Case: The Bhopal Sugar Industries Ltd Vs. The Income-Tax Officer, Bhopal

2. The relevant facts are these. The appellant company carries on the business of manufacturing and selling in various grades and quantities. It has its factory at Sehore which was formerly in the Bhopal State and is now situate in the State of Madhya Pradesh. It purchased sugarcane from local cultivators and also grew its own sugarcane in farms situate in that State, such sugarcane being used for its manufacture of sugar. During the year of account ending on September 30, 1950, the appellant company purchased 7,72,217 maunds of sugarcane from local cultivators at various purchasing centres, 14 in number, situate at a distance of about 8 to 22 miles from its factory. The price paid was Rs.6 per maund, that being the price fixed by the then State of Bhopal. The average cost of transporting the sugarcane from the various centres to the factory was stated to be Rs.9 per maund. During the same period the appellant company grew its own sugarcane to the extent of 6,78,490 maunds and brought the same along with the cultivators sugarcane to its factory for manufacturing sugar. For the sugarcane grown on its own farms the appellant company claimed Rs.0 per maund as its market value (including Rs.9 as average transport charges), the total market value for 6,78,490 maunds thus coming to Rs. 12,29,763. The appellant company deducted from the aforesaid market value a sum of Rs. 9,77,772 as agricultural expenses, namely, expenses of harvesting, loading etc. and claimed the balance of Rs. 2,51,991 as agricultural income to be deducted from the computation of its total income for the assessment year2 . The respondent accepted the figure of Rs. 9,77,772 as agricultural expenses but computed the market value of 6,78,490 maunds of sugarcane grown on the appellants companys own farms at Rs. 9,33,000 at the rate of Rs.0 per maund; thus according to this computation there was a loss of Rs. 44,772 and the respondent held in his assessment order that the appellant company was not entitled to claim any deduction of agricultural income for the assessment year.      3. The appellant company then appealed to the Appellate Assistant Commissioner, Jubalpore, who determined the market value of the sugarcane grown on the appellant companys own farms at Rs. 10,07,132 at the rate of Rs.9 per maund. This resulted in an agricultural income of Rs. 29,360, which the Appellate Assistant Commissioner allowed to be deducted from the total income of the appellant company.      4. Not satisfied with the order of the Appellate Assistant Commissioner, the appellant company preferred an appeal to thex Appellate Tribunal, Bombay, and claimed that the market value of the sugarcane grown on its farms should be Rs.0 per maund and not Rs.. There was no dispute before the Tribunal as to the agricultural expenses, and the question which the Tribunal had to decide related to the market value of 6,78,490 maunds of sugarcane grown on the appellant companys own farms. After referring to R. 23 of thex Rules and certain other matters, the Tribunal

Reasoning: 8. We think that the learned Judicial Commissioner was clearly in error in holding that no manifest injustice resulted from the order of the respondent conveyed in his letter dated March 24, 1955. By that order the respondent virtually refused to carry out the directions which a superior tribunal had given to him in exercise of its appellate powers in respect of an order of assessment made by him. Such refusal is in effect a denial of justice, and is furthermore destructive of one of the basic principles in the administration of justice based as it is in this country on a hierarchy of Courts. If asubordinate tribunalrefuses to carry out directions given to it by a superior tribunal in the exercise of its appellate powers, the result will be chaos in the administration of justice and we have indeed found it very difficult to appreciate the process of reasoning by which the learned Judicial Commissioner while roundly condemning the respondent for refusing to carry out the directions of the superior tribunal, yet held that no manifest injustice resulted from such refusal9. It must be remembered that the order of the Tribunal dated April 22, 1954, was not under challenge before the Judicial Commissioner. That order had became final and binding on the parties, and the respondent could not question it in any way. As a matter of fact the Commissioner of Income tax had made an application for a reference, which application was subsequently withdrawn.The Judicial Commissioner was not sitting in appeal over the Tribunal and we do not think that in the circumstances of this case it was open to him to say that the order of the Tribunal was wrong and, therefore, there was no injustice in disregarding that order. As we have said earlier such a view is destructive of one of the basic principles of the administration of justice10. In fairness of him it must be stated that learned Counsel for the respondent did not attempt to support the judgment of the Judicial Commissioner on the ground that no manifest injustice resulted from the refusal of the respondent to carry out the directions of the superior tribunal. He conceded that even if the order of the Tribunal was wrong a subordinate and inferior tribunal could not disregard it; he readily recognised the sanctity and importance of the basic principle that asubordinate tribunalmust carry out the directions of a superior tribunal. He argued, however, that the order of the Tribunal was unintelligible and the respondent did his best to understand it according to his light. This argument advanced on behalf of the respondent appears to us to be some what disingenuous. We find no difficulty in understanding the order of the Tribunal; it directed the respondent "to ascertain the average transport charges per maund from the centres to the factory and add to it the rate of Rs.6 per maund of a sugarcane". The direction is clear and unambiguous. The respondent instead of ascertaining the average transport charges per maund from the centres to the factory, referred to the transport charges from the farms to the factory and on that footing disregarded the directions of the Tribunal; for the respondent to say thereafter that the order of the Tribunal was not intelligible betrays a regrettable lack of candour. We must, therefore, reject the argument of learned Counsel for the respondent11. The learned Judicial Commissioner referred to three decisions in support of the proposition that a direction or order in the nature of a writ of mandamus cannot be claimed as of right, nor need such a writ issue for every omission or irregularity; Bimal Chand v. Chairman, Jiagunj Azimgunj Municipality, AIR 1954 Cal 285  , Gram Panchayat, Vidul of Vidul v. Multi Purposee Society of Vidul. AIR 1954 Nag 82, and Senairam Doongarmall v. Commr. of Income Tax, Assam (S) AIR 1955 Assam 201. In the view which we have expressed, namely, that by the impugned order the respondent failed to carry out a legal duty imposed on him and such failure was destructive of a basic principle of justice, a writ of mandamus should issue ex debito justitiae to compel the respondent to carry out the directions given to him by thex Appellate Tribunal, Bombay, and it is unnecessary to consider the decisions referred to above except merely to state that in none of them arose any question of condoning a refusal by an inferior tribunal to carry out the directions given to that tribunal by a superior tribunal in the undoubted exercise of its appellate powers, on the ground that the order of the superior tribunal was wrong.