K.L.Roy, J. - (1.) The petitioner is a private limited company carrying on the business of non-scheduled air transport in India. The petitioner had entered into an agreement with the Government of India for air dropping of food in NEFA and other hill areas in Assam. As the said agreement was not renewed after the 30th June, 1967, five out of six airerafts belonging to the petitioner became inoperative from the 1st July 1967. In the circumstances the petitioner intended to dispose of the spare parts and other accessories and even some of the airerafts belonging to it and with that object in view entered into negotiations with various parties. The petitioner applied to the Director General of Civil Aviation on June 21, 1967 for approval of the intended sale of airerafts, stores etc. to parties either in India or abroad. On the 15th July, 1967 the Director General informed the petitioner that he had been advised by the respondent income-tax Officer not to permit any transaction or transfer of airerafts or other materials belonging to the petitioner as considerable amounts were due from the petitioner by way of income-tax and accordingly action on the request of the petitioner was held in abeyance. On the 16th September, 1967 the petitioner asked the respondent Income-tax Officer to allow the petitioner to sell the spare parts to the Royal Nepal Air Lines Corporation and proposed mat the entire proceeds of the sale would be deposited to the credit of the petitioner's income-tax arrears. A similar petition, also dated the 16th September 1967 was addressed to the Central Board of Direct Taxes, New Delhi to the effect that if given the opportunity to sell the spare parts the petitioner would deposit the entire sale proceeds towards its tax arrears. In response to the aforesaid application the petitioner was directed by the Central Board of Revenue to contact the Commissioner of Income-tax to whom necessary instructions had been issued in the matter. Thereafter though several reminders were given to the said Commissioner by the petitioner's Advocate no action was taken with the result that the offer made by Royal Nepal Air Lines Corporation was cancelled. This fact Was notified to the Commissioner by the petitioner's letter dated the 18th November 1967 with a further request for the issue of the necessary income-tax Clearance Certificate in order to enable the petitioner to sell the spare parts to other parties including M/s. S. L. Chakraborty & Co. Thereafter the petitioner received offers from several parties including the Government of Maharashtra, Suppliers Syndicate, S. L. Chakraborty & Co., Indian Air Force and others, for the purchase of its spare parts and other accessories and the petitioner repeatedly applied to the respondent Income-tax Officer to issue the necessary Income-tax Clearance Certificate as otherwise it could not get the approval and sanction of the Director General of Civil Aviation for sale of the aforesaid spare parts and accessories of airerafts. But the aforesaid applications did not yield any response and no such certificate was issued to the petitioner.
(2.) Sometimes in January 1969 an award was made in favour of the petitioner for Rs. 28,00,000 to be paid by NEFA administration but the petitioner was informed that the administration had been directed to withhold the amount of Rupees 14,55,944.00 from the sum payable under the award and accordingly the aforesaid amount has been deducted and paid to ths Income-tax Department towards the income-tax dues of the petitioner. It is submitted that if the petitioner had any further liabilities to income-tax the Income-tax authority would have required the NEFA administration to deduct such further sum from the amount of the award.
(3.) Demands for Rs. 8,753/- and Rs. 3,747/- for interest under Sections 201 (1-A) and 220 of the Income-tax Act for the assessment year 1963-64 were received from the respondent Income-tax Officer who also required the petitioner to expedite the hypothecation of its airerafts for securing the tax demanded for that year. The aforesaid demand was complied with and in terms of the order of this Court in C. R. Case No. 1541 (w) of 1967 one of the petitioner's airerafts was furnished as security for a sum of Rs. 2,04,000/- by way of hypothecation on the 9th January 1970. Further correspondence ensued between the Income-tax Department and the petitioner wherein the Income-tax Department was insisting on the petitioner disclosing the manner in which the money received from the NEFA administration had been utilised by the Directors of the petitioner Company. Finally on the 2nd March 1970 the petitioner received a letter dated the 25th February, 1970 from the Director General of Civil Aviation informing the petitioner to apply for renewal of its non-schedule permit under Rule 134 of the Airerafts Rules giving the particulars required. The petitioner complied with the said requisition and submitted its application. Thereafter by another letter dated the 9th March, 1970 the Director General, Civil Aviation asked the petitioner to furnish, inter alia, its income-tax clearance certificate. On receipt of the said letter the petitioner informed the said Director that in spite of several demands no income-tax clearance certificate has been issued by the respondent Income-tax Officer, Finally by a letter dated the 10th March, 1970 the respondent Income-tax Officer informed the petitioner that as in his opinion the conditions laid down for issue of tax clearance certificate were not satisfied in the petitioner's case he declined to issue the same. After demanding justice this application was made and this Rule obtained on the 26th March, 1970.;