judgement:
ivil Appeal Nos.
171 172 of 1973.
From the Judgment and Order dated 9 3 1972 of the Calcutta High Court in I.T Reference No. 117/67.
D. V. Patel, section P. Nayar and Miss A. Subhashini for the Appellant.
B. B. Ahuja (Amicus Curiae) for the Respondent.
TULZAPURKAR, J.
These two appeals by certificate raise an important question as regards the proper construction of section 33B of the Indian Income Tax Act, 1922 with particular bearing on the scope of sub section
(4) thereof and the effect of sub section
(2) (b) on the sub section
The facts giving rise to the aforesaid question may briefly be stated: The assessment years involved are 1957 58 and 1958 59 corresponding to the accounting years ending March 31, 1957 and March 31, 1958 respectively.
On or about August 5, 1960 the respondent assessee submitted voluntary returns, inter alia, for the said two assessment years alongwith a declaration dated August 8, 1960.
The assessment for these years were completed on August 12, 1960 by the Income Tax Officer, 'E ' Ward, District II(1) Calcutta on total incomes of Rs. 7,000/ and 7,500/ respectively, the same having been made in the status of unregistered firm consisting of three partners, namely, 273 Asha Devi Vaid, Santosh Devi Vaid and Sugni Devi Vaid with equal shares.
On August 2, 1962, the Commissioner of Income Tax issued a notice to show cause why the said assessments should not be cancelled under section 33B of the Act as he felt that the completed assessments were erroneous as being prejudicial to the interests of the revenue and that the Income Tax Officer, 'E ' Ward, District II(1) Calcutta had no territorial jurisdiction over the case of the assessee.
The notice was served on the assessee on August 3, 1962 and the hearing was fixed by the Commissioner for August 6, 1962.
On the ground that none appeared and that there was no application for adjournment, the Commissioner passed his order under section 33B ex parte on that date.
By his said order the Commissioner cancelled the assessments made by the Income Tax Officer on August 12, 1960 on three grounds: (a) that some of the partners were minors and were not competent to enter into any partnership agreement with the result that the status of unregistered firm assigned to the assesse by the Income Tax Officer was clearly wrong and as such the assessments deserved to be cancelled, (b) that the books of account were unreliable and they were not properly examined by the Income Tax Officer with the result that the assessments made were prejudicial to the interests of the revenue and (c) that the Income Tax Officer concerned had no territorial jurisdiction over the case which fell within the jurisdiction of Income Tax Officer, District III(II) Calcutta, and directed the I.T.O. having proper jurisdiction to make fresh assessments after examining the record of the assesse in accordance with law.
In the appeals preferred to the Appellate Tribunal under section 33B(3) the respondent assessee challenged the said order of the Commissioner on various grounds.
The Tribunal, negativing all other contentions of the respondent assessee, came to the conclusion that on merits the facts justified the assumption of jurisdiction under section 33B by the Commissioner but held that the Commissioner had not conformed to the requirements of natural justice by putting to the respondent assessee what case it had to meet and by giving due opportunity for explaining the same.
The Tribunal noted that the Commissioner had disposed of the matter at 11.30 A.M. when none appeared on behalf of the respondent assessee while the notice served upon the latter permitted filing of objections at any time during the course of August 6, 1962 and objections had been filed by the respondent assessee later in the day.
The Tribunal, therefore, allowed the appeals, vacated the Commissioner 's order dated August 6, 1962 and remanded the case to him with the 274 direction to dispose it of afresh after giving due opportunity to the respondent assessee.
Feeling aggrieved by the Tribunal 's aforesaid order dated July 5, 1965 the appellant sought to refer a set of six questions of law said to arise out of the said order to the Calcutta High Court but the Tribunal referred the following two questions only for the opinion of the High Court: "1.
Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assumption of jurisdiction by the Commissioner under section 33B of the Income Tax Act was valid in law? 2.
Whether, on the facts and in the circumstances of the case, the Tribunal acted properly by vacating the order of the Commissioner under section 33B of the said Act and in directing him to dispose of the proceedings under the said section afresh after giving due opportunity to the assessee?" The High Court disposed of the Reference (I.T. Reference No. 117 of 1967) by its judgment dated March 9, 1972 whereby it answered the first question in the affirmative against the assessee, that is to say, on merits it held that the assessments made by the Income Tax Officer required revision at the hands by the Commissioner.
As regards the second question the High Court was of the view that it comprised two aspects, one relating to the vacating of the Commissioner 's order and the other relating to the giving of a direction to him to dispose of the case under section 33B afresh after giving due opportunity to the assessee and the High Court held that in exercise of its appellate powers the Tribunal acted properly in vacating or cancelling the Commissioner 's order but did not act properly in directing him to dispose of the case afresh under section 33B(1) because the period of limitation of two years prescribed under section 33(2)(b) for him to act under section 33B(1) had expired and answered the question accordingly (i.e. in the affirmative on the first aspect and in the negative on the second aspect).
In doing so the High Court held that the provision of sub section 2(b) was absolute and covered even a revisional order of the Commissioner passed in pursuance of a direction given by any appellate authority and relied in that behalf on the aspect that, unlike 2nd proviso to sec.
34(3), there was no provision removing or relaxing the bar of limitation on the power of the Commissioner under section 33B(2) (b) .
The High Court preferred the view of the Assam High Court in C.I.T. vs Sabitri Debi 275 Agarwalla(1) to the view of the Bombay High Court in C.I.T. vs Kishoresingh Kalyansinh Solanki(2).
The Revenue has come up in appeal to this Court challenging the aforesaid view of the High Court.
Since the question relates to the proper construction of section 33B of the Act with particular bearing on the scope of the appellate powers of the Tribunal under sub section
(4) thereof and the effect of sub section
(2) (b) thereon, it will be desirable to note the material provisions of section 33B.
Under sub section
(1) power has been conferred upon the Commissioner to revise Income Tax Officer 's orders but the exercise of such power is regulated by the two conditions mentioned therein, namely, (a) he must consider the order sought to be revised to be erroneous as being prejudicial to the interests of the revenue and (b) he must give an opportunity to the assessee of being heard before revising it.
Sub section
(2) (b) prescribes a period of limitation in negative words by providing that "no order shall be made under sub section
(1) after the expiry of two years from the date of the order sought to be revised.
" Sub section
(3) confers on the assessee a right to prefer an appeal to the Appellate Tribunal against the Commissioner 's order made under sub section
(1) while sub section
(4) indicates the powers of the Appellate Tribunal in dealing with such appeal by providing that "such appeal shall be dealt with in the same manner as if it were an appeal under sub section
(1) of section 33".
Two things stand out clearly or a fair reading of the two concerned provisions, namely, sub section
(2) (b) and sub section
The bar of limitation contained in sub s (2) (b) is on the Commissioner 's power to pass revisional orders under sub section
(1) and the same appears to be absolute in the sense that it applies to every order to be made under sub section
At the same time sub section
(4) confers on the Appellate Tribunal very wide powers which it has while dealing with an appeal under section 33(1).
In other words, the Appellate Tribunal has power "to pass such orders thereon (i.e. on the appeal) as it thinks fit".
In Hukumchand Mills(3), case this Court has explained that the word "thereon" restricts the jurisdiction of the Appellate Tribunal to the subject matter of the appeal which merely means that the Tribunal cannot adjudicate or give a finding on a question which is not in dispute and which does not form the subject matter of the appeal but the words "pass such orders thereon as it thinks fit" include all the powers (except possibly the power of enhancement) which are conferred on the Assistant Appellate Commissioner by section 31 and consequently the Tribunal has authority in exercise of its appellate powers to set aside the order appealed against and direct fresh assessment in the light of the observations made by it in its 276 judgment.
In other words, similar power is possessed by the Appellate Tribunal while dealing with the appeal under sub section (4) of section 33B.
The question that arises for our consideration is whether such a direction to dispose of the case afresh can be given to the Commissioner by the Appellate Tribunal when the period of limitation prescribed under sub section
(2) (b) has expired ? In other words, whether sub section (2) (b) of section 33B has the effect of attenuating or curtailing the appellate powers of the Tribunal under sub section
(4) ? Counsel for the Revenue contended that it was a well settled principle that all the parts of a section or statute should be construed together and that every clause of a section should be construed with reference to the context and other clauses thereof, so that the construction put on a particular provision makes a consistent enactment of the whole statute.
He further urged that the object of conferring revisional power upon the Commissioner under section 33B(1) obviously was to correct erroneous orders of Income Tax Officer in so far as they were prejudicial to the interests of the revenue and such object would be defeated if the bar of limitation contained in sub section
(2)(b) is held applicable to revisional orders passed by the Commissioner in pursuance of or in obedience to a direction given or order made by the Appellate Tribunal in appeal under section 33B(4) or for that matter by the High Court or Supreme Court in case the matter is carried to those Courts.
According to him it would be proper to construe the provision in sub section 2(b) as being applicable to suo motu revisional orders passed by the Commissioner under sub section
(1) and not to orders passed by him in pursuance of a direction issued to him by the Tribunal in appeal.
He urged that there was no reason why sub section
(2) (b) should be regarded as having the effect of attenuating or curtailing the very wide appellate powers conferred upon the Tribunal.
He further urged that no argument could be based on the absence of a provision, similar to the 2nd proviso to section 34(3), in section 33B of the Act the support of his contention strong reliance was placed by him upon the Bombay High Court 's decision in Solanki 's case (supra).
On the other hand, counsel for the assessee canvassed the High Court 's view for our acceptance by pointing out that both sections 33B and 34(3) together with the second proviso were introduced in the Act by the same Amending Act 1948 but in section 33B no provision for removing or relaxing the bar of limitation contained in sub section
(2)(b) was made and hence it was not for the Court to supply a casus omissus.
He also relied on the fact that in the 1961 Act the necessary provision has been enacted in section 263(3) which also showed that in the absence of such provision in section 33B of the 1922 Act the bar of sub section
(2) (b) was 277 applicable to every order of the Commissioner irrespective of whether it was made suo motu or in pursuance of a direction issued by the appellate authority.
According to him since the bar of limitation contained in sub section
(2) (b) of section 33B always operated for the benefit of the assessee as the same accorded finality to the assessment orders, the appellate powers of the Tribunal under sub section
(4) must be regarded as having been curtailed to the extent that the Tribunal cannot remand the case to the Commissioner for making fresh assessment if by then the limitation has expired.
Two principles of construction one relating to casus omissus and the other in regard to reading the statute as a whole appear to be well settled.
In regard to the former the following statement of law appears in Maxwell on Interpretation of Statutes (12th Edn.) at page 33: Omissions not to be inferred "It is a corollary to the general rule of literal construction that nothing is to be added to or taken from a statute unless there are adequate grounds to justify the inference that the legislature intended something which it omitted to express.
Lord Mersey said: 'It is a strong thing to read into an Act of Parliament words which are not there, and in the absence of clear necessity it is a wrong thing to do. ' 'We are not entitled, ' said Lords Loreburn L.C., 'to read words into an Act of Parliament unless clear reason for it is to be found within the four corners of the Act itself. ' A case not provided for in a statute is not to be dealt with merely because there seems no good reason why it should have been omitted, and the omission in consequence to have been unintentional." In regard to the latter principle the following statement of law appears in Maxwell at page 47: A statute is to be read as a whole "It was resolved in the case of Lincoln College [(1595) 3 Co. Rep. 58b, at p. 59b] that the good expositor of an Act of Parliament should 'make construction on all the parts together, and not of one part only by itself. ' Every clause of a statute is to 'be construed with reference to the context and other clauses of the Act, so as, as far as possible, to make a consistent enactment of the whole statute. ' (Per Lord Davey in Canada Sugar Refining Co., Ltd. vs R : 278 In other words, under the first principle a casus omissus cannot be supplied by the Court except in the case of clear necessity and when reason for it found in the four corners of the statute itself but at the same time a casus omissus should not be readily inferred and for that purpose all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute.
This would be more so if literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the Legislature. "An intention to produce an unreasonable result", said Danckwerts L.J. in Artemiou vs Procopiou(1) "is not to be imputed to a statute if there is some other construction available.
" Where to apply words literally would "defeat the obvious intention of the legislation and produce a wholly unreasonable result" we must "do some violence to the words" and so achieve that obvious intention and produce a rational construction, (Per Lord Reid in Luke vs I.R.C. 1968 AC 557 where at p. 577 he also observed: "this is not a new problem, though our standard of drafting is such that it rarely emerges.
In the light of these principles we will have to construe sub section
(2) (b) with reference to the context and other clauses of section 33B. Section 33B was introduced in the Indian Income Tax Act, 1922 by the Income Tax and Business Profit Tax (Amendment) Act, 1948 with effect from March 30, 1948 and the object of introducing the same was obviously to confer revisional powers upon the Commissioner to correct the erroneous orders of an Income Tax Officer in so far as they were prejudicial to the interests of the revenue.
The language of the sub sec.
(1) clearly suggests that the said power was contemplated to be exercised suo motu by the Commissioner inasmuch as the opening words show that it was upto the Commissioner to call for and examine the record of any proceedings under the Act and on examination of the record if he were satisfied that any order passed by an Income Tax Officer was erroneous as being prejudicial to the interests of the revenue he could revise the same after giving an opportunity to the assessee of being heard.
It is true that sub section
(2) (b) thereof prescribed a period of limitation on his power by providing that no order shall be made under sub section
(1) after the expiry of two years from the date of the order sought to be revised by the Commissioner and a literal construction of sub section
(2) (b) also suggests that the bar of limitation imposed thereby was absolute in the sense that it applied to every kind of order to be made under sub section
(1) and no distinction was made between a 279 suo motu order and an order that might be made by him pursuant to a direction given by any appellate or other higher authority but the question is whether such a literal construction should be accorded to that provision ? As stated earlier sub section
(3) conferred on an assessee a right to prefer an appeal to the Appellate Tribunal against the Commissioner 's order made under sub section
(1) and under sub section
(4) the Tribunal had authority to deal with the impugned order of the Commissioner in such manner as it deemed fit in exercise of its appellate powers; for instance, it could confirm the impugned order, it could annul that order, it could after vacating it remand the case back to the Commissioner for making a fresh assessment in the light of the observations made by it in its judgment or it could, after calling for a remand report, rectify the erroneous order of the Income Tax Officer.
Further there was no period prescribed within which an appeal against the impugned order of The Commissioner had to be disposed of by the Tribunal and in the normal course on rare occasions such appeals would have been heard and disposed of before the expiry of two years from the date of the Income Tax Officer 's order which was regarded as erroneous by the Commissioner.
More often than not such appeals would come up for hearing after the expiry of the said period of two years a fact fully known and within the contemplation of the Legislature when it introduced the section in the Act in 1948.
In these circumstances did the Legislature intend to attenuate or curtail the appellate powers which it conferred on the Appellate Tribunal in very wide terms under sub section
(4) by enacting sub section
(2) (b) prescribing a time limit on the Commissioner 's power to revise an erroneous order of the Income Tax Officer when the Commissioner was seeking to exercise the same not suo motu but in pursuance of or obedience to a direction from the Appellate authority ? According to the construction contended for by the assesses and which found favour with the High Court the answer was in the affirmative because sub section
(2) (b), on its literal construction, was absolute.
In our view such literal construction would lead to a manifest y absurd result, because in a given case, like the present one, where the appellate authority (Tribunal) has found (a) the Income Tax Officer 's order to be clearly erroneous as being prejudicial to the interests of the revenue and (b) the Commissioner 's order unsustainable as being in violation of principles of natural justice how should the appellate authority exercise its appellate powers ? obviously it could not withhold its hands and refuse to interfere with Commissioner 's order altogether for, that would amount to perpetuating the Commissioner 's erroneous order, nor could it merely cancel or set aside the Commissioner 's wrong order without doing anything about the Income Tax Officer 's order, for.
that would result in perpetuating the Income Tax 280 Officer 's order which had been found to be manifestly erroneous as being prejudicial to the revenue.
But such result would flow from the view taken by the High Court which has held that the Tribunal acted properly in vacating the Commissioner 's order but did not act properly in directing him to dispose of the proceedings afresh after giving opportunity to the assesses.
Such manifestly absurd result could never have been intended by the Legislature.
Moreover, it was fairly conceded by the counsel for the assesses before us that in exercise of its appellate powers it was open to the Tribunal itself to call for a remand report from either the Commissioner or the Income Tax Officer and rectify the Income Tax Officer 's erroneous order after giving opportunity to the assesses and in doing so no question of limitation would arise.
It was also not disputed by him that it was equally open to the Tribunal to set aside the Commissioner 's order and remand the case directly to the Income Tax Officer giving the requisite direction to rectify his erroneous order and thereupon the Income Tax Officer could carry out the Tribunal 's direction.
for, admittedly, the bar of limitation under 1) sub section
(2) (b) was only on the Commissioner 's paver to make an assessment afresh and not on the Income Tax Officer.
If this be the correct position then it is gravely anomalous that the Tribunal should not be in a position to set aside the Commissioner 's order and remand the case back to the Commissioner for making a fresh assessment because in the meantime two years ' period of limitation has expired, for, it would mean that the Tribunal was prevented from achieving the desired effect directly through the Commissioner but it could do so indirectly through the Income Tax Officer.
A literal construction placed on subs.
(2) (b) would lead to such manifestly absurd and anomalous results, which, we do not think, were intended by the Legislature.
These considerations compel us to construe the words of sub section (2)(b) as being applicable to suo motu orders of the Commissioner in revision and not to orders made by him pursuant to a direction or order passed by the Appellate Tribunal under sub section
(4) or by any other higher authority.
Such construction will be in consonance with the principle that all parts of the section should be construed together and every clause thereof should be construed with reference to the context and other clauses thereof so that the construction put on that particular provision makes a consistent enactment of the whole statute.
Having regard to the above discussion we are clearly of opinion that the view taken by the Bombay High Court in Solanki 's case (supra) on the construction of sub section
(2) (b) of section 33B is correct and we approve of it.
In Sabitri Devi Agrawalla 's case (supra) the Assam High Court took a contrary view and held that under section 33B(4) of the 281 Act the Tribunal would not be justified in remanding the case to the Commissioner after the two years had expired from the date of the order sought to be revised.
The decision seems to rest on three aspects: (a) it being fiscal statute the same must be strictly construed, (b) the bar of limitation contained in sub section
(2)(b) was absolute and unqualified and covered all types of orders and (c) that unlike the second proviso to section 34(3) there was no provision for removing or relaxing the bar of limitation on the power of the Commissioner under section 33B (2) (b) and that since section 33B as well as section 34(3) with second proviso had been introduced in the Act by the same Amending Act of 1948 there was a deliberate omission to make a provision removing of relaxing the 'oar of limitation in section 33B and for such an omission the remedy lay with the Legislature and not with the Court.
The Assam High Court also alluded to the fact that under the 1961 Act the Legislature had made a provision removing or relaxing the bar of limitation in section 263(3).
As regards aspect (b) we have already dealt with it above.
As regards aspect (a) it is well settled that the principle that the fiscal statute should be construed strictly is applicable only to taxing provisions such as a charging provision or a provision imposing penalty and not to those parts of the statute which contain machinery provisions and by no stretch could section 33B be regarded as a charging provision.
As regards aspect (c) we have already pointed out above that a casus omissus has not to be readily inferred and it could not be inferred from the mere fact that both sections 33B and 34(3) together with the second proviso were inserted simultaneously in the Act by the same Amending Act of 1948 and that in the case of former a relaxing provision was not made as was made in the case of the latter provision, firstly because the two provisions operated in distinct fields and secondly it would be improper to do so without comparing the various stages of amendments through which each set of these provisions had undergone since inception.
The further aspect that the Legislature has in the 1961 Act made the requisite provision removing or relaxing the bar of limitation in section 263(3), is, in our view, not of much consequence.
Irrespective of the question whether the second proviso to section 34(3) was enacted ex majore cautella or not (over which conflicting views obtain), it is clear to us that section 263(3) of the 1961 Act must be regarded as an ex majore cautella provision.
Admittedly, at the time when the said provision was enacted in the 1961 Act, the Bombay view held the field and, there was no decision to the contrary of any other High Court.
Obviously, therefore, the enactment of section 263(3) must be regarded as declaratory of the law which was already prevailing and this position has been clarified in the Notes on Clauses of the Income Tax Bill 1961 where it has been stated that sub cl.
(3) of section 263 was new and had been 19 282 added to get over the difficulty experienced in (wrongly state 'caused by ') the Bombay High Court 's; decision in Solanki 's case (supra) .
The enactment of an ex majore cautella provision in the 1961 Act would, therefore, be a legislative recognition of the legal position that obtained as a result of judicial pronouncement qua the 1922 Act.
In our view, therefore.
the Assam case was wrongly decided.
Reference may now be made to a decision of this Court in Pooran Mall 's case, where in a similar situation arising under section 132 of the Income Tax Act, 1961, a restricted construction was accorded by this Court to sub section
(5) thereof which prescribed certain period of limitation.
In that case pursuant to an authorisation issued under section 132(1) of the 1961 Act searches were carried out on October 15 and 16, 1971 at the residence and business premises of P, an individual, and at certain office premises of the firms in which he was a partner, and jewellery, cash and account books were seized.
There was also a search of two banks and a restraint order was made under section 132(3) in respect of l 14 silver bars pledged with those banks on the ground that they were the property of P.
On January 12, 1972, the Income Tax Officer passed a summary order under section 132(5) on the basis that all the assets seized and 114 silver bars belonged to P. Thereupon, P & Sons, one of the firms in which P was a partner, and P filed a writ petition in the High Court challenging the order dated January 12, 1972 and on April 6, 1977, on the basis of the consent of the parties, the High Court quashed the order and permitted the department to make a fresh enquiry after giving an opportunity to the petitioner and pass a fresh order within two months.
After a fresh enquiry the Income Tax Officer passed an order on June S, 1972.
holding that the silver bars belonged to P, the individual, and not the firm, P and Sons.
Thereupon, the firm and P again filed a writ petition challenging the second order.
The High Court held that the Income Tax Officer had no jurisdiction to pass that order beyond the period prescribed in section 132(5) and set aside the order and directed the return of the 114 bars of silver.
This Court held, inter alia, that the order made in pursuance of a direction given ' under section 132(12) or by a Court in writ proceedings, was not subject to the limitation prescribed under section 132(5).
At page 394 this Court has observed thus: "Even if the period of time fixed under section 132(5) is held to be mandatory that was satisfied when the first order was made.
Thereafter, if any direction is given under section 132(2) or by a Court in writ proceedings, as in this case, we do not think an order made in pursuance of such a 283 direction would be subject to the limitations prescribed under A section 132 (5) .
Once the order has been made within ninety days the aggrieved person has got the right to approach the notified authority under section 132(11) within thirty days and that authority can direct the Income Tax Officer to pass a fresh order.
We cannot accept the contention on behalf of the respondents that even such a fresh order should be passed within ninety days.
It would make the sub sections (11) and (12) of section 132 ridiculous and useless.
" It may be pointed out that in section 132 there is no provision removing or relaxing the bar of limitation contained in section 132(5) enabling the Income Tax Officer to pass an order afresh pursuant to any direction issued to him by a higher authority under section 132(12) and even the this Court took the view that the limitation prescribed under section 132(5) will be applicable only to the initial order to be made by the Income Tax Officer and not to an order that would be made by him pursuant to a direction from the Board or notified authority.
The concerned provisions were read together and such construction was put on sub section
(5) of section 132 as made a consistent enactment of the whole statute.
In the result, we are of opinion that the answer given by the High Court to the second aspect of the second question referred to it was clearly wrong and, in our view, the Tribunal 's order vacating the Commissioner 's order and directing the Commissioner to make assessment afresh after giving due opportunity to the respondent assessee was proper.
The appeal is accordingly allowed but in the circumstances, there will be no order as to costs.
V.D.K. Appeal allowed.

dataset_name: IN-Abs

summary:
In respect of the accounting years ending March 31, 1957 and March 1958 respectively on the voluntary returns submitted by the respondent, the Income Tax Officer 'E ' Ward District II (1) Calcutta completed the assessment for these years (1957 58 and 1958 59) on total incomes of Rs. 7000/ and Rs. 7500/ respectively, the same having been made in the status of unregistered firm consisting of three partners, namely Asha Devi Vaid, Santosh Devi Vaid and Sugni Devi Vaid with equal shares.
On August 2, 1962, the Commissioner of Income Tax issued notice to show cause why the said assessments should not be cancelled under section 33B of the Act as he felt that the completed assessments were erroneous as being prejudicial to the interests of the Revenue and the Income Tax Officer 'E ' Ward District II(1) Calcutta had no territorial jurisdiction over the case of the assessee.
The notice was served on the assessee on August 3, 1962 and the hearing was fixed by the Commissioner for August 6, 1962.
On the ground that none appeared and there was no application for adjournment, the Commissioner passed his order under section 33B ex parte on that date.
By his said order the Commissioner cancelled the assessments made by the Income Tax Officer on three grounds (a) that some of the partners were minors and were not competent to enter into any partnership agreement with the result that the status of unregistered firm assigned to the assessee by the Income Tax Officer was clearly wrong and as such the assessments deserved to be cancelled; (b) that the books of accounts were unreliable and they were not properly examined by the Income Tax Officer with the result that the assessments made were prejudicial to the interests of the revenue and (c) that the Income Tax Officer has no territorial jurisdiction over the case which fell in the jurisdiction of Income Tax Officer, District III Calcutta and directed the Income Tax Officer having proper jurisdiction to make fresh assessments after examining the records of the assessee in accordance with law.
The appeals preferred to the Appellate Tribunal under section 33B(3) were accepted.
Finding that the Commissioner 's order passed at 11.30 A.M. ex parte was bad in as much as the notice served upon the assessee permitted filing of objections at any time during the course of August 6, 1962 and the objections were in fact filed later in the day, the Tribunal remanded the case with the direction to dispose it of afresh after giving due opportunity to the respondent assessee.
On a reference to the High Court at the instance of the appellant, the 269 High Court held: (a) the assumption of jurisdiction by the Commissioner under section 33B of the Income Tax Act was valid in law; (b) the Tribunal acted properly in vacating or cancelling the Commissioner 's order, but, (c) the Tribunal did not act properly in directing the Commissioner to act under section 33B(1) because the period of limitation of two years prescribed under section 33(2)(b) for him to act under section 33B(1) had expired.
In doing so, the High Court held that the provision of sub section 2(b) was absolute and covered even a revisional order of the Commissioner passed in pursuance of a direction given by any appellate authority.
Allowing the appeal by Certificate, the Court ^ HELD: 1.
Under sub section (1) of section 33B of the Income Tax Act, power has been conferred upon the Commissioner to revise Income Tax Officer 's orders but the exercise of such power is regulated by the two conditions mentioned therein namely, (a) he must consider the order sought to be revised to be erroneous as being prejudicial to the interests of the revenue and (b) he must give an opportunity to the assessee of being heard before revising it.
Sub section
(2)(b) prescribes a period of limitation in negative words by providing that "no order shall be made under sub s(1) after the expiry of two years from the date of the order sought to be revised".
Sub s.(3) confers on the assessee a right to prefer an appeal to the Appellate.
Tribunal against the Commissioners ' order made under sub s.(1) while sub section
(4) indicates the power of the Appellate Tribunal in dealing with such appeal by providing that "such appeal shall be dealt with in the same manner as if it were an appeal under sub s.(1) of section 33".
Two things stand out clearly on a fair reading of the two concerned provisions, namely, sub s.(2)(b) and sub s.(4).
The bar of limitation contained in sub section
(2)(b) is on the Commissioner 's power to pass revisional orders under sub section
(1) and the same appears to be absolute in the sense that it applies to every order to be made under sub s.(1).
At the same time sub s.(4) confers on the Appellate Tribunal very wide powers which it has while dealing with an appeal under section 33(1).
In other words, the Appellate Tribunal has power "to pass such orders thereon (i.e. on the appeal) as thinks fit.
" The word "thereon" restricts the jurisdiction of the Appellate Tribunal to the subject matter of the appeal which merely means that the Tribunal cannot adjudicate or give a finding on a question which is not in dispute and which does not form the subject matter of the appeal but the words "pass such orders thereon as it thinks fit" include all the powers (except possibly the power of enhancement) which are conferred on the Assistant Appellate Commissioner by section 31 and consequently the Tribunal has authority in exercise of its appellate powers to set aside the order appealed against and direct fresh assessment in the light of the observations made by it in its judgment.
In other words, similar power is possessed by the Appellate Tribunal while dealing with the appeal under sub s.(4) of section 33B. [275 A H, 276 A] Hukamchand Mills 's case, ; applied.
Two principles of construction are relating to casus omissus and the other in regard to reading the statute as a whole are well settled.
Under the first principle, a casus omissus cannot be supplied by the Court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself but at the same time a casus omissus should not be readily inferred and 270 for that purpose all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute.
This would be more so if literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the Legislature.
[277 B, 278 A B] Artemiou vs Procopiou, , Luke vs Inland Revenue Commissioner and 577 Quoted with approval.
The object of introducing Section 33B with effect from March 30, 1948 was to confer revisional powers upon the Commissioner to correct the erroneous orders of an Income Tax Officer in so far as they were prejudicial to the interests of the revenue.
The language of the sub sec.(1) clearly suggests that the said power was contemplated to be exercised suo motu by the Commissioner inasmuch as the opening words show that it was upto the Commissioner to call for and examine the record of any proceedings under the Act and on examination of the record if he were satisfied that any order passed by an Income Tax Officer was erroneous as being prejudicial to the interests of the revenue he could revise the same after giving an opportunity to the assessee of being heard.
It is true that sub s.(2)(b) thereof prescribed a period of limitation on his power by providing that no order shall be made under sub s.(1) after the expiry of the two years from the date of the order sought to be revised by the Commissioner and a literal construction of sub s.(2)(b) also suggests that the bar of limitation imposed thereby was absolute in the sense that it applied to every kind of order to be made under sub s.(1) and no distinction was made between a suo motu order and an order that might be made by him pursuant to a direction given by any appellate or other higher authority.
Sub s.(3) conferred on an assessee a right to prefer an appeal to the appellate Tribunal against the Commissioner 's order made under sub section (1) and under sub s.(4) the Tribunal had authority to deal with the impugned order of the Commissioner in such manner as it deemed fit in exercise of its appellate powers; for instance, it could confirm the impugned order, it could annul that order, or it could after vacating it remand the case back to the Commissioner for making a fresh assessment in the light of the observations made by it in its judgment or it could after calling for a remand report, rectify the erroneous order of the Income Tax Officer.
Further there was no period prescribed within which an appeal against the impugned order of the Commissioner had to be disposed of by the Tribunal and in the normal course on rare occasions such appeals would have been heard and disposed of before the expiry of two years from the date of the Income Tax Officer 's order which was regard as erroneous by the Commissioner.
More often than not such appeals would come up for hearing after the expiry of the said period of two years a fact fully known and within the contemplation of the Legislature when it introduced the section in the Act in 1948.
[278 E H, 279 A D] 4.
The Legislature did not intend to attenuate or curtail the appellate powers which it conferred on the appellate Tribunal in very wide terms under sub s.(4) by enacting sub section 2(b) prescribing a time limit on the Commissioner 's power to reverse an erroneous order of the Income Tax Officer when the Commissioner was seeking the exercise the same not suo motu but in pursuance of or obedience to a direction from the appellate authority.
Any contrary and literal construction would lead to manifestly absurd result, because in a given 271 case, like the present one where the appellate authority (Tribunal) has found (a) the Income Tax Officer 's order to be clearly erroneous as being prejudicial to the interests of the revenue and (b) the Commissioner 's order unsustainable as being in violation of principles of natural justice; it would be difficult for the appellate authority to exercise its powers.
Obviously it could not withhold its hands and refuse to interfere with Commissioner 's order altogether, for, that would amount to perpetuating the Commissioner 's erroneous order, nor could it merely cancel or set aside the Commissioner 's wrong order without doing anything about the Income Tax Officer 's order, for that, would result in perpetuating the Income Tax Officer 's order which had been found to be manifestly erroneous as being prejudicial to the revenue.
Moreover, in exercise of its appellate powers it was open to the Tribunal itself to call for a remand report from either the Commissioner or the Income Tax Officer and rectify the Income Tax Officer 's erroneous order after giving opportunity to the assessee and in doing so no question of limitation would arise.
It was equally open to the Tribunal to set aside the Commissioner 's order and remand the case directly to the Income Tax Officer giving requisite direction to rectify his erroneous order and thereupon the Income Tax Officer would carry out the Tribunal 's direction for, admittedly, the bar of limitation under sub s.(2)(b) was only on the Commissioner 's power to make an assessment afresh and not on the Income Tax Officer.
If this be the correct position then it is gravely anomalous that the Tribunal should not be in a position to set aside the Commissioner 's order and remand the case back to the Commissioner for making a fresh assessment because in the meantime two years ' period of limitation has expired, for, it would mean that the Tribunal was prevented from achieving the desired effect directly through the Commissioner but it could do so indirectly through the Income Tax Officer.
A literal construction placed on sub s.(2) (b) would lead to such manifestly absurd and anomalous results, which, were not intended by the Legislature.
Therefore, the words of sub section 2(b) should be construed as being applicable to suo motu orders of the Commissioner in revision and not to orders made by him pursuant to a direction or order passed by the Appellate Tribunal under sub s.(4) or by any other higher authority.
Such construction will be in consonance with the principle that all parts of the section should be construed together and every clause thereof should be construed with reference to the context and other clauses thereof so that the construction put on that particular provision makes a consistent enactment of the whole statute.
[279 D H, 280 A G] Commissioner of Income Tax vs Kishoresingh Kalyan Singh Solanki, ; approved.
It is well settled that the principle that the fiscal statute should be construed strictly is applicable only to taxing provisions such as a charging provision or a provision imposing penalty and not to those parts of the statute which contain machinery provisions and by no stretch could section 33B be regarded as charging provision.
[281 C D] 6.
A casus omissus has not to be readily inferred and it could not be inferred from the mere fact that both sections 33B and 34(3) together with the second proviso were inserted simultaneously in the Act by the same Amending Act of 1948 and that in the case of former a relaxing provision was not made as was made in the case of the latter provision, firstly because the two provisions operated in distinct fields and secondly it would be improper to do so without compar 272 ing the various stages of amendments through which each set of these Provisions had undergone since inception.
The further aspect the Legislature has in the 1961 Act made the requisite provision removing or relaxing the bar of limitation, in section 263(3), is, not of much importance.
Irrespective of the question whether the second proviso to section 34(3) was enacted ex majore cautella or not (over which conflicting views obtain) it is clear that section 263(3) of the 1961 Act must be regarded as an ex majore cautella provision.
Admittedly, at the time when the said provision was enacted in the 1961 Act, the Bombay view held the field and there was no decision to the contrary of any other High Court.
Obviously, therefore, the enactment of section 263(3) must be regarded as declaratory of the law which was already prevailing and this position has been clarified in the Notes on Clauses of the Income Tax Bill 1961 where it has been stated that sub cl.
(3) of section 263 was new and had been added to get over the difficulty experienced in (wrongly stated 'caused by ') the Bombay High Court 's decision in Solanki 's case.
The enactment of an ex majore cautella provision in the 1961 Act would, therefore, be a legislative recognition of the legal position that obtained as a result of judicial pronouncement qua the 1922 Act.
[281 E H, 282 A] C.I.T. vs Sabitri Devi Agarwalla, over ruled.
Pooran Mall 's case, ; relied on.


judgement:
Civil Appeal No. 2031 of 1979.
Appeal by Special Leave from the Judgment and Order dated 20 1 79 of the Rajasthan High Court (Jaipur Bench) at Jaipur in S.B. Revision No. 112/76.
Soli J. Sorabjee, Solicitor General, Subhodh Markendya and Girish Chandra for the Appellants.
Balakrishna Gaur for the Respondent.
The Judgment of the Court was delivered by KRISHNA IYER, J.
An odd case of sentence of three months ' civil imprisonment and attachment of assets of the Central Government and two of its officers for default in instant reinstatement of a Railway Inspector removed from service for misconduct occasions this appeal by special leave.
300 The Court System is neither a cloistered virtue nor a self righteous process and readily re examines, in its appellate crucible, the judgments rendered at lesser levels even if the subject matter be, as here, alleged disobedience of a judicial order.
Justice is not hubristic and truth triumphs by self criticism.
And so, this Court, in keeping with such an invigilative perspective, must review the punitive directive of the trial court, affirmed upto the High Court but challenged before us, that the Union of India and its officers in the Railway Department the appellants do suffer distraint of property and imprisonment of person for the contempt of its authority by non compliance with its order of injunction.
This case disturbs us somewhat and constrains us to go to the basics in a certain branch of the jurisprudence of contempt of court.
As will presently appear, the synthesis of two seemingly antithetical creeds, both vital to our Republic is the key to the crucial issue projected by this appeal where disobedience of a mandatory injunction to retain in service, pendente lite, the respondent, a railway inspector, regardless of the disciplinary proceedings which had by then allegedly culminated in his exist from service.
The court shall neither be imperious nor be obsequious.
The law, in the area of contempt of court, must avoid the extremes of hyper reactivity to marginal indifference to judicial authority out of pragmatic difficulties and of hypo respect for court commands in a cavalier spirit of 'the court has no guns.
Why care ? ' The fluid, yet valid, concept of 'contempt of court ' keeps judges under the rule of law; for, personal liberty, under our constitutional order, is protected by a processual armour, even if its deprivation be the product of the judicial process.
This caveat is called for in the present case where we are confronted by a bizarre order of contingent imprisonment of unspecified servants and coercive attachment of un particularised properties of the Union of India.
And yet, this order has survived two appeals before arriving here by special leave.
The facts are few and the law is not abstruse; yet, in our view, the order under appeal is an overzealous command with fatal failings writ on its face.
The respondent, an Inspector in the Western Railway, was proceeded against for misconduct.
He did not show up when the 'show cause ' notice was issued; and when the disciplinary steps proceeded further, he artfully rushed to the munsif 's court, by passing the departmental process, and sued for a declaration of immunity and permanent injunction against further governmental action.
Inevitably, he moved for an ad interim injunction to restrain the Railways from affecting his position in service by continuing the disciplinary enquiry and to continue to pay his full salary.
After hearing both sides the court 301 issued, on April 15, 1974, such an injunction or freeze order, which was appealed against in vain; and eventually, the revision to the High Court also proved fruitless.
The blanket order, which was sustained, reads thus: I, therefore, order and direct the N.A. Union of India and its employees not to implement or otherwise put in effect the order of dismissal at 18 1 74 or any other one removing, terminating or dismissing the services of the applicant as I.O.W. Of Western Railways and direct further that the applicant shall be retained and continued on post, power, pay, privileges and perquisites attached to the post of Inspector of Works, W. Rly, and in the same manner as if no orders of removal or any other one were passed.
In other words he shall be placed in the position as he held it on 14 1 1974 in the matter of pay, power, privileges and all other perquisites that he availed and enjoyed on 14 1 1974 and immediately before.
The appellants, hopefully but harmfully, as events proved, awaited the decision in the higher courts before implementing the direction for reinstatement.
But even while the case of injunction was pending in the District Court, in appeal, an application under 0.39 R.2(3) or disobedience was filed on 15 7 1974.
The trial judge held the appellants guilty and passed a nebulous sentence against nameless culprits on January 5, 1976 in these terms.
It is also clear that the non applicants according to the decision of this court dated 15 4 74 have not continued payment of the wages and other allowances and therefore it fully proved that the non applicants have not carried out the order dated 15 4 74 of this court.
Now the non applicants are hereby further ordered that if they fail to comply with the order dated 15.4.74 within 15 days the opposite party shall be visited with the order of attachment of property and sending them to civil jail.
As the non applicant No. 2 has been transferred from Kota Division, therefore, the compliance of the order will be made by the present Divisional Superintendent, Kota.
(Translation furnished in court by the learned Solicitor General) An unsuccessful appeal and an unrewarding revision ensued.
The High Court hortatively told the Union of India that the law is the King of Kings and, admonished in high sounding style 302 that the state functionaries should atleast after 28 years of the functioning of the Constitution and rule of law in this country, realise understand and literally and faithfully implement the judicial pronouncement by showing respect to law All the officers, the citizens in general, the litigants and the State functionaries in all seriousness should keep the following internal saying of the great jurist Maharshi Manu as uppermost in our mind, i.e. 'Law is the King of Kings far more rigid and powerful than they, there is nothing higher than law; and by its powers the weak shall prevail over the strong and justice shall triumph '.
I wish this should not only be exhibited as the guide lines in all Government offices, important public institutions, street corners and road corners but acts upon both in letter and spirit by all irrespective of the office, profession, status and assignment which one holds in life.
We agree but wish to add that the Manu text be exhibited also in courts halls together with Cromwell 's famous statement which the great Judge, learned Hand wanted should be hung on legislative and court halls: 'l beseech you, in the bowels of Christ, think it possible that you might be mistaken ! ' If we scan the anatomy of the Munsif 's order, which was upheld all along, we notice awesome implications that if, within 15 days, compliance with the injunction did not take place which implied payment of long years ' salaries and re induction into service of the respondent (who had by then been removed), all of which required much more time to secure sanctions and drawls of moneys in a mammoth hierarchical machine the opposite parties (who, among them ?) shall be visits with the order of attachment of property (which ?) and sending them (whom ? to civil jail (for how long ?).
As the non applicant No. 2 has been transferred from Kota Division therefore, the compliance of the order will be made by the present Divisional Superintendent, Kota (and so, the transferee officer was in peril of imprisonment ?).
The bracketed interrogations are ours, briefly to indicate that where liberty and property are to be deprived it is fundamental that vagueness is a fatal vice even if the issuing authority be the court.
The infirmity was corrected in small part by the High Court in revision as will presently notice Anyway, this order was stayed by the High Court on 5 3 1976 until it finally dismissed the revision on January 20, 1979.
And it is the appellant 's case that salaries thereafter have been paid, calculations have been made, sanctions obtained and money withdrawn and all the 303 dues of years are ready to be distributed.
The question is whether the action for disobedience was legal and justified and, in any case, the draconian punishment of Government by attaching its properties and putting its servants in jail was a desertion of judicial discretion whole hall mark is to be firm but not authoritarian, liberal but not petulant.
and ever informed by realism and impressed with contrition.
We have here an interlocutory injunction, though unusual, whose soundness is being tested in a separate proceeding in this Court.
Let use pro tempore, assume its valid existence and focus on the folk up of alleged breach and visitation of punishment.
What was the direction ? Could it be practical to comply within that time, having due regard to the inertia of administrative processes ? Was there recusant refusal, and, if so, by whom, in the conspectus of facts here? When does the court go to the extreme of imprisonment of Government servants at lesser levels, who have to act on orders from above, for disobedience? Is it the path of judicial discretion to temper justice with mercy or practise the opposite ? Above all.
though arising in limine, can there be an order of contingent attachment of unspecified properties ? Can the court imprison any one unidentified in the order by making an omnibus direction leaving the life giving parts blanks to be filled up long after the judgment and.
perhaps, to allow the bailiff to seize whom he regards as the violatory? May be, 'Hurry Kills ' and 'hasten slowly ' are mottos good for every one who exercises power either at the wheel of an automobile or through the pen of a public functionary.
We will proceed to resolve these questions which unbosom their answers in their very formulation For instance, does not the mere asking call for the obvious answer that no order by however high a power can be fair or reasonable if it jeopardises the person of a citizen wearing the armour of part III, without so much as specificating the identity of the human being upon whom the authority is to lay hands.
And yet, the learned Munsif merely directed that 'the opposite party ' (plurality of three, including the Central Government) be sent to civil jail.
Moreover, the order notices that the Divisional Superintendent (P2) has been transferred and yet the innocent transferee is put in peril of incarceration.
Realising this fatal Haw, the High Court sought to repair the yawning tear by making the in observation cum direction: The learned Munsif Magistrate, who passed the earlier ll order on January 5, 1976 could not proceed with the proceedings for sending the petitioners concerned to Civil Jail 304 and also of attachment of the property.
It would be for the Munsif concerned to name the officer concerned who is required to be sent to Jail and further to give details of the property to be attached for the purpose of compelling compliance as per finding already given in judgment dated January 5, 1976 as modified in appeal.
(emphasis added) The court was relentless even when informed that the payment of salary pursuant to the order passed by the High Court had already been made.
The concluding portion of the High Court 's judgment stated that the Munsif concerned should take prompt action "for executing his order in respect of sending concerned officer to jail and the attachment of the property concerned as mentioned in his judgment . " Both the orders keep the identity of the key persons and properties in uncertainty.
We are a little startled that a court in the contempt jurisdiction should deprive the personal liberty of a person without naming in the order whom the Court 's bailiff should take into custody or the jail authorities should receive.
Equally clearly, how could property be taken without its being particularised in the judgment, disregarding procedural obligations ? It is not as if without hearing the officer to be jailed and his case against detention considered, the Munsif give ad hoc details of property to be attached without hearing the owner thereof as to his version about why his property should not be touched.
The constitutional sanctity of liberty and the (then) protection of property will become chimerical and the processual law will hang limp is the substantive order is silent and identifying the offender is left over as a ministerial measure.
The High Court was in error in leaving it to the trial court to designate such names when it actually issued the ministerial order to execute its decretal order.
Nameless humans cannot be whisked off to prison even in the name of contempt by insertion of the name after the judgment is delivered.
Natural justice is pervasive doctrine integral to processual fair play in Indian jurisprudence.
For this reason alone, the extent order under challenge is vulnerable against both the attachment of unspecified property and detention of unnamed contemners.
Independently of this invalidatory circumstance, it is apparent that there is no ground for judicial indignation once the facts are appreciated in their realistic setting.
The order of injunction was made by the trial court on 15 4 74 and brought before the High Court where the revision petition was dismissed on 3 1 1979.
Strictly speaking, the order of injunction had not been stayed and should have been obeyed.
305 It is no excuse to say that when appeal and revision pend, litigative hopes lull people into insouciance.
While this is not prudent, it is component in, judging about obstinate non compliance.
To institute a proceeding for disobedience of an injunction commanding reinstatement of a government servant purportedly removed from service by the higher officers of the Railway, together with payment of salary for prior periods, is a stultification of the jurisdiction, if sufficient time is not given.
A little touch of realism would have easily convinced the High Court that a government servant of the Union of India who has been removed from service for misconduct could not be reinstated with full back pay immediately the order was made by the Court.
It had to be communicated to various officers, orders had to be made at various levels, files had to move and notings made for gestation before implementation.
All this takes time and when the court order is eventually effectuated, the salary of the officer will, of course, have to be paid with effect from the original date of the impugned threat of action.
To proceed to punish in haste without pausing to realise how government functions is not fair in this drastic jurisdiction where personal freedom is in peril.
The description of is processes, as prevalent in the days of Lord Curzon, holds good to day.
Here are his impatient words dipped in pungent ink: ".
the administration had become ponderous, like an elephant 'very stately, very powerful, with a high standard of intelligence, but with a regal slowness in its gait '" "Round and round, like the diurnal revolution of the earth, went the file, stately, solemn, sure and slow: and now, in due season, it has completed its orbit, and I am invited to register the concluding stage.
" We are in no mood to condone willful procrastination nor suffer wanton stagnation in Administration as a ground for default in obeying court orders.
The Law does not respect lazy bosses nor 'cheeky ' evaders .
But no proof of that species of guilt has been brought to our notice Mere inaction has no long mileage where means rea is a sine qua non We, therefore, regard the court 's order, holding the appellants in contempt, a hasty measure, probably annoyed by absence of instant compliance.
306 The severity of the sentence is beyond comprehension.
We cannot understand how the court could ignore the fact that salary had been paid from the date of the High Court 's order upto date and the readiness to pay the back salaries, on securing the appropriate sanction and drawl of cheque, had been represented to the court.
Before us, the learned Solicitor General said that the entire back wages were ready to be paid and the necessary cheque had already beery drawn.
We see no inclination on the part of the Government of India to adopt a challenging attitude against the court 's writ.
it is well known that the contempt power should be kept sheathed and the swore should be drawn only sparingly if the court is convinced that there has been willful defiance or disobedience.
Moderation lends dignity to power and we feel that the facts of the present case far from call for any stronger step than an admonition to comply within a realistic spell of time and stiffer action thereafter.
We do not take the view that the Union of India should be shown undue indulgence or its officer singular solicitude.
But once there is clear evidence of active obedience, V coupled with expression, of regret delayed though the compliance be due to the inevitable time lag induced by paper logged procedures, the court may be clement.
Here, compliance and contrition are now present.
In these circumstances, we allow the appeal and record the undertaking of the Union of India, the 1st appellant, that the entire salary due to the respondent will be paid within one week from to day.

summary:
The respondent a railway employee was proceeded against by the department for misconduct.
He did not respond to the 'show cause ' notice issued to him and when the disciplinary proceedings proceeded ex parte he filed a suit for a declaration of immunity and permanent injunction against further departmental action.
He also moved an application for an ad interim injunction to restrain the department from affecting his position in service by continuing the disciplinary enquiry and to continue to pay his full salary.
After hearing, the Munsif directed that the respondent be placed in the same position that he held prior to the commencement of the departmental enquiry in the matter of pay, privileges and all other perquisites that he availed and enjoyed.
The department appealed against this order, and awaited the decision in the District Court before implementing the direction for re instatement.
In the meanwhile the respondent filed an application under Order 39 rule 2(3) of the Code of Civil Procedure for disobedience of the injunction order.
The trial court finding that there was non compliance with the Munsif 's order, directed 15 days time for compliance with the said order and on failure thereof, directed that the department shall be visited with the order of attachment of its property and its officers be sent to the civil jail.
An unsuccessful appeal and an unrewarding revision was the lot of the department.
The High Court made an observation cum direction that as the Munsif could not proceed with the proceedings for disobedience of the court 's order, it would be for the Munsif concerned to name the officer concerned who is required to be sent to jail and to give details of the property to be attached, for the purpose of compelling compliance with the court 's order.
Allowing the appeal to this Court, ^ HELD :1. 1.
The High Court was in error in leaving it to the trial court to designate the names when it actually issued the ministerial order to execute its decretal order.
Nameless humans cannot be whisked off to prison even in the name of contempt by insertion of the name after the judgment is delivered 2.
A government servant of the Union of India who had been removed from service for misconduct could not be reinstated with full back pay immediately the order was made by the Court.
It had to be communicated to 299 various officers, orders had to be made at various levels, files had to move and notings made for gestation before implementation.
All this takes time and when the court order is eventually effectuated, the salary of the officer will, of course, have to be paid with effect from the original date of impugned threat of action.
To proceed to punish in haste without pausing to realise how government functions is not fair in this drastic jurisdiction where personal freedom is in peril.
[305 B D] 3.
The constitutional sanctity of liberty and protection of property will become chimerical and the processual law will hang limp if the substantive order is silent and identifying the offender is left over as a ministerial measure.
[304 F] 4.
Where liberty and property are to be deprived it is fundamental that vagueness is a fatal vice even if the issuing authority be the court.
[302 G] In the instant case, the orders passed by the Munsif and the High Court keep identity of the key persons and properties in uncertainty.
For this reason alone, the orders are vulnerable against both the attachment of unspecified property and detention of unnamed contemners.
[304 C G] 5.
The law, in the area of contempt of court, must avoid the extremes of hyper reactivity to marginal indifference to judicial authority out of pragmatic difficulties.
[300 E] 6.
The fluid, yet valid, concept of contempt of court, keeps judges under the rule of law; for personal liberty is protected by a processual armour, even if its deprivation be the product of the judicial process.
[300 E] 7.
The contempt power should be kept sheathed and the sword should be drawn only sparingly if the court is convinced that there has been wilful defiance or disobedience.
[306 C] 8.
Once there is clear evidence of active obedience, coupled with expression of regret, delayed though the compliance be due to the inevitable time lag induced by the paper logged procedures, the court may be clement.
[306 D]


judgement:
ivil Appeal No. 133 or 1979.
Appeal by Special Leave from the Judgment and order dated 13 6 1972 of the Assam High Court in Income Tax Reference No. 2/64.
H. M. Verma and N. R. Choudhary for the Appellant.
S.C. Manchanda, S.P. Nayar and Miss A. Subhashini for the Respondent.
The Judgment of the Court was delivered by BHAGWATI, J.
This appeal by special leave raises a question of law relating to the interpretation of section 2(6A) (e) of the Indian Income Tax Act, 1922.
The question is in fact concluded by a decision of this Court in Commissioner of Income tax vs C.P. Sarathy Mudaliar but, it has been argued on behalf of the Revenue that this decision is in conflict with an earlier decision given by this Court in Commissioner of Income tax vs Rameshwarlal Sanwarmal and hence the question should be referred to a larger Bench.
We shall presently consider these two decisions, but we may point out straight away that, in our opinion, there is no conflict between these two decisions and the question is completely cover d by the decision in Commissioner of Income tax vs C. P. Sarathy Mudaliar (supra)).
The facts giving rise to the appeal are not in dispute and we may briefly state the same in order to appreciate how the question arises for determination.
The assessee is the Hindu Undivided Family of M/s. Rameshwarlal Sanwarmal consisting of section M. Saharia as manager and karta and 372 his wife and a minor son.
The assessment year with which we are concerned in the appeal is 1956 57, the relevant accounting year being the year ending Ramanavami Sambat 2012, that is, 18th April, 1956.
During this assessment year, the assessee was the beneficial owner of certain shares in a private limited company called Shyam Sunder Tea Co. (P) Limited.
These shares though beneficially owned by the assessee stood in the name of S.M. Saharia in the register of shareholders of the Company.
The assessee also owned 3 business concerns, namely, Nilmony Shop, Saharia & Co. and Saharia Industrial Corporation.
The Company advanced loans to these 3 business concerns during the relevant assessment year and since it was a company in which public were not substantially interested, a question arose in the assessment of the assessee to income tax, whether the loans advanced to these 3 business concerns could be regarded as "deemed dividend" of the assessee under section 2(6A)(e) of the Act? 'he Income tax officer took the view that the loans advanced to the 3 business concerns were attributable to the accumulated profits of the company to the extent of Rs. 4,48,045 and since the assessee which owned the 3 business concerns was the beneficial owner of the shares standing in the name of section M. Saharia, the conditions of section 2(6A) (e) were satisfied and the loans were liable to be regarded as "deemed dividend" taxable in the hands of the assessee under section 2(6A) (e).
The assessee preferred an appeal against the order of assessment but the Appellate Assistant Commissioner agreed with the view taken by the Income tax officer and held that since section M. Saharia held shares in the company as representing the assessee and the loans were advanced to the three business concerns belonging the assessee out of the accumulated profits of the company, the Income tax officer was justified in treating the loans as "deemed dividend" under section 2(6A) (e); and taxing them in the hands of the assessee.
The matter was carried in further appeal to the Tribunal and several arguments were advanced on behalf of the assessee resisting the applicability of section 2(6A) (e), but of them, there are two which are material for our purpose and they are: first, that since the assessee was not a registered holder of shares in the company, the loans advanced to the three business concerns of the assessee could not be regarded aS loans advanced to a share holder so as to attract the applicability of section 2(6A) (e); and secondly, even if the loans could be treated as "deemed dividend" under section 2(6A) (e), they could be taxed only ill the hands of section M. Saharia, the registered shareholder and not : in the hands of the, assessee.
Both these arguments were negatived by the Tribunal and so also were the other subordinate arguments and the appeal was rejected and the assessment confirmed.
This led 373 to a reference application by the assessee and on the application, five A. questions of law were referred by the Tribunal to the High Court.
There were, in fact, six questions but for the purpose of the present appeal, it is not necessary to refer to the first question, since it related to the assessment year 1955 56 and it raised a point of limitation which was ultimately decided in favour of the assessee and there is no dispute about it.
The other five questions related to the taxability of the loans advanced to the three business concerns of the assessee as "deemed dividend" under section 2((A)(e) and each of these questions brought in issue different aspect of taxability.
It is the first of these questions which is material and we may re produce it as follows: "Whether on the facts and in the circumstances of the case, and on a true interpretation of the terms of section 2(6A) (e) of the Income tax Act, 1922, the Tribunal was right ill holding that the amounts of Rs. 2,21,702 (gross) and Rs. 3,43,505 (net) were taxable as dividends in the hands of the applicant H.U.F. for the assessment year 1955 56 and 1956 57 respectively, when the shares were registered in the name of Sri section M. Saharia, the karta of the family ?" This question referred to both the assessment years 1955 56 and 1956 57, but we are not concerned in this appeal with the controversy relating to the assessment year 1955 56 and hence we shall confine ourselves only to the assessment year 1956 57.
Now two distinct aspects were comprised in this question and both were argued before the High Court.
One was whether the loans advanced to the three business concerns of the assessee could be regarded as "deemed dividend" within the meaning of section 2(6A) (e) and the other was whether these loans, even if regarded as "deemed dividend" could be taxed in the hands of the assessee.
The High Court decided both these aspects of the question in favour of the assessee and held that the word "share holder" in section 2(6A) (e) meant registered share holder or in other words, a shareholder whose name is recorded in the Register of the company as the holder of the shares and since the advance in the present case was made to the assessee which was not a registered share holder, it could not be regarded as "deemed dividend" within the meaning of section 2(6A) (e) and that even if it be assumed that the advance was liable to be regarded as "deemed dividend" under section 2(6A) (e), it could be taxed as dividend income only of the registered share holder and not Only of the assessee.
This view taken by the High Court rendered it unnecessary to decide the other four questions and the High Court 374 accordingly declined to consider them.
The result of this decisions was that the assessment made by the Revenue Authorities was set aside in so far as it included the loans advanced by the company to the three business concerns of the assessee as deemed dividend and taxed it in the hands of the assessee.
The Revenue, being aggrieved by the decision of the High Court, preferred an appeal after obtaining special leave of this Court.
Now it seems that through some inadvertence which is difficult to understand, the Revenue attacked only that part of the order of the High Court which held that the "deemed dividend" could be assessed to tax only in the hands of S.M. Saharia, the registered share holder and no in the hands of the assessee which was merely the beneficial owner cf the shares.
Neither in the statement of case filed on its behalf nor in the course of the arguments the Revenue assailed the correctness of the view taken by the High Court that since the assessee was not a registered shale holder, loans advanced to the assessee could not be regarded as "deemed dividend" under section 2(6) (e).
The result was that the only question that came to be considered by this Court was whether the "deemed dividend under section 2(6A)(e) could be taxed in the hands of the beneficial owner of the shares or it could be brought to tax only in the assessment of the registered share holder and the view taken was that where the shares acquired with the funds of one person are held ill the name of another, it is the former who is assessable to tax on the dividend on those shares and this principle would apply equally on the 'deemed dividend ' under section 2(6A)(e).
This Court did not consider whether the loans granted to the three business concerns o the assessee could at all be regarded as 'deemed dividend ' within the meaning of section 2(6A)(e) when the assessee was not a registered share holder and the decision of the High Court to the effect that the assessee not being a registered share holder, the loan advanced to it advanced not be regarded as 'deemed dividend ' under section 2(6A)(e) remained undisturbed.
Now obviously, so long as the decision of the High Court on this point was not over ruled, the question whether the amount of the loans was taxable as "deemed dividend" in the hands of the assessee could not be answered in favour of the Revenue.
But sometimes even Homer nods and through same unfortunate inadvertence for which the counsel appearing on behalf of the assessee in that case must accept full responsibility, this Court discharged the answer given by the High Court in favour of the assessee and in its place substituted an answer, in favour o the, Revenue.
This decision of the Court is reported in Commissioner of Income tax vs Rameshwar Lal Sanwarlal (supra).
375 Since the first question relating to the assessment year 1956 57 was answered by this Court in favour of the Revenue, the Reference went to the High Court for consideration of the remaining questions that had not been answered by the High Court.
It appears that at the hearing of the Reference the first two out of the remaining four questions were not pressed on behalf of the assessees and only the last two questions were argued before the High Court.
Both these questions were considered by the High Court and they were answered in favour of the Revenue and against the assessee.
The assessee thereupon preferred the present appeal after obtaining special leave from this Court.
There is only one contention advanced on behalf of the assessee in support or the appeal, namely, that the amounts of the loans advanced to the three business concerns of the assessee could not be regarded was 'deemed dividend ' within The meaning of section 2(6A)(e) since the assessee was not a registered share holder of the company.
This contention was sought to be supported by the decision of this Court in Commissioner of Income tax vs C.P. Sarathy Mudaliar (supra).
Now there can be no doubt that the decision of this Court in C.I.T. vs C.P. Sarathy Mudaliar (supra) lays down that it isl only where a loan is advanced by a company to a registered share holder out of its accumulate(i profits that it would be liable to be regarded as 'deemed dividend ' under sec.
2(6A)(e) and a loan to a beneficial owner of the share docs not come within the mischief of that section and if this decision represents the correct law on the subject, the amounts of loans advanced to the three business concerns o the assessee would not possibly be brought within the net o taxation as 'deemed dividend '.
But the argument urged on behalf of the Revenue was that it was not open to the assessee to raise this contention based on the decision in Commissioner of Income tax vs C. P. Sarathy Mudaliar (supra), since it was covered by the first question which had already been answered in favour of the Revenue by this Court.
The Revenue conceded That this contention was not specifically raised before the Court when the first question came to be considered but it must be held to have been impliedly decided against the assessee, since the first question could not be answered ill favour of the Revenue on any other hypothesis.
This argument of the Revenue does appear to be very plausible It first blush, but if it is scrutinised closely it will be apparent that it is fallacious and cannot be accepted.
The most important circumstance which it ignores is that when the Reference was first heard by the High Court, the first question was decided in favour of the assessee on two counts, one was that since the assessee was not a registered share holder of the company, the loans advanced to the three business 376 concerns of the assessee could not be regarded as 'deemed dividend ' within the meaning of section 2(6A) (e) and the other was that even if they could be treated as 'deemed dividend ' under section 2(5A) (e), they could be taxed only in the hands of section M. Saharya, the registered share holder and not in the hands of the assessee who was merely a beneficial owner of the shares.
When the Revenue preferred an appeal against the judgment of the High Court, the Revenue should have assailed the decision of the High Court in both its limbs, but through some inadvertence which is difficult to understand, the Revenue challenged by the second limb of the decision ignoring completely the first.
The result was that the decision of the High Court that the amounts of loans advanced to the three business concerns of the assessee did not fall within the definition of 'deemed dividend ' in section 2(6A)(e) remained intact and unaffected by the decision of this Court in the appeal.
Now, it is true that this Court could not have answered the first question against the assessee without over ruling this part of the decision or the High Court, but through some unfortunate error, this Court set aside the answer given by the High Court in favour of the assessee without considering whether this part of the decision of the High Court was right o wrong.
When no contention was raised on behalf of the Revenue before this Court that the decision of the High Court on this point was wrong and that even though the assessee was not a registered shareholder, the amounts of loans advanced to the three business concerns of the assessee were still liable to be regarded as "deemed dividend" under section 2(6A) (e) and no such contention formed the subject matter of discussion before this Court and this Court had, therefore, no occasion to consider this question, it is difficult to see how it can be said merely from the answer given by this Court in favour of the Revenue that this contention was impliedly decided in favour of the Revenue.
It would be straining logic to an absurd limit to say that though this contention was not raised, not argued, not discussed and not decided, yet it must be held to have been impliedly decided because through an error committed by this Court, an answer was given in favour of the Revenue in ignorance of the true position.
lt would also not be right to hold that merely because this Court erroneously answered the first question against the assessee without considering whether the view taken by the High Court on this point was incorrect, the assessee must be precluded from raisin the contention that the assessee not being a registered share holder, the amounts of loans advanced to the three business concerns of the assessee did not fall within the definition of "deemed dividend" under section 2(6A)(e).
Why should the assessee, which had the decision of the High Court of this point in its favour and 377 which decision was not assailed by the Revenue in the appeal and which remained undisturbed by this Court, be prejudiced on account of an obvious error committed by the court.
The proper way of looking at the decision of this Court would be to regard the answer given in favour of the Revenue to be confined only to the aspect considered and decided by this Court.
The only aspect considered by this Court was whether the "deemed dividend" under section 2(6A) (e) could be taxed in the hands of the beneficial owner of the shares or it could be assessed to only in the hands of the registered shareholder, and this Court held that "deemed dividend" did not stand on any different footing from actual dividend and just as actual dividend was liable to be taxed in the hands of the beneficial owner of the shares, so also "deemed dividend" must be held liable to be taxed in the assessment of the beneficial owner.
This Court did not decided the question whether a loan advanced to a beneficial owner of the shares can be regarded as "deemed dividend" within the meaning of section 2(6A) (e) an the answer given by this Court in favour of the Revenue cannot be said to extend to this aspect of the question.
We would, therefore, hold that the first question still remains to be answered so far as this aspect of the question is concerned and it is open to the, assessee to contend that the amounts of loans advanced to the three business concerns of the assessee could not be regarded as "deemed dividend" under section , 2(6A)(e), since the assessee was not a registered shareholder.
It is also obvious from what we have said above that there is no conflict between the decisions of this Court in C.I.T. vs Rameswarlal Sanwarmal and C.I.T. vs C.P. Sarathy Mudaliar (supra).
The question whether, on a proper construction of section 2(6A) (e), a loan advance to a beneficial owner of the shares would be liable to be regarded Ll; "deemed dividend" was not raised or argued before this Court in C.I.T. vs Rameswarlal Sanwarmal and this Court was not called upon to decide it and hence there is no discussion about it in the judgment of this Court nor is there any decision on it.
It is only in the subsequent decision in C.I.T. vs C. P. Sarathy Mudaliar (supra) that this question came up for the first time before this Court for consideration and this Court held that when sec.
2(6A) (e) speaks of a "shareholder" it refers to the registered shareholder and not to the beneficial owner and hence a loan granted to a beneficial owner of the shares who is not a registered shareholder cannot be regarded as a loan advanced to a "shareholder" of he company so as to be within the mischief of section 2(6A(e).
There is thus no conflict at all between the decisions in.
C.I.T. vs C. P Sarathy Mudaliar (supra and C.I.T. vs Rameswarlal Sanwarlal.
In fact, Mr. Justice Hegde was, a common Member of the Bench in both 378 the cases and the subsequent decision in C.l.
T. vs C. P. Sarathy Mudaliar was given within less than a month after the decision in C.l.
T. vs Rameshwarlal Sanwarmal.
lt is impossible to believe that Mr. Justice Hegde was oblivious of the decision in C.I.T. vs Rameswarlal Sanwarmal when he delivered the judgment in C.l.
T. vs C. P. Sarathy Mudaliar.
The Revenue lastly contended that the decision in C.I.T. vs C.P. Sarathy Mudaliar is incorrect and we must refer the present case to a larger Bench.
Now it is obvious that before we can be persuaded to accede to this request, we must be satisfied that the decision in Com missioner of Income Tax vs C. P. Sarathy Mudaliar is wrong.
But having given our most anxious consideration, we find ourselves unable to disagree with the view taken in that decision.
What section 2(6A) (e) is designed to strike at is advance or loan to a "shareholder" and the t word "shareholder" can mean only a! registered shareholder.
It is difficult to see how a beneficial owner of shares whose name does not appear in the register of shareholders of the company can be said o be a "shareholder".
He may be beneficially entitled to the shares but he is certainly not a "shareholder".
It is only the person whose name is entered in the register of shareholders of the company as the holder of the shares who can be said to be a shareholder qua the company, and not the person beneficially entitled to the shares.
It is the former who is a "shareholder" within the matrix and scheme of the company law and not the latter.
We are, therefore, of the view that it is only where a loan is advanced by the company to a registered shareholder and the other conditions set out in section 2(6A) (e) are satisfied that the amount of the loan would be liable to be regarded as 'deemed dividend ' within the meaning of section 2(6A) (e).
The amount of the loan would not fall within the mischief of this section if it is granted to a beneficial owner of the shares who is not the registered shareholder.
The decision in C.I.T. vs C. P. Sarathy Mudaliar does, in our opinion, lay down the correct interpretation of section 2(6A) (e).
Now in the present case it was common ground that the loans were advanced to the three business concerns of the assessee which was a Hindu Undivided Family and this Hindu Undivided Family was not the registered holder of any shares in the company but it was the beneficial owner of certain shares which stood in the name OF the Manager and Karta, Shri section M. Saharya.
The loans were thus advanced to the beneficial owner of the shares and not to the registered shareholder and hence they could not be regarded as loans advanced to a "shareholder" of the company within the meaning of section 2(6A) (e).
Section 2(6A) (e) was accordingly not attracted and the amounts of the loans could not be taxed as deemed dividends 379 in the hands of the assessee.
We accordingly answer the first question A in favour of the assessee so far as this aspect is concerned.
In view of this answer to the first question, it is not necessary to consider the other two questions decided by the High Court on remand.
The learned counsel appearing on behalf of the assesses, in fact, did not press them.
There will he lo order as to costs of the appeal.

summary:
The assessee, a Hindu Undivided Family, owned certain shares in a private limited company in which the public were not substantially interested.
Though the shares were beneficially owned by the Hindu Undivided Family, they stood registered in the name of its Karta.
From out of its accumulated profits the company gave loans, in the assessment year 1956 57.
to three business concerns which were owned by The assessee.
Section 2(6! (e) of the Indian Income Tax Act, 1922 provided that where a private company in which public were not substantially interested gave loans to its shareholders from out of its accumulated profits such loan would be treated as "deemed dividend" in the hands of the shareholders.
The Income Tax officer treated the loans as "deemed dividend" in the hands of the assessee on The ground that though the shares stood in the name of the Karta, the assessee being the beneficial owner, the conditions of section 2(6A) (e) were satisfied.
This view of the Income Tax officer was upheld by the Appellate Assistant Commissioner.
The Appellate Tribunal rejected the contentions of the assessee that the loans could not be taxed as "deemed dividend" in its hands because it was not the registered owner of the shares; and (2) assuming that they could be treated as "deemed dividend" they could be taxed only in the hands of the karta.
The Tribunal referred six questions to the High Court.
Answering two out of the si questions, the High Court held that (1) the loans could not be treated aS "deemed dividend" in the assessee 's hands because the term shareholder used in the section meant only a person whose name is recorded in the company 's register of shareholders and (2) even assuming that the loans were "deemed dividend" they could be taxed only in the hands of the registered shareholder (the Karta).
The assessment made by the Income Tax officer was accordingly set aside.
In appeal to this Court, instead of questioning the correctness of the answers returned by the High Court the Revenue attacked only that part of the High Court 's order which held that "deemed dividend" could be taxed only in the hands of the registered shareholder.
Therefore the question before this Court was whether "deemed dividend" could be taxed in the hands of the beneficial owner of shares or could be brought to tax only in the hands of the registered shareholder.
This Court answered that where shares are acquired with the funds of one person but are registered in the name of another it is the beneficial owner who should be taxed on the dividend on the shares and that this 370 principle applies equally to "deemed dividend" under the section.
Even so, this Court discharged the answer given by the High Court in favour of the assessee and substituted an answer in favour of the Revenue.
Placing reliance on the decision of this Court in C.I.T. vs Sarathy Mudaliar where it was held that a loan advanced by a company to a beneficial owner did not fall within the mischief of section 2(6A)(e) the assessee contended that loans in this case could not be taxed as "deemed dividend" in its hands.
The Revenue on the other hand contended that (I) since in the earlier case of Rameswarlal Sanwarmal this Court had answered the reference in favour of the Revenue and that decision was final the later decision in Sarathy Mudaliar 's case would not be available to the assessee; (2) although the present question was not specifically considered by this Court on the earlier occasion it must be held to have been impliedly decided against the assessee and (3) that the decision in Sarathy Mudaliar 's case was incorrect and should be referred to a larger bench. ^ HELD: The arguments of the Revenue are fallacious.
When the Revenue came in appeal to this Court in the earlier case of Rameswarlal Sanwarmal it challenged only the second part of the High Court 's decision ignoring the first part.
The result was that the first part of the High Court 's decision that loans advanced to The business concerns of a beneficial owner of shares could not be regarded as 'deemed dividend" in his hands and that the loans in the sent case did not fall within the meaning of section 2(6A)(e) remained intact and unaffected by the decision of this Court.
This Court could not have answered the first question against the assessee without over ruling the first part of the High Court 's decision.
However, through inadvertence, this Court set aside the High Court 's answer without considering whether this part of tile decision was right or wrong.
When no contention was raised on behalf of the Revenue that even if the assessee was not a registered shareholder loans advanced to its business concerns would be "deemed dividend" in its hands and there was no occasion for this Court to consider the question, from the mere fact that an answer was given in favour of the Revenue, it cannot be said that this contention was impliedly decided in its favour.
[376 C H] 2.
The proper Way of looking at the decision of this Court in Rameswarlal Sanwarmal would be to regard the answer given in favour of the Revenue to be confined only to the aspect considered and decided by this Court, namely, that "deemed dividend" did not stand on any different tooting from actual dividend and just as actual dividend is liable to be taxed in the hands of the beneficial 6 owner of the shares.
so too "deemed dividend" must be held liable to be taxed ill the hands of the beneficial owner.
This Court did not consider whether a loan to a beneficial owner could be regarded as "deemed dividend".
Therefore, this aspect of the question still remained to be answered and it was open to the assessee to contend that the loans advanced to its business concerns could not be regarded as "deemed dividend" within the meaning of the section since the assessee was not a! registered shareholder.
[377 A D] 3 (1) The decision of this Court in Sarathy Mudaliar 's case laid down the law correctly and there is no need to refer the case to a larger bench.
The 371 question whether a loan advanced to beneficial owner of shares would be liable to be regarded as "deemed dividend" was neither raised nor considered by this Court in Rameswarlal Sanwarmal 's case but came up for consideration for the first time in Sarathy Mudaliar 's case only.
There is thus no conflict between the two decisions, [77 E l] (b) It is only where a loan is advanced by a company to a registered shareholder the other conditions set out in the section are satisfied that the amount of the loan would be liable to be regarded as "deemed dividend".
The amount of loan would not fall within The mischief of the section if it is granted to a beneficial owner of the shares.
[378 E F] In the instant case the loans were advanced not to the registered shareholder but to the business concerns of the beneficial owner.
Hence they could not be regarded loans advanced to a shareholder of the company within the meaning of the section.
[378 H