COMMISSIONER OF INCOME TAX (CENTRAL) CALCUTTA v. B. N. BHATTACHARJEE & ANR.
Citation: [1979] 3 S.C.R. 1133; 1979 INSC 114
Court: Supreme Court of India
Bench: V.R. KRISHNA IYER , V.D. TULZAPURKAR
Judgment date:
Case summary
1979 INSC 114. Supreme Court of India judgment dated 1979-05-04. COMMISSIONER OF INCOME TAX (CENTRAL) CALCUTTA v. B. N. BHATTACHARJEE & ANR. Read the...
Judgment text
1133 COMMISSIONER OF INCOME TAX (CENTRAL) CALCUTTA A v. B. N. BHATTACHARJEE & ANR. May 4, 1979 [V. R. KRISHNA IYER AND V. D. TULZAPURKAR, JJ. ] Income Tax Act, 1961 (43 of 1961)-Ss. 245A-245M-Scope, purpose and \, /. obiect of-Procedure and powers of Settlement CommiJsion-Settlen1ent Com- application under s. 245C, acted under s. 245D(l) and called for a report from the Commissioner, mindless of the movement. of the calender. For, the ides of March came in the meanwhile and the C. I. T. , for reasons we do not know, took a stiff look at the case and reported on 1st April, 1977. "that prosecution proceedings for concealment of in- come and also false verification in the return were already ' .. C. I. T. v. B. N. BHATTACHARJEE (Krishna Iyer, l. ) I 143 pending before the Chief Metropolitan Magistrate, and that he did not consider this as a fit case to be proceeded with by the Settlement Commission".
After some correspondence with the applicant, and without giving a hearing, the Settlement Commission by its order dated the 3rd February, 1978 informed the applicant that, as the Commissioner had objected under section 2450( 1), Settlement Commission did not allow the application to be proceeded with. " . • ~ Parenthetically though,· it must be stated that on the first rejection ··of the application by the Settlement Commission, the Revenue moved the I. T. A. T. for restoration of its appeals although no specific provi- sion enables such a restoration. The assessee can apply for restoration of his appeals since s. 245M enables it. This order of the Commission shows that some correspondence with the applicant' did take place before the order not to proceed with his composition petition. No hearing as such was given to him though, before making this adverse decision of February 3, 1978. The assessee urged that the order be reviewed as natural justice had not been complied with.
The Settlement Commission yielded to this sub- mission and, after elaborate argument and reasoning, reached the rever. s'"- conclusion that the C. I. T's opposition to the composition not- withstanding, the application for settlement shall be considered on the merits. The Union of India, through the C. I. T. concerned, has challenged the Settlement Commission's decision on jurisdictional and other legal grounds. The statutory scheme, the semantics of the expressions used, ,. the jurisdictional limitations of the Settlement Col! lmission and allied _ issues, have been debated at the bar and the declaration of law on these aspects has seminal significances because it relates to a sensitive area where Big Business may operate at high politico-official levels and the court mnst invigilate so that the law keeps its promises . • -·• appeal relates'. The Revenue had preferred appeals here but later withdrawn them. Does such withdrawal amount to not having pre- ferred an appeal at all ?
The crucial question, therefore, ii Iii to whether the liSsesilee is disentitled altogether to make an application before a Commission · D because the Income Tax Officer has already preferred an appeal to the I. T. A. T. although he has subsequently withdrawn it. E Does filing the appeal ipso facto imply that the die is cast and withdrawal thereof can. no( whittle down its preventive impact? We will presently discuss this point. We must clarify that this legal bar to the Settlement Commission's jurisdiction contained in the proviso to s. 245M was not urged by the applicant's counsel before us consistently with the stand the Depart- ment had throughout taken in this case. But law, as laid down by this F Court, transcends the facts of a given case or stances of parties or counsel. Here the Department did file appeali and later withdrew them be- fore the application for settlement was made.
~ the time the appli- cation before the Settlement Commission was moved no departmenlel G appeal was pending. Indeed, the documenli in this case clearly point to the assumption by the C. I. T. and the assessee that if the Revenue withdrew its appeal the disentitlement in the proviso would disappear. Even so, when an appeal is filed by the I. T. Q. , does not the prolnbi- tion operate? This turns on the meaning of the words "preferred an appeal". "Preferred" is a word of dual import : its semantics H depend on the scheme and the context; its import must help, not hamper, the object of the enactment even if liberty with language may be necessary. • .. • • C. I. T. v. B. N. BHATTACHARJEE (Krishna Iyer, J. ) 1153 There is good ground to think that an appeal means an elfective A appeal. (') ~ appeal withdrawn is an appeal non e~t as judicial thinking suggests. ( 2 - 3 ) Black's Law Dictionary gives the following meaning : PREFER : To bring before; to prosecute; to try to pro- ceed with.
Thus, preferring an indictment signifies prosecut- ing or trying an ingictment. To give advan. ta_ge, priority, or privilege; to select for first pay! Ilent, as to prefer one creditor over others. Thus it may mean 'prosecute' or effectively pursue a proceeding or merely institute it. Purposefully interpreted, preferring an appeal means more than fonnally filing it but effectively pursuing it. If a party retreats before the contest begins it is as good as not having entered the fray. After all, Chapter XIXA is geared to promotion of settlement and creation of road-blocs in reasonable compositions. The teleological method of interpretation leads us to the view that early withdrawal of the I. T. O's appeal removes the bar of the Proviso. The problem that troubles us arises from s. 245M(7). ,If a settle-· ment application is not entertained and is rejected in limine there is a statutory revival of the assessee's appeal before the I. T. A. T.
because of the deeming provision, but what happens to the appeal of the I. T. O. which he withdraws to enable the assessee to file an application before the Commission? Literally read, s. 245M(7) covers the revival of the assessee's appeals bnt not the I. T. O's appeals. The inference from this omission is that no occasion arises for revival of the I. T. O's appeals because once he files an appeal no application for settlement can be made. That is to say, the proviso to s. 245M (1) interdicts entertainmmt of a settlement application if departmental appeals are filed. This interpretation narrows the benign amplitude of the Chapter of attracting as many big assessees with disputed claims as are ready to settle their liabilities through the Commission. There may be cases where the A. A. C. has given partial relief to the assessee and both sideg may be aggrieved. Both sides may have filed appeals.
There is no understandable ground to exclude the possibility of such cases being settled merely because the I. T. O. has, perhaps for good reasons, filed an appeal. The purpose of substituting the method of investiga- tive negotiation, just settlement and early exigibility by a high-powered -----· (l) 31 S. T. C. 434. (2)21S. TC. 154,52 I. LR. 780; (3) 1973 31 S. "l'. C. 434. B c D E F G H B 1154 SUPREME COURT REPORTS (1979] 3 S. C. R. Commission for a tier·up-tier of long-protracted litigation, where victory may be phyrrhic and futile, is ill-served by keeping out cases solely for ! he reason that departmental appeals have been filed. To truncate the operation of the salutary provisions of Chapter XIXA more substantial reasons must be present. Of course, if no alterna- tive interpretation is possible, it is not for the court to explore the intendment of the legislation beyond the language in which the Section is couched. ..
/ • , However, there is an alternative meaning which reconciles the \ ' rationale of settlement with the embargo of the Proviso. If we react. ->--' c into the words "prefer an appeal" the sense of effectively prosecuting an appeal, then mere institution followed by withdrawal will cancel the effect result in non-prosecution and obliteration of the appeal, which is the same as not preferring an appeal. The meaning of "pre- fer" as given in the Black's law Diction~ry supports this construction. Among available semantic options law prefers that which furthers the D statutory objective. E F G e The pos~ble obstacle in adopting this interpretation is that while the asse~see's appeal gets revived when the Commission rejects an application, the I. T. O. 's appeal is not resuscitated under s. 245M(7). Even this is more imaginery than real and depends on over-emphasis on verbalism. After all, the clause we have to decode is "the assessee shall not te deemed to hav!
' withdrawn the appeal from the appellate tribunal". The obvious object of this clause is to restore the parties to status quo ante, and in fairness, must apply to the Department as to the assessee. This non-discriminatory import can be reasonably read into the clause if we construe the expression the "assessee" in a wider way so as to include all parties affected by the subject matter of the assessment. In that case, the clause may m! 'an that no one who is aggrieved by the assessment shall "be deemed to have withdrawn the appeal from the appellate tribunal. " An equitable and purpose- oriented construction of the clause means that the assessee will be put back in the same position vis-a-vis his appeals and if, to facilitate his moving the Commission, the l. T. O. has withdrawn the depart- mental appeals, the Commission's rejection of the application shall not Prejudice the Revenue. Actus curie neminem gravabit is the prin- ciple of wider import and is a tool of construction too.
This perhaps may be making up for a lacuna by a restructuring of the clause so at to work out justice to the Department. The scheme of s. 253 ( 4) contemplates filing of memorandum of cross objections by the I. T. O. on receipt of notice of an appeal by the assessee. So much so, it is • ,, C. l. T. v. B. N. BHATTACHARJEE (Krishna Iyer, J. ) 1155 also possible, alternatively, to read into s. 24SM(7) the right of the Department to file an appeal de nova on receipt of notice of the revival of the assessee's appeal, within the period specified ins. 253(4). This does not do violence to the language of s. 24SM(7) and affords equitable relief to the Department by enabling it to bring its appeal back to life notwithstanding the earlier withdrawal, when the asses- see's appeal reincarnates under s. 24SM(7) . B We ore mindful that a strictly grammatical construction is depart- ,, I ed from in this process and a mi\dly legislative flavour is imparted by • ·~ this interpretation.
The judicial process does not stand helpless with · ·folded hands but engineers its way to discern meaning when :t new construction with a view 10 rationalisation is needed. Lord Deuning, C in his recent book "The Discipline of Law"(') made a seminal obser- vation on "Ironing out !. he creases" by quoting a passage from Seaford Court Estates Ltd. v. Asher('). • • • •. "Whenever a statute comes up for consideration it must be remembered that it is not within human powers to foresee the manifold sets of facts which may arise, and, even if it were, it is not possible to provide for them in terms free from all ambiguity. The English language is not an mstrument of malbe~tical precision. Onr literature would be much the poorer if it were. This is where the draftsmen of Acts of Parlia- ment have often been unfairly criticised. A judge, believing himself to be fettered by the supposed rule that he J!
lust look to the language and n9thing else, laments that the draftsmen have not provided for this or that, or have been guilty of some or other ambiguity. It would certainly save the judges trouble if Acts of Parliament were drafted with divine prescience and perfect clarity. In the absence of it, when a defect appears a judge cannot simply fold his hands and blame the draf(l;man. He must set to work orr the constructive task of finding the intention of Parliament, and he must do this not only from the language of the statute, but also from a consideration of the social conditions which give rise to it, and of the mischi~f which it was passed to remedy, and then he must supplement the written word so as to give 'force and life' to the inte_ntion of the legislature. That was clearly laid down by the resolution of the judges in Heydon's case, and it is the ~afest guide today. Good prac- tical advice on the subject was given about the same time (1) p. 12. (2\ (1949) 2 K. B. 481.
D E F G H A B c D E F G B 1156 SUPREME COURT REPORTS [1979) 3 s. c. R. by Plowden .... Pnt into homely metaphor it is this : A judge should ask himself the qnestion : If the makers of the Act had themselves come across this ruck in the texture of it, how would they have straightened it out? He must then do as they would have done. A judge must not alter the mate- rial of which it is woven, but he can and should iron out the creases. " • The upshot of the discussion is to hold that if the Department , files an appeal which it drops to enable an application before the \ ' Commission, then the Proviso to s. 245M ( 1) does not debar the. >"- • motion for settlement. The preliminary objection raised by Shri A. K. Sen need not detain use because we are satisfied that the amplitude of Art. 136 is wide enough to bring within the jurisdiction orders passed by the Settlement Commission.
Any judgment, decree, determination, sen- tence or order in any case or matter passed or made by any court or tribunal, comes within the correctional cognizance and review power of Art. 136. The short question, then, is whether the Settlement Commission cannot come within the category of "Tribunals". To clinch the issue, s. 245L declares all proceedings before the Settlement Commission to be judicial proceedings. We have hardly any doubt that it is a tribunal. Its powers are considerable; its determination affects the rights of parties; its obligations are quasi-judicial; the orders it makes at every stage have tremendous impact on the rights and lia- bilities of parties. When a body is created by statute and clothed with authority to determine rights and duties of parties and to impose pains and penalties on them it satisfies the test laid down in Associated Cement Co. case(').
A Constitutional Bench of this Court in that case has indicated the quintessential test in this regard and we need only extract a portion of the head-note relevant to this aspect : "In considering the question about the status of any body or authority as a tribunal under the article, the con- sideration about the presence of all or some of ! be trappings of a court is really not decisive. The presence of some of the trappings may assist the determination of the question as to whether the power exercised by the authority which possessed the said trappings, is the judicial power of the State or not. The main and basic test, however, is whether the adjudicating power which a particular authority is empowered to exercise, has been (I) Associated Cement Co. Ltd. v. P. N. Sharma & Anr. [196512 S. C. R. 366 • C. I. T. V. B. N. BHATTACHARJEE (Krishna Iyer, l.
) 1I57 conferred on it by a statute and can be described as a part of the State's inherent power exercised in discharging its judicial function. "(') The expanding jurisprudence of administrative tribunals to which some eminent judges, cradled in Dicean concepts in the early days of English law, has come to stay whether we call it the new des- potism or the pragmatic instrumentality of dispensing justice untram- • melled by the complexities and mystiques which are part of the , processual heredity of courts. The Franks Committee rightly :-.. /,,:aid : (2) • ,.. • - "Reflection on the general social and economic changes of recent decades convinces us that tribunals as a system for adjudication have come to stay. " "The advantage which tribunals had over courts" states Seervai in his classic work ou the Constitution of India "lay in cheapness, accessibility, freedom from technicality expedition and expert know- ledge of their particular subject.
"(') A casual perusal of Chapter XIXA convinces the discerning eye that the Settlement Commission exercises many powers which affect, for good or otherwise, the rights of the parties before it and vests in it powers to grant immunity from prosecution and penalty, to investigate into many matters and to enjoy conclusiveness regarding its orders or settlement. In short, Settlement Commissions are Tribunals. The preliminary point fails and we proceed to consider the triple substantial questions set out earlier. The two gut issues that must now engage us take us to the turn of events surrounding the withdrawal of appeals by both sides. To complete the story-and this fact has a bearing on one of the legal ,questions-it must be stated that wheh the Settlement Commission ·,. -first acted under the Second Proviso to s. 245D(l), the Department, eV\ln like the assessees, appled to the I. T. A. T. for revival of its appeals although s.
245M(7) does not make any such provision for revival of the LT. O's appeals. In ordinary circumstances the 2nd Proviso to s. 245D ( 1) is easy of construction and the exercise is also simple. The assessee applies to the Commission, thereupon the Commission shall call for a report from the Commissioner. The Commissioner may object to the appli- ( 1) Ibid. p. 366 (2) Franks! Committee on Administrative Tribunals and Enquiries p. 8 (3) Franks Committee Report, p. 9, quoted by Seervai in~his Constitutional Law of India p. 1226. A TI c D E F G e 1158 SUPREME COURT REPORTS [1979] 3 S. C. R. A cation being proceeded with on the grounds specified in the second Proviso to sub-s. (1) of s. 245D. If he so objects the application "shall not be proceeded with". This is express, explicit and mandatory. Where an application is allowed to be proceeded with under sub- s. (1), the Settlement Commission may call for the relevant records 8 from the Commissioner and hold further enquiry.
Thus, the Com- mission's power to proceed with the application can be paralysed by the Commissioner objecting to the application being proceeded with. In our case the Commission called for a report from the Commissioner and the Commissioner objected to the application being proceeded with , ' whereupon the Commission declined to proceed with the application. _.. }. -,, C But on the assessee's motion for review of that order which was passed without hearing him, fresh consideration after hearing both sides fol- lowed and the Commission decided to proceed with the application hold- ing that the Commissioner was estopped from objecting. The crucial question is whether the Commissioner's statutory power to object to the Settlement proceedings on the gronnd of the presence D of grave deviances mentioned in Proviso 2 to s. 245D(l) can be nullified by the doctrine of estoppel and if it can be whether there are grounds to hold that a iXea of estoppel is sustainable in the cir- cumstances.
We must realise that the CommiSsioner has a dnty to the public Revenue and, more importantly, a duty to object to any E assessee who is prima facie guilty of grave criminal conduct in the shape of concealment of income or perpetration of fraud getting away with it by invoking Chapter XIXA. The Wanchoo Committee was mindful of the benefits of a policy of collection of tax without pro- tracted litigation through the machinery of the Settlement Commission F but the potential for escape by the big whales of economic crime by re- sort to the Settlement Commission engaged the Committee conscience. ~ So it expressed the view that it was "of paramount importance that only persons who are known for their integrity and high sense of ' justice and fairness are selected for appointment on the Tribunal (Settlement Commission).
This was a pious wish and the Committee G went further to guard against fraud and to uphold the paramount principles, more important than physical gains and losses, of economic offenders being punished by arming the Commissio'ner with the right to object to the very entertainment of the application. "We consider that this will be a salutary safeguard, because otherwise the Tribunal (Settlement Commission) might become an escape route for tax H evaders who have been caught and who are likely to be heavily penalised or prosecuted. " The gravity of this public policy cannot be undermined by interpretative softness of Second Proviso to • C. I. T. v. B. N. BHATTACHARJEE (Krishna Iyer, J. ) 1159 s. 245D(l). To whittle down the imperative nature of this veto power is to undo the expectations of the Wanchoo Committee and amonnts to stultify the rule of law an integral part of which is that the law shall not let the greater felon loose.
Can the rule of estoppet override a statu- tory mandate of a prohibitory character calculated to inhibit/escapt from the coils of the law crime? r Moreover, we to have to examine, assuming the application of the ' rule of estoppel, where the basics of that rule of a clear representation having been made by A to B and th~ latter on the face of representa· tion acting to his detriment can be spun out of the_ circumstances be· fore ·w. Now we come to the meat of the matter-the plea of esfoppel or -• its variants. The C. I. T. 's objection to the jurisdiction of the. Com· mission to proceed with the matter has been shot down by the artil- lery of estoppel. The order under appeal proceeds to hold that a conspectus of the circumstances of the case compels the conclnsion that an understandin: had been reached between the assessee and the C. I. T. , evidenced by mutual withdrawal of their respective appeals before the I. T. A. T.
, that the Co=ission would be permitted to ex- plore a settlement; and so, the statutory veto available to the C. I. T. to interdict the enquiry by the Commission could not be exercised be- cause he was estopped. from so doing, resiling from his earlier stand. The argument has a;n attractive veneer or cosmetic charm but law is moce than skin-deep and courts peep beneath to see the principle of ... - cqcity and justice thereby promo_t_ed. What, in essence, is estoppel? Estoppel is a rule of equity which forbids truth being pleaded or representation, on which faith another has acted to his deteriment, being retracted. Even extending the rule i'nto ·the new-fangled empire of promissory estoppel, it cannot go . beyond the limits of the Law Revision Committee in England which Lord Denning allowed to blossom in the High Trees care. (') "We therefore recommend that a promise which the pro· · miser knows, or reasonably should !
mow, will be relied upon A B c D E F · by the promisee; shall be enforceable if the promisee bas G altered his position to his detriment in reliance oil the pro- mise. " The soul of estoppel ·is equity, not facility for inequity. Nor is estoppel against statute permissible because public policy animating a c statntory provision may then become the casualty. Halsbury has H noted this sensible nic_ety. (1) [1947) l KB 130-also see "Discipline of Law" by Lord Denning, p. 202. A B c D E F G H 1160 SUPREME COURT REPORTS [1979) 3 S. C. R, "Where a statute, enacted for the benefit of a section of the public, imposes a duty of a positive kind, the person charged with the performance of the duty cannot by estoppel be prevented from exercising his statutory powers. "(') "A petitioner in a divorce suit cannot obtain relief sim- ply because the respondent is estopped from denying the charges, as the court has a statutory duty to inquire into the truth of a petition.
"( 2 ) • ' The luminous footnote cites rulihgs and states that "This rule probably also applies where the statute bes- tows a discretion rather than imposing a duty. "(•) .. ~ To sum up, where public duties cast by statute are involved, private parties cannot prevent performance by invoking estoppel. We do not discuss further since the facts here exclude estoppel. In the present statutory situation s.
245D by the 2nd Proviso, casts a public duty on the Commission of Income Tax to consider, in the light of the case made out in the assessee'~ application, whether "concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any ta"t or oth~r sum charge- able or imposable under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, has been established or is likely to be estab- lished by any Income-tax authority, in relation to the case", md exercise his veto power to prevent escape of macro-criminals prima facie guilty of grave economic crimes. He cannot bargain over this interdict in advance or barter away a legal mandate in anticipation. He may permit or even assist the filing of a conciliation motion by the assessee but when the Commission intimates him under s. 245D r.. _ (1) he shall, with statutory seriousness, exercise his discretion. He -.
cannot enter into a 'deal' over this power without betraying the statu- " tory trust. We cannot therefore accept the plea that the Commissioner of Income Tax, by conduct and 'understandings' has 'irredeemably mortgaged' his statutory duty to object, if the case deserves such objec- tion. Estoppel then is both odious and ominous and discretion the door to corruption. Even otherwise, there must be an active representation proceed- ing from the functionary sought to be muzzled by estoppel. and the (1) Maritime E/ec. Co· Ltd. v. General Diaries Ltd. [19371AC610 and Halsburys Laws of England para 1515. (2) Hudson v. Hudson (19481 p. 292 and Halsburys Law of England para 1515. (3) Halsbury, 4th Edn. p. 1019. , • : '· ' ' C. I. T .. v. B. N. BHATTAGHARJEE (Krishna Iyer,!. ) 1161 pleading. ,party must have acted·to his detriment on· the· faith of the said representation or futuristic promise. Here; the ·. C. I. T. made no representation to the assessee..
He merely yielded to the latter's persuasion; Nor did the assessee act on any representation of the C. I. T. The withdrawal of his appeal was not because of or induced by the C. I. T. The Commissioner never asked him to withdraw his appeals but when asked by the assessee to withdraw the departmental appeals did so on condition that the other also withdrew his appeals, Granting that the C. I. T. did facilitate the motion before the Commis- ,, j sion, it did not mean that the assessee did anyhing. to his detriment. .. --.. c... _ Moreover, there was and could not be any rep~entation or even 'negotiation, (except illicit) regarding the exercise of the statutory func- tion under the 2nd Proviso in advance of the filing of the application for settlement. Even on grounds of public policy, it will be lending legal colour to hushing up prosecutions of high-placed offenders by an unjust extension of the rule of estoppel.
Bargaining between tax authorities and big assessees over criminal prosecution~ and the like is beset with corrupt· potential that a court of conscienct1 cannot succumb to such a rule of estoppel. Apart from the jural untenability of the contention let us see if the factual matrix supports the claim. A close look at the foundational facts will reveal the fallacy of the plea of estoppel. Is mere 'understanding' or ambiguous conduct the stuff of W°'hich the fabric of estoppel ·is made? We find the case of the respondent a rope of sand, a route to fraud. , a permit for non-performance of public duties. The assessee takes the initiative and beseeches the In- come Tax Department to help him, move the Settlement Commission by withdrawing its appeals. The story, wheI!. unfurled, shows how the assessee acted on his own· independently of the Department, never had any blanket assurance from the .
fatter about non-objection to the later stages of the application whatever be the guilt of the assessee vis-a-vis the 2nd. proviso to s. 2450(1), defeating the statutory efficacy of the provision. It all begins chronologically with the assessee--respondent represen- ting to I. T,A. T. on 23-8•1976, the following: Re: I. T. appeals in the name of Sri B. N. Bhattacharjee for the Asst. years 1962-63, 63-64, 64-65, 65-66, 66-67, 67"68; 68-69, 69-70, 70-71, 71-12, 72-73 and 73-74 l8-409SC1179 . B c D E F G H B c 1162 SUPREME COURT REPORTS [1979] 3 S. C. R, Sub: Prayer u/s 245M of the LT. Act, 1961 for with- drawal of appeals. With regard to the above I beg to submit that all the above appeals I have filed on 12-9'-75 but now I like to have my cases settled by the settlement Commission and as such I may kindly be allowed to with- draw all the above twelve appeals u/s 245M of the I. T. Act, 1961.
The matter is very much urgent and the settlement petition is to be filed within a day or two before the Settlement Commission, New Delhi. ,, Pray that an early order of the appellate Tribunal permitting the~ withdrawal of all the above appeals may kindly be issued to me and for this act of kindless I shall ever pray. Dt. 23-8-76. sd. S. N. Manda! D At this time the Department had done nothing to induce him to withdraw his appeals or move the Commission to that effect. It was a unilateral act of his and if the I. T. A. T. allowed him to withdraw, that was rwt because of the C. I. T's conduct but the compulsion of s. 245M(3). If at all, the assessee was chasing the Department and falling at its feet seeking mercy and praying for withdrawal of its E appeals as is evident from Annexure E which runs thus: F G Dear Sir.
I have instructed my counsel to withdraw all my Tribu- nal appeals to e'nable me to file petition before the Settlement Commission stop 1 seek your mercy and sympathy by with- drawing APPEAL FILE by the Department so that I can file my Settlement Petition here for settlement stop I assure you my full co-operation and I want settlement bonafide and I am acting in good faith stop I pray for your kind consideration and cooperation stop 25-5-76. Esteem Regards B. Bhattacharjee Camp : New Delhi How can this craven attitude be converted into a conduct induced by the Department detrimental to the assessee's interest? Even the H latter letter to Shri Kuruvilla, Member Central, Board of Direct Taxes is plaintive and supplicative and not indicative of any representation by the Department to the assessee leading to the latter's action to his • .. , ' ' C.!. T. v. B. N. BHATTACHARJEE (Krishna Iyer, J. ) 1163 own prejudice. In fact, Annexure F dated September 10, 1976 winds up: "1.
I shall be grateful, if you would kindly ask your department to withdraw all the pending appeals filed by the Department with I. T. A. T. Lastly if the Department find any technical difficulties I am prepared to swear my affidavit to protect the interests of the department. I assure you my full cooperation with the department in arriving at a reasonable settlement of the cases. I am writing this in a good faith. I am enclosing herewith the photostat copies of the correspondences for your kind and benign consideration. " We have earlier recounted the further developments and all that has happened is a communication from the C. I. T. to the assessee dated December 16, 1976 which is cryptic in tenns: B c "I am to inform you that the departmental appeals D pending before the Income-tax Appellate Tribunal, Calcutta against you will be withdrawn provided all the appeals filed by you for the assessment year 1962-63 to 1973-74 are withdrawn by you.
" It is incredible that the tone, sequence and the context and pour- ing subjective wine into the vessel of words used, the Commission should interpret this communication to reflect an understanding of wocds a representation by the department to the assessee to do a thing to bis prejudice whereupon he acted that way laying the basis for a plea of estoppel. Far from the Revenue making any poiitive repre- sentation to the assessee it was a case of concession shown to him to try his chance before the Commission. This is clear from the asso;- see's petition to the Tribunal dated 17-12-76 wherein he states- " ..... now the learned C. I. T. , Central, Calcutta has very kindly agreed to withdraw their Departmental appeals for the assessment years 1962-63 to 1971-72 on condition that your petitioner would also withdraw all the appeals for 1962-63 to 73-74 assessments. " It is true that the C. I. T.
withdrew the appeals of the Department, but it is not true that he made any representations to the assessee to act in a particular manner with a promise of doing something to his advantage leading to the assessee in turn acting to his own prejudice by withdrawing his appeals. His withdrawal of the appeals was in- E F G H 'A • 1164 SUPJ!. EME COURT REPORTS [1979] 3 s. c. R.. dependently decided upon by him so that he could move the Com- mission. Thereafter he moved the Department to withdraw its appeals so as to entitle him to make an application to the Commis- sion. The order of the I. T. A. T. dated 24-12-76 makes it clear that it granted permission to withdraw appeals because: "The learned departmental representative Shri Naraya- nan also had no objection to permission being granted for withdr(lwal of the appeal. " We need not overload this judgment with more extracts from ,.
• letters and petitions because it is abundantly clear that the basics of \ equitable estoppel are blissfully absent and the canons that govern the ,. >-~" application of the principle contradict its extension to a situation like c the present. We, therefore, overrule the plea of estoppel which has found favour with the Commission and hold that the objection raised by the C. I. T. is a potent interdict on the jurisdiction of the commis- sion. D It is not inappropriate to state that the policy of the law as disclosed in ChaEter XIXA is not to provide a rescue shelter for big tax-dod- gers who indulge in criminal activities by approaching the Settlement Commission.
The Settlement Commission will certainly take due note of the gravity of economic offences on the wealth of the nation E which the Wanchoo Committee had emphasised and will exercise its power of immunisation against criminal prosecutions by using its power only sparingly and in deserving cases; otherwise such orders may be- come vulnerable if properly challenged. Thus, a holistic perspective in the correct statutory setting makes the conclusion irresistible that the appeal must be allowed, that the F Settlement Commission should be inhibited from proceeding with the application of the assessee and the appeals by the assessee before the I. T. A. T. must be revived and disposed of expeditiously. The depart- mental appeals, having been admitted by the C. I. T. himself to be very weak and frivolous, should not be revived as it will be ouly a waste of IG public time and public money. The appeals are allowed, but in the circumstances of the case, the parties will bear their costs. N. V. K.
Appeals allowed. •
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