MD PARWEZ AHMED Vs. UNION OF INDIA

JUDGEMENT

(1.) Initially in all these writ applications the Petitioners had challenged the constitutional validity of Section 44AC of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') as in force upto the assessment year 1992-93 and Section 206 of the Act on various grounds. However, as we have been informed that the constitutional validity of the aforementioned, provisions is under challenge before the Supreme Court in which the Supreme Court has issued direction to all the High Courts in, the country not to decide the constitutional validity with a further direction to only consider the prayer for grant of interim, relief made in different writ applications, initially by order dated 20.4.1993 this Court with a view to passing of an interim order, directed the Respondents to ascertain the amount which would have been otherwise assessed as payable by the Petitioners on the basis of the assessment which could have been made under Section 28 of the Act. This was done only for the purpose of ascertaining as to what amount this Court may direct the Petitioners to deposit as condition for the grant of stay as a purely interim measure. Further, this Court directed the Petitioners to inform as to the nature of security which could be furnished by it to ensure the payment of demand if the writ implication fails. In the meantime, an interim order was also passed that the demand raised on the basis of the provisions contained in Section 44AC of the Act shall not be enforced. Thereafter, this matter was heard on different occasions for consideration of passing of the interim order. However, on the last date Mr. Jain, learned Counsel appearing for the Petitioners, in disregard of the validity/constitutionality of Section 44AC of the Act ventured to submit that the deemed income at the rate of 40 percent had to be calculated on the basis of the cost price of the country spirit after excluding the excise duty payable thereon and not on the basis of the purchase price, including the excise duty.

(2.) The short relevant facts in the present case are that the Petitioners are retail vendors if country liquor, which is alcoholic liquor meant for human consumption. They have to maintain all necessary books of accounts in the regular course of business. According to them, they are attached to specific warehouse from where only they can get the supply. This privilege they have acquired by participating in Auction-cum-lender system of settlement of Shops envisaged under the Bihar Excise Act, 1950 and the rules framed thereunder.

(3.) This system was, however, not applicable in the case of the Petitioners of C.W.J.C. No. 3781 of 1993 and 3784 of 1993. The shops of the Petitioners of the aforesaid two cases were located in West Bengal where, according to the Petitioners of the said two writ applications, there is no system of auction and the prices are also fixed. The Petitioners are required to lift country spirit from the specified warehouses every month from the wholesalers, all of whom acquired the privilege of supply in wholesale of country spirit from the respective warehouses to these Petitioners.