ALTAFUR RAHMAN Vs. UNION OF INDIA

JUDGEMENT

(1.) BY this application under Article 226 of the Constitution of India, the petitioner questions the jurisdiction of the Controller to impose penalty under Section 73(5) of the Estate Duty Act, for short, "the Act". The petitioner calls in question the jurisdiction of the Controller to impose penalty without consideration of his application to treat him "as not being in default", and it involves consideration as to the ambit of discretionary power of the Controller under Section 73(4) of the Act to treat an accountable person "as not being in default". The case also involves the interpretation of sections 62, 70, 73(4) and 73(5) of the Act. In the process, we are to consider the contour of power of the High Court under Article 226 of the Constitution of India to interfere with the discretionary power of the Controller under Section 73(4) of the Act as well as his quasi -judicial power to impose penalty under Section 73(5) of the Act read with Section 46(1) of the Indian Income Tax Act, 1922.

(2.) A short resume of the intrinsic facts necessary for disposal of the case is set out hereinbelow :

(3.) IT appears from the order marked annexure 5 that the Controller exercised his power under Section 70(1) of the Act. At least the said provision was quoted. The Controller turned down the prayer of the petitioner to pay the first instalment in June, 1972. The petitioner defaulted in the payment of some instalments and the Controller issued notice to show cause why the order allowing payment by instalments should not be withdrawn and why penalty should not be imposed upon the petitioner for such defaults. The petitioner again prayed that he might be treated "as not being in default" under Section 73(4) of the Act and set out the grounds why the order should be made in his favour. The petitioner prayed for extension of time. Ultimately, when the petitioner failed to deposit five instalments, a notice of demand was issued by the Controller. The petitioner again prayed for treating him "as not being in default". Thereafter, the Controller passed the impugned order dated April 18, 1972, whereby the prayers of the petitioner to pay the first instalment in June, 1972, as well as his prayer to treat him "as not being in default" were rejected and, a penalty of Rs. 10,470 was imposed upon him and other accountable persons under Section 73(5) of the Act. On June 8, 1972, the petitioner filed this writ application under Article 226 of the Constitution and obtained a rule. The operation of the impugned order was stayed on condition of depositing Rs. 6,000 towards the estate duty demand. Mr. S.K. Senapati, learned counsel for the petitioner, has stated that the amount of Rs. 6,000 has since been deposited.