NARAYANA RAO Vs. COMMISSIONER OF INCOME TAX HYDERABAD

JUDGEMENT

(1.) This is a petition to direct the stay of the collection of Income-tax arrears pending the disposal of a reference under Sec. G6 (2) of the Income-tax Act., The petitioner was assessed as a Hindu joint family. It consists of two branches, one branch represented by Polisetti Narayana Rao and the other by his brother Govinda Rao. Narayana Rao was the Kartha of the family and in that capacity submitted returns for the assessment years 1946-47, and 1947-48 on 7-11-1946 and 15-9-1947 respectively. In the assessment proceedings, the assessee claimed that there was a partial partition in the family and that certain specific items, viz., house properties, cloth and yarn business and Sudarsana Oil Mill business were divided between the two branches. The Income-tax Officer negatived the claim of division, but on appeal to the Appellate Assistant Commissioner it was upheld. On further appeal by the department it was held by the Tribunal that there was division as regards sonic of these properties and that there was none as regards certain others. The asvsessee thereupon applied to the Income-tax Appellate Tribunal to state a case and refer to the High Court a question formulated by him. There were two appeals before the Tribunal, I. T. A. Nos. 5831 and 5832, arising out of two assessments for the above mentioned assessment years. The Tribunal declined to do so and the matter was brought before us by the assessee under Sec. 66 (2) of the Income-tax Act. This Court directed the Tribunal to state a case and submit for the opinion of this Court a question of law arising out of their decision. That order of this Court was passed on C. M, P. Nos. 4391 and 4392 of 1954. The present petition is filed as an interlocutory Application in C. M. P. No. 4392 of 1954, which was the main petition and seeks stay, as above stated, of the collection of the arrears "pending disposal of the case directed to be referred by C. M. P. No. 4392 of 1954." Now, it is to be noticed that C. M. P. No. 4392 of 1954 is the application referred to in Cl. (2) of Sec. 66 of the Act and that has already been prdered by this Court, requiring the Appellate Tribunal to state the case and to refer a question. In due course, a reference will be made by the Income- tax Appellate Tribunal upon the requisition so issued and the case when it is so stated and referred will be taken on the file of this Court as a 'referred case'. The C. M. P. as such has been ordered and the referred case as such is yet to be on the file of this Court. How far it can be said that there are, in these circumstances, any proceedings pending on the file of this Court is a matter which has however, not been argued before us and we are not to be supposed as expressing any opinion on it.

(2.) The learned Advocate-General for the Commissioner of Income-tax, Hyderabad, questioned the jurisdiction of this Court to issue any such order as is sought by the assessee. He referred to Cl. 7 of Sec. 66 which runs as follows:

(3.) He argues that the power of this Court under Sec. 66 (2) is merely consultative and advisory, that this Court has no power to pass a decree or order under the Income-tax Act, that the above non obstante clause debars the passing of any order directing a stay, and that the only power that the High Court has to direct stay with respect to any matter concerning the tax is what is contained in the above proviso, whereby the High Court is entitled to make an order postponing payment of any refund payable by the Commissioner. This argument is countered by the learned Counsel appearing for the petitioner by invoking our jurisdiction under Sec. 151 C. P. C. and Art. 227 of the Constitution of India. The learned Counsel points out that the proviso to Article 225 of the Constitution of India removes the limitations previously in force upon the powers of the High Court because of Section 226 (1) of the Government of India Act, 1935 (corresponding to Sec. 106 of the earlier Act of 1919.)