BHOPAL SUGAR INDUSTRIES LTD. vs. THE INCOME-TAX OFFICER, BHOPAL

CIVIL APPEAL No. 407/1956Supreme Court[1961] 1 S.C.R. 47402 September 1960Bench: 5 JudgesAuthor: S.K. DAS, M. HIDAYATULLAH, K.C. DAS GUPTA, J.C. SHAH, N. RAJAGOPALA AYYANGAR8 pages
AI SummaryAllowed

What were the facts?

The appellant, Bhopal Sugar Industries Ltd., appealed an assessment order from the Income-tax Officer (ITO), Bhopal. The dispute concerned the market value of sugarcane grown on the company's own farms for the assessment year 1951-52. The company claimed a certain market value and deducted agricultural expenses, seeking to reduce its total income. The ITO computed the market value differently, resulting in no agricultural income deduction. The Appellate Assistant Commissioner (AAC) determined a higher market value, allowing a deduction. The Income-tax Appellate Tribunal (ITAT), while agreeing that the market was the factory, directed the ITO to ascertain average transport charges from purchase centers to the factory and add it to Rs. 1-4-6 per maund to determine the market value. If this value exceeded Rs. 1-7-9 per maund, further relief was to be given. The Commissioner withdrew an application for reference. The ITO subsequently refused to carry out the ITAT's directions, stating no relief could be given. The company petitioned the Judicial Commissioner for a writ of mandamus, which was dismissed. The company appealed this dismissal to the Supreme Court.

What did the Supreme Court hold?

The Supreme Court held that the Judicial Commissioner was clearly in error in dismissing the petition for a writ of mandamus. The Court found that the ITO's refusal to carry out the directions of the ITAT, a superior tribunal, was a denial of justice and destructive of the basic principle of a hierarchy of courts. The Court emphasized that the ITAT's order had become final and binding, and the ITO could not disregard it, regardless of whether he believed the order to be wrong. The argument that the ITAT's order was unintelligible was rejected as disingenuous, with the Court finding the directions clear and unambiguous. The Court allowed the appeal, set aside the Judicial Commissioner's judgment, and issued a writ of mandamus directing the ITO to carry out the ITAT's directions. The Court did not expressly leave any issue undecided.

What were the issues?

1. Whether the Judicial Commissioner erred in dismissing the petition for a writ of mandamus, thereby allowing the Income-tax Officer (ITO) to refuse to carry out the directions of the Income-tax Appellate Tribunal (ITAT). Assessee's Contention: The assessee argued that the ITO's refusal to implement the ITAT's directions constituted a denial of justice and was destructive of the hierarchical administration of justice. They contended that the ITAT's order had become final and binding, and the ITO could not question it. Revenue's Contention: The revenue, through the ITO, argued that the ITAT's order was unintelligible and that the ITO had done his best to understand it. They also implicitly argued, through the Judicial Commissioner's reasoning, that no manifest injustice resulted from the refusal to comply with the ITAT's order, and that a writ of mandamus is not a matter of right for every omission or irregularity. The revenue cited Bimal Chand v. Chairman, Jiagunj Azimgunj Municipality, Gram Panchayat, Vidul v. Multi Purpose Co-operative Society of Vidul, and Senairam Doongarmall v. Commr. of Income Tax, Assam.

Which sections of the Income-tax Act were involved?

Section 66(1)

AI-generated summary — verify with the full judgment below

4i4 8UPRE:\fE COURT REPORTS [ 1961] i96o direction is given under s. 8(2), there is not.bing in that provision which prevents rectification of that ordn. ~(;~, ~>~~ By sub-s. (4) of s. 8 of the ln\'cstiga.tion Act, the "· findi11gH recorded by the Commission in cases or points Thr Cnmmi"''"" referred t-0 theri1 are macle final in all aRsessment or 0/ /llcowHo·., reassessment proceedings. The Act has, by sub-s. (2) of "1-'"".'· Jrnvau- s. 8 remored.the bar of limitation which arose by CO>t·Corh•• & 2 f I I T A 1 I • c00 , 1., nangalvi(' ~. 5 o t le ncorue ~~ ct. twas con1petcnt t- icre- 0 ... _ fore to the Income I ax Officer to reopen the assess. """" 1. ment proceedings not w ithslll.nding any lapse of time and the prev ions order of assessment did not opPrate as a bar to such reassessment. The High Court was therefore in our judgment right in recording its answers on the three questions submitted by the Com- missioner of Income Tax. In that view, the appPal fails and is dismissed with costs. Appeal dismissed. THE BHOPAL SUGAI{ INDUSTRIE8 LTD. v. THE J'.'iCOME-TAX. OFFICEH, BHOPAL (8. K. DAS, j\f. HIDAYATULLAH, K. c. DAS GUPTA, J. c. SHAil AN

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 66(1)

All 184 judgments and leading authorities on Section 66(1) →

Recent GST High Court judgments

Search GST case law →