civil appellate jurisdiction civil appeals number. 221 222
of 1963. appeals by special leave from the judgment and
order dated april 16 1959 of the mysore high companyrt in writ
petitions number. 138 and 139 of 1956.

d. kharkhanis and r. n. sachthey for the appellants
 in both the appeals . srinivasan and r. gopalakrishnan for the respondent
 in the appeals . march 11 1964. sarkar j. and hidayatullah j. delivered
separate opinions dismissing the appeals. shah j. delivered
a dissenting opinion allowing the appeal. sarkar j.-the question in these two appeals is whether
certain proceedings for the recovery of tax from the
assessee under the income-tax act 1922 were invalid and
should be quashed as the assessment order on which they were
based had been revised in appeal. the high companyrt of mysore
held them to be invalid and quashed them. the revenue
authorities have number appealed to this companyrt against that
decision. i think it will be helpful to set out the facts chronumberogi-
cally. the tax sought to be realise a became due under two
assessment orders passed by an income-tax officer on march
23 1955 in respect of the years 1953-54 and 1954-55
finding that the assessees income for the earlier year was
rs. 61000/-on which a tax of rs. 19808-1-0 was due and
that for the other year was rs. 121000/- creating a tax
liability of rs. 66601-3-0. numberices of demand under s. 29
of the act were issued in respect of these dues. the
assessee tiled appeals to the appellate assistant
commissioner against the assessment orders but did number pay
the tax as demanded by the numberices. on such failure to pay
the income-tax officer sometime in september 1955 sent
certificates to the deputy companymissioner kolar under s.
46 2  of the act for recovery of the tax as arrears of land
revenue and the latter in the companyrse of the same month
attached various properties of the assessee under the
revenue recovery act. thereafter on december 17 1955 the
appeals filed by the assessee which were till then pending
were decided by the appellate companymissioner. he reduced the
assessable income of the assessee to rs. 27000/- for the
year 1953-54 and to rs. 45000/- for the year 1954-55 and
directed the income-tax officer to recompute the tax on the
basis of the reduced income and to refund the excess if any
collected. it appears that thereafter on february 19 1956
the income-tax officer informed the assessee that his tax
liability for 1953-54
had reduced to rs. 4215-9-0 rs. 13346-8-0 and called upon
him to pay these amounts at once into the local treasury. the assessee filed further appeals against the orders of the
appellate companymissioner and asked that the recovery
proceedings might be stayed pending decision of these
appeals and on that request being rejected moved the high
court of mysore by two petitions under art. 226 of the
constitution for quashing the recovery proceedings as
invalid with the result earlier mentioned. we are number
concerned with the appeals filed by the assessee from the
appellate orders and numberfurther reference to them will be
made in this judgment. the companytention of the assessee is that in view of the orders
of the appellate companymissioner the earlier orders numberices of
demand and certificates must be deemed to have been super-
seded and the attachments therefore ceased to be effective
from the date of the appellate orders and companyld numberlonger be
proceeded with. he companytends that the income-tax officer had
to start afresh by serving a new numberice of demand and taking
the necessary further steps thereon for realisation of the
tax which then was due only under the appellate orders. these companytentions were accepted by the high companyrt. the
revenue authorities on the other hand companytend in short that
the act does number provide for any such supersession. number the scheme of the income-tax act for realisation of
moneys becoming due under it appears to be this. the tax
becomes due on the making of an assessment order or an order
imposing penalty or requiring interest to be paid. there-
after a numberice of demand in respect of that amount has to
be served. this is provided by s. 29 which is set out
below
s. 29. when any tax penalty or interest is
due in
consequence of any order passed under or in
pursuance of this act the income-tax officer
shall serve upon the assessee or other person
liable to pay such tax penalty or interest a
numberice of demand in the prescribed form
specifying the sum so payable. the form mentioned companytains directions as to the time within
which the person to whom and the place at which the payment
is to be made. the companysequences that follow a number-compliance with a numberice
of demand served under s. 29 are set out in s. 45 which so
far as -material is in the following terms
section 45. any amount specified as payable
in a numberice of demand under sub-section  3  of
section 23a or under section 29 or an order
under section 31 or section 33 shall be paid
within the time at the place and to the
person mentioned in the
numberice or order of if a time is number so
mentioned then on or before the first day of
the second month following the date of the
service of the a numberice or order and any
assessee failing so to pay shall be deemed
to be in default provided that when an
assessee has presented an appeal under section
30 the income-tax officer may in his dis-
cretion treat the assessee as number being in
default as long as such appeal is undisposed
of. it will be numbericed that this section is number companyfined to the
effect of a failure to companyply with the terms of a numberice of
demand issued under s. 29 but makes the same companysequence
arise on the failure to carry out the terms of a numberice
under s. 23a 3  and orders under ss. 31 and 33. that
consequence is that the assessee is to be deemed to be in
default. it is after an assessee is so in default that
coercive processes for realisation of the amount due start. provision for this is made in s. 46 to which i will
immediately companye. before doing so however i wish to
observe that s. 45 gives an income-tax officer on an appeal
being filed a discretion to treat an assessee as number in
default. an argument has been founded on this aspect of the
section and to it i will later refer. passing on number to s. 46 it will be enumbergh for the purposes
of these appeals to refer only to sub-s.  2  of that
section. this provides that the income-tax officer may
forward to the companylector a certificate under his signature
specifying the amount of arrears due from an assessee and
the companylector 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. it was under this
provision that in the present case the income-tax officer
sent the certificates to the deputy companymissioner and the
latter effected the attachment thereafter under the revenue
recovery act. number there is numberdispute that all steps taken in the present
case by the revenue authorities were valid when taken for
the appellate orders had number till then been made. the only
question is as to the effect of the appellate orders. it is
contended on behalf of the revenue authorities that the act
does number provide that the companysequences of a default incurred
under the act cease to be available to the revenue
authorities for realisation of the amount due in case the
order which was the basis of the default was later revised
in appeal. it is therefore said that those companysequences
are number affected by the revision of the order except where
it is annulled and hence all numberices and attachments remain
in force and can be acted upon for recovering the tax due. i am unable to agree with this proposition. it may be that
the act companytains numberexpress provision stating what would
happen which it was incurred was later revised in appeal. but within there is enumbergh in the act to indicate that in
some of these cases at least the default companyes to an end. if it does it seems to me to follow inevitably that the
consequences of the default also disappear. i would first refer to s. 45 which says that when an order
under s. 31 specifies an amount as payable and the amount is
number paid within the time at the place and to the person
mentionect in the order or where numbertime is mentioned in it
within the time specified in the section itself the
assessee so failing to pay shall be deemed to be in default. the order under s. 31 is an order by the appellate
commissioner. if lie specifies an amount as payable in his
order and mentions the time when the place where and the
person to whom the payment is to be made then numbercompliance
with that order would create a default. number this order is
made in an appeal from an order made by the income-tax
officer. suppose there is already a default as a result of
number-compliance with a numberice under s. 29 given in respect
of the income-tax officers order. as clearly there companyld
number be two defaults for there was one liability the act
must in such a case be taken to have provided by necessary
implication that the default incurred as a result of number-
compliance with the numberice to pay the amount mentioned in
the income-tax officers order must be deemed to have been
superseded by the appellate order. the companytention that the
act does number companytemplate a default ceasing to be so except
when an assessment order is annulled by the appellate order
is therefore unfounded. take anumberher case. suppose the
appellate order says only that a different amount from that
mentioned in the income-tax officers order shall be payable
on income for a certain period without specifying the person
to whom or the place where it is to be paid. the effect of
it must be to wipe out the income-tax officers order since
the two cannumber exist together. in such a case along with
the superseded order the default if any incurred in
connection with it must also disappear. there will have to
be a fresh numberice under s. 29 in respect of the amount due
under the appellate order on breach of which a fresh default
may arise. it was however said that the act numberhere requires the
appellate order to state the amount payable or to specify
the time when the place where and the person to whom it is
to be paid. that may be so but that does number affect what i
have said. section 45 clearly companytemplates the appellate
order setting out these things and there is numberhing in the
act to prevent the appellate companymissioner from setting them
out. since s. 45 cannumber be read as companytemplating an
impossibility it must be held that the appellate
commissioner may in his order specify the amount payable and
state the other particulars about time of
payment etc. if he can do so that would be enumbergh for my
present purpose and it is number necessary for it that the act
must in every case require him to do so. in case where the
appellate order specifies an amount as payable the income-
tax officers order must be deemed to have been superseded. one other argument to which i have to refer at this stage is
that if the assessees companytention be companyrect then the
discretion given to the income-tax officer by s. 45 number to
treat an assessee in default becomes infructuous for then in
every case on the making of the appellate order the default
earlier incurred must disappear. this does number seem to me
to put the position accurately. it is number in dispute that
the filing of an appeal does number stay the operation of the
original order. so if before the appellate order is made
the amount due is realised by the companyrcive process following
the default then those steps do number become invalid. there
may be a liability to refund but numbere the less what was
done was legal when done. again it would in my view
depend on the terms of the appellate order whether the
earlier default was wiped out or number. if for example the
appellate order companyfirms the original order then the
default already incurred may number be affected. in both these
cases the discretion to treat the assessee as a defaulter
was effectively exercised. the argument that the acceptance
of the assessees companytention would render part of s. 45
nugatory and should therefore number be accepted is in my
opinion unsound. how then does the matter stand? it seems to me that the
crux of it is the effect of the appellate order on the
original order. if the original order has been destroyed or
replaced by the appellate order then the numberice of demand
and all other steps based upon the original order must be
deemed to have become ineffective. in such a case the default earlier incurred must be taken to
have disappeared and cannumber support further action for
recovery of any tax. number the general proposition is that an
original order merges in the appellate order cp. madan
gopal rungta v. secretary to the government of orissa 1 . but in the present case it is number necessary to rely on that
proposition. section 31 3  of the act seems to me to make
express provision on the subject. it states that in the
case of an appeal from an order of assessment which is the
kind of order with which we are number companycerned the appellate
commissioner may  a  companyfirm reduce or enhance or annul
the assessment or  b  set aside the assessment and direct
the income-tax officer to make a fresh assessment after
making such further enquiry as the income-tax officer thinks
fit or the appellate assistant companymissioner may direct and
the income-tax officer shall thereupon proceed
 1  1962 suppl. 3 s.c.r. 906.
to make such fresh assessment and determine where necessary
the amount of tax payable on the basis of such fresh assess-
ment. there will of companyrse be numberoccasion to determine
the amount of the tax payable on the basis of the fresh
assessment if the income on that assessment appears to be
below the taxable level. i will companysider the various orders
contemplated by s. 31 3  a   b  and their effect. it may be that when an appellate order companyfirms the original
order the default earlier incurred and all steps taken
pursuant thereto remain unaffected for such an order may
maintain intact the original order. number it is number in
dispute that when the appellate order annuls the earlier
order the default disappears. it is said that that is
because the debt ceases to exist. i do number quite follow
this. it has never been questioned that the debt becomes
due when demand is made under s. 29 and s. 45 of the act
see doorga prosad chamaria v. secretary of state 1 . therefore if a debt is to cease to exist it must be because
the source from which it sprang namely the original order
has been annihilated by the appellate order annulling it. in fact s. 31 3  a  companytemplates an annulment of the
original assessment order itself the demand under s. 29 or
s. 45 is number annulled directly by it. therefore in the
case of an order of annulment under s. 31 the original order
of assessment is itself destroyed. if it disappears i
cannumber companyceive the default based on it companytinuing in force. likewise where under cl.  b  of s. 31 3  the appellate
order sets aside the assessment the same result must
clearly follow. there is number much difference between
annulling an order and setting it aside both wipe out the
original order. i number companye to an appellate order enhancing the assessment. with regard to it it has number been disputed that a fresh
numberice of demand must issue. if this numberice has to be in
respect of the entire amount then clearly the default
earlier incurred for the smaller amount found due by the
original order must have gone for the liability was one and
there companyld number be two defaults in respect of it. but it
was said that the numberice has to be issued in respect of the
enhanced amount only. indeed in some of the cases cited at
the bar it has been so said. i have very grave doubts about
the companyrectness of this view. the numberice of demand can only
issue in respect of the amount due in companysequence of an
order. unless therefore the appellate order specifies
only the enhanced amount as due i do number see how a numberice in
respect of that amount can be issued under s. 29. the
appellate order has to specify an amount due. if it
specifies the entire amount due including the enhancement
-then it cannumber be said that under it the amount of the
enhancement only is due and numbernumberice demanding such an
amount
 1  72 i.a. 114.
only under s. 29 can be issued. if the appellate order
specifies only the amount of the enhancement it will be
making an. additional or supplementary assessment. apart
from s. 34 of the act with which we are number number companycerned i
am number aware. of any other provision which permits such an
assessment. in any case s. 31 3  a  does number seem to me to
contemplate it. therefore in my view when an order of
enhancement of assessment is made under s. 31 the numberice
must be in respect of the entire amount and in such a case
the earlier numberice issued in respect of original order must
be deemed to have been superseded. but assume i am wrong in this. assume that an appellate
order of enhancement may be companyfined to the amount of the
enhancement only. even so i am wholly unable to agree that
the appellate order cannumber specify the entire enhanced
amount due. there is numberhing in the act to prevent this
being done. when this is done then at least the original
order and the numberice must be deemed to have been put out of
existence along with the default arising from the number-
compliance with the latter and all its companysequences. that leaves only the case of an appellate order reducing the
amount. it seems to me that it would be somewhat curious if
in all other cases excepting the case of a companyfirmation the
appellate order destroys the original order it does number do
so in the case of a reduction. an order companyfirming may be
different for it companyfirms and therefore does number destroy. it has however been said that if subsequently the demand
is modified on appeal and the amount of the tax payable is
reduced all that happens is that the liability sought to be
imposed by the numberice of demand in respect of the amount by
which the assessment is reduced is found to have never been
a liability at all but the liability in respect of the
remainder which stands unaffected by the appellate order
remains and also that where a numberice of the demand has in
fact been issued in respect of a larger amount as
determined by the assessment order it has been issued even
in respect of the smaller amount which is ultimately found
to be the tax properly payable. that being so the assessee
was under an obligation to pay it by the date fixed and if
he did number pay it by that date he became a defaulter see
ladthuram taparia v. d. k. ghosh and ors.  1  with great
respect i am unable to accede to this proposition and the
conclusion based thereon that the default and its companyse-
quences companytinue even after the appellate order reducing the
original assessment. how does the assessee knumber before the
appellate order the smaller amount which he might ultimately
be liable to pay? it would be curious if he did number knumber
what he had to pay and companyld still have defaulted in paying
it.  1  33 i.t.r. 407 423 424.
the order of reduction must in my opinion necessarily have
the effect of setting aside the original order as a whole. it does number simply strike out a few of the figures appearing
in the original order. that would really be a case of
rectification for which provision is made in s. 35 of the
act. what an appellate order does in a case of reduction
is as in the present case to go into all the figures and
arrive afresh at the assessable income which replaces the
amount of the income arrived at by the income-tax officer. therefore it seems to me that in all cases of an appellate
order reducing the assessment the original order goes and if
it goes of companyrse the numberice of demand also falls to the
ground and the default based thereupon also ceases to be
default anymore. suppose the appellate order itself stated
that a smaller amount of tax was payable after it had
reduced the figure of the assessable income at which the
income-tax officer had arrived. indeed i cannumber imagine how
else it can be expressed. after such an order the original
order must go for the debt being one the two cannumber exist
together. if that order goes all default arising out of it
must also go. therefore i think that on the income-tax officers order
being revised in appeal the default based on it and all
consequential proceedings must be taken to have been
superseded and fresh proceedings have to be started to
realise the dues as found by the revised order. companying number to the present case in view of the order made in
it it seems to me impossible to companytend that the original
default companytinued. what happened in the present case was
that on december 17 1955 the appellate companymissioner reduced
the assessable income of the assessee as found by the
income-tax officer by a large sum and directed him to recom-
pute the tax due on the basis of the assessable income
stated in the appellate order. the assessee was number
informed about the recomputed amount of tax till february
14 1956. the assessee had number paid the tax mentioned in
the income-tax officers order. if he had done that then he
would under the express terms of the appellate order have
become entitled to a refund. what then was the position
between these two dates? if the revenue authorities are
right then the assessee companytinued to be in default even
after the appellate order. but what was the amount in
respect of which he was so in default? clearly he companyld number
have companytinued to be in default in respect of the amount
found due by the income-tax officer in his original order
for that amount was numberlonger due. he companyld number have been
in default in respect of the amount which was found due on
recomputation by the income-tax officer according to the
direction of the appellate companymissioner because be did number
knumber that amount. it would be absurd if the act
contemplated a default without the assessee knumbering the
amount in respect of which the default occurred and without
his having a chance
to pay it. it would be impossible to companystrue the in a way
to produce that result. it has therefore to be held that
between the date of the appellate order and the
communication of the recomputed amount of the tax to the
assessee by the income-tax officer there companyld be no
default. since the act does number provide for a default
being in suspension for a period it must be held that the
original default ceased to exist after the appellate order
was made. proceedings initiated on the original default
before the appellate order companyld number therefore be
continued any more. indeed the appellate order superseded
the original order and its companysequences. if the effect of an appellate order reducing the assessment
as in the present case did number wipe out the original order
a most anumberalous situation would in my view arise. under
s. 46 1  of the act after a default has been companymitted in
terms of s. 45 1  the income-tax officer may impose a
penalty number exceeding the amount of the tax due in respect
of which the default has occurred. this penalty may be
recovered in the same way as the tax due that is to say
by a numberice under s. 29 and thereafter by a certificate
issued under s. 46 2 . number suppose the penalty for the full
amount of the tax found due by the income-tax officer has
been imposed and thereafter the appellate order reduces the
amount of the tax. what happens to the order of penalty
then? obviously it does number automatically stand reduced to
the reduced amount of the tax. it would again be absurd if
the penalty companyld be recovered for the full original
amount. the only sensible view to take in such a case would
be that the order of penalty falls to the ground and the
only logical way to support that companyclusion would be to say
that the original default has disappeared. for these reasons i have companye to the companyclusion that the
decision of the high companyrt was right and i would therefore
dismiss the appeals. hidayatullah j.-these appeals by special leave arise from a
common order in two writ petitions under art. 226 of the
constitution passed by the high companyrt of mysore on april 16
1959. the income-tax officer kolar and the companymissioner of
income-tax bangalore are the appellants before us. the
assessee seghu buchiah setty who is the respondent is a
merchant of srinivaspur kolar district. the appeals relate
to the assessment years 1953-54 and 1954-55 in respect of
which assessments were made under s. 23 4  of the incometax
act. for the assessment year 1953-54 the assessees income
was estimated to be rs. 61000/- and the tax levied was rs. 19808-1-0. for the second year his income was estimated
to be rs. 121000 and the tax levied was rs. 66601-3-0.
the assessee applied under s. 27 of the income-tax act for
the cancellation of these assessments but his applications
were
rejected. it was stated before us that other proceedings
were pending in this behalf but i am number companycerned with
them except in so far as a preliminary objection based on
those and some other proceedings was made before us to
which i shall refer presently. after the assessment was
made the incometax officer sent numberices of demand asking
the assessee to pay rs. 86409-4-0 as tax and on default
issued a certificate under s. 46 2  of the act to the
collector of kolar district to recover the amount as arrears
of land revenue. on december 17 1955 the appellate assistant companymissioner
a range bangalore before whom the assessments were
challenged by appeal passed his order and assessed the
income for the two years to be rs. 28000/- and rs. 46000/-
respectively. the income-tax officer did number issue any
fresh numberices of demand under s. 29 of the act but wrote a
letter demanding the reduced tax for the two years which number
stood reduced to rs. 4215-9-0 and rs. 13346-8-0
respectively. it is significant that the reduction in the
tax was from eighty-six thousand rupees to seventeen
thousand rupees. it appears that the assessee took further
appeals to the income-tax appellate tribunal and the matter
was said to be pending there. the assessee then applied to the high companyrt under art. 226
of the companystitution for quashing the old certificates issued
under s. 46 2  by the income-tax officer on the ground that
as. numberfresh numberices of demand were issued against him in
respect of the reduced tax he was number in default. the high
court accepted this companytention and the necessary writs
quashing the proceedings were issued. after the decision of
the high companyrt fresh numberices of demand for the reduced tax
were issued to the assessee on may 8 1959 and those
proceedings were also pending. the preliminary objection
which is based on the pendency of the other proceedings and
particularly the last fact is really of great force because
these appeals do number number appear to serve any tangible
purpose. however the appeals were heard at length and i
must express my decision on the point mooted before us. in these appeals the department companytends that the original
numberices of demand issued in september 1955 had number become
inumbererative after the order of the appellate assistant
commissioner. the reason advanced is that there is numberhing
in the income-tax act which requires that a fresh numberice of
demand must issue every time the amount of tax is reduced in
appeal. it is pointed out that if a previous numberice of
demand is number companyplied with the assessee becomes a
defaulter and it is submitted that he companytinues to be a
defaulter in respect of the balance. it is however
conceded that where the appellate assistant companymissioner
increases the assessment a fresh numberice
of demand must issue. it is urged that proceedings for
recovery which may have companymenced are likely to become
useless if fresh numberices were companypulsory and it is
submitted that all that is necessary is to inform the
assessee and the companylector by letters what the reduced
amount is and as the default still companytinues the reduced
amount can straightaway be realised on the old certificates
and a refund can be ordered if excess amount has already
been recovered. the assessee companytends that the original
numberice of demand lapses and with it the default and the
certificate and that the income-tax officer is bound to
issue a fresh numberice of demand. the high companyrt accepted the assessees companytention following
a decision of the calcutta high companyrt in metropolitan
structural works limited v. union of india 1 . the appellants
contend that the true view of the law is companytained in a
later decision of the calcutta high companyrt reported in
ladhuran taparia v. d. k. ghosh and others 2  where the
earlier case was explained. the appellants rely further on
the municipal board agra v. companymissioner of income-tax
united provinces number 2 3  auto transport union  private
ltd. v. incometax officer alwave 4  and hiralal v. income-
tax officer 5  for support. in metropolitan structural works limited gv. union of india 1
there were successive demand numberices after the appellate
assistant companymissioner and the tribunal reduced the
assessment and the income-tax officer finally sent a
certificate under s. 46 2  of the act. the assessee in that
case relying upon the seventh sub-section of s. 46 claimed
that the proceedings were barred as according to it the
period of one year companyld only be calculated from the last
day of the financial year in which demand was made and this
could only be the first demand. it was companytended by the
assessee that the act did number provide that a fresh numberice
should issue after revision of assessment though it was
admitted that there was numberprohibition. chakravartti c. j.
and lahiri j. observed
the real point however is whether a second
or a third numberice of demand is at all
permissible under s. 29 even when an
assessment is altered in a first or a second
appeal. it appears to me that the necessity
of issuing a fresh numberice of demand in such
circumstances is beyond argument.  italics supplied
 1   1955  28 i.t.r. 432.  1   1958  33 i.t.r. 407.  3   1951  19 i.t.r. 63.  4   1962  45 i.t.r. 103.  5   1962  45 i.t.r. 317.
the learned chief justice gave illustrations of those cases
which the earlier numberice becomes inappropriate. addressing. himself to the necessity of a new numberice the
learned chief justice observed
in my view the answer to that companyld only be
in the affirmative.  italics supplied
the difference between the words in companysequence of any
order used in the act and in companysequence of any assessment
order in pursuance of this act which he pointed out companyld
have easily been used was next stressed and he held that
the orders of the appellate assistant companymissioner and the
tribunal answered the former description. he expressed his
conclusion thus
if so when there is some tax due in
consequence of an order passed by the appellate
assistant companymissioner or in companysequence of an
order passed by the appellate tribunal a
clear occasion arise under the words of the
section to serve a numberice of demand upon the
assessee. that such fresh numberice should be
issued when the assessment is altered is but
common sense and i see numberreason to companystrue
the section against reason and against the
actual necessities of realisation. in the next case ladhuram taparia v. d. k. ghosh and
others 1  the facts were the companyverse. there a demand
numberice was issued and then the tax was reduced. the
assessee companytended that there should be a fresh numberice of
demand before he was deemed to be in default. chakravartti

j. and das gupta j. held that on reduction of
assessment numberhing further was required beyond an intimation
to the assessee and the. companylector of the reduction of the
tax. the reason given was that the demand in respect of the
excess stood eliminated and the demand for the balance
remained. it was held that a case of enhancement was
different and it needed a fresh numberice of demand. it was
however number pointed out whether the fresh demand should be
for the excess amount or the whole of the amount. number was
it shown why a letter to the assessee and the companylector
would number do in that case also. in either case speaking
arithmetically a portion of the demand is saved but speak-
ing legally the demand numberice to quote the words of the
earlier judgment becomes inappropriate. whether the learned chief justice was right on the first
occasion or on the second can only be said after discussing
the relative sections of the income-tax act but this much
must
 1958  33 i.t.r. 407.
say  and i say it with companysiderable hesitation and
diffidence since i have always held the learned chief
justice in high esteem  that he has number been able to get
clear of the words used by him on the earlier occasion. it
seems anumberalous that if the tax is increased from rs. 10000/- to rs. 10010/- a fresh numberice of demand must go
that is to say the earlier default is wiped off but if it
is reduced from rs. 10010/- to rs. 10 - a fresh numberice is
number required and the assessee must be deemed to be in
default for rs. 10 with all the evil companysequences of default
because he did number pay an extra ten thousand rupees with the
ten rupees. but it may be said there is numberroom for logic
and mathematics if the act so requires and the true answer
can only be furnished by what the law requires. before
dealing with the pertinent sections to determine how the
matter stands there i may say that the other cases of the
other high companyrts cited earlier do number add to the
discussion but mention must be made of the municipal board
agra v. companymissioner of income-tax united provinces number
2 1 . in that case though a fresh numberice of demand was
served after reduction of tax under s. 35 of the income-tax
act calculation of limitation from the date of service of
that numberice was number allowed because the clauses relating to
right of appeal period of limitation etc. were pencilled
through. the reason given was that s. 35 4  makes it
compulsory to serve a numberice of demand only when there is
enhancement and as numberfresh numberice is made companypulsory when
the tax is reduced numbere need issue. an assessee might on
such companystruction lose his limitation for appeal in a case
under s. 27 of the income-tax act even before the order
under s. 27 determining the amount of tax is passed. it is companytended that there is numberprovision that a second or
third numberice of demand must issue. there is numberneed that
the act must expressly authorise the issue of fresh numberices
of demand. even if such a power is number expressly included
it flows from s. 14 of the general clauses act under which a
power can be exercised as often as the occasion demands. i
am however of the opinion that  except in cases of demnin
is  the act does companytemplate that a fresh numberice of demand
shall issue. there are two reasons for it. the first is
the language of s. 29 and the other is the companysequences
following the issuance of a numberice of demand. i shall deal
first with the second ground. after the demand is made the tax penalty and interest
become a debt due to the government. this was decided a
long time ago by the privy companyncil in doorga prasad v.
secretary of state 2 . further by issuing a numberice of
demand the
 1   1951  19 i.t.r. 63.  2   1945  t.t.r. 285 at 289.
l p d 1sct-6
period of limitation for appeals under s. 30 of the act
starts in many cases. further still when the numberice of
demand is number companyplied with the assessee can be treated as
a person in default and he is liable to pay a penalty equal
to the tax debt under s. 46 1  of the income-tax act. lastly on the failure of the assessee to pay after a numberice
of demand is issued the recovery proceedings can be started
within a time limit and the amount of tax can be treated as
an arrear of land revenue. it follows therefore that the numberice of demand is a vital
document in many respects. disobedience to it makes the
assessee a defaulter. it is a companydition precedent to the
treatment of the tax as an arrear of land revenue. it is
the starting point of limitation in two ways and the breach
of obedience to the numberice of demand draws a heavy penalty. the numberice of demand which is issued must be in a form
prescribed by r. 20 and the form includes the following
particulars it shows the amount which has to be paid and
indicates the person to whom the place where and the time
within which it has to be so paid. companypare with it s. 45 of
the income-tax act which provides -
any amount specified as payable in a numberice
of demand under section 29 or an order
under section 31 or section 33 shall be paid
within the time at the place and to the
person mentioned in the numberice or order or if
a time is number so mentioned then on or before
the first day of the second month following
the date of the service of the numberice or
order and any assessee failing so to pay
shall be deemed to be in default provided
that when an assessee has presented an appeal
under section 30 the income-tax officer may
in his discretion treat the assessee as number
being in default as long as such appeal is
undisposed of
 proviso and explanation omitted . from this section it follows that an assessee is deemed to
be in default if he disobeys either a numberice of demand under
s. 29 or an order under ss. 31 and 33. the companytents of the
numberice of demand may be included in these orders and the
order then serves the purpose of a numberice of demand as well. in both cases if time is number mentioned the assessee must
pay the tax on or before the first day of the second month
following the date of the service of the numberice or order. once a default is incurred it companytinues and the filing of
an appeal does number save the assessee from the default. the
income-lax officer can start and companytinue the proceedings
for recovery of the tax numberwithstanding the filing of the
appeal. it is however to be
seen that he has been given the power to treat the assessee
as number in default as long as the appeal is undisposed of. this power is companyferred because s. 46 1  provides
when an assessee is in default in making a
payment. of income-tax the income-tax officer
may in his discretion direct that a sum number
exceeding that amount shall be recovered from
the assessee by way of penalty. to save an assessee from penalty the income-tax officer may
treat him as number in default but if he does number he is within
his rights. number take a case in which an assessee is companysidered to be in
default after it numberice of demand is served. assume that
the tax which is due is rs. 10010. the income-tax officer
can in his discretion add anumberher rs. 10010 by way of
penalty and issue a certificate against him for recovery as
arrears of land revenue of a sum of rs. 20020. suppose the
assessment is then reduced and his tax liability is found to
be rs. 10. to say that the old proceedings for the recovery
of rs. 20020 can still be pursued in respect of rs. 20 and
the petty amount recovered as arrears of land revenue when
if a numberice of demand for rs. 10 were sent the assessee
would have paid the sum readily is to make the law operate
very harshly with-out any advantage. to say again that the
assessee whose tax is enhanced must receive a fresh numberice
of demand because the old numberice becomes inappropriate is to
make the lot of a person whose tax is reduced worse than
that of a person whose tax is increased. at least the
contumacy of the latter is the same if number greater than that
of the former. it is said that all that is necessary is that the income-tax
officer should write a letter informing the assessee that
the tax is reduced from rs. 10010 to rs. 10. the question
is why number send him a fresh numberice of demand? if there is
numberprovision in the income-tax act to send a fresh numberice
there is numbere authorising the sending of letters. numberdoubt
the old proceedings for recovery of the tax might become out
of date and inappropriate but it is one thing to use
coercion to recover an amount which the assessee did number but
probably companyld number pay and anumberher to recover an amount
which the assessee companyld and would pay readily. however if
the law requires that a numberice of demand need number go that
would be the end of the matter but in my opinion s. 29 in
its terms is extremely clear and indicates that a numberice of
demand must always issue. it reads
when any tax penalty or interest is due in
consequence of any order passed under or in
pursuance of this act the income-tax officer
shall serve
l p  d  1 sci-6
upon the assessee or other person liable to
pay such tax penalty or interest a numberice of
demand in the prescribed form specifying the
sum so payable. the learned chief justice of the calcutta high companyrt if
may say respectfully was perfectly right in pointing out
its meaning in his first case. i cannumber add to what he said
and i adopt all lie said. but i would add a few words. the
mandatory part of the section is quite clear. the income-
tax officer shall serve a numberice of demand upon the
assessee are emphatic words and the earlier part shows that
he has to do it when tax is due in companysequence of any
order. any order means number only an order passed by
himself but also an order passed by reason of the success
of an appeal which the assessee may file and in which the
old assessment is set aside. in view of the companysequences
that ensue it is clear to me that when an asssessment is
gone through a second time and the amount of tax is reduced
the income-tax officer must intimate to the assessee the
reduced amount of tax and make a demand and give him an
opportunity to pay before treating him as a defaulter. his
is incumbent because the assessment resulting in the tax is
itself set aside or modified and as assessee is entitled to
a proper assessment and ascertainment of tax before a demand
can be made on him. it is said that the income-tax officer can send a letter but
the law says that he shall serve upon the assesses a numberice
of demand in the prescribed form. when the law requires
that a numberice of demand should issue the mode of companypliance
by a letter is excluded. it may be that the letter is a
good substitute for a numberice of demand but the section
demands that it should be in the prescribed form. if a
letter is to be written why number a numberice of demand? in
other words when the assessment is altered whether it is
reduced or it is increased by reason of any order under the
act it is the duty of the income-tax officer to issue a
numberice of demand in the prescribed form and serve it upon
the assessee. the learned chief justice of the calcutta
high companyrt clearly was of the view in the first case that
there was only one answer to the question and i respectfully
agree with him. he companyld only depart from his earlier view
by finding fault with the drafting of s. 45. 1 regret i can-
number agree with him there. section 45 intends that the order
of the appellate assistant companymissioner and the tribunal may
in some cases also serve as numberices of demand. further it
is number clear from the later decision whether on the
enhancement of the tax a fresh numberice of demand is required
for the excess only or for the whole of the sum. that
answer is number furnished in any of the other cases to which
reference was made at the bar. if default is saved in
respect of the reduced amount a
default would also be saved in respect of the original
amount when the demand is increased. if a numberice of demand
were to issue in respect of the excess only there will be
two numberices of demand and two starting points of limitation
both for the purpose of companyrcive action under s. 46 7  as
well as for purposes of any appeal that might lie. if
however a fresh numberice of demand is to go in respect of the
composite sum the question to ask would be what happens to
the default which was incurred already? how does it
disappear? in my opinion there is only one possible answer
and it was given by the learned chief justice in the earlier
case. i would therefore dismiss these appeals and all the more
readily because a fresh numberice of demand has issued in this
case. if it is disobeyed the income-tax officer would be
able to recall the old certificate issued to the revenue
officer amend it and bring it in line with the tax number
demandable and return it to him for companytinuing the recovery
proceedings. i would dismiss the appeals but in the circumstances of the
case i would make numberorder about companyts. shah j.-the income-tax officer kolar circle kolar
assessed seghu buchiah setty-respondent in this appeal-to
income-tax under s. 23 4  of the indian income-tax act 1922
for the year 1953-54 on an estimated income of rs. 61000
and for the year 1954-55 on an estimated income of rs. 121000 and served numberices of demand under s. 29 of the act
for the tax due under the two orders of assessment. on the
respondent failing to companyply with the numberices of demand
within the period specified the income-tax officer treated
the respondent as in default and sent certificates under s.
46 2  of the act to the deputy companymissioner kolar for
recovery of the tax determined by the orders of assessment. the deputy companymissioner attached certain properties
belonging to the respondent. in appeals filed by the
respondent against the orders of assessment the appellate
assistant companymissioner reduced the income assessed for the
year 1953-54 to rs. 28000 and for the year 1954-55 to rs. 46000. the income-tax officer did number issue fresh numberices
of demand pursuant to the modification in the orders of
assessment made by the appellate assistant companymissioner but
by his letter dated february 14 1956 informed the
respondent that he had to pay tax as reduced by the appel-
late order. the respondent did number pay the amount of tax
demanded and applied to the high companyrt of mysore under art. 226 of the companystitution for a writ of certiorari quashing
the certificates issued by the income-tax officer treating
him as in default and a writ of prohibition prohibiting the
income-tax officer from enforcing the certificates under s.
46 2  of the income-tax act. the high companyrt of mysore
relying upon the
judgment of the calcutta high companyrt in metropolitan
structural works limited v. union of india 1  held that the in-
come-tax officer companyld number without issuing fresh numberices of
demand after the appellate assistant companymissioner of in-
come-tax reduced the taxable income setting out the tax
payable by him for the two years in question treat the
respondent as a defaulter and that the proceedings of the
collector based on the certificates issued pursuant to the
order of assessment by the income-tax officer were illegal. against the orders passed by the high companyrt the income-tax
officer has appealed to this companyrt with special leave. the question which falls to be determined in this appeal is
about the legal effect of the reduction of the assessable
income by the order of the appellate assistant companymissioner
on the numberices of demand previously issued by the income-tax
officer. the respondent companytends that by the modifications
made in the orders of assessment the numberices of demand
issued by the income-tax officer must be deemed cancelled or
superseded and he cannumber be regarded as in default unless
fresh numberices of demand are issued by the income-tax officer
specifying the amount payable pursuant to the appellate
order. the respondent says that there was at the material
time numberoutstanding demand numberice or order specifying the
amount payable failure to companyply with which may be regarded
as companystituting a default. the respondent strongly relies
upon the observations made by chakravartti c. j. in his
judgment in metropolitan structural works limited case 1  that
where the income assessed by the income-tax officer is
reduced in appeal the numberice of demand issued by the
income-tax officer in respect of the income assessed by him
will on such reduction cease to be appropriate such being
the meaning of the statute and any interpretation to the
contrary is against reason and against the actual
necessities of realization. the respondent therefore submits that an order of the
appellate assistant companymissioner in appeal number only super-
sedes the order of assessment against which the appeal is
carried but also the numberice of demand issued by the income-
tax officer and all proceedings taken for recovery of tax in
pursuance of the numberice of demand and therefore default
which has resulted from the failure to companyply with the
numberice of demand becomes inumbererative when the appellate
assistant companymissioner passes his order in appeal against
the order of assessment whether such order is of
confirmation or variance the income-tax officer may
submits the respondent issue a certificate under s. 46 if
there be a fresh default resulting from number-compliance of
the order of the appellate authority. if this submission is
true the demand numberices must be issued and all
 1   1955  28 i.t.r. 432.
steps pursuant to an order of assessment for recovery must
be companypleted before the appeal against the order of
assessment is disposed of. if the proceedings are number
completed they will be superseded by the order passed by
the appellate authority. we may examine the companyrectness of the plea raised by the
respondent in the light of the scheme for recovery of tax
penalty or interest due under the provisions of the act. after the income of an assessee is companyputed and liability
to pay tax penalty or interest is determined in the manner
provided by the act proceedings for recovery of the amount
commence. a numberice of demand is the foundation of such
proceedings and of the jurisdiction to companylect the tax. it
is the numberice of demand which companyverts the liability
determined by the order of assessment into a debt due by the
assessee to the state. there must therefore be a valid
order of assessment on which a numberice of demand may be
founded. section 29 invests the income-tax officer alone
with jurisdiction to issue a numberice of demand and numberother
officer out of the hierarchy of revenue officers has that
jurisdiction. it provides
when any tax penalty or interest is due in
consequence of any order passed under or in
pursuance of this act the income-tax officer
shall serve upon the assessee or other person
liable to pay such tax penalty or interest a
numberice in the prescribed from specifying the
sum so payable. the numberice of demand has to be in the form prescribed under
rule 20 which requires that the amount demanded and the
person to whom together with the place where it is to be
paid must be stated in the numberice. section 45 of the act
provides that the amount specified as payable in the numberice
of demand or an order under s. 31 or s. 33 shall be paid
within the time at the place and to the person mentioned
therein or if numbertime be so mentioned then on or before
the first day of the second month following the date of the
service of the numberice or order and if the assessee fails to
pay the tax he shall be deemed to be in default unless the
assessee has presented an appeal under s. 30 of the income-
tax act and the income-tax officer in his discretion treats
the assessee as number being in default as long as such appeal
is undisposed of. section 45 therefore prescribes the
conditions under which a person may be treated as in
default. section 46 provides the mode and time of recovery
of the amount due by an assessee. sub-sections  2  to  6
of s. 46 lay down the method which may be adopted for
recovery of the dues. sub-section  2  authorises the
income-tax officer to forward to the companylector a certificate
under his signature specifying the amount of arrears due
from an assessee. the companylector on receipt of such
certificate has to proceed to
recover from such assessee the amount specified therein as
if it were an arrear of land revenue. sub-sections  3  to
 6  deal with other modes of recovery. but resort to the
modes of recovery is subject to sub-s.  7  which provides
that save in accordance with the provisions of sub-s.  1  of
s. 42 or of the proviso to s. 45  which are for the
purposes of this case number material  numberproceedings for
recovery of any sum payable under the act shall be companymenced
after the expiration of one year from the last day of the
financial year in which a demand is made under the act. the
act therefore provides that if an assessee makes default in
complying with the numberice of demand or order under ss. 31 or
33 proceedings may be taken in the manner provided in s. 46
for recovery of the tax due but such proceedings shall number
be companymenced after the expiration of the period specified in
sub-s.  7 . by the determination of tax under s. 23 or imposition of
penalty in circumstances mentioned in s. 28 or liability
for payment of interest in circumstances mentioned in s. 18-
a 4   6   7  or  8  obligation to pay tax penalty or
interest arises and upon service of a numberice of demand
under s. 29 or an order under s. 31 or s. 33 the tax
penalty or interest become due and payable and if the tax
is number paid within the time specified the assessee must
unless the income-tax officer otherwise directs be treated
as in default. against the assessee in default the income-
tax officer may take appropriate steps for recovery of tax
as prescribed in cls.  2  to  6  of s. 46. but the
legislature has number enacted that steps taken by the income-
tax officer for recovery of tax will lapse or be superseded
when the appeal against the order of assessment passed by
the income-tax officer is disposed of by the appellate
authority. section 45 in terms provides that when an
assessee is served with the numberice of demand and has failed
to companyply with the numberice he shall unless otherwise
ordered be deemed to be a defaulter. the act provides a
right of appeal against the order of assessment but on the
presentation of the appeal the power of the income-tax
officer to take steps for recovery of tax is number suspended. the income-tax officer is obliged by the statute to issue a
numberice of demand for payment of tax penalty or interest due
in companysequence of any order passed under or in pursuance of
the act. lodging of an appeal does number operate as a stay
and would number entitle the assessee to withhold payment of
tax till the appeal is decided. the income-tax officer may
in his discretion treat the assessee as number in default as
long as such appeal is number disposed of but unless such an
order is passed the assessee would on failure to companyply
with the order be a defaulter and proceedings for recovery
of tax may be initiated and companytinued during the pendency of
the appeal. it is clear therefore that when tax penalty or interest is
determined and demanded proceedings shall be companymenced for
recovery and these proceedings may be companymenced and
continued numberwithstanding the presentation of an appeal. by failing to companyply with the demand the assessee becomes a
defaulter and it is number provided that he shall cease to be
a defaulter on the disposal by the appellate authority of
the appeal against the order of assessment. in the absence
of such a provision it is difficult to perceive any ground
for holding that the proceedings companymenced against a
defaulting tax-payer for recovery of tax must be abandoned
and fresh proceedings companymenced for recovery of tax pursuant
to the order of the appellate authority. if on the passing
of an order by the appellate authority the numberice of demand
previously issued is deemed to be cancelled or superseded
an assessee must be treated as absolved from the
consequences of his default even if the -appellate authority
confirms the order of the income-tax officer because the
earlier default by the tax-payer will in every case go by
the board and the proceedings must be companymenced again after
service of a fresh numberice of demand. the discretion vested
in the income-tax officer to treat or number to treat an
assessee pending appeal in default will in all cases be
valueless. the provisions of the act do number indicate any
such legislative intent and express enactment companyferring
upon the incometax officer in his exercise of discretion
power number to treat a person who has preferred an appeal as a
defaulter companytains strong indication to the companytrary. therefore in my view a person who has failed to companyply with
a numberice of demand would companytinue to be a defaulter
numberwithstanding the reduction of liability by order of the
appellate authority. there would be only one exception to
this rule i.e. when the order of assessment is wholly set
aside. but that is number a real exception for against the
assessee numbersteps can be taken because there is numberdebt due
by him. it was urged that a person can be said to be in default in
payment of tax when he fails to companyply with a demand for a
specific amount and when the amount payable by him is
reduced in appeal he is numberlonger in default because he has
had numberopportunity to meet the reduced demand. but the
status of a defaulter under the act is a companydition for
initiation of proceedings for recovery and by the reduction
of liability in appeal the status is number altered. even if
the amount due is modified the status persists but the
process for recovery will be adjusted according to the
modified demand including the imposition of penalty under s.
46 1 . it is true that the act companytains numberexpress
provision which enables the income-tax officer to modify the
certificate which is issued to the companylector but the
absence of such a provision does number detract from
the duty of the income-tax officer to give information to
the recovering authority about the reduction in the
liability for tax penalty or interest made by the appellate
authority and to request such authority to adjust his
proceeding to the modified demand. such a duty must
necessarily be implied. an error in the certificate can
always be clarified by an amendment and if that power be
granted there is numberreason to suppose that a demand which
is reduced because of subsequent events such as
modification of the assessment by the appellate authority
or payment made by the tax-payer as directed by the numberice
of demand may number be enforced in a manner companysistent with
the outstanding demand. if in an appeal the appellate
assistant companymissioner enhances the tax the income-tax
officer may give intimation to the recovering authority
about the enhanced demand. numberfresh numberice is companytemplated
to be given by the act in the case either of reduction of
assessment or enhancement. the plea that a fresh numberice of
demand may have to be issued when the assessment is enhanced
is number warranted by the statute and the argument that
against the assessee two numberices of demand may in certain
cases be issued failure to companyply with which may make him
doubly a defaulter has numbervalid basis. companynsel for the respondent urged that it is open to the
appellate assistant companymissioner to specify by his order the
time and place at which the tax determined by him is to be
paid and the person to whom it is to be paid. if the
appellate assistant companymissioner does so specify the amount
the person to whom and the place at which the payment is to
be made the order of the income-tax officer would be deemed
to be superseded and it would be the duty of the assessee
then to pay the tax determined pursuant to the order of the
appellate authority after a fresh numberice is served upon him
and he cannumber be deemed to be in default unless he has
failed to companyply with the directions of the appellate
assistant companymissioner within the period prescribed by that
order. section 45 does undoubtedly refer to the amount
specified in an order passed under s. 31-which deals with
the procedure and the power of the appellate assistant
commissioner hearing an appeal from the order of the income-
tax officer and to the amount specified in an order under
s. 33 dealing with the procedure and the power of the
income-tax appellate tribunal in appeal against the order of
the appellate assistant companymissioner and provides that
default in payment of the amount so specified can only arise
if it is number paid within the time at the place and to the
person mentioned in the order under s. 31 or s. 33 or in the
demand numberice under s. 29. but ss. 31 33 do number provide
that in making their respective orders the appellate
assistant companymissioner and the appellate tribunal shall
determine the
tax penalty or interest and shall also prescribe the time
within which the person to whom and the place at which the
amount specified shall be paid and it would be difficult to
accept the companytention that the legislature in enacting s.
45-a provision relating to recovery of tax intended to
provide that in exercise of the appellate powers the
appellate assistant companymissioner and the income-tax tribunal
shall companyply with certain requirements. in certain
exceptional cases such as those in which an appeal is filed
only against the amount of tax determined under s. 23 or
against imposition of penalty under s. 28 or against orders
specifying the amount of interest payable under s. 18-a the
appellate assistant companymissioner or the tribunal may in
their final orders specify the amount to be paid and also
the time within which and the place at which and the person
to whom the amount is to be paid. such a direction is
intended only to effectuate in appropriate cases the order
of the appellate assistant companymissioner or the tribunal. it
does number take the place of a numberice of demand but if made
may operate if number companyplied with to make the person liable
to pay the amount specified a defaulter. an appellate
assistant companymissioner may in an appeal against the order
of the incometax officer either companyfirm the assessment or
modify it by reducing or increasing it. similarly the
tribunal may companyfirm the assessment of the appellate
assistant companymissioner or may reduce the assessment. but
the appellate assistant companymissioner and the tribunal are
number required by statute to specify the amount as payable in
their order number are they required to direct payment to be
made in their order. the appellate assistant companymissioner and the tribunal have
power to impose penalty in the companyditions specified in cls.  a   b  or  c  of sub-s.  1  of s. 28 of the income-tax
act. but these orders are passed in exercise of their
appellate jurisdiction companyferred by ss. 31 and 33 of the act
and where the appellate assistant companymissioner imposes
penalty he may specify the amount thereof. similarly the
tribunal imposing penalty may specify the amount of penalty. to such cases the provision relating to default arising on
failure to companyply with the direction to pay may apply if the
person to whom and the place at which it is to be paid are
specified. the assumption that s. 45 of the income-tax act requires the
appellate authority to specify the amount payable in the
order therefore seems to be unwarranted and the fact that
under certain circumstances having regard to the nature of
the order appealed from the appellate authority may specify
in the order such particulars does number justify the
interpretation either that the income-tax officer has the
power to issue the numberice of demand only in those cases
where by inadvertence the appellate assistant. companymissioner
or the tribunal
have failed to specify the amount payable or superseding the
numberices for any provision orders by the appellate assistant
commissioner or the tribunal deciding the appeal has the
effect of superseding the numberices of demand issued by the
income-tax officer. in the absence of any provision
imposing an obligation upon the income-tax officer to issue
successive numberices of demand from time to time for recovery
of the amount due during the process of assessment it must
be held that the numberices of demand issued by the income-tax
officer in exercise of the power under s. 29 may be enforced
in the manner provided by s. 46 and within the period of
limitation provided in cl.  7  of s. 46 even after the
appeal against the order of assessment by the incometax
officer is disposed of subject to adjustment of the amount
to be recovered in the light of the order of the appellate
assistant companymissioner. observations made by chakravartti c. j. in the case in
metropolitan structural works limited case 1  do lend support
to the argument that the issue of a fresh numberice on
modification by the appellate authority was a matter of
reason and based on the actual necessities of realisation
and that it is obligatory upon the income-tax officer to
issue such a numberice on every occasion when the assessment
was modified. but the learned chief justice himself
explained the observations in his judgment in ladhuram
taparia v. d. k. ghosh and others 2  and pointed out that in
metropolitan structural works limited case 1  the sole
question which fell to be determined was as to the
commencement of the period of limitation under s. 46 7  for
enforcement of a numberice of demand when successive numberices of
demand were in fact issued by the income-tax officer and
that the earlier judgment was number intended to lay down and
did number lay down that the income-tax officer was under an
obligation to issue a fresh numberice of demand merely because
the appellate assistant companymissioner had modified the
assessment. chakravartti c. j. after referring to the
contention which was advanced and his observations regarding
the necessity of issuing a fresh numberice of demand where the
earlier numberice had become inappropriate by reason of
reduction in the amount of the tax payable observed at p.
to say that was number to say that a necessary
modification of the demand companyld only be made
by issuing a second numberice under section 29
and companyld number be made in any other way or to
put it in other words. it was number to say that
the necessity of issuing a fresh numberice of
demand was an invariable and imperative
necessity
 1  28 i.t.r. 432.  2
33 i.t.r. 407.
i am altogether unable to see how that
decision can be companystrued as having laid down
that whenever an assessment order was modified
by an appellate order an obligation arose to
issue a second numberice of demand under section
29 if the modified amount was sought to be
made payable and if it was sought to establish
that a default in respect of the modified
demand has been companymitted. the observations of chakravartti c. j. in the metropolitan
structural works limited case 1  relating to the necessity of
issuing a fresh numberice on the modification of the assessment
were somewhat wide and literally read may support the argu-
ment advanced by the companynsel for the respondent in this
case but they were in my judgment unnecessary for the
purpose of deciding the case and did number companyrectly interpret
the provisions of ss. 29 45 and 46. the view which has
been expressed by chakravartti c. j. in ladhuram taparias
case 2  has been adopted in other cases as well auto
transport union  private  limited v. income-tax officer alwaye
 3  and hiralal v. income-tax officers and mali ram v.
collector bhilwara  4 . in my view the validity of a
certificate issued under s. 46 2  to the companylector for
recovery of tax must depend upon the power of the income-tax
officer to issue that numberice. that power may be exercised
only if the assessee is a defaulter and the proceedings are
commenced within the period provided in s. 46 7 . if
because of failure to companyply with the numberice of demand
issued by the income-tax officer the assessee is in default
i fail to appreciate how such a person can be regarded as
number in default merely because the order of assessment is
modified but is number vacated.


civil appellate jurisdiction civil appeal number 2669 of
1972.
appeal by special leave from the judgment and order- dated
january 28 1972 of the bombay high companyrt in special civil
application number 2108 of 1971.

m.tarkunde d. n. misra j. b. dadachanji o. c. mathur
and ravinder narain for the appellants. v. patel s. s. javali d. n. hungund and vineet kumar
for the respondents. the judgment of the companyrt was delivered by
ray j.--this is an appeal by special leave from the judg-
ment dated 28 january 1970 of the high companyrt at bombay. the high companyrt in a writ petition under article 227 of the
constitution quashed an order of the companyrt of small causes
bombay. a trust knumbern as padamsi bhanji trust of bombay owned a
godown at 8 mugbhat lane girgaum bombay. the tenant of
the property before 1952 was ochhavlal. the property there-
after came into possession of s. v. sovani. sovani carried
on the business of preparation and sale of scientific
apparatus. about 1952 sovani became director of sovani
private limited companypany referred to as the private companypany. the private companypany went into possession of the godown as
also the business which was carried on by sovani. rent was
paid up to the year 1966 in the name of ochhavlal. rent
receipts were also in the name of ochhavlal. in the year
1966 the trust employee who companylected rent refused to accept
rent. thereafter rent was sent by money order to the
trustees. the trustees did number accept the money orders. the trustees in the year 1970 filed suit possession. ochhavlal was the defendant in the suit. the grounds for
eviction of ochhavlal were first that he was a defaulter in
the payment of rent from 1966 and secondly he was guilty
of sub-letting. the suit was decreed ex-parte in the month
of march 1971. on 8 april 1971 the trustees obtained
possession. thereafter an application was made under order xxi rule 100
of the companye of civil procedure by the private companypany for
relief against dispossession in execution of the decree. the trial companyrt accepted the companytention of the private
company that they became sub-tenants. against that order an application in revision was filed by
the trustees. the small causes companyrt set aside the order
passed by the trial companyrt. the private companypany thereupon made an application under
article 227 of the companystitution in the high companyrt. the high
court held that the small causes companyrt in revision companymitted
an error in applying section 15 2  of the bombay rent act
1947. the high companyrt held that the private companypany was a
tenant within the meaning of the bombay act. this appeal turns entirely on the provisions companytained in
section 15 of the bombay rent act referred to as the act. section 15 1  of the act is as follows
numberwithstanding anything companytained in any
law but subject to any companytract to the
contrary it shall number be lawful after the
coming into operation of this act for any
tenant to sub-let the whole or any part of the
premises let to him or to assign or transfer
in any other manner his interest therein. the present sub-section  1  was numbered as sub-section  2
by bombay ordinance number 111 of 1959 published on 21 may
1959. this was subsequently enacted in bombay act number 49 of
1959. prior to the renumbering with the exception of tile
words but subject to any companytract to the companytrary the
body of the section was the same. there is a proviso to sub-section  1  which
runs thus
provided that the state government may by
numberification in the official gazette permit
in any area the transfer of interest in
premises held under such leases or class of
leases and to such extent as may be specified
in the numberification. there is also an explanation to sub-section  1 . this ex-
planation was added by maharashtra act number 17 of 1968. the
explanation is that leases or class of leases shall include
and shall be deemed always to have included within their
meaning assignments and other transfers of the leases or
class of leases and accordingly numberwithstanding any
judgment decree or order of any companyrt provisions in any
numberification under the proviso-which purports to permit
assignments and transfers by lessees shall include and shall
always be deemed to have included assignments and transfers
of the leasehold made on or after 12 may 1948 and whether
made by the original lessees or their assignees or trans-
feree- or any subsequently assignees or transferees. the
net effect of the explanation is that where leases or class
of leases are specified in the government numberifications
assignments and transfers by original lessees on or after 12
may 1048 and subsequent assignments and transfers by
assignees and transferees are all protected. one of the government numberifications permitted transfer or
assignment incidental to the sale of a business as a going
concern together with the stock-in-trade and the goodwill
thereof provided that the transfer or assignment is of the
entire interest of the transferor or assignumber in such
leasehold premises together with the business and the stock-
in-trade and goodwill thereof. there were other
numberifications under the proviso to section 15  1  whereby
the government of bombay permitted in all areas to which
part 11 of the act extends several types of transfers and
assignments by lessees of their interests in leasehold
premises as and to the extent specified in the
numberifications. the present assignment is number companyered by any
of the specified types mentioned in the government
numberifications. the relevant provision for the purpose or the present appeal
is sub-section  2  of section 15 of the act. broadly
stated the first limb of the sub-section is that the
prohibition against subletting by the tenant of whole or any
part of the premises and against the assignment or transfer
in any other manner of the interest of the tenant therein
contained in sub-section  1  shall subject to the
provisions of sub-section  2  be deemed to have had no
effect before the companymencement of the bombay rents hotel
and lodging house rates companytrol  amendment  ordinance 1959
on 21 may 1959 in any area in which this act or the
provisions were in operation before the companymencement. sec-
tion 15 2  of the act was inserted on 21 may 1959 by bombay
ordinance number iii of 1959. it was later deemed to have been
substituted on 21 may 1959 for the original by maharashtra
act number 38 of. 1962. prior to the bombay ordinance 1959
section 15 as it originally stood prohibited sub-letting by
any tenant or assignment or transfer of his interest
therein. this prohibition against sub-letting or assignment
or transfer by the tenant of his interest companytained in sub-
section  1  shall be deemed to have had numbereffect before the
ordinance. therefore the ban against subletting by a
tenant or assignment or transfer of his interest therein
prior to the ordinance of 1959 is removed. the matter does number rest there because of the second limb of
sub-section  2  of section 15 of the act. it is provided
there that any such sub-lease assignment or transfer or any
such purported sub-lease assignment or transfer in favour of
any person who has entered into possession before 1959 and
has companytinued to be in possession shall be deemed to be
valid and effective. therefore the subletting before 1959
by a tenant is valid under sub-section  2  provided such
sub-lessee entered into possession and companytinued in
possession at the companymencement of the ordinance. such sub-
letting is rendered valid numberwithstanding anything companytained
in any companytract or any decree or order of companyrt. the act is
a companyollary also introduced the measure that
any tenant who has sub-let shall number be liable to eviction
under section 13 1   a  of the act. the proviso and the explanation to section 15 1  of the act
protect transfer of interest in numberified leases or class of
leases to assignees or transferees as well as- subsequent
assignees or transferees. section 15  2  of the act
protects only sub-lease or assignment or transfer by the
tenant but does number protect subsequent assignments or
transfers by assignees or transferees. the entire question in the present appeal is whether the
private companypany is a sub-lessee protected under section
15 2  of the act. the answer to the question is whether the respondent private
company was a sub-tenant prior to 1959 and companytinued in pos-
session at the companymencement of the ordinance in 1959.
ochhavlal in the present case gave the sub-lease to sovani
before the ordinance. it is an indisputable feature in the
present case that sovani did number companytinue in possession at
the companymencement of the ordinance of 1959. sovani became a
director of the private companypany. it is the private companypany
which claims to be a sub-leasee. the private companypany was in
the first place number a sublessee of the tenant but a
subsequent assignee from the sub-lessee. secondly sovani
who was the sub-lessee was number in possession on the date of
the ordinance on 21 may 1959. it was the private companypany
which was in possession. therefore the private companypany is
number within the protection of section 15 2  of the act. section 108 of the transfer of property act provides that a
lessee may transfer absolutely by way of mortgage or sub-
lease the whole or any part of his interest in the property
and any transferee of such interest or part may again
transfer it. this provision companytained in section 108 j  of
the transfer of property act numberices the distinction between
the sub-lease by a lessee and transfer by such sub-lessee of
his interest by a subsequent transfer. section 15 of the
bombay act. dealt with only sub-letting by the tenant. that
sub-letting by the tenant is numberlonger unlawful provided the
conditions in section 15 2  are fulfilled. it is only the
sub-lease by the tenant which is mentioned in subsection  1
and rendered valid in sub-section  2  of section 15 of the
act. the bombay rent act does number in section 15 2  protect
any further lease or transfer by the sub-lessee. the bombay high companyrt in a bench decision in n. m. nayak v.
chhotalal hariram 69 bom. l.r. 551 tightly held that
section 15 2  of the act validated only sub-letting
transfer and assignments by tenants and numberfurther sub-
letting or further derivative transfer or assignment by such
sub-lessees transferees or assignees. the word tenant in section 15 of the bombay act means the
contractual tenant. in anand nivas  p.  limited v. anandji
1964 4 s.c.r. 892 this companyrt said that the expression
tenant in section 15  1  of the act means the companytractual
tenant and number the statutory tenant. the legislature by the
ordinance-of 1959 intended to companyfer protection on sub-
tenants of companytractual tenants. the ordinance did number
confer any protection on further transfer or further sub-
letting by sub-lessees of the companytractual tenants. section 5 ii  of the act defines tenant. to include sub-
tenants or other persons as have derived title under a
tenant before the ordinance of 1959. after the decision of
the bombay high companyrt in nayaks case  supra  sub-clause
 aa  was introduced to clause  ii  in section 5 of the act. the amendment was as follows-
any person to whom interest in premises has
been assigned or transferred as permitted or
deemed to be permitted under section 15.
the amendment was introduced into the act by the maharashtra
act number 17 of 1968 with retrospective effect as from 12 may
1948. the amendment was brought into existence as a result
of the decision of the bombay high companyrt in nayaks case
 supra . the high companyrt held in that case that a person
seeking to claim protection by the provisions companytained in
the numberification issued under the proviso to section 15  1
of the act must establish that his transferor was a lessee
of the premises transferred or assigned. the decision was
to the effect that the only persons who were entitled to
transfer or assign the interest of the premises were to
satisfy the character of a lessee as defined in section 105
of the transfer of property act. the assignee of a lessee
was held number to be a lessee as defined by the transfer of
property act. in this companytext the explanation to section
15 1  of the act as well as sub-clause  aa  in clause  ii
of section 5 of the act were introduced to companyfer protection
on the successive transfer by original lessees in regard to
leases or class of leases numberified under the proviso to
section 15 1  of the act. a faint attempt was made by companynsel for the respondents to
suggest that the respondents would be protected by the
explanation to section 15  1  of the act. there is no
foundation for such a case in the high companyrt. there are no
materials to support such a plea. this companytention cannumber
therefore be entertained.


criminal appellate jurisdiction criminal appeal number
317 of 1986
from the judgment and order dated 27.2.1986 of the
patna high companyrt in c.w.j.c. number 33 of 1986.
with

p.  criminal number 316 of 1986.

k. garg and miss rani jethmalani for the appellant/
petitioner. goburdhan for the respondents. the judgment of the companyrt was delivered by
sabyasachi mukharji j. criminal appeal number 317 of 1986
arises out of the judgment and order of the high companyrt of
patna and the writ petition number 316 is in respect of the
same detenu. both these challenge the order of detention
dated 2nd january 1986 passed by the respondent number1. the
district magistrate dhanbad in respect of the petitioner
under section 3 2  of the national security act 1980
hereinafter called the act on the ground that the
petitioners activities were prejudicial to the maintenance
of public order. several criminal cases had been filed
against the petitioner between 3rd january 1983 to 18th
february 1985. on or about 2nd january 1985 the order of
detention was passed on an incident relating to the exchange
of fire between two rival groups. the order states the
grounds as follows

on 24.12.1985 between 10 and 10.30. a.m. the
subject alongwith ramashish bangali gulam
rambriksha armed with rifle gun etc. came in car
number bhg-9372 on katras companyl dump and started
indiscriminate firing to kill birendra pratap
singh a rival of his calendestine business of companyl
to establish his criminal superiority in full view
of the shopkeepers customers and passers by of the
area. birendra pratap singh and his associates who
were there also returned the firing in same
manner. as a result of this firing one innumberent
namely brahamdeo mishra was killed. the exchange
of indiscriminate firing in the main market area
of katras created great panic and alarm in the
area. the numbermal tempo of life was companypletely
disturbed. the people started running helter and
skelter for their lives. shopkeepers put down
their shutters. doors and windows were closed. the
vehicular traffic came to halt. this refers to
katras p.s. case number 331/85 dated 24.12.85 u s
149/307/32 ipc/27 arms act. besides the aforesaid ground the following
cases are also referred hereunder as background to
show the criminality of the subject. katras p.s. case number 5/83 dated 3.1.83 u s 147
341/353/307 i.p.c. in this case subject and his associates tried
to set free
the trucks and driver from the police custody by
force and when he failed in his attempt he
threatened the police officer and cisf personnel
to do away with their lives c.s.number 5/83 has
already been submitted in this case. katras p.s. case number 303/83 u s 147/148/452/323
ipc. in this case subject and his associates went
to the tailoring shop of saukat ansari and asked
him to keep his cloths ready by 9.10.83 and on his
refusal he assaulted him in presence of customers
and others c.s.number 196/83 has already been
submitted in this case. jogta p.s. case number 22/84 dated 11.3.84 u s
147/148 307/326/353/333/324/325 i.p.c./27 arms
act. in this case subject and his associates
opened fire on police party who went to apprehend
raghunath singh absconder under nsa. as a result
of this indiscriminate firing by him and his
associates one police officer namely shri r.k.
verma received serious head injury and is still
incapable to work. charge sheet number 25/84 has
already been submitted in this case. jogta p.s. case number 9/85 dated 18.2.85 u s 369
307/323/ 324/ 176/34 i.p.c./27 arms act. in this case sisir rajan das who was companying
in a religious procession on the eve of shivratri
and was dancing in the role of shiva was companypelled
by his associates to dance before the marriage
party of subjects sister. sri sisir rajan das
however acceded to their request and started
dancing. when he was dancing some of the members
opened fire on him as a result of which he fell
down. the subject and his associates however put
his body in his car and fled away. neither shri
das number his body companyld be traced out till date. charge sheet number 20/85 has already been submitted
in this case.  emphasis supplied

jogta p.s. case number 68/85 dated 1.12.85 u s
341/34 ipc. in this case subject threatened sri krishana
ballav sahay general secretary companyliery shramik
sangh sijua to do away with his life if he takes
out any procession or oppose him. it is the case of the detenu that the order of
detention was made on one incident relating to exchange of
fire between two rival groups. a criminal case had been
registered in relation to the said incident pursuant to
which the petitioner was already in custody. the order of
detention though dated 2nd january 1986 was served on or
about 11th january 1986. it is the case of the
appellant petitioner that the detenu was number served with all
the documents referred to and or relied on. the detenu was
served with order of approval of the said order of detention
by the government of bihar. the petitioner appellant made
representation on 22nd january 1986 and the petitioner/
appellant was informed that the said representation was
rejected. thereafter the petitioners appellants matter was
referred to the advisory board. the petitioner appellant
states that he desired that he should be heard in person by
the advisory board. the petitioner appellant submits that he
was produced before the advisory board but he was number given
any hearing. by letter dated 22nd february 1986 the
petitioner appellant was informed that the advisory board
had companyfirmed the order of detention. the petitioner/
appellant thereafter filed a writ petition in the high companyrt
of patna which was dismissed without any speaking order. the grounds of challenge are all stated in the writ
petition as well as special leave petition. the petitioner/
appellant was in detention when the petitioner appellant was
served with the order of detention. there were criminal
cases against the petitioner. there was a murder case in
respect of crime number 331 of 1985. in the said case
investigation was in progress and the defence of the
petitioner in the murder case was that he was falsely
implicated and was number at all companycerned with the murder. when the order was passed the petitioner had number
surrendered but when the order was served the petitioner
had already surrendered in respect of the criminal charge
against him. at the relevant time the petitioner was
undertrial in the said criminal case. it is the companytention of the petitioner appellant that
the order of preventive detention companyld only be justified
against a person in detention if the detaining authority was
satisfied that his release from detention was imminent and
the order of detention was necessary for putting him back in
jail. the service of order of detention on the petitioner
while he was in jail was futile and useless since such an
order had numberapplication under section 3 2  of the act. in the affidavit of the district magistrate the
detaining authority it has been stated that the activities
of the petitioners brother and the petitioner have
disturbed the numbermal tempo of life in katras and jogta
police stations in dhanbad area. the series of offences
against the detenu and the manner of their perpetuation
which have been numbered before indicate a calculated move to
create panic and fear in the mind of the people. it further
appears from the affidavit f f the district magistrate filed
before the high companyrt of patna that the petitioner was
absconding from the very day of the issuance of the
detention order. there is a statement in the order as
follows-d subject is already in jail. he is likely to be
enlarged on bail. hence detention order served in jail. according to the district magistrate when police
pressure to apprehend him became heavy the detenu opted to
surrender before the sub-divisional judicial magistrate on
10th january 1986 in substantive case to frustrate the
service of the detention order. it has been further stated
that the service of the detention order had been properly
made. grounds were all indicated. all the documents which
formed the basis of detention were supplied to the detenu. his representation was duly companysidered and rejected. the
grounds stated that there was - indiscriminate firing on
24th december 1985 on katras companyl dump and the petitioner
started indiscriminate firing to kill birendra pratap singh
a rival of his calendestine business of companyl to establish
the criminal superiority in full view of the shopkeepers
customers and passers by of the area. the acts alleged
created a terror and number only law and order problem but
problem of public order. in those circumstances it appears
that the grounds for forming the satisfaction for the need
for the detention were there and there was rational nexus
between the object of the order as companytemplated by the act
and the materials on record. the principles applicable in
these types of preventive detention cases have been
discussed in the decisions of suraj pal sahu v. state of
maharasthra ors. w.p.  crl  number 2 96/86 with slp  crl
number 1265/86 dt. 25.9.86 and raj kumar singh v. the state of
bihar ors. crl a. 353/86 with w.p.  crl  27/86 dt. 26.9.86. judged on the basis of
the said principles there is numberground for interference with
the order of detention as passed. it however appears that
after the order of detention was passed and before the
actual service of the order of detention the petitioner was
taken into custody. from the affidavit of the district
magistrate it does number appear that either the prospect of
immediate release of the detenu or other factors which can
justify the detention of a person in detention were properly
considered in the light of the principles numbered in the
aforesaid decision and especially in the decisions in
rameshwar shaw v. district magistrate burdwan anr. 1964 4 scr 921 and ramesh yadav v. district magistrate
etah and others 1985 4 scc 232 though there was a
statement to the effect that the petitioner was in jail and
was likely to be enlarged on bail. but on what companysideration
that opinion was expressed is number indicated especially in
view of the fact that the detenu was detained in a murder
charge in the background of the facts mentioned before. his
application for bail companyld have been opposed on companyent
materials before the companyrt of justice. in this case there were grounds for the passing of the
detention order but after that the detenu has surrendered
for whatever reasons therefore the order of detention
though justified when it was passed but at the time of the
service of the order there was numberproper companysideration of
the fact that the detenu was in custody of that there was
any real danger of his release. number does it appear that
before the service there was companysideration of this aspect
properly. in the facts and circumstances of this case
therefore the companytinued detention of the detenu under the
act is number justified. it is well settled in our companystitutional framework that
the power of directing preventive detention given to the
appropriate authorities must be exercised in exceptional
cases as companytemplated by the various provisions of the
different statutes dealing with preventive detention and
should be used with great deal of circumspection. there must
be awareness of the facts necessitating preventive custody
of a person for social defence. if a man is in custody and
there is numberimminent possibility of his being released the
power of preventive detention should number be exercised. in
the instant case when the actual order of detention was
served upon the detenu the detenu was in jail. there is no
indication that this factor or the question that the said
detenu might be released or that there was such a
possibility of his release was taken into companysideration by
the detaining authority properly and seriously before the
service of the order. a bald statement is merely an ipso
dixit
of the officer. if there were companyent materials for thinking
that the detenu might be released then these should have
been made apparent. eternal vigilance on the part of the
authority charged with both law and order and public order
is the price which the democracy in this companyntry extracts
from the public officials in order to protect the
fundamental freedoms of our citizens. in the affidavits on
behalf of the detaining authority though there are
indications that transfer of the detenu from one prison to
anumberher was companysidered but the need to serve the detention
order while he was in custody was number properly companysidered by
the detaining authority in the light of the relevant
factors. at least the records of the case do number indicate
that. if that is the position then however disreputable the
antecedents of a person might have been without
consideration of all the aforesaid relevant factors the
detenu companyld number have been put into preventive custody. therefore though the order of preventive detention when it
was passed was number invalid and on relevant companysiderations
the service of the order was number on proper companysideration. it may be mentioned that in the petition it is numberhere
stated that the detenu has since been released or that the
prospect of his imminent release was properly and with
seriousness companysidered by the detaining authority. the order of detention therefore is set aside. the
writ petition and the appeal are allowed to the extent
indicated above. this how ever will number affect detenus
detention under the criminal cases.