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PETITIONER:

THE COMMISSIONER OF INCOME TAX, DELHI

Vs.

RESPONDENT:

BANSI DHAR & SONS

DATE OF JUDGMENT19/12/1985

BENCH:

MUKHARJI, SABYASACHI (J)

BENCH:

MUKHARJI, SABYASACHI (J)

TULZAPURKAR, V.D.

CITATION:

1985 SCALE (2)1416

ACT:

Indian Income Tax Act 1922: Section 66 and Income Tax

Act 1961: Section 256 - High Court - Jurisdiction of - To

grant stay or pass interim orders in pending references.

Interpretation of statutes : Words of statute -

Judicial construction of words by superior court - How far

useful in construing identical words in another enactment.

HEADNOTE:

The Assessee was a Hindu Undivided Family. The father

of the Karta of the HUF died in an air crash. On his death a

sum of over Rs. 2 lakhs was received by the Karta from the

Insurance Company on account of the insurance policy

covering the life of his father. The income derived from the

said amount was treated as his personal income and assessed

in his personal assessment, and it continued to be assessed

in the personal assessment of the Karta even after formation

of the HUF on his marriage and the birth of a son. This

position continued till the assessment year 1959-60.

For the first time in the assessment year 1960-61 the

Income Tax Officer treated the income from the insurance

amount as that of the HUF and assessed the income in the

hands of the HUF. Being aggrieved the assessee appealed and

the Appellate Assistant Commissioner set aside the

assessment holding that the income was the personal income

of the Karta and not of the HUF.

The Revenue preferred an appeal to the Income Tax

Appellate Tribunal. A similar appeal was also preferred to

the Tribunal by the Revenue for assessment year 1962-63.

Both the appeals were disposed of by a common order, whereby

it was held that the income in question was that of the HUF

and was liable to be assessed as such.

The Tribunal referred to the High Court at the instance

of the assessee-HUF the question, "whether the amount

received from

851

the Insurance Company on account of the accident Insurance

Policy covering the risk of his father was correctly treated

as ancestral property." The assessee also filed applications

for injunction and stay under section 151 of the Code of

Civil Procedure invoking the inherent jurisdiction of the

High Court.

In the applications for stay it was contended that for

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the subsequent years 1963-64 & 1964-65 similar appeals had

been filed by the Revenue, before the Tribunal and were

pending, that for the assessment years 1965-66 to 1969-70

the orders of the Appellate Assistant Commissioner were

against the assessee and the assessee-HUF had preferred

appeals to the Tribunal which were also pending, that in the

said appeals preferred by the assessee HUF, on application

by the assessee the Tribunal had granted stay of recovery of

the tax demanded, on the condition that the assessee should

furnish adequate security, that since the matter relating to

the two assessment years (1960-61 and 1962-63) were before

the High Court under section 66(1) of the Indian Income Tax

Act, 1922/section 256(1) of the Income Tax Act, 1961 similar

order of stay should be granted by the High Court because

prejudice would be caused to the assessee if in spite of

full tax being paid by the karta in his personal assessment,

the HUF is asked to pay tax over again in respect of the

same income.

The Revenue opposed the aforesaid applications for

stay, contending in its counter-affidavit that under the

provisions of the Income Tax Acts of 1922 and 1961 the High

Court exercised only an advisory or consultative

jurisdiction, and consequently had no jurisdiction or power

to grant stay of the recovery of tax as prayed for in the

application, and that grant of stay by the High Court and

this court had in fact been prohibited by the two Acts of

1922 and 1961.

The High Court rejected the preliminary objections

raised by the Revenue and granted stay of realisation of

taxes. It found that there should be stay on terms and

granted stay on condition that the assessee should furnish

adequate security for the said amount to the satisfaction of

the concerned Income Tax Officer.

In the appeals to this Court: on the question of

jurisdiction of the High Court and Supreme Court to grant

stay or pass interim orders in pending references under

section 66 of the Indian Income Tax Act, 1922 and section

256 of the Income Tax Act, 1961.

Allowing the Appeals to this Court,

852

^

HELD : 1. The High Court in answering a question under

section 66 of 1922 Act or section 256 of 1961 Act does not

exercise original, appellate or revisional jurisdiction but

only advisory jurisdiction. [866 C; 870 C]

2. Rendering advice on the question of law referred to

the courts has nothing to do with the recovery of tax or

granting stay in respect of the same. [870 G]

3. It cannot be said that the High Court has inherent

power or incidental power in the matter of a reference

pending before it to grant stay of realisation or to grant

an injunction. That must remain within the jurisdiction of

the appellate authority and pendency of a reference does not

detract from that jurisdiction of the Appellate Authority.

The High Court was, therefore in error in the instant case

in exercising its jurisdiction by passing an order for stay

of realisation under section 151 of the Code of Civil

Procedure, 1908 in a pending reference. The High Court could

have exercised its power if the Appellate Authority had not

properly exercised its jurisdiction, not in reference

jurisdiction but by virtue of its jurisdiction under Art.

226 or Article 227 of the Constitution of India in

appropriate cases. But that was not so in the instant

case.[870 H - 871 B]

Sridhar v. Commissioner of Wealth Tax, 153 at 543, at

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547; Dwarka Prasad Baja v. Commissioner of Income Tax, West

Bengal-I, 126 I.T.R. 219. approved.

Polisetti Narayana Rao v. Commissioner of Income Tax,

Hyderabad, 29 I.T.R. 222, over-ruled.

4. In answering questions or disposing of references

either under section 66 of 1922 Act or section 256 of 1961

Act, the High Courts do not exercise any jurisdiction

conferred upon them by the Code of Civil Procedure or the

Characters or by the Acts establishing the respective High

Courts. In respect of certain matters jurisdictions

exercised by the High Court must be kept separate from the

concept of inherent powers or incidental powers in

exercising jurisdiction under section 66 of 1922 Act or

section 256 of 1961 Act. Section 66 of Income-tax Act of

1961 is a special jurisdiction of a limited nature conferred

not by the Code of Civil Procedure or by the Charters or by

the special Acts constituting such High Courts but by the

special provisions of Income-Tax Act 1922 or 1961 for the

limited purpose of obtaining High Court's opinion on

questions of law. In giving

853

that opinion properly if any question of incidental or

ancillary power arises such as giving an opportunity or

restoring a reference dismissed without hearing or giving

some additional time to file paper book, such powers inhered

to the jurisdiction conferred upon it. But such incidental

powers can not be so construed as to confer the power of

stay of recovery of taxes pending a reference which lie in

the domain of an appellate authority. The concept of

granting stay in a reference ex debito justitiae therefore,

does not arise. That concept might arise in case of the

Appellate Authority exercising its power to grant stay where

there is no express provision. Ex debito justitiae is to do

justice between the parties. [870 C-F]

Tata Iron & Steel Co. Ltd. v. Chief Revenue Authority

of Bombay, 1923 Privy Council - 50 Indian Appeals 212;

Commissioner v. Bombay Trust Corporation, 1936 A.I.R. Privy

Council - 63 Indian Appeals 408; Hukum Chand Boid v.

Kamalanand Singh, [1906] I.L.R> 33, Cal. 927; Commissioner

of Income Tax Bombay v. Scindia Steam Navigation Co. Ltd.,

42 I.T.R. 589; C.P. Sarathy Mudaliar v. Commissioner of

Income Tax, Andhra Pradesh, 62 I.T.R. 576; Jatashankar

Dayram v. Commissioner of Income Tax, 101 I.T.R. 343,

referred.

Income Tax Officer, Cannaore v. M.K. Mohammed Kumhi, 71

I.T.R. 815, explained.

5. In an appropriate case, if the assessee feels that a

stay of recovery pending disposal of the reference is

necessary or is in the interest of justice, then the

assessee is entitled to apply before the Appellate Authority

to grant a stay until disposal of reference by the High

Court or until such time as the Appellate Authority thought

fit. But in case the Appellate Authority acted without

jurisdiction or in excess jurisdiction or in improper

exercise of the jurisdiction, then the decision of such

Appellate Authority can be corrected by the High Court by

issuing appropriate writs under Articles 226 and 227 of the

Constitution. [869 H - 870 B]

6. Prior to 1918, there was no provision for reference

to the High Court at all in respect of any decision by the

revenue authorities. In Act VII of 1918, section 51

contained this provision under which the Chief Revenue

Authority was empowered to refer a case to the High Court

when any questions arose regarding the interpretation of any

of the provisions of the Act or of any rule made thereunder.

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The said authority could do so

854

(i) either suo motu (ii) on reference from a subordinate

authority or (iii) on the application of the assessee. This

is no part of the Civil or appellate or revisional

jurisdiction of the High Court. [858 G-H]

7. Section 66 of the Act of 1922 provides that within

certain time either at the instance of the assessee or at

the instance of the Revenue, the Tribunal might refer a

question of law for the opinion of the High Court. It also

empowered the assessee to make an application to the High

Court in case the Tribunal refused to refer the question

after drawing up a statement of case. Section 66A provides

for reference to be heard by Benches of High Courts and

appeals in certain cases to this Court. Under Section 256 of

1961 Act, the provision of reference to the High Court is

the same as under section 66 of 1922 Act. [859 B, F, 860 C]

8. Once certain words in an Act of Parliament had

received a judicial construction in one of the superior

courts, and the legislature repeated these without any

alteration in a subsequent statute, the legislature must be

taken to have used them according to the meaning which a

court of competent jurisdiction had given to them. This rule

of interpretation affords only a valuable presumption as to

the meaning of the language employed in a statute. Where a

judicial interpretation is well settled and well recognised

the rule ought doubtless, to receive effect, but must be a

question of circumstances whether Parliament was to be

presumed to have tacitly given statutory authority to a

single judgment of a competent court so as to render that

judgment, however, obviously wrong unexaminable by the

Highest Court. [868 E-G]

Barras v. Aberdeen Steam Trawling and Fishing Co. Ltd.,

1933 A.E.R. - 1933 A.C. 402, referred to.

JUDGMENT:

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1668

(NT) of 1978.

From the Judgment and Order dated 15.7.1977 of the

Delhi High Court in I.T.R. Nos. 82 & 83 of 1973.

WITH

Civil Appeal Nos. 77 & 78 (NT) of 1974

From the judgment and Order dated 30.7.1973 of the

Patna High Court in Tax Appeals Cases Nos. 16 & 17 of 1972.

855

S.C. Manchanda, and Miss A. Subhashini for the Appellant in

C.A. No. 1668 of 1978.

S.T. Desai, Harish Salve, Mrs. A.K. Verma, Miss Lira

Goswami and J.B. Dadachandji for the Respondent in C.A. No.

1668 of 1978.

B.B. Ahuja and Miss A. Subhashini for the Appellant in

C.A. No. 77 & 78 of 1974.

Nemo for the Respondents in C.A. No. 77 & 78 of 1974.

The Judgment of the Court was delivered by

SABYASACHI MUKHARJI, J. The main question involved in

these appeals, is the question of jurisdiction of the High

Court, to grant stay or pass interim orders in pending

references under section 66 of the Indian Income-Tax Act,

1922 (hereinafter called the Act of 1922) and section 256 of

the Income Tax Act, 1961 (hereinafter called the 'Act of

1961'). These appeals are by special leave from the

judgments of the High Courts. The main judgment is the

judgment of the Delhi High Court in the case of L. Bansi

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Dhar and Sons v. Commissioner of Income-Tax, New Delhi (C.A.

No. 1668/78). The question arose in applications filed by

the assessee under section 151 of CPC in two Income-tax

References Nos. 82 and 83 of 1973 relating to the assessment

years 1960-61 and 1962-63 respectively praying that the High

Court might be pleased to grant an order of injuction for

restraining the Commissioner of Income-tax (I), Central

Revenue Building, and/or his subordinate officers including

the Income-tax Officer, Company Circle (III), from enforcing

and/or realising the demand raised in the aforesaid

assessment years 1960-61 and 1962-63, and from taking any

steps for the recovery thereof till the disposal of the

references pending in the High Court.

The assessee is a Hindu undivided family. The Karta of

the HUF is Lala Bansi Dhar. His father, Lala Murlidhar, died

in the year 1949 in an air crash. On the death of the

father, a sum of Rs.2,49,874 was received by Lala Bansi Dhar

from the insurance company on account of an accident

insurance policy covering the risk of the life of the

deceased. The income derived from the said amount was

treated as the income of Lala Bansi Dhar and was assessed in

his personal assessment. Lala Bansi Dhar was married on 3rd

February, 1953, and a son, Tilak Kumar, was born on 3rd

856

February, 1956. The income from the insurance amount

continued to be assessed in the personal assessment of Lala

Bansi Dhar even after formation of the HUF on his marriage

and the birth of a son, and continued to be so assessed till

the assessment year 1959-60.

In the assessment year 1960-61 for the first time, the

Income-tax Officer treated the income from the insurance

amount as that on the HUF and assessed the income in the

hands of the HUF. On appeal by the assessee, HUF, the

Appellate Assistant Commissioner set aside the assessment

holding that the income was the personal income of Lala

Bansi Dhar and not of the HUF. Against that order, the

revenue preferred an appeal to the Income-tax Appellate

Tribunal. A similar appeal was also preferred to the

Tribunal by the revenue for the assessment year 1962-63.

Both the appeals were disposed of by the Tribunal by a

common order on 23rd November, 1970 whereby it was held that

the income in question was that of the HUF and the liable to

be assessed as such. Then at the instance of asseasee-HUF,

the Tribunal referred to the High Court the following

question under section 256(1) of the Income-tax Act, 1961,

as arising out of the said common order namely :

"Whether, on the facts and in the circumstances of the

case, the amount of Rs.2,49,874 received by L. Bansi Dhar

from the insurance company on account of the accident

insurance policy covering the risk to the life of his

father, L. Murlidhar, is correctly treated as ancestral

property of the H.U.F. of which L. Bansi Dhar is the karta?"

Two references were registered as Income-tax References

Nos. 82 and 83 of 1973, and it was in the said references,

that the applications for injunction and stay had been filed

by the assesee-HUF under section 151 of the Code of Civil

Procedure invoking the inherent jurisdiction of the High

Court.

It was stated in the application for stay that for the

subsequent assessment years 1963-64 and 1964-65, similar

appeals had been filed by the revenue before the Tribunal

and the same were pending, that for the assessment years

1965-66 to 1969-70, however the orders of the Appellate

Assistant Commissioner were against the assessee, and the

assessee-HUF had preferred appeals to the Tribunal which

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were also pending, that in the said appeals preferred by the

assessee-HUF on application by the assessee, the Tribunal

had granted stay of the recovery of the tax demanded on

857

the condition that the assessee should furnish adequate

security to the satisfaction of the Income-tax Officer, that

since the matter relating to the two assessment years (1960-

61 and 1962-63) was before the High Court in references

under section 66(1) of the Indian Income-tax Act,

1922/section 256(1) of the Income-tax Act, 1961, similar

order of stay should be granted by the High Court and

prejudice would be caused to the assessee if in spite of

full tax being paid by its karta in his personal assessment,

the HUF is asked to pay tax over again in respect of the

same income. A counter-affidavit was filed in which a

preliminary objection was raised that under the provisions

of the Income-tax Act, the High Court exercised only an

advisory or consultative jurisdiction and consequently had

no jurisdiction or power to grant stay of the recovery of

tax as prayed for in the application, and that, in fact, the

grant of stay by the High Court and this Court had been

prohibited by the two Acts of 1922 and 1961. On merits,

however, it was admitted that tax had been paid by Lala

Bansi Dhar in his personal capacity on the basis of the same

income which had been returned by him in his individual

income-tax return, yet, it was admitted that as a result of

the impugned order of the Appellate Tribunal, the income

from the insurance amount was assessable in the hands of the

HUF and the HUF was obliged to pay the tax unless and until

the question of law referred to the High Court was answered

in favour of the assesee and that the assessee would not be

prejudiced if no stay was granted and the tax was realised,

as it would get a refund of the tax paid in case the

references were answered in its favour.

The question for determination which fell for

consideration before the High Court and which requires to be

considered in these appeals by this Court, is, whether the

court, in a reference to it either under section 66(1) of

the Act of 1922, or under section 256(1) of the Act of 1961,

has jurisdiction or power to pass any order granting stay of

recovery of the taxes pending the disposal of the

references.

The High Court on consideration of certain matters,

rejected the preliminary objection and granted stay of the

realisation of taxes. The High Court found that, in the

facts and circumstances of the case, there should be stay on

terms and the High Court granted that stay on condition that

the assessee should furnish adequate security for the said

amount to the satisfaction of the concerned Income-tax

Officer within six weeks from the date of the order of the

High Court. The other two matters being Civil Appeals Nos.

77 and 78 of 1974 arise out of

858

the decision of the Patna High Court where stay was granted

by the Patna High Court in respect of realisation of tax

pending disposal of the income-tax references.

The revenue has come up to this Court challenging the

validity of the decision of the High Courts that pending

references in income-tax matters to the Courts either under

section 66 of the Act of the 1922 or under section 256 of

the Act of 1961, the High Courts or the Supreme Court, as

the case may be, have inherent powers or jurisdiction to

pass any order granting stay or granting injunction staying

the realisation of the amount pending disposal of the

references. Incidentally, it may be pointed out that at the

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bar at the time of hearing of the appeals, it was stated by

counsel on behalf of the assessee that in the decision of

the Delhi High Court, ultimately the reference has been

answered in favour of the assessee. So far as the assessee

in that matter is concerned the question has become

academic.

The High Court of Delhi in its judgment had discussed

all the relevant authorities. The references were pending

under section 66(1) of the Act of 1922 for the first two

years, in respect of similar appeals for the assessment

years 1965-66 and 1969-70 the references were pending under

section 256(1) of the Act of 1961. The scheme of section

66(1) of the Act of 1922 as well as section 256(1) of the

Act of 1961 are well-known.

The High Court noted and as is the case that the Act of

1922 did not and the Act of 1961 does not contain any

express provision empowering the High Court or the Supreme

Court to grant stay of recovery of tax including pending

disposal of the reference before it or pass any order in

that respect of the same. Therefore, the assessee sought to

invoke the inherent jurisdiction or the ancillary powers of

the courts.

Prior to 1918, there was no provision for reference to

the High Court at all in respect of any decision by the

revenue authorities. In Act VII of 1918, section 51

contained this provision under which the Chief revenue

authority was empowered to refer a case to the High Court

when any question arose regarding the interpretation of any

of the provisions of the Act or of any rule made thereunder.

The said authority could do so (i) either suo motu or (ii)

on reference from a subordinate authority or (iii) on the

application of the assessee. This is no part of the civil or

appellate authority or revisional jurisdiction of the High

Court.

859

Section 66 of the Act of 1922 contains similar

provisions like section 149 of the English Income-Tax Act,

1918. Section 66 of the Act of 1922 provides that within

certain time either at the instance of the assessee or at

the instance of the revenue, the Tribunal might refer a

question of law for the opinion of the High Court. It also

empowered the assessee to make an application to the High

Court in case the Tribunal refused to refer the question

after drawing up a statement of case. It is well-settled

that the fact found by the Tribunal were to be accepted by

the High Court and in case the High Court found that the

facts found by the Tribunal were not sufficient, the High

Court might under sub-section (4) of section 66 require the

Tribunal to make such additions thereto or alteration

therein as the High Court might direct in that behalf. The

High Court upon hearing of any such case should decide the

question of law raised thereby and deliver its judgment

thereon containing the grounds on which such decision is

founded and shall send a copy of such judgment under the

seal of the Court and the signature of the Registrar to the

Appellate Tribunal. Sub-section (7) of section 66 provides

that notwithstanding that a reference is made under the

section to the High Court, "income tax shall be payable in

accordance with the assessment made in the case". It is

provided that if the amount of an assessment is reduced as a

result of such reference, the amount over-paid shall be

refunded with such interest as the Commissioner may allow

unless the High Court, on intimation given by the

Commissioner within thirty days of the receipt of the result

of such reference that he intends to ask for leave to appeal

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to the Supreme Court, or to an authority authorising the

Commissioner to postpone payment of such refund until the

disposal of the appeal to the Supreme Court.

Section 66A provides for reference to be heard by

Benches of High Courts and appeals in certain cases to this

Court.

The provisions of Code of Civil Procedure relating to

appeals to the Supreme Court as far as might apply in case

of appeals under the section in the like manner as in the

case of appeals by the High Court provided that nothing in

sub-section (3) shall be deemed to have effect on sub-

section (5) or sub-section (7) of section 66. Sub-section

(4) of section 66A provides that where the judgment of the

High Court is varied or reversed in appeal under the

section, effect shall be given to the order of the Supreme

Court in the manner provided in sub-section (5) and (7) of

section 66 in the case of a judgment of the High Court.

860

After the High Court and in cases of appeals to the

Supreme Court, the courts answer the question in any manner

or give certain opinion. The appellate tribunals would

dispose of the appeals in accordance with the opinions

expressed or answers given by the High Courts or the Supreme

Court. Therefore under the scheme, the appeal is kept

pending before the Tribunal and the appellate jurisdiction

is retained by the Tribunal, but the High Court exercises an

advisory or consultative jurisdiction.

Under section 256 of 1961 Act, the provision of

reference to the High Court is the same as under section 66

of 1922 Act. The slight differences between section 256 of

1961 Act and section 66(1) and (2) of 1922 Act have been

noted in Kanga & Palkivala's Income Tax - 7th Edn. - Vol I,

p.1146. For the present purpose it is not necessary to set

these out in detail. There is provision for reference to the

Supreme Court under section 257 of 1961 Act. By sections 261

and 262, there are provisions for appeal to Supreme Court

and hearing before Supreme Court from the decision of the

references in the High Courts. Section 265 enjoins that

notwithstanding that a reference has been made to the High

Court or the Supreme Court or an appeal has been preferred

to the Supreme Court, tax shall be payable in accordance

with the assessment made in the case. The scheme of 1961 Act

so far as the scheme of reference to the High Court on a

question of law is concerned is the same as that of 1922

Act. When a question of law arises, the Tribunal can and in

certain circumstances must seek at the instance of the

assessee or in its own motion or at the instance of the

revenue the opinion of the High Court on such a questions.

The jurisdiction exercised by the High Courts is purely

advisory, it is neither of a Civil Court exercising

original, nor of any appellate or revisional jurisdiction.

Therefore, the powers and jurisdiction of the High Courts

and in certain cases of the Supreme Court, are those which

are expressed and conferred upon them and also those which

inher in the exercise of that jurisdiction or are ancillary

or those which sub-serve the exercise of that function and

jurisdiction of giving advice. The appeal is kept pending

before the Appellate Tribunal.

In Tata Iron & Steel Co. Ltd. v. Chief Revenue

Authority of Bombay, 1923 Privy Council = 50 Indian Appeals

212, the Judicial Committee had to consider the question

whether the function of the High Court under these

provisions was advisory or not. The Judicial Committee

decided that such advice was not judgment within the meaning

of clause 39 of the Letter Patent of the High

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861

Court of Bombay. The use of the expression 'determination'

was not decisive as to whether the decision was merely

advisory or not. The decision or order made by the court

under section 51 was merely advisory. This view was re-

affirmed in Commissioner v. Bombay Trust Corporation, 1936

A.I.R. Privy council 269 = 63 Indian Appeals 408. It is for

this reason that section 66A of the 1922 Act expressly

provided for an appeal from a decision of the High Court

under section 66 of the said Act. The High Court noted that

neither 1922 Act nor 1961 Act did contain any express

provision empowering the High Court or the Supreme Court to

grant stay or recovery of tax pending disposal of the

reference before it. The High Court in the decision under

appeal held that it had inherent jurisdiction under section

66 of 1922 Act or under section 256 of 1961 Act to grant

stay pending disposal of the reference. The High Court

referred to the several decisions some of which will have to

be noticed here. Thereafter on consideration of the relevant

facts, the High Court granted the stay in the instant case

as noted before.

Reliance was placed by the High Court on the decision

of the Andhra Pradesh High Court in Polisetti Narayana Rao

v. Commissioner of Income-tax, Hyderebad, 29 I.T.R. 222. The

Andhra Pradesh High Court referred to the decision in the

case of Hukum Chand Boid v. Kamalanand Singh, (1906) I.L.R.

33, Cal. 927, and referred to the observations of Woodroffe,

J., where he posed the question as to whether the power

vested in the High Court under section 151 of the Code of

Civil Procedure was wide enough to apply to a case like the

present. It was noted that the decision was approved and

followed by the Madras High Court in several cases as was

noted at page 226 of 29 I.T.R. It was further pointed out

that article 227 was wide enough to include such power. The

judgment of that Court was delivered by Bhimasankaram J.

Subba Rao, C.J. of the Andhra Pradesh High Court was a party

to that decision. It may, however, be pointed out that in

the facts and circumstances the Court found that the

assessee was not entitled to any relief pending the disposal

of the reference. As pointed out before that reliance had

been placed by the Andhra Pradesh High Court on the decision

in Hukum Chand Boid's case (supra). It is necessary,

therefore, to discuss that decision. The said case was

concerned with the nature of the jurisdiction and the ambit

of powers under section 583 and 546 of the Code of Civil

Procedure 1882 as it stood at the relevant time. The

division bench of the Calcutta High Court consisting of

Woodroffe and Mookherjee JJ. held that under the principle

indicated by section 583 of the Code of Civil Procedure a

decree for reversal

862

necessarily carried with it the right to restitution of all

that had taken under the erroneous decree and the Appellate

Court having seisin of the appeal, had as ancillary to its

duty to grant restitution, an inherent power in the exercise

of which it could, notwithstanding that the decree appealed

against had been executed, call upon the respondent to

furnish security for the due performance of any decree which

might be made on the appeal. After discussing the facts the

court held that the Code of Civil Procedure bound the courts

so far as it went. The Code, was not exhaustive and did not

affect the previously existing powers unless it took these

away; in matters with which it did not deal, the court could

exercise an inherent jurisdiction to do that justice between

the parties which was warranted under the circumstances and

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which the necessities of the case required. There was

difference of opinion between Woodroffe J. and Mookerjee J.

on the scope of applicability of section 546 of the Code of

Civil Procedure. Justice Woodroffe at page 931 of the report

observed:-

"The Court has, therefore, in many cases, where

the circumstances require it, acted upon the

assumption of the possession of an inherent power

to act ex debito justitiae and to do that real and

substantial justice for the administration, for

which it alone exists."

Similarly Justice Mookerjee observed at page 941 of the

report as follows:-

"It may be added that the exercise by Courts, of

what are called their "inherent powers" or

"incidental powers" is familiar in other systems

of law, and such exercise is justified on the

ground that it is necessary to make its ordinary

exercise of jurisdiction effectual, because, "when

jurisdiction has once attached, it continues

necessarily and all the powers requisite to give

it full and complete effect can be exercised,

until the end of law shall be attained" (See Works

on Courts and their Jurisdiction section 27 and

Wells on Jurisdiction of Courts, Chapter XVII)".

These observations, however, will have to be understood

in the context in which the same were made. If there was

jurisdiction to do certain matter then all powers to make

that jurisdiction effective must be implied to the authority

unless expressly prohibited. But in references under 1922

Act as well as

863

1961 Act the courts merely exercise an advisory or

consultative jurisdiction while the appeals are kept pending

before the tribunal, therefore, nothing should be implied as

distracting from the jurisdiction of the tribunals. Power to

grant stay is incidental and ancillary to the appellate

jurisdiction. What was true of the appellate jurisdiction

could not be predicated of the referential jurisdiction. -

See the observations of the majority judgment of the Delhi

High Court in Narula Trading Agency v. Commissioner of Sales

Tax [1981] 47 S.T.C. p.45, though made in the context of

different statutory provisions.

This decision of Andhra Pradesh High Court was noticed

by this Court in Income-tax Officer, Cannanore v. M.K.

Mohammed Kunhi 71 I.T.R. 815. That decision requires a

little closer examination. This Court in that decision was

dealing with section 254 of the Act of 1961 which conferred

on the Appellate Tribunal powers of the widest amplitude in

dealing with appeals before it. This Court held that power

granted by implication the power of doing all such acts, or

employing such means, as were essentially necessary to its

execution. The statutory power under section 254 carried

with it the duty in proper cases to make such orders for

staying recovery proceedings pending an appeal before the

Tribunal, as would prevent the appeal, if successful, from

being rendered nugatory. Section 254 carried with it the

appellate powers of the Appellate Tribunal. This Court while

interpreting that power referred to the Sutherland's

Statutory Construction of third edition, articles 5401 and

5402., in Domat's Civil Law (Cushing's edition), Volume 1,

at page 88, Maxwell on Interpretation of Statutes, eleventh

edition, and case to the conclusion that where the power was

given to an authority, incidental powers to discharge that

authority were implied in the grant of that power. This

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Court noted that the Income-tax Appellate Tribunal was not a

court but exercised judicial powers. The Court noted that

there were certain decisions in which difficulties were felt

that the Appellate Tribunal did not possess the power to

stay recovery during the pendency of an appeal. Reference

was made to a decision of the Andhra Pradesh High Court in

the case of Vetcha Sreeramamurthy v. The Income-tax Officer,

Vizianagaram and Another 30 I.T.R. 252, where Viswanatha

Sastri, J. observed that there was no confinement of an

express power of granting a stay of realisation of the tax,

nor was there any power allowing the tax to be paid in

instalments. The learned judge observed that neither the

Appellate Assistant Commissioner nor the Appellate Tribunal

was given the power to stay the collection of tax.

Therefore, according to the learned judge,

864

whether the law should not be made more liberal so as to

enable an assessee who has preferred an appeal, to obtain

from the appellate forum, a stay of collection of tax,

either in whole or in part, on furnishing suitable security,

was a matter for the legislature to consider. Referring to

the decision in Pollisetti Narayana Rao v. Commissioner of

Income-tax (supra), this Court made an observation to the

effect that "the same High Court held that stay could be

granted by it pending reference of a case by the Appellate

Tribunal to the High Court. This power the High Court had

under section 151 of the Civil Procedure Code and under

article 227 of the Constitution". This passage in our

opinion cannot be taken as approving the observations of the

Andhra Pradesh High Court in Pollisetti Narayana Rao's case

(supra). This Court was dealing with the power of the

appellate authority i.e. the Appellate Tribunal. Therefore,

that would be an entirely different question. The appellate

authority must have the incidental power or inherent power-

inherent for the disposal of an appeal to grant a stay or

not to grant a stay.

The High Court, in our opinion, as was contended by the

revenue in answering a question under section 66 of 1922 Act

or section 256 of 1961 Act does not exercise original,

appellate or revisional jurisdiction but only advisory

Jurisdiction. See the observations of the judicial committee

in Tata Iron & Steel Co. Ltd. v. Chief Revenue Authority,

Bombay, (supra). It is only consultative, neither original

nor appellate.

In New Jehangir Vakil Mills Ltd. v. Commissioner of

Income-tax, Bombay North Kutch and Saurashtra 37 I.T.R. 11,

this Court held that the High Court cannot direct the

Tribunal to find new facts or raise a new question of law or

embark a new line of enquiry.

In Commissioner of Income-tax, Bombay v. Scindia Steam

Navigation Co. Ltd. 42 I.T.R. 589, a bench of five judges of

this Court was of the view that reference jurisdiction or

special jurisdiction is different from appellate or

supervisory jurisdiction. The jurisdiction of the High Court

in a reference under section 66 of 1922 Act was special one,

different from its ordinary jurisdiction as a civil court.

The High Court hearing a reference under that section did

not exercise any appellate or revisional or supervisory

jurisdiction over the Tribunal. It acted purely in an

advisory capacity on a reference which properly came before

it under section 66(1) and (2) of 1922 Act. This Court noted

that the High Court gives the Tribunal advice,

865

but ultimately it is for the Tribunal to give effect to that

advice. This Court further observed that it was of the

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essence of such a Jurisdiction that the court shall decide

only questions which were referred to it and not any other

questions. This Court was, however of the view that the

power of the court to issue a direction to the Tribunal

under section 66(2) of the Act of 1922 was in the nature of

a mandamus and it was well settled that no mandamus would be

issued unless the applicant had made a distinct demand on

the appropriate authorities for the very reliefs which he

sought to enforce by mandamus and that had been refused.

This question was again considered by this Court in

Petlad Turkey Red Dye Works Co. Ltd. Commissioner of Income-

Tax Bombay North 48 I.T.R. 92. This Court observed at page

98 of the report that the jurisdiction of the High Court was

confined to giving an opinion. It was purely advisory and

the High Court had no jurisdiction to direct the Tribunal to

take fresh evidence.

In C.P. Sarathy Mudaliar v. Commissioner of Income-Tax,

Andhra Pradesh 62 I.T.R. 576, this Court noted that the High

Court cannot set aside the order of the Tribunal and the

High Court does not sit in appeal over the judgement of the

Tribunal. If the High Court found that the material facts

were not stated in the statement of case, or the Tribunal

had not stated its conclusion on material facts, the High

Court might call upon the Tribunal to submit a supplementary

statement of case under section 66(4) of 1922 Act. It may be

mentioned that it would be incidental to answering the

question.

In the case of Commissioner of Income-tax, Bombay City

I v. Greaves Cotton and Co. Ltd. 68 I.T.R. 200, this Court

noted that it was well settled that the High Court was not a

court of appeal under reference under section 66 of 1922 Act

or under section 256 of 1961 Act and it was not open to the

High Court in such a reference to embark upon a re-appraisal

of the evidence and the facts found by the Tribunal must be

accepted by the High Court.

A full bench of the Kerala High Court in the case of K.

Ahamad v. Commissioner of Income-tax, Kerala 96 I.T.R. 29,

held that the High Court had power to delete under section

256 of 1961 Act an erroneous sentence in the judgment. The

full bench held that the courts were constituted for the

purpose of doing justice and should have power that is

inherent to the discharge of the function and that these

must have power akin to correct accidental slips. The full

bench therein acted on the principle that no act of the

court should ever injure a party.

866

A learned single judge of the Bombay High Court in the

case of Jatashankar Dayaram v. Commissioner of Income-Tax

101 I.T.R. 343, held that application for a reference under

section 256(2) of 1961 Act in forma pauperis can be

permitted. This would be incidental or ancillary to the

discharge of the function of giving advice conferred under

section 66 of 1922 Act.

This Court in the case of Jaipur Mineral Development

Syndicate v. Commissioner of Income-Tax, New Delhi 106

I.T.R. 653 at 656, held that reference which was dismissed

for paper books not being filed in time could be restored.

It is common ground that jurisdiction conferred upon

the High Court under the Income-Tax Act is neither original

nor appellate. The jurisdiction which it exercised in

dealing with the income-tax reference was advisory and is a

special jurisdiction.

It was contended on behalf of the assessee that the

High Court was a court when it exercised its special

jurisdiction and it was well settled that the High Court

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while hearing a reference under a taxing statute had

inherent power to make all such orders as it would be

necessary to do justice where the circumstances of the case

so required and for this reliance was placed on the

observations of this Court in the case of Jaipur Mineral

Development Syndicate v. Commissioner of Income-Tax, New

Delhi (supra). But as has been noticed before the power that

was exercised was for properly giving advice.

The Allahabad High Court in Sridhar v. Commissioner of

Wealth-Tax, 153 I.T.R. 543 at 547, observed that only power

that High Court could exercise under section 27 of the

Wealth-Tax Act, 1957 was similar to section 66 of 1922 Act

i.e. to give opinion about the questions referred to it in

an advisory capacity by answering the questions in favour of

the assessee or the revenue, as the case might be. Even

while hearing a reference under a taxing statute, the High

Court has certain inherent powers. But the extent and scope

of the inherent power which can be exercised by an appellate

or revisional court cannot be the extent and scope of the

inherent power of the High Court while exercising an

advisory jurisdiction such as is conferred by section 27 of

the Act. The inherent power which the High Court can

exercise while hearing a reference under section 27 must be

confined to the procedure about the hearing of a reference

and to passing such orders as are ancillary or incidental to

the advice which the

867

High Court proposes to give while answering the questions.

While hearing a reference under section 27, the Allahabad

High Court further held that the High Court did not have the

further inherent power to pass interim orders restraining

the orders of AAC or by the Tribunal being given effect to.

It was further held that what the High Court could not do at

the time of passing the final order, it could certainly not

do as an interim measure in the purported exercise of its

inherent power.

It is true that the High Courts sometimes act on the

assumption that it possessed inherent power to act ex debito

justitiae and to do real and substantial justice for which

alone these existed where the circumstances of the case so

required, the power related to matters of procedure and not

substantive rights of the parties. See in this connection

Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal,

[1962] 1 Supp. S.C.R. 450, where this Court a page 463 of

the report referred to section 151 of the Code of Civil

Procedure and observed that the section itself said that

nothing in the Code should be deemed to limit or otherwise

affect the inherent power of the court to make orders

necessary for the ends of justice. This 'inherent power' as

was observed by this Court "had not been conferred on the

court. It was a power inherent in the Court by virtue of its

duty to do justice between the parties before it".

Further the Code itself recognised the existence of the

inherent power of the Code, there was no question of

implying any powers outside the limits of the Code. See also

Padam sen and Anr. v. The State of Uttar Pradesh, [1961] 1

S.C.R. 884 at 887.

The special jurisdiction of the High Court under

section 256 does not deprive it of judicial character or its

inherent power, it was submitted. This in our opinion does

not solve the question because the High Court in answering

reference indubitably acts in judicial capacity and must be

implied to have powers which are necessary to discharge the

obligations in exercising its jurisdiction of giving advice

conferred by the special provisions of the statute. It was

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further submitted that the extent and scope of that inherent

power could not be confined to a straight jacket. It took

within its ambit the power to grant stay of proceedings

before the court as it deemed necessary to do for the ends

of justice. The High Court could exercise such power to

grant stay, it was submitted where the legislature had not

denied or excluded the same in unmistakable terms. But this

was not clear because of the language. It was stated that

pendency of a

868

reference would not stay the realisation, indicates that

reference has nothing to do with the stay of realisation.

The realisation of non-realisation of tax is part of the

appellate jurisdiction of the Tribunal. It was, however,

submitted that the inherent power of the High Court and also

of the Supreme Court had not been excluded by the general

provision in section 265 of 1961 Act which stated that

notwithstanding that a reference has been made to the High

Court or the Supreme Court or an appeal has been preferred

to the Supreme Court, tax shall be payable in accordance

with the assessment made. This section, it was submitted,

did not impose any embargo on the inherent power. It was

submitted that section 265 of 1961 Act, as regards reference

made to the High Court, is in pari materia with section

66(7) which also related to reference to the High Court.

Section 66(7) was interpreted by the Andhra Pradesh High

Court in Pollisetti Narayana Rao v. Commissioner of Income-

tax (supra). It was submitted that legislature by adopting

the identical language in 1961 Act must be regarded as

having accepted it in section 265 of 1961 Act. It was

submitted that while in re-enacting similar provisions of

section 66(7), in section 265 the legislature must be

regarded as intending the same meaning to the pari material

expression in the 1961 Act. For this reliance was placed on

the observations of House of Lords in the Case of Barras v.

Aberdeen Steam Trawling and Fishing Co., Ltd. 1933 A.E.R. =

1933 A.C. 402, where it was held that once certain words in

an Act of Parliament had received a judicial construction in

one of the superior courts, and the legislature repeated

these without any alteration in a subsequent statute, the

legislature must be taken to have used them according to the

meaning which a court of competent jurisdiction had given to

them. Lord Macmillan however observed that this rule of

interpretation afforded only a valuable presumption as to

the meaning of the language employed in a statute. Where a

judicial interpretation is well settled and well recognised

the rule ought, doubtless, to receive effect, but must be a

question of circumstances whether Parliament was to be

presumed to have tacitly given statutory authority to a

single judgment of a competent court so as to render that

judgment, however, obviously wrong, unexaminable by the

highest court.

Therefore, in this case only solitary decision of the

Andhra Pradesh High Court which was not in all subsequent

cases followed and which in a way was contrary to several

decisions of the other High Courts as well as this Court

cannot be said to have received parliamentary acceptance.

The attention of the Andhra Pradesh High Court was not drawn

to the decision of this Court in Seth

869

Premchand Satramdas v. State of Bihar 19 I.T.R. 108, where

dealing with the nature of the Jurisdiction of the Courts in

reference matters under Sales Tax Act this Court observed

that the High Court acquired Jurisdiction to deal with the

case by virtue of an express provision of the Bihar Sales

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Tax Act. Jurisdiction was only consultative neither original

nor appellate.

The Calcutta High Court in the case of Dwarka Prasad

Baja v. Commissioner of Income-tax, West Bengal-I 126 I.T.R.

219, observed that in exercising its Jurisdiction under

section 256 of the Income-Tax Act, 1961, the High Court did

not act as a court of appeal, as the Income-tax Appellate

Tribunal does under section 254 of the Act. The High Court,

in disposing of the reference, could only answer the

questions actually referred and could not raise any question

by itself. The findings of fact by the Tribunal were final

so far as the High Court was concerned and only on limited

grounds such findings of fact could be challenged. After the

judgment of the High Court is delivered, the Tribunal has to

pass necessary orders to dispose of the case in conformity

with the judgment under section 260 of the Act. The High

Court exercised a very limited jurisdiction. It did not

dispose of the entire matter but its decision was confined

only to the questions of law as arise from the order of the

Tribunal. Therefore, it could not be said that the High

Court exercised its general jurisdiction under article 227

of the Constitution in dealing with a reference. If the High

Court could in such case exercise its powers under equity

jurisdiction and grant a temporary injunction or a stay it

would have to ascertain and to go into facts for which the

Income-Tax Act, 1961 did not make any provision. Moreover,

issuance of orders permitting collection or recovery of tax

or staying such collection or recovery if made under

exercise of inherent power would result in extension of the

jurisdiction of the High Court under section 256 of the Act

of 1961. The Calcutta High Court, further, was of the view

that a court could not vest itself with such additional

jurisdiction by invoking its inherent powers. Hence, the

Court, in seisin of a reference under the I.T. Act could not

issue an order of temporary injunction, according to the

Calcutta High Court, or stay of proceedings which was an

injunction in an indirect manner in respect of recovery of

taxes.

In an appropriate case, if the assessee feels that a

stay of recovery pending disposal of the reference is

necessary or is in the interest of justice, then the

assessee is entitled to apply before the appellate authority

to grant a stay until disposal

870

of reference by the High Court or until such time as the

appellate authority thought fit. But in case the appellate

authority acted without jurisdiction or in excess

jurisdiction or in improper exercise of the jurisdiction,

then decision of such appellate authority can be corrected

by the High Courts by issuing appropriate writs under

article 226 and 227 of the Constitution.

It has to be borne in mind that in answering questions

or disposing of references either under section 66 of 1922

Act or section 256 of 1961 Act, the High Courts do not

exercise any jurisdiction conferred upon them by the Code of

Civil Procedure or the Charters or by the Acts establishing

respective High Courts. In respect of certain matters

jurisdictions exercised by the High Court, must be kept

separate from the concept of inherent powers or incidental

powers in exercising jurisdiction under section 66 of 1922

Act or 256 of 1961 Act. Section 66 of Income-Tax Act of 1922

or section 256 of Income-Tax Act of 1961 is a special

jurisdiction of a limited nature conferred not by the Code

of Civil Procedure or by the Charters or by the special Acts

constituting such High Courts but by the special provisions

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of Income-Tax Act 1922 or 1961 for limited purpose of

obtaining High Court's opinion on questions of law. In

giving that opinion properly if any question of incidental

or ancillary power arises such as giving an opportunity or

restoring a reference dismissed without hearing or giving

some additional time to file paper book, such powers inhered

to the Jurisdiction conferred upon it. But such incidental

powers can not be so construed as to confer the power of

stay of recovery of taxes pending a reference which lie in

the domain of an appellate authority. Therefore, the concept

of granting stay in a reference ex debito justitiae does not

arise. That concept might arise in case of the appellate

authority exercising its power to grant stay where there is

not express provision. Ex debito justitiae is to do justice

between the parties.

Rendering advice on the question of law referred to the

courts has nothing to do with the recovery of tax or

granting stay in respect of the same.

Therefore, in our opinion it cannot be said that the

High Court had inherent power or incidental power in the

matter of a reference pending before it to grant stay of

realisation or to grant injunction. That must remain within

the jurisdiction of the appellate authority and pendency of

a reference does not detract

871

from that jurisdiction of the appellate authority. In our

opinion, therefore, the High Court was in error in

exercising its jurisdiction by passing an order for stay of

realisation under section 151 of the Code of Civil Procedure

in a pending reference. The High Court could have exercised

its power if the appellate authority had not properly

exercised its jurisdiction, not in reference jurisdiction

but by virtue of its jurisdiction under article 226 or

article 227 in appropriate cases. But that was not the case

here.

In that view of the matter, we are in respectful

agreement with the views expressed by the Allahabad High

Court in Sridhar v. Commissioner of Wealth-tax (supra) and

the views of the Calcutta High Court in Dwarka Prasad Baja

v. Commissioner of Income-tax, West Bengal-I (supra) and we

are unable to sustain the views expressed by Andhra Pradesh

High Court in Polisetti Narayana Rao v. Commissioner of

Income-tax, Hyderabad (supra). The appeals are accordingly

allowed. The judgment and order of the High Court are set

aside. But in the facts and circumstances of the case,

parties are directed to pay and bear their own costs.

N.V.K. Appeals allowed.

872