Shah, J. - (1.) Agricultural income of the respondent Raja Jagdish Prasad Sahi - was assessed by the Collector of Sultanpur to tax under the U. P. Agricultural Income tax Act 3 of 1949 for the Fasli year 1359, corresponding to the period July 1, 1951 to June 30, 1952, and he was directed to pay the amount due in four equal instalments of Rs.13,274/5/- each. The respondent failed to pay the first and the second instalments which fell due respectively on December 9, 1952 and February 9, 1953. The Revenue authorities imposed upon the respondent liability to pay Rs. 4,400/ - in the aggregate as penalty for default in payment of the two instalments.
(2.) Pursuant to a certificate issued by the Deputy Commissioner of Sultanpur, proceedings were started against the respondent to recover Rs. 17,674/ 5/'-being the amount of the second instalment and penalty. The respondant then presented a petition under Art. 226 of the Constitution before the High Court of Judicature at Allahabad for a writ directing the Collectors of Sultanpur and Allahabad to refrain from recovering or taking any steps for recovery of the amount claimed under the certificate by coercive process, and in the alternative, if the amount or any portion thereof was held recoverable, for a writ directing the Revenue authorities to adjust the amount found so payable against compensation bonds given to the respondent under the U. P. Zamindari Abolition and Land Reforms Act No. 1 of 1951 - hereinafter called "the Abolition Act". The High Court held that the recovery of penalty not being based on orders properly passed under S. 31 of the U. P. Agricultural Income tax Act, 3 of 1949, the threatened proceedings for sold were void, and that the Collector was bound to accept in satisfaction of the instalments of tax due to compensation bonds payable to the respondent under the Abolition Act. The Court accordingly quashed the proceedings for recovery of the amounts of penalty and directed that the Revenue authorities do grant in respect of the instalment of tax due relief to the respondent under R. 8-A of the Zamindari Abolition and Land Reforms Rules in the manner indicated in the judgment. Against that order, the Collectors of Sultanpur and Allahabad have appealed to this Court, with special leave.
(3.) The claim to recovery penalty has not been pressed before us and nothing need be said in that behalf. The revenue authorities, however, claim that an order adjusting liability for the amount due as tax payable under the U. P. Agricultural Income tax Act against com- pensation bonds cannot be made by the High Court. This plea is sought to be supported on three grounds:(i) that compensation due to the respondent has already been paid to him by the issue of compensation bonds under S. 68 of Act 1 of 1951, and there is no machinery for making adjudtment of tax liability against compensation bonds already delivered to the intermediately; (ii) that under Rule 8-A of the Zamindari Abolition and Land Reforms Rules the Collector has the option to adjust liability for tax due against the compensation payable, but he is not obliged at the instance of the intermediary to grant that relief; and (iii) that under S. 6 of Act 1 of 1951 the amount of tax payable for the period after July 1, 1952 is not liable to be set off against compensation payable to the intermediary.;