CHHAGAN LAL RATHI Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE judgment of the court was delivered by The appellant carried on business as a commission agent. By a notice dated July 15, 1957 he was required by the Income -tax Officer to make payment of a sum of Rs. 36,611.88 due as arrears of tax from a partnership firm which had discontinued its business and of which the appellant was a partner. It is admitted between the parties that the arrears included income -tax as well as excess profits tax. As no payment was made by the appellant, the Income -tax Officer served a notice dated July 29, 1957, purporting to be under section 46(5A) of the Income -tax Act, 1922, upon the Allahabad Bank Ltd., Kanpur, informing the bank that a sum of Rs. 36,611.88 was due from the appellant and that any money held by it, or which may be so held in future, to the credit of the appellant in his bank account, should be paid over to the Income -tax Officer to the extent of that liability. The bank informed the Income -tax Officer on August 9, 1957, that the account of the appellant showed a credit balance of Rs. 33,119.48 and that this amount had been set apart by it pending further instructions from the Income -tax Officer. The amount of Rs. 33,119.48 included a sum of Rs. 15,000 which the appellant claims to have received from one of his constituents as money advanced for the purchase of cloth. On August 30, 1957, the bank deposited Rs. 18,119.48 in the Government treasury from the appellants account pursuant to the notice from the Income -tax Officer.

(2.) THE appellant then filed a petition under article 226 of the Constitution on September 3, 1957, in this court, and assailed the validity of the notice dated July 15, 1957, and of the proceedings under section 46(5A). While praying for certiorari to quash the notice and the proceedings, he also sought an order for the refund of Rs. 18,119.48 from the Income -tax Officer and a further order restraining the bank from making over the balance amount of Rs. 15,000 to him. On September 5, 1957, on an application for interim relief, the court declined to issue an interim injunction restraining the bank from paying the balance of Rs. 15,000 to the Income -tax Officer. The order, however, contained the provision that 'if the bank does make payment during the pendency of the writ petition, and if the petitioner succeeds in this petition, he would be entitled to an order for refund of the amount by the Income -tax Officer to the bank.' Meanwhile, on September 4, 1957, the bank had deposited a further sum of Rs. 15,000 in the Government treasury from the appellants account.

(3.) MR . Gopal Behari, for the appellant, contends that the provisions of section 46(5A) of the Income -tax Act could not be invoked by the Income -tax Officer in the instant case for the purpose of recovering the excess profits tax due. Section 21 of the Excess Profits Tax Act applies certain provisions of the Income -tax Act, 1922, as if those provisions were provisions of the Excess Profits Tax Act and referred to excess profits tax instead of to income -tax. Among the several provisions of the Income -tax Act so enumerated is section 46. Mr. Gopal Behari points out that at the time when the Excess Profits Tax Act was enacted in 1940, section 46 did not include sub -section (5A), that sub -section having been, inserted subsequently in 1948, and he urges that, therefore, when reference was made by section 21 of the Excess Profits Tax Act to section 46 no reference could have been intended to sub -section (5A). Accordingly he contends that the provisions of sub -sections (5A) of section 46 of the Income -tax Act never became incorporated in the Excess Profits Tax Act.