JUDGMENT <NAME>, J.

1. The plaintiff is the appellant in the second appeal and his suit for recovery of possession of 1 acre 58 cents in S. No. 160/1 in the village of Melur described by boundaries in the plaint schedule was dismissed by the <ORG> below. Hence this appeal.

2. One <NAME> had two sons, <NAME> and <NAME>. <NAME> is the first defendant in the present suit. His son <NAME> is the.second defendant. <NAME> had two sons <NAME> and <NAME>. <NAME> is the present plaintiff. <NAME> died in 1935. In 1917, <NAME> instituted a suit for partition, O.S. No. 190 of 1917, on the file of <ORG>, and impleaded in that suit <NAME> also as a party. In that suit 2 acres 39 cents in S. No. 160/1 of which the present suit property forms a part was not included, presumably because the property was purchased by <NAME> in his own name. The suit was decreed. Later, <NAME>, the present second defendant, instituted another suit for partition, O.S. No. 202 of 1929, against <NAME>, <NAME>, the present first defendant and others. That suit comprised all the properties including 2 acres 39 cents (S. No. 160/1). There was a preliminary decree for partition in that suit decreeing partition according to the shares to which each was entitled and <NAME> died after the preliminary decree in that partition suit. He executed a will dated 16th January, 1929, whereunder he made a bequest among others of 2 acres 39 cents in S. No. 160/1 to the present plaintiff, <NAME>. After the death of <NAME>, the partition suit, O.S. No. 202 of 1929, was continued after impleading <NAME>, his widow, as a party. It must be stated that the ibequest in favour of the plaintiff under the will of <NAME> was to obtain possession of the property after the death of <NAME> as a life interest was created in favour of <NAME> under, the said will. As <NAME> died after the preliminary decree and as <NAME> was added as his legal representative and as the plaintiff had only a right to possession after the death of <NAME>, apparently the title based on the will in respect of the 2 acres 39 cents was not and could not be put forward by the present plaintiff in that suit, O.S. No. 202 of 1929. In due course there was a final decree in that partition suit in which the properties were divided and allotted to the various sharers in accordance with the directions, contained in the preliminary decree. In 1936, <NAME>, the present first defendant, instituted a suit, O.S. No. 17 of 1936, against the plaintiff in respect of the right to management of certain charities belonging to the family. That suit did not proceed to trial and there was a compromise decree in that suit on 21st September, 1936 (Ex. P-4). Under this compromise, <NAME>, the present first defendant, agreed to recognise the rights of the plaintiff, the present appellant under the will of <NAME>. The portion of the compromise relating to this-matter is as follows:

That the plaintiff herein (i.e. <NAME>) has no interest, claim or right whatsoever regarding the properties belonging to the defendant under <NAME> will; that the plaintiff herein and his heirs should not question this will.

As <NAME> was in possession of a third share and as <NAME> was also in. possession of another third, the plaintiff instituted the present suit on the basis of the will of <NAME> to recover possession of the 2/3rd share in S. No. 160/1; the other third was in the possession of the plaintiff as per the partition decree in O.S. No. 202 of 1929.

3. The suit was dismissed by both the <ORG> on the ground that as the compromise relating to the suit property was outside the scope of the suit O.S. No. 17 of 1936 the compromise required registration; and further that in any event the title of the plaintiff to recover the properties on the strength of the will of <NAME> was concluded by the decision in O.S. No. 202 of 1929. So far as the second defendant in the suit is concerned he was not a party to the compromise and the view of the <ORG> below that the plaintiff's claim so far as the plaintiff's claim as against him is concerned is governed by the decision in O.S. No. 202 of 1929 seems to me to be correct. It is for this reason that the learned advocate for the appellant did not press in this appeal his claim against the second defendant and I think that the position taken by the learned advocate is perfectly correct.

4. The claim however against the first defendant stands on a different footing. In O.S. No. 202 of 1929 the claim of the present plaintiff based on the will of <NAME> could not be put forward as he was not impleaded as the legal representative of <NAME> but his widow <NAME> was impleaded and even if he was impleaded it was impossible for him to have raised the question of title to the property under the will as the only question in issue then was as between <NAME> and other members as to whether the present suit property was his self-acquired property or not. Except the decree in the suit we do not have any other record, of that suit, i.e., either the pleadings or the judgment, to indicate what exactly the contentions of the parties were in that litigation. We may assume-that that suit decided or at any rate proceeded on the. footing that this item also-was joint family property and not the self-acquired property of <NAME>. to which he was solely entitled. That implication it is that helps the second defendant in retaining his one-third share in the present suit. It is open to <NAME> or other members who are in possession of this item to agree to treat the will as valid notwithstanding the implied finding, if one there was, in O.S. No.. 202 of 1929 that the property was the joint family property and not the self-acquired: property of <NAME>. This admission so far as the first defendant is concerned is contained in the compromise decree in O.S. No. 17 of 1936. It is on the basis of this admission that the present suit was instituted by the plaintiff to recover possession of the property from the first defendant. The view, therefore, of the <ORG> below that the implied decision in O.S. No. 202 of 1929 stands in the way of the plaintiff recovering possession of the one-third share in S. No. 160 /1 in the possession of the first defendant seems to me to be clearly wrong.

5. The argument that the compromise decree requires registration as it creates or in any event declares the right of the plaintiff to the suit property, in my opinion, proceeds on a misconstruction of the clause in the compromise decree. All that the clause says is that <NAME> agrees to treat the will as valid; <NAME> definitely stated in it that he and his heirs would not question the will and that they had no interest in the properties. This is not in my opinion either a declaration of the title of the plaintiff or of his rights in the suit property; nor does this language create any title under this document to the suit properties in favour of the plaintiff. The title of the plaintiff is derived under <NAME>'s will and not under this document. As this document therefore does not create or declare or extinguish any rights in the property it does not in my judgment require registration. As pointed out by <ORG> in <CITATION> (1931) 62 M.L.J. 296 : L.R. 59 I.A. 130 : I.L.R. 11 Pat. 272 (P.C.) the word "declare" really implies that the document itself creates a title; a mere recital of a fact is not a declaration within the meaning of Section 17 of the Registration Act. It implies a declaration of will and not a mere statement. In the document before <ORG>, the language was:

That in view of the petition filed by <NAME>, your petitioners beg to file the original deed of gift and prays that your Honour may be pleased to sanction the same or order a fresh grant on the same terms to be executed.

That was held to be not a declaration within the meaning of Section 17 requiring registration. The importance of the case before <ORG> however is that it approves an earlier decision of West, J., in <NAME> v. <NAME> (1881) I.L.R. 5 Bom. 232 in which the language of the document considered in that decision was similar to the language of the document in the present case. There it was stated:

... we three persons and our heirs and representatives have no interest of any kind whatever. If we or they should prefer any claim then the same is to be null. This release paper we have duly passed in writing jointly and severally and in sound mind.

It was stated by <ORG>, with reference to this document that it did not contain a declaration and did not require registration. A passage from the judgment of <ORG>, was quoted by their Lordships of <ORG> at page 300 and they approved the view of <ORG>, as to the meaning of the word " declare " in Section 17 of the Registration Act. The same view was also taken in <ORG> v. <NAME> (1947) 2 M.L.J. 304 (P.C.). In view of these decisions I am of opinion that the compromise decree does not require registration as it does not by itself declare or create any rights in the suit property in favour of the plaintiff.

6. The result is that the plaintiff is entitled to succeed in respect of the one-third share in S. No. 160/1 of the extent of 2 acres 39 cents which is in the possession of the first defendant under the partition decree in O.S. No. 202 of 1929 and which in the final allotment was described as item 5(c)(2). The second appeal is allowed to this extent and the decrees of the <ORG> below will be modified by passing a decree in favour of the plaintiff for recovery of possession of that portion of S. No. 160/1, which was allotted to the first defendant as representing his one-third share under the partition decree in O.S. No. 202 of 1929 and was described as item No. 5(c)(2) in the schedule attached to the decree. The plaintiff will be entitled also to a decree for Rs. 15 representing profits for one year. from <NAME> 1939 to <NAME> 1940 (April 1939 to April 1940) and future profits will be ascertained under Order 20, Rule 12 of the Code of Civil Procedure by the trial Court. The second appeal against the second defendant fails and is dismissed. The plaintiff will be entitled to recover half costs in all the <ORG> from the first defendant. (No leave).


JUDGMENT <NAME>, J.

1. There are two sets of appeals in this case both arising from the same judgment. The first set of appeals came to be filed under the following circumstances :

2. Civil Appeals Nos. 2157-2160 of 68 were brought to this Court on the strength of certificates issued by <ORG> of Patna. <ORG> while granting those certificates did not give any reason in support of them. That being so, those certificates cannot be considered as having been given according to law. Hence the appeals brought on the strength of those certificates must be held to be non-maintainable. It is under those circumstances the assessee-appellant applied to this Court to grant special leave against the judgment of <ORG>. We granted the special leave asked for. On the basis of the special leave granted by this Court Civil Appeals Nos. 1304-1307 of 71 have been filed.

3. The assessee is <ORG> incorporated under the Indian Companies Act . We are concerned with its assessment for the assessment year 1956-57, 1957-58, 1958-59 and 1959-60 the corresponding accounting years being the calender years 1955, 1956, 1957 and 19.58.

4. In response to a notice issued by the Income-tax Officer under Section 22(2) of the Indian Income Tax Act, 1922 to be hereinafter referred to as 8th Act' the assessee filed Nil returns for all the four years. It claimed that it was not liable to pay income-tax as it was a Members' <ORG>. Before the Income-tax Officer the Balance sheets and Profits and Loss Accounts of the assessee for the relevant accounting years were produced. After perusing those records, the Income-tax Officer came to the conclusion that the assessee was not liable to pay any tax in respect of the amounts realised by it from its Members. Sometime thereafter the Income-tax Officer issued notices to the assessee under Section 34(1)(b) . In response to those notices the assessee again filed Nil returns but the Income-tax Officer did not accept those returns. He assessed 140 <CITATION> .) 1972 the assessee for the assessment years 1956-57, 1957-58, 1958-59 and 1959-60 on Rs. 7,526/-, Rs. 3,521/., Rs. 5,313/-and Rs. 6,881/-respectively. He came to the conclusion that the amounts received from members of the <ORG> as guests charges must be considered as the incline of the assessee and that the same is liable to be taxed.

5. Aggrieved by the orders of the Income-tax Officer, the assessee took up the matters in appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner affirmed the orders of the Income-tax Officer. A further appeal was taken by the assessee to <ORG>. The <ORG> upheld the contentions of the assessee and came to the conclusion that the notices issued under Section 34(1)(b) were incompetent notices as the Income-tax Officer cannot be said to have received any information after he made the assessments in questions.

6. As the instance of the department the <ORG> referred to <ORG> under Section 66(1) of the Act, one question relating to the assessment year 1956-57 and two questions relating to the assessment years 1957-58, 1958-59 and 1959-60. In respect of the assessment year 1956-67, the question referred was:

whether on the facts and circumstances of these cases the <ORG> erred in holding that the provisions of Section 34(1)(b) were not properly invoked and the re-assessment proceedings for the assessment years '956-57, were invalid.

In respect of the remaining assessment eat years, the questions referred are :

(1) Whether on the facts and circumstances of these cases the <ORG> was justified in holding that the re-assessment for the years 1957-58, 1958-59 and 1959-60 under Section 34 were invalid on the ground that the Income-tax Officer had passed no orders of assessment on the original returns ?

(2) Whether on the facts and circumstances of these cases the <ORG> erred in holding that the provisions of Section 34 were not properly invoked and the re-assessment proceedings for the assessment years 1957-58, 1958-59, and 1959-60 were invalid ?

7. <ORG> answered all those questions in favour of the <ORG>. The learned Counsel for the assessee did not challenge the correctness of the answer given by <ORG> in respect of question No. 1 relating to the assessment years 1957-58, 1958-59, and 1959-60. He submitted that the question is concluded by the decision of this Court in <CITATION> view of that submission we do dot propose to go into that question.

8. Now coming to the question referred in respect of the assessment year 1956-57 and the second question referred in respect of the subsequent years the Income-tax Officer has not placed any material before the <ORG> to show that he received any fresh information either on questions of facts or on questions of law subsequent to the date he passed the original assessment orders. This court has repeatedly ruled that the information referred to in Section 34(1)(b) must be that the Income-tax Officer receives after he makes the original order of assessment. It must come to his knowledge subsequent to the assessment sought to be reopened. In these cases it is admitted that all the facts were placed before the Income-tax Officer when he passed the original orders of assesssment. The fact that the <ORG> had received certain amounts as guests charges from its members had been placed before the Income-tax Officer. It is not the case of the Income-tax Officer that he did not come to know all the relevant facts when he made the original orders of assessment. It is also not his case that at the time he made those orders he was not aware of the true legal position. It was for the Income-tax Officer to show that he had received some information subsequent to his passing the original orders of assessment. No such material was placed before the <ORG>. That being so, the <ORG>, in our opinion was right in holding that the Income-tax Officer was incompetent to initiate proceedings under Section 34(1)(b) . <ORG> has given no reason to come to the conclusion that there was any subsequent information on the basis which the Income-tax Officer could have re-assessed the assessee under Section 34(1)(b) .

9. For the reasons mentioned above, we allow Civil Appeal Nos. 1304, 1307 of 1971 to the extent mentioned above, discharge the answer given in respect of the question relating to the assessment year 1956 57 as well as the answer given to the second question relating to the subsequent years and answer those questions in favour of the assessee. The answer given by <ORG> in respect of the first question relating to the assessment years 1957-58, 1958-59 and 1959-60 stands. The assessee is entitled to its coats in these appeals in this Court. Hearing fee one set.

10. Now coming to Civil Appeals Nos. 2157-2160 of 68 they are dismissed as not being maintainable. In these appeals, there will be no order as to costs.


<NAME>, J.

1. This is a petition under Article 226 of the Constitution impugning the legality of an order dated 30-4-1958 passed by Mr. <NAME>, <ORG>, Commissioner, <ORG>, dismissing the petitioner from service under the State of Uttar Pradesh as Supervisor <NAME>. The petitioner has filed a long and rambling affidavit containing the entire history of his case from the year 1947 when he first got into trouble uptill the date of his dismissal in 1958. After looking into the entire record (which consisted of several hundreds of foolscap typed pages) I feel that it is not necessary for me to consider any of the arguments advanced on behalf of the petitioner as I am of the opinion that they have no force, but I have also come to the conclusion that the order of dismissal is vitiated by failure-to comply with the mandatory provisions of Article 311 of the Constitution and must therefore be quashed. It is necessary to give, very briefly the facts which form the background of this case.

2. The petitioner states in the affidavit that he was appointed a Supernumerary <NAME> by the Director of Land Records, U. P. on 25-2-1925. In October, 1927, he was confirmed as Supervisor <NAME> and in 1945 promoted as a second grade Supervisor <NAME>. In 1947, however, his troubles and misfortunes began.

3. The petitioner was prosecuted under Section 161, I.P.C . for the offence of taking illegal gratification, According to the petitioner the proceedings were a frame-up against him caused by the prejudice and hostility of certain local officials. He was convicted on 19-8-1950, and appealed against his conviction. Without waiting for the result of the appeal, the authority concerned passed an order of dismissal against the petitioner on 19-1-1951. But on 7-3-1951, his appeal was allowed by the learned Sessions Judge of Bareilly on the technical ground that the prosecution of the petitioner was without sanction and therefore without jurisdiction. On 11-11-1952, he was served with a charge sheet in respect of the same offences which were the foundation of the criminal proceedings ending in his acquittal.

On 17-1-1953, he was served with a notice to show cause why he should not be dismissed from service. In his reply he contended that the charge was without jurisdiction. He must have been dismissed subsequently, for when he filed a writ petition in this Court (Writ Petition No. 7507 of 1951) a statement was made on behalf of the Government on 23-11-1953, that the order, of dismissal had been withdrawn. The petition having become infructuous was dismissed by a Division Bench of this Court, but the State was ordered to pay the costs of the petitioner. On 6-3-1954, the petitioner made his first representation for the implementation of the decision of the Government -- that is to say, he demanded reinstatement. Subsequently he made numerous representations which again landed him into trouble.

On 5-1-1955, he was served with a second charge sheet accusing him of having used language in his representations which was highly objectionable. Quotations from his various representations were included in the charge sheet, which is Annexure VIII of the counter affidavit filed on behalf of the State. This was duly followed by a notice asking him to show cause why he should not be dismissed. In reply to this the petitioner contended that the notice was without jurisdiction. It appears that he also made representations to the then Chief Minister and to several Ministers. His wife appears to have approached the then Governor of the State (the late <NAME>). His efforts eventually were successful, for an order was passed on 25-7-1956, reinstating him in service. This is annexure 'F' of the petitioner's affidavit. The relevant paragraph is No. 2 which runs as follows :

"On the dismissal of <NAME> Supervisor Kanungo district Pilibhit <NAME> a Supernumerary Kanungo was confirmed by the Collector, Pilibhit in that vacancy. <NAME> has since been reinstated with effect from the date of dismissal.

The orders for confirmation of <NAME> in that vacancy have therefore become infructuous. <NAME> should in supersession of the previous orders now be confirmed with effect from 22-1-1951 in the vacancy caused by the dismissal of <NAME> Supervisor Kanungo district Moradabad. He should be informed accordingly through the collector under whom he may be serving at present.

<NAME>, I.C.S.

Commissioner, <ORG>. Bareilly.

No: 1703/9/VII-36 (54-55) dated July 25, 1956.

Copy forwarded to all the Collectors in the division for information and necessary action immediately.

An uptodate copy of the gradation list fin triplicate) of supervisor <NAME> in such district after the above confirmations may please be sent to me immediately.

<NAME> Head Assistant for Commissioner No. 1710/VII-36-(54-55) of date.

Copy forwarded to <ORG>, U. P, Section 4 Lucknow for information.

<NAME> Head Assistant for Commissioner."

4. It is necessary to pause at this stage and consider the legal effect of this order of reinstatement. The petitioner had been charged with certain offences on two occasions. On the first, he was dismissed but the order of dismissal was withdrawn. But perhaps the statement made to <ORG> was not implemented and, though the dismissal was formally revoked, the petitioner in fact remained: outside his service. His representations were considered objectionable and he was again served with a charge sheet. While the proceedings were still pending, the order of reinstatement dated 25-7-1956, was passed. The language of this order shows that the petitioner's reinstatement was absolute and unqualified. This is shown by the fact that the official who was given the appointment created by his dismissal had to give it up in favour of the petitioner. It is also shown by directions for the amendment of the Gradation list and bringing it uptodate in the light of the petitioner's reinstatement.

5. The petitioner, however, was not satisfied with his position. It appears that he was given no post even after the passing of the reinstatement order, nor was he paid his salary with effect from the date of his dismissal apart from the subsistence allowance which he had been receiving during the period of his suspension. On 24-5-1957, he served a notice on the Governor of the State which bears the title "Notice to launch Satyagrah by starting to fast unto death at the western gate of the Government House Lucknow on 10-6-1957 at 10.30 A.M." The notice was sent by registered post and was marked 'Immediate'. In it the petitioner complained of what he called "10 years wrongful suspension. 10 years prosecution (obviously meaning persecution)." After narrating his version of the events of the preceding decade and giving a catalogue of his grievances he ended the letter with a prayer backed with a threat. The prayer is in these terms:

"It is, therefore, prayed (1) That in terms of judgment of <ORG> D/- 23-11-53 orders for payment of my salary arrears from 20-11-47 to-date and for reinstatement be issued.

"(2) That orders for amendment of invalid rules in terms of judgment of Judge Bareilly 17-12-51 be issued.

(3) My case be withdrawn from Revenue Department and be entrusted to the General Administration department in charge of Chief Minister.

(4) The undertakings given to me by Smt. <NAME> to pay lavishly for my wrongful prosecution and to post me as Tahsildar be fulfilled.

(5) I be suitably compensated for the loot of "my house.

(6) A commission headed either by a Judge of High Court or Minister of Justice be appointed to look into the serious crimes committed by superior officials of the Government.

For the grant of my above requests I shall be grateful."

6. The threat was in these words "If however my requests are not granted by 9-1-1957, I shall begin my fast unto death at Government House Lucknow on 10-6-57 at 10.30 A.M."

7. A copy of this notice was forwarded to the Chief Minister of Uttar Pradesh, Dr. <NAME> "for favour of looking into the matter personally and save a high family from disaster and wrongful prosecution."

8. It is not at all surprising that the Government took serious objection to this kind of notice and the petitioner was again in serious trouble. On 11-7-1957, a charge sheet was issued against him in which he was accused of having sent the notice to the Governor "in utter disregard of official discipline" and of having given a "threat to Government to redress your grievances according to your own choice." As this charge sheet is the foundation of the impugned order of dismissal, it is necessary to quote its text verbatim :

"Under Regd. With Acknowledgment.

<ORG>, Pilibhit No D/- 11-7-1957.

<NAME>, Supervisor Kanungo (under Suspension) Pilibhit, Mohalla Garhi Gate, Bareilly. You are hereby charged as follows : 1. That you sent a notice dated 24-5-57, addressed to the Rajyapal of Uttar Pradesh threatening to start hunger, strike at the Western Gate of <ORG> House on 10-6-1957 at 10-30 A.M. in case your grievances were not redressed by 9-6-1957, through <NAME>, Revenue Minister, Uttar Pradesh, and thereby committed a breach of orders contained in para 2 of Appointment (A) Department G. O. No. 3551/11-161 1012/47 dated 31-10-1947 by approaching the members of <ORG> direct.

You are thus guilty of utter disregard of official discipline and giving threat to Government to re-dress your grievances according to your choice.

Evidence which it is proposed to consider in support of the above charge :

(1) Notice dated 24-5-57 of Sri <NAME>, Supervisor Kanungo, Pilibhit (under suspension) addressed to the Governor of U. P. through Sri <NAME>, Revenue Minister.

You are hereby required on or before 27-7-1957 to put in a written statement of your defence in reply to the above charges. Your are warned that if no such statement is received from you by the undersigned within the time allowed, it will be presumed that you have none to furnish and orders will be passed in your case accordingly.

You are further simultaneously to inform the undersigned in writing whether you desire to be heard in person and in case you wish to examine or cross examine any witnesses to submit along with your written statement their names and addresses together with a brief indication of the evidence which each such witness will be expected to give.

July 11, 1957 Sd. G. S. Sial I.A.S.

Collector, <NAME>."

9. It is noteworthy that the only offence imputed to the petitioner in this charge sheet is his alleged misconduct in having served the notice dated 24-5-1957, on the Governor. There is no reference whatsoever to the earlier offences accepting illegal gratification and using offensive language which were the subject matter in earlier proceedings against him. The petitioner was called upon to defend himself against this charge and nothing else.

10. An enquiry was instituted and the report of the Enquiry Officer, Mr. <NAME>, dated 25-12-1957, is attached as Annexure XIII to the counter affidavit of the <ORG>. This Officer held that the charge was proved against the petitioner. On the basis of this finding the Commissioner Rohilkhand Division Mr. <NAME> served a notice on the petitioner to show cause why the order of dismissal in regard to him "should not be confirmed". It is somewhat difficult to understand what the Commissioner meant by the phrase "why these orders should not be confirmed?", Under the law no order of dismissal could be passed unless and until the accused official had shown cause and his explanation had been considered by the dismissing authority. Probably Mr. <NAME> referred to the request of the Collector of Pilibhit for the Commissioner's concurrence in the proposal to dismiss the petitioner (see para 5 of Mr. <NAME>'s order); the Commissioner merely used wrong terminology which however did not of itself prejudice the petitioner.

11. But in his order requiring the petitioner to show why the punishment or dismissal should not be imposed on him, the Commissioner took into consideration certain acts of the petitioner which were not included in the charge sheet dated 11-7-1957, and which were the foundation of earlier charge sheets in 1952 and 1955 respectively. For example, in para 7 of his order he considered the charge sheet served on the petitioner in 1952, in which he was accused of accepting illegal gratification. He also considered the charge sheet of 1955 in which the petitioner was accused of using offensive language in his representations. He also considered the latest charge sheet dated 11-7-1957, by which the petitioner was accused of having threatened the Governor with a hunger strike unless his grievance was redressed by a certain date. On the basis of these three offences the Commissioner came to the following conclusion:

"I therefore propose to dismiss <NAME> ........ from service."

12. It appears that the petitioner did not give any satisfactory explanation beyond challenging the jurisdiction of the authorities to reopen the matter after his reinstatement. The Commissioner thereupon held, and in my opinion rightly, that the petitioner had been given an opportunity to submit what-ever explanation he wanted and proceeded to pass the final order of dismissal against him.

13. Unfortunately, however, this order is also vitiated by the fact that Mr. <NAME> took into consideration not only the petitioner's misconduct as expounded in the charge sheet dated 11-7-1957, -- which alone he was entitled to consider -- but also the earlier acts of alleged misconduct which find no place in that charge sheet. For example, in para 27 of his order, the Commissioner wrote "There is no doubt whatsoever from the evidence which was produced in the criminal trial ...... that he accepted illegal gratification from <NAME> on the strength of recommending his application for supply of wood from the Government Forest." In para 28 he wrote "An official who accepts illegal gratification in the most blatant manner and then tries to save himself from the punishment that he has merited by writing to his superior officers in language so offensive and unbalanced, certainly merits dismissal."

14. Taking into consideration these three acts of misconduct alleged to have been committed by the petitioner, Mr. <NAME> passed the following order:

"I now dismiss him from service, the dismissal to take effect from 12-11-52."

15. A perusal of both the orders passed by Mr. <NAME> -- the one containing the show cause notice and the other directing the petitioner's dismissal -- clearly shows that Mr. <NAME> was chiefly Influenced by the petitioner's conduct in having accepted illegal gratification, in or about 1947. In fact, the offence with which the petitioner was actually charged in the charge-sheet dated 11-7-1957, was hardly considered by him at all. There is 3 passing reference to it, but of perfunctory nature. Mr. <NAME>'s decision to dismiss the petitioner is really based on the alleged offence of having taken illegal gratification.

16. The Commissioner was clearly not entitled in the impugned proceedings to consider any act of the petitioner except the one in respect of which he was called upon to defend himself. The proceedings started with a charge that the petitioner had been guilty of having threatened the Governor to go on strike and ended with his conviction on the charge of having accepted illegal gratification and used offensive language. Thus there has been a clear violation of the mandatory provisions of Article 311(2) of the Constitution, which enjoins that "no person .... shall be dismissed or removed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him."

The petitioner is entitled to complain that if Mr. <NAME> had confined himself to the offence of threatening the Governor with a hunger strike ho might not have taken such a serious view of the petitioner's misconduct. But that act together with the other offence of accepting illegal gratification must have turned the scales against him and impelled the Commissioner to take the view that an official who was guilty of taking a bribe should not be allowed to remain in service. If a Government servant is charged with specified acts of misconduct, it is not open to the dismissing authority to consider any other acts of misconduct with which he may have been charged in any earlier proceedings which, however, were subsequently dropped and ended in his unconditional reinstatement, If he is punished for these earlier acts which are not included in the latest charge, he will be deemed not to have been given a reasonable opportunity to show cause against the action proposed against him. I, therefore, hold that the order dismissing the petitioner was made without complying with the provisions of Article 311(2) of the Constitution and is illegal. I, therefore, quash the order of the Commissioner of Rohilkhand Division dated 30-4-1958, dismissing the petitioner from service.

17. It must be clearly understood that the order of dismissal is being quashed on the technical ground that it was passed without complying with the statutory safeguards of Article 311. But I am constrained to observe that the petitioner does not appear to be a person temperamentally fit to be retained in <ORG> service. I have read some of his representations which contain the following epithets or adjectives against <ORG> : 'tyrannical' 'barbaric' and 'sheer callousness'. On one occasion he wrote to <ORG>, "Such an attitude does not fit in with the tall talk of secularism and 'social justice' by the Hon'ble Minister of <ORG> and Hon'ble Ministers of <ORG>."

To the Collector of Pilibhit he once wrote, "It is deplorable 'that you have put in cold storage my complaints against Sri <NAME>'. All these offensive words and phrases were used by the petitioner several years after the partition of India when there was no occasion or excuse for such utterances.

His crowning act of indiscipline was a notice to launch <NAME> at the gate of the <ORG> House. All these facts prove that the petitioner has no sense of discipline or decorum whatsoever, Though the order of dismissal has been quashed by the <ORG>, it will be open to the <ORG> if they so desire, to issue a fresh show-cause notice on the basis of the inquiry initiated by the charge sheet tinted 11-7-1957. In the circumstances of this case, the parties shall bear their own costs.


JUDGMENT <NAME>, J.

1. <ORG>, Cochin Bench, has referred the following question at the instance of the assessee under Section 256(1) of the Income-tax Act, 1961.

"Whether, on the facts and in the circumstances of the case, the <ORG> was right in holding that the deduction under Section 80E has to be worked out on the adjusted total income of the year, after setting off the losses brought forward from the preceding year ?"

2. The year of assessment is 1967-68. The Income-tax Officer determined the total income assessable to tax for that year at Rs. 2,13,769. The loss in the earlier years amounting to Rs. 87,437 was then set off against the profits and gains arising from the business of the assessee which is a limited company, apparently under Section 72 of the Income-tax Act, 1961. From the balance net income of Rs. 1,26,332, 8 per cent. was deducted under Section 80E as it stood at the relevant time. The assessee appealed and one of the contentions raised before the Appellate Assistant Commissioner was that for the deduction under Section 80E , the total income arising from profits and gains, viz., Rs. 2,13,769, should be the figure that should be taken into account. This contention was upheld by the Appellate Assistant Commissioner. But, in further appeal, the <ORG> reversed the decision of the Appellate Assistant Commissioner and held that the 8 per cent. can be permitted only on the net balance income after setting off the losses and that the figure for the purpose of Section 80E is Rs. 1,26,332. The question is which of these views is the correct one. It is necessary to refer to Section 80E as it stood at that time :

"80E. Deduction in respect of profits and gains from specified industries in the case of certain companies.--(1) In the case of a company to which this section applies, where the total income (as computed in accordance with the other provisions of this Act) includes any profits and gains attributable to the business of generation or distribution of electricity or any other form of power or of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule, there shall be allowed a deduction from such profits and gains of an amount equal to eight per cent. thereof, in computing the total income of the company.

(2) This section applies to--

(a) an Indian company; or

(b) any other company which has made the prescribed arrangements for the declaration and payment of dividends (including dividends on preference shares) within India.

but does not apply to any Indian company referred to in Clause (a), or to any other company referred to in Clause (b), if such Indian or other company is a company referred to in Section 108 and its total income as computed before applying the provisions of Sub-section (1) does not exceed twenty-five thousand rupees."

3. Counsel for the assessee contended that the view taken by the <ORG> is not justified by the section. According to him, the computation of the total income of profits and gains arising from the business does not involve the application of Section 72 of the 1961 Act providing for set-off. Counsel for the revenue, however, urged that the set-off permissible tinder Section 72 is part of the computation of the total income.

4. Chapter IV of the Income-tax Act, 1961, deals with the computation of income falling under the various heads mentioned in Section 14 of the 1961 Act and Chapter VI in which Section 72 occurs deals with the aggregation of income, and set-off or carry forward of loss. Section 80E in Chapter VIA deals with deductions to be made in computing total income. The definition of the term "total income" in Section 2(45) of the 1961 Act merely states that the total income means the total of the amount of Income referred to in Section 5 computed in the manner laid down in the Act. Computation as such is used only in the heading in Chapter IV. Section 66 also provides that in computing the total income of an assessee there shall be included all income on which no income-tax is payable under Chapter VII, etc. What is provided in Section 66 is also relating to computation. Similarly, the same words are used in Section 67 . But, there are no such words in Section 72 . Section 72 speaks of the net result of the computation under the head "Profits and gains of business or profession." We consider that the set-off permitted under Section 72 is from an amount arrived at after applying the provisions of Chapter IV along with other sections of the Act such as Sections 66 and 67 , etc., dealing with computation of income and after permitting the deductions under Section 80E . Counsel for the revenue submits that the process must be reversed and before the deduction under Section 80E is made, the set-off under Section 72 must be allowed.

5. Section 80E seems to be a special provision and permits deduction from profits and gains attributable to specific activities like business of generation or distribution of electricity or any other form of power or of construction, manufacture or production of any one or more of the articles or things specified in the List in the Fifth Schedule. The set-off under Section 72 is applicable in relation to the profits and gains arising from any business or profession. We, therefore, think that the deduction under Section 80E is a special benefit given to a company which satisfies the conditions under Section 80E and the deduction of 8 per cent. permissible under that section is only from profits and gains attributable to the specific activities to which we have referred. This is a special benefit. This must refer to the results of that particular activity. This benefit should not be diminished by the other benefits conferred by the Act, such as the right to have the previous losses set off. The two serve different purposes and the benefit of both must be available to an assessee, without the one impinging on the other. The acceptance of the contention of the revenue would have the result of substantially depleting the benefit under Section 80E . This is not permissible. Even apart from this, we think, the wording of Section 80E , which talks of "total income" is also an indication that the deduction under Section 80E must be before the set-off permissible under Section 72 is made. In the case before us the total income consists exclusively of profits and gains arising from the specific activities mentioned in Section 80E . This refers to the total income of a particular year, namely, the previous year. And from this the deduction under Section 80E has to be made as the deduction is related to the profits and gains from specified activities of a particular period. The figure arrived at after setting off the losses under Section 72 is certainly not the total income arising from the profits and gains attributable to the activities in the year. We, therefore, answer the question referred to us in the negative, that is in favour of the assessee and against the department. There will be no order as to costs.

6. A copy of this judgment under the seal of <ORG> and the signature of the Registrar will be sent to <ORG> as required by Sub-section (I) of Section 260 of the Income-tax Act, 1961.