961 (for short, the `Act’).

Respondent No.1, as the plaintiff, filed a suit for partition against 7 defendants, defendants 6 and 7 being respectively Union of India through Finance Secretary and Commissioner of Income Tax, Orissa, now the appellant before us. Defendants 1 and 2 are step-brothers and defendants 3 to 5 are step-sisters of the plaintiff. Plaintiff said that she was the daughter of Bansidhar Agarwal from his first wife, while defendants 1 to 5 were the children of Bansidhar Agarwal from his second wife. Defendant No. 1 is Babulal whose residential and business premises were subjected to search and seizure assets including certain gold ornaments, subject matter of the suit filed by the plaintiff, were seized. In the suit the plaintiff had prayed for partition of those very gold ornaments. Plaintiff said that her mother died in 1938 and that at that time she was possessed of 200 tolas of gold ornaments which was her stridhan. Her mother made a will bequeathing gold ornaments to the plaintiff and other children of Bansidhar form his second wife in proportion to number of daughters of each of such children to meet the dowry demand and marriage requirements of their daughters. These ornaments were kept in the custody of father of the plaintiff who died on February 10, 1990. After his death the ornaments came in the custody of Babulal Agarwal, the first defendant. The family decided to partition the ornaments. At that time there were 14 grand- daughters who were the daughters of the plaintiff and defendants 1 to 5. Since the plaintiff had 5 daughters she was entitled to 5/14th share in the ornaments. But before the partition could take place, Income Tax Officer raided the house of the first defendant on March 23, 1990 and seized those gold ornaments which weighed 2128 gms. along with other assets. Plaintiff said that she filed a petition before the Income Tax Officer for return of the ornaments but he refused. The plaintiff then issued a notice to the Commissioner of Income Tax, Orissa, defendant No.7, who, it is alleged, assured her that justice would be done to her claim and had stated that her case would be disposed of within three months. Nothing happened in spite of the reminders and no decision was taken. This gave cause of action to the plaintiff. She served a notice under Section 80 of Code of Civil Procedure on Defendants 6 and 7 and thereafter filed the suit.

From the facts, it is quite obvious that the plaintiff would not have filed the suit for partition as there was no dispute to her claim by other relatives but for the fact that gold ornaments were then in the custody of the Income Tax Department. Notices of the suit were served on Defendants 6 and 7. They filed an application in the Court on August 7, 1992 challenging the very maintainability of the suit in view of Section 293 of the Act. The Section is as under :

“293. Bar of suits in civil courts.

No suit shall be brought in any

civil court to set aside or modify

any proceeding taken or order made

under this Act, and no prosecution,

suit or other proceeding shall lie

against the Government or any

officer of the Government for

anything in good faith done or

intended to be done under this

Act.”

As to why the suit was not maintainable, reference was made to the operations conducted under Section 132 of the Act and the order passed in those proceedings under the Act. Under the authorisation issued by the Director of Income Tax (Investigation), Hyderabad under sub-section (1) of Section 132, search and seizure operations were conducted in the residence-cum-business premises of Babulal and also at the business premises of a company of which he was the Managing Director. Two bank lockers in the name of plaintiff would not have filed the suit for partition as there was no dispute to her claim by other relatives but for the fact that gold ornaments were then in the custody of the Income Tax Department. Notices of the suit were served on Defendants 6 and 7. They filed an application in the Court on August 7, 1992 challenging the very maintainability of the suit in view of Section 293 of the Act. The Section is as under :

“293. Bar of suits in civil

courts. No suit shall be brought in

any civil court to set aside or

modify any proceeding taken or

order made under this Act, and no

prosecution, suit or other

proceedings shall lie against the

Government or any officer of the

Government for anything in good

faith done or intended to be done

under this Act.”

As to why the suit was not maintainable. reference was made to the operations conducted under Section 132 of the Act and the order passed in those proceedings under the Act. Under the authorisation issued by the Director of Income Tax (Investigation), Hyderabad under sub-section (1) of Section 132, search and seizure operations were conducted in the residence-cum-business premises of Babulal and also at the business premises of a company of which he was the Managing Director. Two bank lockers in the name of Babulal and his brother Girdharilal in the Andhra Bank were also searched. These search operation were carried on from March 23, 1990 to March 26, 1990. Case, Jewellery, diamond ornaments, silver coins and ingots were found and seized. Statement of Babulal was recorded under sub-section (4) of Section 132 of the Act. In respect to cash and jewellery Babulal admitted having concealed income of Rs. 7,00,000/- which according to him was the value of the gold ornaments found in excess of 515 tolas which had been disclosed by him and his family members in his wealth-tax return. He offered an additional income of Rs. 3,50,000/- in his name and the same amount in the name of his brother on account of undisclosed investment in acquisition of gold ornaments. During the course of investigation, Babulal also gave written submission, Regarding gold ornaments, his stand now was that gold ornaments weighing 2128 gms. belonged to Mani Devi who was the first wife of his father and as per her wished, h is father was the custodian of this jewellery on behalf of the plaintiff who was the only daughter of his father from his first wife and also on behalf of the children to be gotten after remarriage of his father. His contention was that this jewellery had been kept by his father who was now no longer alive. After completion of the investigation, the Income Tax Officer passed an order under Section 132(5) of the Act holding that total liabilities on account of tax, interest and penalty of Babulal came to Rs, 56,079/- as against which value of the assets seized during the course of search and seizure operation which included the gold ornaments in question to be retained with the Department. The Income Tax Officer disbelieved the version of the Babulal that gold ornaments in question were owned by his step-mother and how she wished to distribute the same among her daughter and other children that may be born to the second wife of her husband. According to Babulal, as per his second version, the gold ornaments remained in the custody of his father from 1938 till 1990, when he died without these having been utilised as per the wishes of his step-mother, natural mother of the plaintiff. The assets retained by the order under sub-section (5) of Section 132 are to be dealt with in accordance with the provisions of Section 132B of the Act. An order was passed under sub-section (5) of Section 132 of the Act can be objected to under sub-section (11) thereof to the Commissioner of Income Tax. We may set out Section 132, in the relevant part, as under : “132. Search and seizure.- (1)…

(2) …

(3) …

(4) The authorised officer may,

during the course of the search or

seizure, examine on oath any person

who is found to be in possession or

control of any books of account,

documents, money, bullion,

jewellery or other valuable article

or thing and any statement made by

such person during such examination

may thereafter be used in evidence

in any proceeding under the Indian

Income tax Act, 1992 (11 of 1922),

or under this Act.

Explanation : For the removal of

doubts, it is hereby declared that

the examination of any person under

this sub-section may be not merely

in respect of any books of account,

other documents or assets found as

a result of the search, but also in

respect of all matters relevant for

the purposes of any proceeding

under the Indian Income-tax Act,

1922 (11 of 1922), of under this

Act.

(4A) Where any books of account,

other documents, money, bullion,

jewellery or other valuable article

or thing are or is found in the

possession or control of any person

in the course of a search, it may

be Presumed–

(i) that such books of account,

other documents, money,

bullion, jewellery or other

valuable article or thing

belong or belongs to such

person;

(ii) that the contents of such

books of account and other

documents are true; and

(iii) that the signature and every

other part of such books of

account and other documents

which purporting to be he

handwriting of any particular

person or which may reasonably

be assumed to have been signed

by, or to be in the

handwriting of, any particular

person, are in that person’s

handwriting of, any particular

person, are in that person’s

handwriting, and in the case

of a document stamped,

executed or attested, that it

was duly stamped and executed

or attested by the person by

whom it purports to have been

so executed or attested.

(5) Where any money, bullion,

jewellery or other valuable article

or thing hereafter in this section

and in sections 132A and 132B

referred to as the assets is seized

under sub-section (1) or sub-

section (1A), the Income-tax

Officer, after affording a

reasonable opportunity to the

person concerned of being heard and

making such enquiry as may be

prescribed, shall, within one

hundred and twenty days of the

seizure, make an order, with the

previous approval of the Deputy

Commissioner .–

(i) estimating the undisclosed

income (including the income

from the undisclosed property

in a summary manner to the

best of his judgment on the

basis of such materials as are

available with him;

(ii) calculating the amount of tax

on the income so estimated in

accordance with the provisions

of the Indian Income-tax Act,

1922 (11 of 1922), or this

Act;

(iia) determining the amount of

interest payable and the

amount of penalty imposable in

accordance with the provisions

of the Indian Income-tax Act,

1922 (11 of 1922), or this

Act, as if the order had been

the order of regular

assessment;

(iii) specifying the amount that

will be required to satisfy

any existing liability under

this Act and any one or more

of the Acts specified in

clause (a) of sub-section (1)

of section 230A in respect of

which such person is in

default or is deemed to be in

default,

and retain in his custody such

assets or part thereof as are in

his opinion, sufficient to satisfy

the aggregate of the amounts

referred to in clauses (ii),, (iia)

and (iii) and forthwith release the

remaining portion, if any, of the

assets to the person from whose

custody they were seized :

Provided that it, after taking into

account the materials available

with him, the materials available

with him, the Income-tax Officer is

of the view that it is not possible

to ascertain to which particular

previous year or years such income

or any part thereof relates, he may

calculate the tax on such income of

part, as the case may be, as if

such income or part were the total

income chargeable to tax at the

rates in force in the financial

year in which the assets were

seized and may also determine the

interest or penalty, if any,

payable or imposable accordingly :

Provided further that where a

person has paid or made

satisfactory arrangements for

payment of all the amounts referred

to in clause (ii), (iia) and (iii)

or any part thereof, the Income-tax

Officer may, with the previous

approval of the Chief Commissioner

or Commissioner, release the assets

or such part thereof as he may deem

fit in the circumstances of the

case.

(6) The assets retained under sub-

section (5) may be dealt with in

accordance with the provisions of

section 132B.

(7) If the Income-tax Officer is

satisfied that the seized assets or

any part thereof were held by such

person, for or on behalf of any

other person, the Income-tax

Officer may proceed under sub-

section (5) against such other

person and all the provisions of

this section shall apply

accordingly.

XXX XXX XXX

(11) If any person objects for any

reason to an order made under sub-

section, he may, within thirty days

of the date of such order, make an

application to the Chief

Commissioner or Commissioner,

stating therein the reasons for

such objection and requesting for

appropriate relief in the matter.

132B. Application of retained

assets–

(1) The assets retained under sub-

section (5) of section 132 may be

dealt with in the following manner,

namely :-

(i) The amount of the existing

liability referred to in

clause (iii) of the said sub-

section and the amount of the

liability determined on

completion of the regular

assessment or reassessment for

all the assessment years

relevant to the previous years

to which the income referred

to in clause ((i) of that sub-

section relates including any

penalty levied or interest

payable in connection with

such assessment or

reassessment and in respect of

which he is in default or is

deemed to be in default may be

recovered out of such assets.

(ii) If the assets consist solely

of money, or partly of money

and partly of other assets,

the Assessing Officer may

apply such money in t he

discharge of the liabilities

referred to in clause (i) and

the assessee shall be

discharged of such liability

to the extent of the money so

applied.

(iii) The assets other than money

may also be applied for the

discharge of any such

liability referred to in

clause (1) as remains

undischarged and for this

purpose such assets shall be

deemed to be under distraint

as if such distraint was

effected by the Assessing

Officer of, as the case may

be, Tax Recovery Officer under

authorisation from the Chief

Commissioner under sub-section

(5) of section 226 and the

Assessing Officer or, as the

case may be, Tax Recovery

Officer may recover the amount

of such liabilities by the

sale of such assets and such

sale shall be effected in the

manner laid down in the Third

Schedule.

(2) Nothing contained in sub-

section (1) shall preclude the

recovery of the amount of

liabilities aforesaid by any other

mode lain down in this Act.

(3) Any assets or proceeds thereof

which remain after the liabilities

referred in clause (i) of sub-

section (1) are discharged shall be

forthwith made over or paid to the

persons from whose custody the

assets were seized.

(4)(a) The Central Government shall

pay simple interest at the rate of

fifteen per cent per annum on the

amount by which the aggregate of

money retained under section 132

and of the proceeds, if any, of the

assets sold towards the discharge

of the existing liability referred

to in clause (iii) of sub-section

(5) of that section exceeds the

aggregate of the amounts required

to meet the labilities referred to

in clause (i) of sub-section (1) of

this section.

(b) Such interest shall run from

the date immediately following the

expiry of the period of six months

from the date of the order under

sub-section (5) of section 132 to

the date of the regular assessment

of reassessment referred to in

clause (i) of sub-section (1) or,

as the case may be, to the date of

last of such assessments or

reassessments.”

In view of the proceedings conducted under Section 132 of the Act and order having been passed under sub-section (5) of Section 132 thereof and seized assets including the gold ornaments, subject matter of the suit ordered to be retained, the Revenue objected to the maintainability of the suit and said that it was clearly barred by Section 293 of the Act and a civil court had no jurisdiction to try such a suit under Section 9 of the Code of Civil Procedure. Section 9 of the Code imparts jurisdiction on a civil court to try of suits of the civil nature excepting suit of which their cognizance is either expressly or impliedly barred. The Subordinate Judge framed and tried the preliminary issue on the maintainability of the suit. He observed that Section 293 of the Act could not be a blanket bar for all types of civil suit brought for redress against infringement of a legal right for which no remedy was prescribed under the Act. According to him, the claim of the plaintiff as set out in the suit had not been adjudicated by defendant No.7 and on that account legal right of the plaintiff stood violated and she suffered legal injury which entitled her to judicial process to file a suit. Thus, according to the learned Subordinate Judge, there is no remedy in the Act for redressal of the grievance of the plaintiff and the relief which the plaintiff claimed in the suit could not be granted to her in the Act. He, therefore, held the suit to be maintainable. Commissioner of Income Tax and Union of India aggrieved of this order filed a revision in the Orissa High Court. The learned Single Judge upheld the order of the Subordinate Judge and dismissed the revision. High Court did note the fact that the plaintiff filed a petition before the Income Tax Officer for returning the seized gold ornaments but the prayer was refused and that thereafter she issued a notice to the Commissioner of Income Tax and when that yielded no result, she filed the suit for partition of the suit properties. High Court also noticed that the order passed under sub-section (5) of Section 132 of the Act was not appealed against and had become final and further that the assessment proceedings were still pending before the Deputy Commissioner, Income Tax (Assessment). High Court referred to a decision of this Court in Dulhabhai vs. State of Madhya Pradesh [(1968) 3 SCR 662 – AIR 1969 SC 78] wherein seven principles were laid down regarding exclusion of jurisdiction of a civil court. According to the High Court, the suit filed by the plaintiff was not to set aside or modify the order passed by the Income Tax Officer under Section 132(5) of the Act and had she filed suit for that purpose, the plaint could have been rejected at the threshold in the face of the bar contained in Section 293 of the Act. A perusal of entire provision of Section 132 would show that it did not give finality to any order passed under sub-section (5) thereof, though the order could be varied or modified by the Chief Commissioner or Commissioner, as the case may be, but even that order did not give finality under the Act. High Court said that :

“it has to be borne in mind that

section 132 of the Act relates to

the pre-assessment stage. In order

to oust the jurisdiction of the

civil court in the case at hand one

has to examine whether the Income

tax Officer under sub-section (11)

of Section 132 would be able to

grant the relief claimed by

opposite party No.1 that the seized

gold ornaments are subject to

partition, it being the stridhan

property of her mother who

bequeathed the same in a will. As

the matter, I am of the view,

neither the Income-tax Officer nor

the named authority under sub-

section (11) of section 132 would

be able to grant the aforesaid

relief. Opposite Party No.1 is not

an assessee and she is a third

party so far as the proceeding

initiated against opposite party

No.2 under Section 132 of the Act

is concerned.”

High Court also held that although Section 132 provided for a remedy by way of challenge before the named authority under sub-section (11) of Section 132 of the Act, plaintiff could not redress her grievance because the relief of partition claimed by her in the suit could not be granted by the statutory machinery provided in the Act. We do not think that the High Court approached the question in its proper perspective. It failed to consider the effect of the decree if passed in the suit on the order under Section 132(5) of the Act or other proceedings under Section 132B of the Act. When Section 293 originally stood, it provided that “no suit shall be brought in any civil court to set aside or modify any assessment or order made under this Act”. The word “assessment” was omitted and the words “proceeding taken” were inserted in its place. This made the section more comprehensive in nature. Direct effect of the decree in the suit would be that the gold ornaments, subject matter of this suit, would be taken out of the order of the Income Tax Officer under Section 132 (5) of the Act and would not be available to be applied in proceedings under Section 132B of the Act. It is immaterial if the proceeding under Section 132 gives no finality to the order passed under Section 132 (5) of 132(11) of the Act. It is not the case of the Revenue that Income Tax Authority can grant decree for partition. It is not also material for the decision of the case if the will now set up by the plaintiff was genuine or not. The question that felt squarely for consideration was the right or the plaintiff as a third party in the proceedings under Section 132 of the Act. If we analyse the section, the following steps are visualise : “(1) search is conducted under the

authorisation of the named

authority;

(2) seizure of the assets, books of

accounts, documents etc. in

pursuance thereto;

(3) to examine on oath any person

during the course of search or

seizure operations who is found to

be in possession or control of any

of the assets, books of account,

documents etc.;

(4) statements so recorded can be

used in evidence in any proceeding

under the Act;

(5) there is a presumption that

assets, books of account or

documents found in control of any

person in the course of search

belong to him and that the

contents of books of account and

documents are true and that

signatures, books of account and

documents which purported to be in

the writing of any particular

person are signed or in the hand-

writing of that particular person;

(6) after affording a reasonable

opportunity of being heard and

after making enquiry as prescribed,

the Income Tax Officer is to pass

an order keeping in view the

requirements of sub-section (5) of

Section 132 of the Act;

(7) if the Income Tax Officer

passes order for retention of

assets, these are to be dealt with

in accordance with Section 132B;

(8) if the Income-tax Officer is

satisfied that the seized assets or

any part thereof belongs to any

other person, the Income-tax

Officer may proceed under sub-

section (5) against any such

person; and

(9) if any person objects for any

reason to the order made under sub-

section (5), he can approach the

Chief Commissioner or Commissioner

for redressal of his grievance.

A perusal of the order passed under Section 132(5) would show that the Income-tax Officer was not satisfied that the subject gold ornaments belonged to any other person and not to Babulal. It was, therefore, not necessary for him to proceed under sub-section (7) of Section 132 of the Act. However, the plaintiff was well aware of the proceedings under Section 132 and she did approach the Income-tax Officer, as aforesaid, who rejected her petition. In any case, she could have approached the Chief Commissioner or Commissioner under sub-section (11), if she had any objection for any reason to the order made under sub-section (5) of Section 132 of the Act. We do not think sub-section (11) is confined to only that person who was subjected to search and seizure operation and against whom the order under sub-section 132(5) was passed. The words “any person” appearing in sub-section (11) of Section 132 of the Act are significant and even a third party can made an application to the Chief Commissioner or Commissioner giving reasons for his objection to the order and seeking appropriate relief in the matter. This remedy the plaintiff did not avail. When the plaintiff was unable to get the release of the seized gold ornaments, allegedly belonging to her mother, under the provisions of the Act, she could not be filling a partition suit indirectly get a decree to have a finding that the gold ornaments belonged to her mother and that she had right to claim her share therein. If she succeeds in her claim this will have direct effect of getting that order of the Income- tax Officer under Section 132(5) of the Act set aside or modified to that extent. This Section 293 does not permit. The decree if passed in a suit would not only effect 5/14th share of the plaintiff which she was seeking on partition of the gold ornaments, but also whole of the ornaments weighing 2128 gms would get effected and taken out of the order under sub-section (5) of Section 132 of the Act. Mr, Vellapalli, who at out request, appeared amicus curiae submitted that one had to see if the suit was filed before or after the conclusion of the assessment proceedings. He said it was a suit for title and not, in any way, for setting aside the order passed by the Income-tax officer, even though as a consequence of an ultimate decree, it might affect the working of that order. He said form of the suit was to be seen if it is maintainable or not and that the jurisdiction of the civil court is decided as to how suit is framed. According to Mr. Vellapalli, purpose of of Income-tax proceedings is to determine the tax liability of the assessee and if liability is created, then to recover that and assets are to be retained but that was not an issue before the civil court. He also referred to Schedule 2 of the Act to contend that the Act did not altogether bar a civil suit. It is difficult to accept such submissions. We think Section 293 is quite specific and does not admit of any ambiguity if ultimately a suit is to result in a decree or order which sets aside or modifies any proceeding taken or order made under the Act, that suit would not be maintainable. We are not concerned with the frame of the suit as such but to see the ultimate result to which the suit as such but to see the ultimate result to which the suit would lead to. In the present case, both the Commissioner of Income-tax and Union of India have been impleaded as defendants. On pleadings of the parties, an issue will have to be framed on the validity of proceedings under Section 132 of the Act which cannot be permitted in view of the bar contained in Section 293 of the Act. In Raleigh Investment Co., Ltd. vs. Governor-General in Council [(1947) 15 ITR 332 (PC), a suit was filed by Raleigh Investment Company Ltd. claiming repayment of Rs. 4, 35, 295/-, part of a larger sum paid by it under an assessment of Income-tax made upon it. The basis of this claim was that in the computation of assessable income, effect had been given to a provision of the Income-tax Act, 1992 which in the submission of the plaintiff was ultra vires the legislature and that the assessment was, therefore, wrong. One of the contention raised was that the suit was barred by reason of Section 67 of the Income Tax Act, 1922. Section 67 contained bar of suits in civil court. Section 67 provided as under :

“67. Bar of suits in Civil Court.-

No suit shall be brought in any

Civil Court to set aside or modify

any assessment made under this Act,

and no prosecution suit or other

proceeding shall lie against any

officer of the Government for

anything in good faith done or

intended to be done under this

Act.”

The Court held that though in form the relief claimed did not profess to modify or set aside the assessment, in substance the suit was directed exclusively to a modification of the assessment and was barred by Section 67 of the Indian Income-tax Act. In Kamala Mills Ltd. vs. State of Bombay [(1965) 56 ITR 643 (SC)], plaintiff, the appellant filed a suit claiming to recover certain amount paid as sales tax on the ground that it had been illegally levied against it. One of the questions for consideration was if Section 20 of the Bombay Sales Tax Act, 1946 contained a bar against the suit. Section 20 is as under : “Save as is provided in section 23,

no assessment made and no order

passed under this Act of the

rules made thereunder by the

Commissioner of any person

appointed under section 3 to assist

him shall b e called into question

in any civil court, and save as is

provided in sections 21 and 22, no

appeal or application for revision

shall lie against any such

assessment or order.”

It was contended by the plaintiff that Section 20 had no application because the order of assessment which the plaintiff sought to challenge had been made by the relevant Sales Tax Authorities without jurisdiction. This Court repelled this argument and said that an assessment based on an erroneous finding about the character of the transaction was not an assessment made without jurisdiction and was not outside the purview of Section 20 and that words in that section were wide enough to take within its sweep even erroneous orders of assessment and would be entitled to claim protection against the institution of a civil suit. The court then observed :

“The jurisdiction of a civil court

can be excluded even without an

express provision. In every case,

the question about the exclusion of

the jurisdiction of civil courts

either expressly or by necessary

implication must be considered in

the light of the words used in the

statutory provision on which the

plea is statutory provision on

which the pleas is rested, the

scheme of the relevant provisions,

their object and their purpose.”

In State of Bombay (Now Gujarat) vs. Jagmohandas & Anr. [(1966) 60 ITR 206 206], the respondent-plaintiff had filed a suit against the State of Bombay for recovery of a certain amount which it alleged it h ad paid as advance tax on various dates, while submitting returns for a particular period. It also claimed interest. The State raised objection that the suit was barred by Section 13 and 20 of the Bombay Sales Tax Act, 1946. This Court held that as no assessment had been made under the Act was called in question in the suit Section 20 of the Act did not bar the suit. This Court also negatived the contention of the defendant that when a registered dealer filed a return and calculated and paid tax on the basis of the return, he, in fact, made an assessment and, therefore, brought himself within Section 20 of the Act. The Court said :

“We are unable to read the word

`assessment’ in section 20 to

include a mere filing of return and

payment by a registered dealer. In

our opinion, the word “assessment”

has reference to assessments made

under section 11, and 11A of the

Bombay Sales Tax Act, 1946.

Therefore, we must overrule the

contention of the learned Solicitor

General that section 20 expressly

bars the present suit.”

It is not necessary for us to consider the scope of Section 13 referred to above as that is not relevant to the issue raised before us.

In Rangammal & Ors. vs. Union of India & Ors. [(1963) 48 ITR 598 (Mad)], the appellants-plaintiffs had brought a suit for a declaration that property described in the plaint should not be either sold or could be sold if at all only subject to a charge in favour of the sixth plaintiff for realisation of income tax arrears due from their elder brother and for a permanent injunction restraining the Union of India and the Collector of Coimbatore from bringing those properties to sale for realisation of the income-tax arrears due. It was the contention of the plaintiffs that the brothers were having their independent business and were not having joint family businesses. However, the Income-tax authorities treated all the businesses as joint family business and the status of the assessee was taken as Undivided Hindu Family. In order to realise the arrears of income-tax, the properties, subject matter of the suit, were brought to sale. At that stage, the suit was filed. Earlier, it appeared that the plaintiffs had filed a suit for partition of joint family estate and a preliminary decree was passed and then final decree where some of the properties mentioned in the plaint in the present suit were allotted to minor plaintiffs. One of the question raised was whether the suit as such was barred by Section 67 of the Income-tax Act, 1922. A Division Bench of the Madras High Court, after examining the background of the case, observed that it was true that prayer in the plaint was not couched in terms which would bar the operation of section 67 of the Income-tax Act because the prayer was for declaration that the properties in question were not liable to be proceeded against for the satisfaction of the demand due under the assessment. The Court said that merely by casting the prayer in the form a declaration, the substance of the prayer could not b e hidden. The Court held that the substance here was that the share of the minors in the joint family property was not liable for the income-tax arrears because the tax was assessed on businesses which were not joint family businesses. The court, thus, held that Section 67 of the Act was a bar to the maintainability of the suit even though the declaration asked for did not in terms referred to cancellation of the assessment made by the tax authorities. Principles of law are, therefore, well settled where a civil court will not assume jurisdiction. In Dulhabhai etc. vs. State of Madhya Pradesh & Anr. [(1968) 3 SCR 662 – AIR 1969 SC 78], this Court laid 7 principles for the courts to see if the suit was barred under Section 9 of the Code or not. It is not necessary to set out all the 7 principles as we find that the present suit would be barred under the second principle laid by this Court which we reproduce as under :

“Where there is an express bar of

the jurisdiction of the court, an

examination of the scheme of the

particular Act to find the adequacy

or the sufficiency of the remedies

provided may be relevant but is not

decisive to sustain the

jurisdiction of the civil court.

Where there is no express exclusion

the examination of the remedies and

the scheme of the particular Act to

find out the intendment becomes

necessary and the result of the

inquiry may be decisive. In the

latter case, it is necessary to

see if the statute creates a

special right or a liability and

provides for the determination of

the right of liability and further

lays down that all questions about

the said right and liability shall

be determined by the tribunals so

constituted, and whether remedies

normally associated with actions in

civil courts are prescribed by the

said statute or not.”

We have seen above that the scope of Section 293 of the Act has been widened now even to include any proceeding under the Act and it is not merely confined merely to set aside or modify any order. From of suit is not relevant. It is the substance which is to be seen. When the statute prescribed certain procedure and proceedings thereunder are held and order passed, it is difficult to accept a contention that proceeding and order can be modified or set aside in a civil suit filed by a third party. Section 293 is specific and does not admit filing of a suit which has the effect of even indirectly setting aside or modifying any proceeding taken under the Act or order made thereunder. In the present case, search and seizure were effected as per the provisions of the Act, assets and documents seized and statement of Babulal recorded under sub-section (4) of Section 132 of the Act wherein he admitted that the gold was acquired from his and brother’s undisclosed income which he was even prepared to surrender to tax. It was thereafter in the course of further enquiry that he came up with a version that the gold ornaments in question belonged to his step- mother who bequeathed the same for the benefit of children of the plaintiff and other children that would be born to the second wife of his father. This version did not find favour with the Income-tax Officer and he was not satisfied that gold ornaments in question did not belong to Babulal. It was, a therefore, not necessary for him to issue any notice under sub-section (7) of Section 132 of the Act to the plaintiff. In any case, the plaintiff was well aware of the proceedings before the Income-tax Officer and she could have also filed objection to the order made by the Income- tax Officer under Section 132(5) of the Act to the Chief Commissioner or Commissioner under Section (11) thereof which remedy she did not avail. Considering the whole gravamen of the plaintiff in the suit and the law on the subject, we are of the opinion that the Subordinate Judge and the High Court were not correct in rejecting the contention of the Revenue and holding that the suit was not barred under Section 293 of the Act. We, therefore, allow the appeal set aside the impugned judgment of the High Court and of the Subordinate Judge and dismiss the suit filed by the plaintiff. We would like to record our appreciation of the assistance rendered by Mr. Vellapalli and Mr. Kapur who appeared amicus curiae at our request.

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