THE COMMISSIONER OF INCOME TAX, DELHI vs. BANSI DHAR & SONS

CIVIL APPEAL No. 1668/1978Supreme Court1985 INSC 25219 December 1985Bench: 2 JudgesAuthor: V.D. TULZAPURKAR, SABYASACHI MUKHERJI B22 pages
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What were the facts?

The assessee, a Hindu Undivided Family (HUF), received over Rs. 2 lakhs from an insurance policy upon the death of the Karta's father. This amount was initially treated as the Karta's personal income until assessment year 1959-60. For assessment year 1960-61, the Income Tax Officer assessed the income from this amount as belonging to the HUF. The Appellate Assistant Commissioner overturned this, deeming it personal income. The Revenue appealed to the Income Tax Appellate Tribunal for assessment years 1960-61 and 1962-63. The Tribunal, in a common order, held the income to be that of the HUF. The assessee then referred a question to the High Court regarding whether the insurance amount was correctly treated as ancestral property. The assessee also sought stay of tax recovery from the High Court for subsequent assessment years, citing pending appeals and prior stays granted by the Tribunal. The Revenue contended that the High Court lacked jurisdiction to grant stay orders.

What did the Supreme Court hold?

The Supreme Court held that the High Court, when answering questions referred under Section 66 of the Indian Income Tax Act, 1922, or Section 256 of the Income Tax Act, 1961, exercises only advisory jurisdiction and not original, appellate, or revisional jurisdiction. Rendering advice on a question of law is distinct from the recovery of tax or granting a stay. The Court found that the High Court does not possess inherent or incidental power to grant a stay of tax realization or an injunction in a pending reference. Such powers must remain with the appellate authority. The pendency of a reference does not detract from the appellate authority's jurisdiction. Therefore, the High Court erred in exercising its jurisdiction by passing an order for stay of realization under Section 151 of the Code of Civil Procedure. The High Court could only exercise its power under Article 226 or 227 of the Constitution if the appellate authority had acted without jurisdiction or in excess thereof, which was not the case here. The appeals were allowed, and the High Court's judgment and order were set aside.

What were the issues?

1. Whether the High Court, in answering a reference under Section 66 of the Indian Income Tax Act, 1922/Section 256 of the Income Tax Act, 1961, possesses the jurisdiction to grant a stay of tax recovery or pass interim orders. (Question of law) Assessee's contentions: - The assessee argued that since similar appeals for subsequent years were pending before the Tribunal and had been granted stay on furnishing security, the High Court should also grant a stay to prevent prejudice, especially if the HUF was made to pay tax again on income already taxed in the Karta's personal assessment. Revenue's contentions: - The Revenue argued that the High Court exercises only advisory or consultative jurisdiction in references and has no power to grant stay of tax recovery, as such power is prohibited by the Income Tax Acts of 1922 and 1961.

Which sections of the Income-tax Act were involved?

Section 66,Section 256,Section 151

AI-generated summary — verify with the full judgment below

A B 850 THE COMMISSIONER OF INCOME TAX, DELllI v. liANSI DHAR & SONS DECt:!'lllEK 19, 1985 [V .D. TULZAPURKAK AND SABYASACHI MUKHARJI, JJ, J Indian Income Tax Act 1922 : Section 66 and Income Tax Act 1901 : Section 256 - High Court - Juri iction of - To grant stay or pass interim orders in pending references.

Interpretation of statutes : Words of statute - Judicial c construction of words by Superior court - How far useful in con~truing identical words in another enactment.

The Assesse•. was a Hindu Undivided Family. The father of the Karta of the HUF died in an air crash. On his death a swn of over Rs. 2 lakhs was received by the Karta from the Insurance Company on account of the insurance policy covering the life of D 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 yesr 1960-61 the Income Tax Officer treated the income from the insuranc

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