Mohammed v. Collector of Calicut — 1965 DIGILAW 227 (KER)

Judgment :- 1. The petitioner prays: "a) to call up and quash by a writ of certiorari or any other writ or direction or order the certificate issued under S.41 (3) of the Kerala Agricultural Income Tax Act by the 2nd respondent for the recovery of arrears of tax from the petitioner and to quash the said certificate, and b) to issue any other writ or direction or order, which the court deem fit and proper." 2. According to the petitioner, the certificate was issued to recover the tax, surcharge and penalty due from him for the assessment years 19.60-61,1961-62 and 1962-63. The assessment for the year 1960-61 was made on 12-6-1964 and notices were issued to the petitioner (Exts. P.1 (a) and P.1 (b)), demanding a sum of Rs. 395, as tax and Rs. 19.75, as surcharge to be paid on or before 30-6-1961. The demand not having been done complied with there were successive impositions of penalties evidenced by Exts. P. 2 to P. 4. The assessment for the year 1961-62 was made on 11-10-1961 and for the year 1962-63(1 am informed), on 28-9-1963. For the entire amount of tax due for the years 1960-61,1961-62, and 1962-63, together with surcharge and penalty, the Income-tax Officer issued a certificate to the Collector for proceeding under the Revenue Recovery Act. I have been informed by the learned Government Pleader, by reference to the files that the first of such certificates was issued on 21-3-1962 in respect of the amounts due for the years 1960-61 and 1961-62. After the assessment for 1962-63 was completed a fresh certificate was issued. In pursuance of the same, the petitioner states that the 3rd respondent collected certain amounts under threat of distress warrant No. PR 1/308/64 and has further threatened to attach and sell, the properties of the petitioner. In the additional affidavit filed by the petitioner, it is stated that the third respondent received the revenue recovery order on 22-7-1964 and attached the petitioner's property on 3-8-1964. 3. The petitioner's case is that by reason of S.41 (4) of the Kerala Agricultural Income-tax Act no proceedings for recovery could be commenced after the expiration of three years from the date fixed for payment in Ext. P.1, namely 30-6-1961. Inasmuch as the revenue recovery proceedings are for a consolidated amount including what was covered by Ext. 3. The petitioner's case is that by reason of S.41 (4) of the Kerala Agricultural Income-tax Act no proceedings for recovery could be commenced after the expiration of three years from the date fixed for payment in Ext. P.1, namely 30-6-1961. Inasmuch as the revenue recovery proceedings are for a consolidated amount including what was covered by Ext. P.1, it is claimed that the entire certificate is liable to be quashed. 4. S.41, Clause.3 and 4 of the Kerala Agricultural Income-tax Act, 1950 read as follows: "(3). The Agricultural Income-tax Officer may forward to the Collector a certificate under his signature specifying the amount of arrears due from an assessee and the collector, on receipt of such certificate, shall proceed to recover from such assessee the amount specified therein as if it were an arrear of land revenue: . Provided that without prejudice to any other powers of the Collector in this behalf, he shall for the purpose of recovering the said amount have the powers which under the Travancore or Cochin Code of Civil Procedure, a Civil Court has for the purpose of the recovery of an amount due under a decree. (4) No proceeding for the recovery of any sum payable under this Act shall be commenced after the expiration of three years from the latest day fixed for payment in the notice of demand served under S.30 or where the assessee has been treated as not being in default under the proviso to S.40 pending his appeal, after expiration of three years from the date on which the appeal is decided". 5. The petitioner's counsel argued that the commencement of the proceedings, referred to in sub-clause 4 are the proceedings for recovery by the Collector on receipt of the certificate from the Agricultural Income-tax Officer, referred to in Clause.3 and that such proceedings commence only when the Collector on the receipt of the certificate issues notice to the petitioner for recovery in any of the modes contemplated by the Revenue Recovery Act. It is said that in the present case the certificate itself, as alleged in the petitioner's additional affidavit, was received by the 3rd respondent only on 22-7-1964 and any notice issued by him thereafter could only be beyond three years, from 30-6-1961, the date fixed for payment in Ext. P.1. 6. It is said that in the present case the certificate itself, as alleged in the petitioner's additional affidavit, was received by the 3rd respondent only on 22-7-1964 and any notice issued by him thereafter could only be beyond three years, from 30-6-1961, the date fixed for payment in Ext. P.1. 6. It seems to me, that on the pleadings, the argument noticed above is not open to the petitioner. The prayer is to quash the certificate issued under S.41 (3) of the Act, and if, as the petitioner's counsel now contends, the issuance of the certificate would not amount to commencement of the proceedings contemplated by S.41 (4) of the Act, and is not within the purview of its ban, I fail to see why a quashing of the certificate is prayed for. On his own case, the petitioner ought to have prayed for quashing the proceedings for attachment and sale and there is no prayer for the same. That apart, I am content to deal with the petitioner's arguments on the merits. The argument that the commencement of the proceedings referred to in Clause.4 of S.41 of the Act must be related to proceedings of the Collector for revenue recovery on receipt of the certificate from the Agricultural Income-tax Officer referred to in Clause.3, and cannot cover the issuance of the certificate itself, though attractive in the first blush, seems, on analysis, difficult to accept. 7. S.45, Clause.7 of the Indian Income Tax Act, 1922, which embodied an analogous provision, in so far as it is material, ran as follows: 7. Save in accordance with the provisions of Sub-section (1) S.42, or of the proviso to S.45, no proceedings for the recovery of any sum payable under this Act shall be commenced after the expiration of one year from the last day of the financial year in which any demand is made under this Act. Save in accordance with the provisions of Sub-section (1) S.42, or of the proviso to S.45, no proceedings for the recovery of any sum payable under this Act shall be commenced after the expiration of one year from the last day of the financial year in which any demand is made under this Act. Explanation:-A proceeding for the recovery of any sum shall be deemed to have commenced within the meaning of this section, if some action is taken to recover the whole or any part of the sum within the period hereinbefore referred to, and for the removal of doubts, it is hereby declared that the several modes of recovery specified in this section are neither mutually exclusive, nor affect in any way any other law for the time being in force relating to the recovery of debts due to Government, and it shall be lawful for the Income-tax Officer, if for any special reasons to be recorded he so thinks fit to have recourse to any such mode of recovery notwithstanding that the tax due is being recovered from an assessee by any other mode." The explanation was inserted by the Income-tax Amending Act, 1953. 8. In Governor General in Council v. Shiropani Sugar Mills Limited (in Liquidation) (AIR. 1945 F.C. 16) Chief Justice Spens, delivering the judgment of the Court observed: "That still leaves open the question whether action under S.46, Income-tax Act, is covered by the phrase "other legal proceedings." Clearly it is not a proceeding in an ordinary Court of law. But we see no reason why in British India no "legal proceedings" can be taken otherwise than in an ordinary Court of law, or why a proceeding taken elsewhere than in an ordinary Court of law, provided it be taken in a manner prescribed by law and in pursuance of law or legal enactment, cannot properly be described as a "legal proceeding". If it be considered that the effect of the Income-tax authorities putting the machinery of S.46, Income-tax Act, in motion for the collection of arrears of income tax is to bring into operation all the appropriate legal enactments relating to the collection of land revenue in the province concerned, it, is, in our judgment, very difficult to say that they are not taking a "legal proceeding." In fact, in this very case, had the company not been in liquidation, the appellant would have had the choice at his option of (a) proceeding by "suit" in the ordinary Courts in respect of the arrears, or (b) by forwarding (under S.46 (2), Income-tax Act) to the Collector the requisite certificate, initiating and putting into force collection of the arrears as arrears of land revenue under and in accordance with the appropriate provisions of the U. P. Land Revenue Act (III of 1901). Surely such last mentioned action on the part of the Income-tax authorities would be the adoption of another legal proceeding for the collection of the arrears as opposed to the institution of a suit. The proviso to S.45 (2) empowers the Collector, if he so choses, the exercise of all the powers which a civil court may exercise in respect of the attachment and sale of debts due to a judgment-debtor. If the Income-tax Officer will be taking a "legal proceeding" when he moves the Collector-as we think he must be held to do-to realise the tax by attachment and sale of debts due to the assessee, it can make no difference in principle that the Collector is asked to exercise his summary powers under the land revenue law." (underlining mine). 9. As I read the above observations, the court endorsed the position that the Income-tax Officer will be taking a legal proceeding when he moves the Collector to realise the tax by attachment and sale of debts due to the assessee. 10. In Arunadevi Janodia v. The Collector of Madras (AIR. 1952 Mad. 794 = 22 ITR. 349), Subba Rao J. of the Madras High Court (as he then was) had to construe the S.46 (7) of the Indian Income-tax Act, 1922 as it stood prior to the addition of the explanation by the amendment of the 1953. 10. In Arunadevi Janodia v. The Collector of Madras (AIR. 1952 Mad. 794 = 22 ITR. 349), Subba Rao J. of the Madras High Court (as he then was) had to construe the S.46 (7) of the Indian Income-tax Act, 1922 as it stood prior to the addition of the explanation by the amendment of the 1953. The learned judge observed: "Learned counsel contends that the words "no proceedings for the recovery" in S.46 (7) refer only to the proceedings taken by the Collector for the recovery of arrears under the Revenue Recovery Act, and therefore the proceedings having been commenced by him one year after the prescribed time are barred under that sub-section, whereas learned counsel for the Income-tax Officer argues that the proceedings for the recovery of the sum commence from an earlier point of time when the Income-tax Officer forwards a certificate under S, 46 (2), and he has forwarded certifcates in the present case on 25-3-1947,23-3-1948 and 24-3-1948, which date are within the prescribed time. The question therefore is, what do "proceedings for the recovery" mean in S.46 (7). The process of assessment, involves three stages: (1) The factum of assessment, (2) demand of the amount assessed, and (3) proceedings to recover the amount if default is made by the assessee. The Income-tax Officer starts the proceedings to recover the arrears in the prescribed manner after the default is made. The procedure prescribed for the recovery of the arrears is embodied in S.46 of the Act. The proceedings for the recovery therefore start when the Income-tax Officer forwards the certificate to the Collector. But the learned counsel for the petitioner argued with some force that the words used in S.46 (2) brought about a distinction between the issuing of a certificate by the Income-tax Officer and the starting of proceedings to recover from the assessee. He relied upon the words in S.46 (2) "on receipt of such certificate, shall proceed to recover from such assessee the amount", and compared those words with the words in S.46 (7) "proceedings" for the recovery of any sum payable under this Act, and contended that the said proceedings for recovery related to the stage when the Collector proceeded to recover the amount from the assessee. The word "proceeding" relates to the "modes in which judicial transactions are conducted". The word "proceeding" relates to the "modes in which judicial transactions are conducted". In its general acceptance it connotes "a prescribed mode of action for carrying into effect a legal right" (see P. Ramanatha Aiyar's Law Lexicon) The meaning of the word is wide enough to include the entire procedure prescribed by the Act for realising the amount. The fact that the Collector proceeds to recover the amount from the assessee is not inconsistent with the circumstance that the proceedings for recovery start earlier. I therefore hold that the issue by the Income-tax Officer of a certificate is the first step of the proceedings for the recovery of the arrears. So construed, it follows that the proceedings were started within the time prescribed by S.46 (7) of the Act." 11. I am in respectful agreement with the above reasoning. The principle of the above decision was followed in C. M. George v. Income-tax Officer, Madras (1958-33 ITR. 22). In Kashiram Agarwalla v. Collector of 24-Parganas (AIR. 1958 Cal. 524), Chief Justice Das Gupta of the Calcutta High Court (as he then was), had no difficulty in holding, in the light of the explanation to S.46 (7) added by the amending Act of 1953 that: "the forwarding of the certificate by the Income-tax Officer is "some action" taken for recovery of the dues within the meaning of the explanation and consequently the proceedings for recovery commenced as soon as the certificate was forwarded." The learned Chief Justice further observed: "It is important to remember that the limitation is provided against persons seeking to recover. The person seeking to recover is the Income-tax Department. It would be odd to think that the action taken to commence the proceedings would be action taken by somebody other than the person who seeks to recover. The Collector or any other authority that may under the law take action to recover after the Income-tax Officer has taken initial action by forward ing the certificate may act quickly or otherwise. It cannot be believed that the legislature intended that delayed action on their part would have the effect of barring the remedy of the Income-tax Department. For these reasons, I am of opinion that the action by the Income-tax Officer in forwarding the certificate to the Collector under S.46 (2) is action on the taking of which a proceeding shall be 'deemed to have commenced."' 12. For these reasons, I am of opinion that the action by the Income-tax Officer in forwarding the certificate to the Collector under S.46 (2) is action on the taking of which a proceeding shall be 'deemed to have commenced."' 12. The above observations seem to me to furnish an additional reason, unaided by the explanation added in 1953, to hold that the issuance of a certificate to the Collector would constitute the commencement of the proceedings. 13. I was informed by the learned Government Pleader that in O. P. No. 1346 of 1964 my learned brother Govindan Nair, J. has taken the view that the issuance of a certificate by the Income-tax Officer would amount to the commencement of the proceedings. As the judgment is not available, I was unable to peruse the same. 14. Following the principle of the above rulings, as the certificate in this case was admittedly issued within three years of 30-6-1961, the date fixed for payment in Ext. P.1, I hold that the recovery proceedings are not barred by reason of the provisions in S.41 (4) of the Kerala Agricultural Income-tax Act. 15. Petitioner's counsel urged that his client had no notice of the attachment as required by S.24 of the Travancore-Cochin Revenue Recovery Act, and, as stated in paragraph I of the additional affidavit of the petitioner dated 17th August, 1964. The O. P. being only one to quash the certificate issued by the Agricultural Income-tax Officer, an investigation of the validity of the proceedings for attachment and sale is beyond its scope, and I decline to investigate this question. After the admission of the O. P. by order dated 20-8-1964, this Court stayed all revenue recovery proceedings. It would be open to the petitioner if so advised and so entiled, to agitate this question in separate appropriate proceedings. 16. The O. P. fails and is dismissed with costs.