LexCHAMPA KUMARI SINGHI & ORS. versus THE MEMBER BOARD OF REVENUE, WEST BENGAL AND OTHERS
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A B c D E f G II CHAMPA KUMARI SINGm & ORS. ~· THE MEMBER BOARD OF REVENUE, WEST BENGAi, AND OTHERS February 2, 1970 (M .. HiDKYATULLAH, C.J., J. C. SHAH, K. S. HEGDE, A. N. G,ROVER, A. N. RAY AND I. D. DuA, JJ.] ' . Indian Income.Tax Act (ll of 1922), ss. 46 and 47-Liability agreed to be .~id by instclments, and in default of single instalment entire balanc:e. exigible-Asressment orders in terms. of agreement-Demand notices- issu£'d-Default in instahnent-Recovery proceeding after more than one year of the default but before the last instalment due-Whether claint bc·rred. An agreement was signed between the Revenue and the assessees fix ... ing the assessees' income-tax liability for several past years, and fixing instalments for its payment. The last instalment was payable on March 31, 1957. It was also stipulated that on the breach of a single instalment the whole amount would become exigible. The Income-tax Officer made the assessment orders in acco'rdance with the agreement. These orders and demand notices to pay the amount by March 31, 1953 were sent to the assessees in September 1952 with letters stating that if there was no default in payment of the instalment due on March 31, 1953, further ex- tension of time for paying the balance will be granted. The assessees filed revisions under s. 23-A of the Income-tax Act, 1922 against the orders of assessment. The Commissioner held the assessments were pro- perly made as they were made in accordance with the settlement after the assessees' disclosure. Later the earlier agreement for payment by instalments was varied. The main variation in the second agreement was that the penalty was reduced and smaller instalments were fixed. In March 1956 certificate's under s. 46(2) of the Act were issued and notices under the Bengal Public Demands Recovery Act, 1913 were served. On the question whether the certificates were barred by limitation under s. 4 7 (I) Indian Income-tax Act, 1922 this Court, HELD : (Per Hidayatullah, C. J., Shah, Grover, Ray and Dua, JI.) The certificates were not barred by time. The assessment order reproduced the agreement as part of it and the agreement therefore became the assessment order. Under the ass~ss ment order a notice of demand was sent to pay the money of the first ms-- talment by March 31, 1953. On breach of it the whole, amount was said to be exigible and the demand in ·respect of that was also made. The assessees, therefore, became defaulters on the failure to pay the first instalment. S:nce instalments were 2ranted, cl. (iY) Of the proviso to S. 47(7) applied. That clause does not mention about the exigibility of the whole amount or exigibility of any particular instalment. It only says that if ·instalments are granted time of one year ending w.ith the end of the financial year is to be calculated from .the date on wh.ich the last instalment is payable. The language of cl. (1v) of the proy1~0 was un- fortunate in expressing this intent and has now been C<?_rrectet;I. tn th~ new tnco1ne-tax Act but the intention was always obvious. Even tn. !he second agreement which replaced the agreement the same cond1llon 468 SUPREME COURT REPORlS (1970) 3 S.C.R. obtained. There was a concession 3hown in the matter of penalty and A smaller instalments ,.vere fixed. But the revenue had stipulated even then that the concession mentioned above would only be -available if the revised scheme of payment was strictly followed. Jn other words. p,ay- ment was to be made by instalments and this ,concession therefore~ attracted the provisions of cl. (iv). The Government copld always ac'Cept any instalment even if paid late without having to worry about the period of limitation of one year from the date of den1and. since cl. (iv J of the B first proviso- gave them an option to wait till the last instalment was payable. The scherr1e of instalments took the maller out of the main p;;1rt of sub-s. (7) and brought it within the proviso to clause (iv). [476 G- 477 DJ (Per Hegde, J. dissenting)- ;--,.]f an assessee fails to comply with the demand made in aC'.cordance with the provision in s. 45 within the time mentioned therein then he is 'defaulter' within the meaning of the Act. Unless the assessee is a defaulter, no action can be taken again.st him C under s. 46. Non-fulfilment of the terms of the agreement does not amount to a defauh under s. 45. Sub-sec
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