LexS. V. KANDASKAR versus V. N. DESHPANDE & ANR.
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A 8 c D E F G 965 S. V. KANDASKAR v. V. N. DESHPANDE & ANR. January 4, 1972 [S. M. S1KR1, C.J., J. M. SHELAT, I. D. DuA, H. R. KHANNA AND G. K. MITTER, JJ.J Income Tax-S. 148 and ·Companies Act-S: 446(1 )-Whether lnconie Tax Officers require leave of the liquidation Court to reopen assessment of a con1pc..ny for escaped income. A company (in liquidation) was ordered by the High Court to be wound up and the official liquidator was appointed its liquidator. There- after the l.T.0. issl>'d notices under s. 148 of I.T. Act proposing to reopen tbe assessment of the Company in respect of the assessment years 1950-51 to 195,5-56. The I.T.O. further notified tbe official liquidator to produce account• and documents specified at the back of the notices. The offidal liqujdator made an application before the High Court ques- tioning the jurisdiction of the I.T.O. to issue the said notices without the leave of the High Court, as required under S. 446(1) of the Companies Act. The learned single Judge of the High Court issued an injunction restrainin2 th~ I.T.O. to reassess the said Company. On appeal, the ap- pellate bench gf the High Court reversed the order and set aside the in- junction. On apl)eal to this Court only one question arose for determi- nation as to 'whether it was necessary for the I.T.O. to obtain leave of the liquidation court when he wants to reassess the company for escaped income in resoect of the past years. Dismissi,ng the appeal, HELD : The Income Tax Officer need not obtain leave of the wind- ing up court for commencing or continuing assessment or reassessment proceedings. The Income-tax Act is a complete Code and s. 147 em- powers the Income Tax Officer to assess or reassess escaped .income. Further while holding these assessment proceedings, the Income Tax Offic•r does not oel"form the functions of a Court as contemplated by s. 446(2) of the Act. The liouidation court cannot perform the functions of Income Tax Officers while assessing the amount of tax oavable bv the assessees even if the assessee be the Companv which is being wound up, by the Court. It 'von'd le11d to anoma 1ons chnseouencr~s if the winrfinI? up Court were to be held empowered to transfer the assessment proceedings to itself and assess the Comoanv to Income tax. [Q78 B-Dl Gn1•P-,.nnr-rrenerrrf in Cn1rncil v. Sh;,.,unani Srtf!'1r Mil's Ltd .• f1946) F.C.R. 40. Shakrmtala v. The Peoples' Bank of Northern India Ltd. (in liquidation). rtQ41] I.LR. 22 Lah. 760 and M. K. Rnn~anathan v. Stai. of Mndms. fl 9551 2 S.C.R. 374, refel"red to and di<cussed, CIVIL APPELLATE JURISDICTION: Civil Appeal· No. 1650 of 1970. Aooeal from the Judgment and order dated January 31, 1970 H of the Bombay High Court in Appeal No. 94 of 1967. S. T. DPsai. P. C. Bhartnri Aiit MPhta. Kirit MPhfa. J. B. Dmf,,rhanji. 0. C. Mathur and Ravinder Narain, for the appellant. 14-L73fiS,1pCJl72 966 SUPREME COURT REPORTS [1972] 2 s.c.R. B. Sen, S. K. Aiyar and R. N. Sachthey, for the respondents. The Judgment ~the Court was delivered by Dua, J.-The Colaba Land and Mills Co., Ltd., (il}. liquida- tion) was ordered by the Bombay High Court on Octobe,1)7, 1959 to be wound up under the provisions of the Companies Ac(, 1 of 1956 and tlie Official Liquidator was appointed its liquidator. Eadierpn May 1, 1959 the Official Liquidator had been appointed by the High Court its provisional liquidator. On August 23, 1966 the Income-tax Officer (Companies Circle) concerned issued six different notices under s. 148 of the Income-tax Act, 1961 pro- posing to reopen the assessment of the Company and to re-assess it in respect of the assessment years 1950-51 to 1955-56. On December 31, 1966, the Income-tax Officer served further notices under s. 142(1) of the Income-tax Act upon the Official Liqui- dator calling upon him to produce accounts and documents speci- fied at the back of the notices and to furnish any information called for by the said officer. At the foot of the said notices it was stated that failure on the part of the Official Liquidator to com- ply with the terms of those notices would not only result in ex- parte assessment against the Company but might also entail penalty under s. 271 of the Income-tax Act. Certain negotiations followed between the Official Liquidator and the Inspecting Assis- tant Commissioner of Income-tax but they were infrilctuous. On an application made by the Official Liquidator in t
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