SURYA KUMARI, R., SMT. vs INCOME TAX OFFICER

Venkatarama Reddi, J.

The petitioner, who is an assessee under the Income Tax Act, 1961 (hereinafter referred to as ''the Act'') questions the order dated 10-12-1998 passed by the 1st respondent herein refusing to issue a certificate u/s 230A of the Act and seeks a direction to the respondent to issue the clearance certificate. There is also a further prayer to direct the 3rd respondent (Sub-Registrar, Dwaraka Nagar, Visakhapatnam) to register the sale deed that may be submitted by the petitioner. The impugned order dated 10-12-1998 reads as follows:

"With reference to the above subject, I am to inform you that your application for issue of clearance certificate u/s 230A of the Income Tax Act, 1961 cannot be entertained because proceedings of the Anti-Corruption Bureau, Visakhapatnam, initiated in your husband, Shri R. Mohana Rao''s case are pending and as seen from the record, these proceedings do have a bearing on the investment of the property contemplated for sale by you. Further, I have been requested by the Anti-Corruption Bureau authorities not to accord any permission for sale or transfer of any property either in your name or in the name of your husband or in the name of your son.

In the circumstances, your application cannot be entertained and is, therefore, rejected."

We fail to understand how the certificate u/s 230A can be withheld on the mere ground that the raid by Anti Corruption Bureau has brought to light certain materials which have a bearing on the source of investment of the property contemplated to be sold by the petitioner. It is clear from section 230A that the assessing officer has to satisfy himself that the applicant has either paid or made satisfactory provision for payment of all ''existing liabilities'' under the Act and other allied Acts or the registration of the document will not prejudicially affect the recovery of any existing liability under the various Acts mentioned in clause (a) of sub-section (1) of section 230A. Admittedly, there is no demand pending against the petitioner. There is no proceeding, either by way of reopening or otherwise, pending in regard to the past years in which the tax relatable to the property in question is pending adjudication. The liabilities which may arise in the future in the event of the assessment proceedings being reopened or revised are not within the contemplation of section 230A. The impugned order does not refer to any existing liability of the petitioner remaining unsatisfied or the recovery of the existing liability being prejudicially affected. The vague allegation that the proceedings initiated against the petitioner''s husband under the Prevention of Corruption Act by Anti Corruption Bureau has got some bearing on the investment of the property intended to be sold by the petitioner, does not, in our view, constitute a legitimate ground to refuse a certificate u/s 230A. Moreover, the second reason mentioned in the impugned order that the Anti Corruption Bureau requested him not to accord permission for sale or transfer of property is an irrelevant ground. The mere request by the Anti Corruption Bureau officials does not absolve the respondent No. 1 of the statutory obligation to apply his mind independently with reference to the criteria laid down in clauses (a) and (b) of section 230A(1).

The learned standing counsel for the department relied on the observations made by the Supreme Court in Bihari Lal Jaiswal and Others Vs. Commissioner of Income Tax and Others, . That was a case in which the assessee applied for registration of a partnership-firm which was constituted contrary to the prohibition laid down in Excise Law. The individual licence-holder wanted to form a partnership soon after the licence was granted to him. Their Lordships of the Supreme Court observed that when the law prohibits entering into a particular partnership agreement, there can be in law no partnership agreement. Repelling the argument that the provisions of the Excise Law cannot be imported while considering the application for registration filed under the Income Tax law, the learned Judges observed as under:

". . . The grant of registration under the Income Tax Act, it must be remembered, confers a substantial benefit upon the partnership firm and its members. There is no reason why such a benefit should be extended to persons who have entered into a partnership agreement prohibited by law. One arm of law cannot be utilised to defeat the other arm of law. Doing so would be opposed to public policy and bring the law into ridicule. It would be wrong to think that while acting under the Income Tax Act, the Income Tax Officer need not look to the law governing the partnership which is seeking registration. It would probably have been a different matter if the Income Tax Act had specifically provided that the registration can be granted notwithstanding that the partnership is violative of any other law-but it does not say so."

These weighty observations do not, in anyway, come to the aid of the respondents. We have already adverted to the ratio of the decision of the Supreme Court. The registration of the firm cannot be dissociated from the question of lawfulness of the partnership agreement. Moreover, this is not a case where the issuance of the certificate by the Income Tax Officer would have the effect of defeating any provision under the Prevention of Corruption Act. We make it clear that any action taken in accordance with law by the competent court under the provisions of the Prevention of Corruption Act or any other relevant law will not be affected by the grant of certificate per se u/s 230A.

As far as the 3rd respondent is concerned, we are not inclined to consider the question whether the 3rd respondent is bound to register the document. The petitioner has a distinct cause of action in that regard and it is not open for the petitioner to seek different reliefs against different authorities acting under different enactments, based on misjoinder of causes of action. Hence, the writ petition is dismissed against 3rd respondent. However, liberty is given to the petitioner to seek appropriate relief against the 3rd respondent in a separate proceeding.

The writ. petition is partly allowed with the observations made above. No costs.