AJIT KUMAR GANGULI Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS revisional application under Art. 227 of the Constitution is directed against an order passed in revision by the Board of Revenue, West Bengal, reviving Certificate Case No. 300 IT of 1948-49 against M/s H. and A.K. Ganguli, represented by the petitioner, Ajit Kumar Ganguli and his partners. The petitioner, Ajit Kumar Ganguli, was a partner of the firm styled "M/s H. and A.K. Ganguli" which had its office at 17/19 R.G. Kar Road, Calcutta. According to the petitioner, the said partnership firm discontinued business w.e.f. 8th Aug., 1942, the assets and liabilities of the firm, with the right to use the firm name "M/s H. and A.K. Ganguli" in respect of existing tenders and contracts being taken over by M/s Ganguli and Sons Ltd., having its office at No. 17, R.G. Kar Road. On 23rd March, 1948, the ITO District I(2), Calcutta, assessed the income of the firm "M/s H. and A.K. Ganguli" for the asst. yr. 1943-44 Rs. 1,62,000 and by a notice under s. 29 of the IT Act, dt. 5th April, 1948, demanded Rs. 83,111-15-0 on account of income-tax and surcharge and super-tax and surcharge for the said year, the demand being payable by 30th April, 1948. Further, the ITO by an order dt. 30th June, 1948, imposed under s. 28(1)(b) of the IT Act a penalty of Rs. 81,527-10-0 on the firm, and served a notice of demand under s. 29 of the Act, dt. 9th July, 1948, making the amount payable by 25th July, 1948. Neither of the two amounts demanded having been paid, the ITO on 4th Feb., 1949, signed and forwarded a certificate under s. 46(2) of the IT Act to the Collector, 24-Parganas, and Certificate Case No. 300 IT of 1948-49 was started thereon, for recovery of the sum of Rs. 1,64,639-9-0, representing the sum of the two demands; the certificate under s. 4 of the Public Demands Recovery Act being filed on 10th Feb., 1949, and notice under s. 7 of the Act being issued on the same date.

(2.) THE petitioner in the meantime appealed against the assessment of tax and imposition of penalty on the defunct firm, M/s H. and A.K. Ganguli, but the appeal was dismissed by an order dt. 30th May, 1949. THE petitioner filed a second appeal before the Tribunal, Calcutta, and the Tribunal by its order dt. 28th Feb., 1950, modified the order of the ITO determining the income of the firm at Rs. 1,13,750 and reducing the demand on account of income-tax with surcharge and super-tax with surcharge to Rs. 51,666-11-0 and the penalty to Rs. 50,100. THE partners of the defunct firm paid Rs. 10,000 towards the tax demand on 29th March, 1950, to the Income-tax office. THEreafter, a fresh notice of demand under s. 29 of the IT Act dt. 28th April, 1950, was issued on the defunct firm, requiring payment of Rs. 41,666-11-0 on account of the tax (Rs. 51,666-11-0 less Rs. 10,000 paid) by 15th May, 1950. No further amount being paid into the Income-tax office the ITO, District I(2), Calcutta, wrote a letter dt. 12th April, 1951, to the Certificate Officer, 24-Parganas, informing him that the demand had been reduced to Rs. 51,666-11-0 on account of tax and surcharge, and Rs. 50,100 on account of penalty, and that the certificate filed on 10th Feb., 1949, might be corrected accordingly, and the certificate case proceeded with. It was also intimated that Rs. 10,000 out of the reduced demand had been paid into the Income-tax office. THE certificate filed on 10th Feb., 1949, was amended accordingly, and steps for realisation of the amount were taken : the certificate case had remained stayed till then, awaiting the result of the appeals by the petitioner or his firm. After resumption of proceedings in the certificate case, the petitioner with his partners paid a total sum of Rs. 54,500 into the certificate Court, in some instalments, so that the amount paid comes to Rs. 64,500 and a balance of Rs. 37,266-II-0 remained due. THE petitioner tried to obtain remission of that amount by applying to the Central Board of Revenue. Being unsuccessful, the petitioner filed an objection before the Certificate Officer on 17th July, 1957, contending that the certificate field against the defunct firm was liable to be cancelled on four grounds, viz., (1) defect in the form of the certificate, (2) defect in the notice under s. 7 of the Public Demands Recovery Act, (3) failure to issue a fresh certificate under s. 46 (2) of the IT Act after modification of the original demands by the Tribunal, and failure to file a fresh certificate under s. 4 of the Public Demands Recovery Act (the Certificate Officer erroneously summarised this ground as demand notice being in respect of different amounts), and (4) making of assessment on a discontinued unregistered firm in the firm name and not in the names of the partners. THE Certificate Officer, 24-Parganas, heard the objections on the same date, and allowed only one objection, viz., that relating to the defect in the form of the notice; he held that notice as issued under a facsimile rubber- stamp signature of the Certificate Officer was bad, and directed that a fresh notice under s. 7 be issued under the signature of the Certificate Officer. THE other objections were overruled. An appeal was preferred before the Divisional CIT against the order of the Certificate Officer. THE learned Divisional CIT while hearing the appeal for admission on 21st Aug., 1957, overruled the objection relating to the failure to issue a fresh certificate under s. 46(2) of the IT Act and to file a fresh certificate under s. 4 of the Public Demands Recovery Act, by referring to the decision in Ladhuram Taparia vs. D.K. Ghosh (1958) 33 ITR 407 (Cal) : TC52R.1361 that when the amount of demand was reduced by the appellate authority, these were not necessary. He also overruled the objection relating to the assessment having been made on a discontinued unregistered firm, holding that the certificate Court could not go behind the decision of the IT authorities, and that there was no allegation that the Certificate Officer was proceeding against the personal property of any of the partners. THE learned Divisional CIT by his order dt. 21st Aug., 1957, admitted the appeal only on the ground of defect in the form of the certificate filed under s. 4 of the Public Demands Recovery Act, the defect being that the tax demand and the penalty were not separately shown in the certificate. THE Divisional CIT heard the appeal ex parte on the 14th Oct., 1957, none having appeared on behalf of the IT Department. He pointed out that in the certificate originally filed, the total amount of the demand, Rs. 1,64,639-9- 0, was mentioned against the heading "Amount of public demand..... and period for which such demand is due" (henceforward called the second heading); and against the heading "Further particulars of the public demand for which the certificate is signed" (henceforward called the fourth heading), it was only noted "I. Tax for 43-44", and that the tax demand and the penalty were not separately noted; and the description "penalty" not mentioned at all; and similarly, in the amended certificate, the reduced total demand of Rs. 1,01,766-11-0 was shown in lump, with a note "vide ITO's letter dt. April 12, 1951", but still the amount of the tax demand and the penalty were not separately specified. THE learned Divisional CIT held, relying on the decision of Abanindra Kumar Maity vs. A.K. Biswas AIR 1954 Cal 355, that in view of the non-mention of particulars, the certificate was void ab initio; and he cancelled the certificate. THE IT Department (strictly, the Union of India represented by the CIT) then filed a revisional petition under s. 53 of the Public Demands Recovery Act before the Board of Revenue. THE Member, Board of Revenue, referred to the unreported Division Bench decision of Union of India vs. Jiwanmull Bhutoria CR 784/57 decided on 3rd June, 1959 and observed that if the public demand was sufficiently identified the omission to mention some particulars would not vitiate the certificate proceedings; and that in the present case the certificate debtor could identify the public demand quite clearly and, therefore, the lack of some particulars in the certificate was no reason for cancelling the certificate. THE learned member also dealt with no point regarding filing of a fresh certificate after the service of a fresh notice of demand, observing that in view of the decision in Ladhuram Taparia's (supra), the service of a fresh notice of demand was not necessary when the demand was reduced in appeal, and that, therefore, the fresh notice of demand for the reduced amount of the demand should be taken as non-existent and would not make any difference. Accordingly, the learned Member allowed the revision petition and directed that the certificate case do proceed. THE petitioner, Ajit Kumar Ganguli, has obtained this rule under Art. 227 of the Constitution against the aforesaid order of the Board of Revenue. Mr. H.P. Mukherjee, appearing on behalf of the petitioner, has urged before us that the unreported decision on which the learned Member of the Board of Revenue relied, viz., Union of India vs. Jiwanmull Bhutoria (supra) on 3rd June, 1956, must be deemed to have been superseded by a still more recent decision of this Court, viz., Satish Chandra Bhowmick vs. Union of India (1960) 65 CWN 324, where a Division Bench of this Court doubted the correctness of the decision of the decision in Union of India vs. Jiwanmull Bhutoria (supra) and reaffirmed the statement of law made in the decision of Abanindra Kumar Maity vs. A.K. Biswas (supra). He has, therefore, urged that the certificate filed against the unregistered firm of which the petitioner was a partner must be cancelled on the ground that it did not mention the particulars required to be mentioned in the form. THE position of law on the point has, therefore, to be examined.

(3.) IN Satish Chandra Bhowmick vs. Union of INdia (supra), it was held that for the validity of the certificate proceedings, the necessity is not merely that the certificate is intelligible and the procedure adopted is one of substantial compliance with law, but the necessity is strict adherence to every requirement of the Act, which is a minimum guarantee that the legislature has prescribed in a summary procedure. It is a matter of regret that the division bench should have decided the case on a view of law contrary to that of the unreported decision of another division bench and not referred the matter to a full bench. We would certainly have referred to a full bench the question involved, viz., whether substantial compliance with the prescribed form of certificate, so that the public demand can be identified, is sufficient for the validity of certificate proceedings, and whether "further particulars" include such things as the description of a tax demand as assessment on concealed or undisclosed income, and reasons for imposing a penalty when the demand includes it. But we are saved from the necessity of doing so on account of an Act that has come into force in the meantime, viz., the Bengal Public Demands Recovery (Validation of Certificates and Notices) Act, 1961 (W. B. Act XI of 1961) published in the Calcutta Gazette on 28th April, 1961. The Act is as follows :