- (1.) THE Petitioners Messrs. H. R. Luxman and Company constitute a joint Hindu family firm and are carrying on their business at Amritsar and Calcutta. They were assessed to income-tax for the years 1944-45, 1945-46 and 1946-47 by assessment orders dated 21-3-1949, 24-1-1950 and 31-8-1950, respectively. Three recovery certificates in respect of the amounts of Rs. 357/14/-, Rs. 5,907/2/- and Rs. 17,164/6/- outstanding against the assessees out of the assessments for the aforesaid years were issued on 19-1-1950, 18-1-1951, and 51-1952. Nothing was, however, recovered. The Income-tax Officer made a report to the Commissioner that the amounts Were outstanding against the assessees and that nothing had been recovered from them on which the Inspecting Assistant Commissioner recommended that the demands may be written off. The Commissioner of Income-tax on 6-2-1956, Passed an order saying: "in the circumstances, I authorise the remission of outstanding demand".
(2.) ON 20-9-1956, a certificate, technically called the Import and Export Verification certificate, was issued by the Income-tax Officer in which he said: "in my opinion the applicant mentioned above has been doing everything possible to pay the tax demands promptly and regularly and to facilitate the completion or the pending or outstanding proceedings. This certificate is valid for one year from the date of issue. " The Department later came to know that a firm Messrs. Netherland Trading society, Calcutta, owed some money to the assessees and in exercise of the powers vested in the Income-tax Officer by Section 46 (5-A) of the Income-tax Act the Income-tax Officer sent a notice to the said firm saying that the assessed amounts were due from the petitioners and that the sums owed by the firm (Messrs. Nether-land Trading Society) to the petitioners to the extent of the assessed amounts should be paid to him instead of to the petitioners. The petitioners have come up to this Court under Articles 226 and 227 of the constitution of India and have prayed for a writ of mandamus to issue to the respondent enjoining upon him to withdraw his notice under Section 46 (5-A) of the Income-tax Act. They have also prayed for a writ in the nature of certiorari to issue for quashing the proceedings so far taken in that direction. The main allegations of the petitioners are that the assessed amount had been remitted by the Commissioner by means of his order, dated 6-2-1956, and that there was no money to be recovered from them regarding which action under Section 46 (5-A)could be taken. The petitioners also allege that the Income-tax Officer could not issue a fresh certificate under Section 46 (2) of the Act in view of the provisions of section 46 (7 ).
(3.) THE case was contested by the Department inter alia on the ground that the commissioner's order only amounted to writing off of the demand in their books of account and was never intended to be an order remitting the amount and that the commissioner had really no power to remit any amount. Mr. Bhagirath Das, learned counsel for the petitioners, has drawn my attention to the order of the commissioner, dated 6-2-1956, and submits that the order must be taken to be one for the remission of the demand in toto. As I have already Pointed out, this order was passed on the recommendation of the Income-tax Officer and the inspecting Assistant Commissioner for the writing off of the demand and although the word actually used by the Commissioner was "remission", the whole idea was to write off the demand. The Commissioner's order must in the circumstances of the case be interpreted as meaning that he agreed to write off the demand. The mere fact that the demand is written off by the Department in their own accounts does not, however, preclude the Department to recover the amount if and when they find that it has become possible to recover the same. If the order be interpreted to mean that the commissioner remitted the amount assessed against the Petitioners, the order must be treated to be one without jurisdiction and inoperative. The Commissioner has no power at all under any Section of the Income-tax Act or any other law to remit any amount out of the assessment made as long as the assessment stands. Under Section 33-A of the Act, he has, no doubt, the Power to revise the various orders of the Income-tax Officers, but he cannot remit an amount when the assessment is allowed to stand. It is a well known principle of law that the State is not bound by any act of an officer which he is not legally authorised to do: see in this connection Attorney-General for Ceylon v. A. D. Silva, 1953 AC 461 (A), Howell v. Falmouth Boat Construction Ltd. , (1951) 2 All ER 278 at p. 280 (B), Federal Crop Insurance Corporation v. A. A. Merrill, (1947) 92 Law ed 10 (C ). The certificate issued by the Income-tax Officer on 20-9-1956, does not in any way help the assessees inasmuch as it does not say that the assessees do not owe any amount of tax to the Department. I am, therefore, unable to hold that no amount was due from the assessees on the date when the Income-tax officer issued a notice under Section 46 (3-A ).;