S MANICKAM CHETTIAR Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) IN respect of assessment years 1950-51, 1951-52 and 1952-53, a partnership firm called M/s. Oakwell Estate, Haldmulla, Ceylon, and one of its partners, SP. Viswanathan Chettiar (hereinafter referred to as the "assessee"), were assessed to tax in respect of their income arising from Ceylon, by the income-tax authorities in INdia, on the basis that the control and management of the firm vested in INdia. The total tax demand, after setting off for double taxation relief, which was outstanding and payable by the assessee, was Rs. 93, 357. The assessee is an INdian citizen holding INdian passport and had been residing at Ceylon on a visa issued by the Ceylon Government. He had no properties in INdia.Though the demands had been issued as early as 1952 and 1953, the tax had been in arrears and the assessee did not appear to have taken any steps to repatriate monies from Ceylon for payment of tax arrears. He came to INdia some time in 1972, in connection with the death of a near relation. On coming to know of this the INcome-tax Officer had intimated all ports of embarkation about the tax arrears of the assessee.By a petition dated February 14, 1972, the assessee requested the Additional Commissioner of INcome-tax to direct the INcome-tax Officer to issue a tax clearance certificate. This petition was forwarded to the INcome-tax Officer, Circle-I, Karaikudi, for report. IN his report, the INcome-tax Officer pointed out that the assessee had not paid so far anything towards the arrears, that he had not moved the Ceylon authorities for remittance all these years, that his father has some assets in INdia and that unless the assessee is pinned down to a specific programme of clearance of arrears with adequate security it would be difficult to realise the arrears once the assessee is permitted to leave INdia. IN the meanwhile, the assessee filed another petition on February 18, 1972, offering to pay and to furnish security for due payment of the arrears in monthly instalments of Rs. 1, 500. He also enclosed with this petition a copy of the security bond to be executed by the writ petitioner herein with guarantee for the due payment of the instalments of tax.

(2.) THE assessee further prayed in this petition that instructions may be issued to the Tax Recovery Officer and the Income-tax Officer concerned to issue a tax clearance certificate and withdraw the orders issued to the various ports of embarkation enabling him to proceed to Ceylon. THE petition further stated that there should not be any interruption in his entry and departure from India during the period of regular payment of monthly instalments of tax.After calling for a report as to the solvency of the writ petitioner herein and after the petitioner executed a security bond the Tax Recovery Officer passed an order on April 4, 1972, stating that in satisfaction of the security bond executed by the petitioner, Manicakam Chettiar, guaranteeing for the payment of tax arrears the said Viswanathan Chettiar and the firm Oakwell Estate were permitted to pay the arrears of tax in monthly instalments of Rs. 1, 500 commencing from the month of May, 1972, and payable on the last day of every month. THE order further stated that if there was any default in payment of tax in any month, the permission granted to pay in instalments would be deemed to have beau withdrawn with immediate effect and the entire balance of tax would become payable immediately. A tax clearance certificate also was given to the assessee. None of the instalments was paid after the assessee after for Ceylon.

(3.) THE company moved the High Court to set aside the order of the Textile Commissioner and the Government and to direct them to issue import licence for an amount equal to 100 per cent. of the value of their exports. This prayer was resisted on the ground that the Export Promotion Scheme itself was administrative in character and that it contained mere executive instructions which created no enforceable right in exporters. THE High Court allowed the writ petition and, on a further appeal, the Supreme Court held, relying on the principle of promissory estoppel, that the assurance given by the Government under the export Promotion Scheme would be enforceable because it was intended to be acted upon and was in fact acted upon. This principle was also accepted by the Supreme Court in a later case, Turner Morrison & Co. v. Hungerford Investment Trust as a rule which "undoubtedly advanced the cause of justice".In the present case, the assessee promised to pay the arrears in monthly instalments and the petitioner executed the bond agreeing to pay the amount in case of default by the assessee.