S. V. KANDASKAR v. V. N. DESHPANDE & Anr.

On !lPpeal by the Inome-tax Officer and the Union of India before the aP,pellate bench of the High Court against the order of injunction, the Division Bench (Modi and Desai, JJ.) reve"sed the order of the learned. single Judge and set aside the in junction issued by him. Before the appellate bench two contentions were raised on behalf of the Income-tax-Officer: (1) ihat notices for re assessment issued under s. 148 were not legal proceedings within the meaning of that phrase as used in s. 446(1) of the Act, and (2) that, assuming the re-assessment proceedings started under the A B c D E F G H ! A B c D E F G H s. v. KANDASKAR v. v. N. DESHPANDE (Dua, /.) 967 said notices to be leg~! proceedings. leave of the Company Court under s. 446(1) of the Act was not necessary because the Income• tax Officer had exclusive jurisdiction to make re-assessment and to determine the tax liability. The proceedings by way of assessment before the Income-tax Officer, according to the contention were outside the pale of jurisdiction of all civil courts Cpmpany Court. . The appellate bench did not consider it neces ·Sary to decide the first contention because, on the aut:hority of Damji Valji Shah v. Life ln.rurance Corparation of India('), the second contention deserved to be accepted and that was considered sufficient to conclude the appeal. including The Official Liquidator, after securing a certificate of fitneas from the High Court under Art. 133(1)(c) of the Constitution has appealed to this Court and the only question which requires consi· deration here is, if it is necessary for the Income-tax Officer obtain leave of the liquidation court when he wants to re-aMel!l!I the company for escaped income in respect of past years. Section 446 of the Act reads : "(l) When a winding up order has been made or the Official Liquidator has been appointed as provi sional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company. except by leave of the Court and subject to such terms as the Court may impose. (2) The Court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in fore~, have entertain, or dispose of-=- · jurisdiction (a) any suit or proceeding by or against the com pany; (b) any .claim ~ade by or a~ainst the company (in ~ludm~ claims by or agamst any of its branches lil India); (c) any question of priorities or any other question whatsoever, w~et~er of law or fact, which may relate to or anse m course of the winding up of the company; ~h~ther such suit or ~roceeding ~as been institut~ or is r. suc;h clha1mbeeor quest10n has arisen or arises mstltuhted, o 1 n made or is made before or _or sue app 1cat10n as {I) A.I.JI.. 1966 S.C. 135. 968 SUPREME COUJ.T REPORTS [1972] 2 S.C.R. after the order for the winding up of the company, or before or after the commencement of the Companies {Amendment) Act, 1960. (3) Any suit or proceeding by or against the com pany which is pending in any Court other than that. in which the winding up of the company is proceedmg may, net'lyithstanding anything contained in any other law for the time being in force. be transferred to and disposed of by that Court. (4) Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding pending in appeal ·before the Supreme Court or High Court." To appreciate and understand the precise scope of this sect:ion so far as it concerns us in the present controversy, we consider it pr(). per to turn to the scheme of the Act on this aspect. Chapter ll of Part VII of the Act beginning with s. 433 deals with winding up by the Court. Section 439 provides for applications for wind ing up and s. 441 tells us when the winding up of a company is !P be deemed to commence. Section 442 which confers power oli courts to stay or restrain proceedings against the company reads : · "442. At any time after the presentation of a wind ing up petition and before a winding up order has been made, the compan_y or any creditor or contributory may-· (a) where any suit or proceeding against the com pany is pending in the Supretne Court or in any High Court, apply to the Court in which the suit or proceeding is pending for a stay of pro ceedings therein; and (b) where any suit er proceeding is vending against the company in any other Court, apply to the Court having jurisdiction to wind. up the com ·pany, to restrain further proceedings in the suit or proceeding; and the <;ourt to ,which. ?PPlication is so made may stay or restram the pfoceed1.6gs accordingly, on such terms as it thinks fit." ' Section 444 enjoins the Court making an order for the winding up of a company to cause intimation thereof to be sent forthwith to the Official Liquidator and the Reg; strar appointed, uhder the Companies Act. Official Liquidators attached to the l-Iigh Courts are appointed by the Central Govemment under s. · 448 and the Registrars by the Central Government under s. 609 of the Act. A • c D E G H ( I S. V. KANDASKAR v. V. N. DESHPANDE (Dua,/.) 969 A B D E F It is the duty of the petitioner in the winding up proeecdings and also of the company to file under s. 445 a certified copy of the order of winding up with the Registrar who has to notify in the Official Gazette that such an order has been made. Such order is to be deemed to be a notice of discharge of the officers and em ployees of the company except when the bu~iness of the company is continued; vi de s. 445 ( 3). Then comes s. 446, which has al ready been set out. The present sub-s. (2) of this section was substituted for the Clld one in 1960 by Act 65 of 1960 and sub-&. ( 4) was also added by that Act. Sub-section (2) is on the lin~ of s. 7 of the Presidency Towns Insolvency Act, 1909, s. 4 of the Provincial Insolvency Act, 1920 and s. 45B of the Banking Com panies Act. The object of this sub-section appears to be to em power "the court as in exercise of insolvency jurisdiction to decide all claims made by or against any company and other questions whatsoever so that winding up proceedings might be expedited" Sub-sections (2) and (3) both seem to have been inserted to give effect to the recommendation of the Company Law Commit tee Report contained in para 207(c), namely, fb1lt "all suits by or against a company in winding up should, notwithstanding any provisions in any law for the time being in force, be instituted in the court in which the winding up proceedings are pending". This was considered to ~. to quote the exact words "on balance an advantage to all concerned, including_ -the parties which have relating to its a claim against the companies, to ·institute suits :iffa!rs in the Cou~ where the. winding up proceedings are pend mg'. Ln the Indian Companies Act, 1913, s. 171 provided for preventing litigation against a company in the process of being wound up and it read as : "171. When a winding up order has been made or a provisional liquidator has been appointed no suit or other legal proceeding shall be proceeded with or com menced against the company except by leave of the ~ourt, and subject to such terms as the Court may IIllpose." The words underlined were inserted by the Companies Amend- G ment Act, 193~ which followed the English Act. It is nardl ~ecessary to pomt out that company legislation in India has evlr smce th~ first enactment of 1850 (Registration of Joint.'.stock <;ompames Act, No. XLIII of 1850) broadly been followin lmes of devel.opme~t of the company law in England. The otject of ~· 171 was des1gn~d to achieve was to prevent all litigation a~amst the company in the process of being wound up ex t with the consen~ ?f the coui;i. We have reproduced this seciliin ~a~s~ the dec1s1ons to which reference has been made by Shri sa1 ID the very beginning of his arguments relate to the cons- H - 910 SUPREME COURT REPORTS ( 1972] 2 S.C.R. truction of this section by the Federal Coui;t of India and by this Court. The Federal Court in The Governor-General in Council v.Shiromani Sugar Mills Ltd. (1) while construing this section held that the words "other legal proceedings" in this section comprise any proceedings by the revenue authorities under s. 46(2) of the Indian Income-tax Act and accordingly, before. forwarding the requisite certificate under s. 46 (2) to the Collector, which would put the machinery for the collection of the arrears of land revenue .into motion, the Income-tax Officer should have applied under s. 171 of the Indian Companies Act for leave of the wi.nding up Court. The passage on which Shri Desai specifically relied where, disagreeing with the observation~ of a Full Bench of the Lahore High Court in Shakuntla v. The People's Bank of Northern India Ltd. (In Liquidation)( 2 ), Spens, C.J. observed that the expression "or other legal proceedings" in s. 171 need not and, therefore, should not be confined to "original proceedings in a court of first instance analogous to a suit initiated by means of a petitiQn similar to a plaint". The learned Chief Justice there went on to observe : "Section 171 must, in our judgment, be construed with reference to other sections of the Act and the general scheme of administration'of the assets of a company in liquidation laid down by the Act. In particular, we would refer to s. 232. Section 232appears to us to be supplementary to s. 171 by providing that any creditor (other than Government) who goes ahead, notwith· standing a winding up order or in ignorance of it with any attachment, distress, execution or sale, without the previous leave of the Court, will find that such steps are void. The reference to 'distress' indicates that leave of the Court is required for more than the initiation of ori ginal proceedings in the nature of a suit in an ordinary Court of law. Moreover, the scheme of the application of· the company's property in the pari passu satisfaction of its liabilities, envisaged in s. 2.11 and other sections of the A9t, cannot be made to work in coordination, un less all creditors (except such secured creditors as are 'outside the winding up' in the sense indicated by Lord \Vrenbury in his speech in Food Controller v. Cork(") are subjected as to their actions against the property of the company to the control of the Court. Accordingly, judgment; no narrow construction should be in our placed upon the words 'or other legal proceeding' in s. 171. In our judgment, the words can and should be held (I) (1946[ F.C.R. 40. (2) l192J] A.C. 647. (3) [1941] I.LR. 22 Lah. 760. A B c D E F G H A B c D E F G H s. v. KANDASKAR v. v. N. DESHPANDE (Dua, J.) 971 to cover distress and execution proceedings in the ordi nary Courts. In our view, such proceedings are other legal proceedings against the company, as contrasted with ordinary suits against the company." Jn that case a com?any was ordered to be wound up in April, 1942 and an order of rssessment to income-lax of the profits made by the company in the year ending May 31, 1940 was made in 1943 and the Income-tax Officer, without obtaining leave of the winding up court, commenced proceedings for recovery of tax as if it were an arrear of land revenue. It was on these facts that it was observed that the words "or other legal proceedings" can and should be held to cover distress and execution proceedings. This expression was not held to cover assessment proceedings to which apparently no objection was the parties though they were represented by eminent counsel. The decision referred is M. K. of this Court to which Shri Desai has next Ranganatlzan v. Government of Madras(-1). The head-note which gives a clear idea of the ratio of this decision is in these words : raised by "The secured creditor is outside the winding up and can realise his security without the leave of the winding up Court, though if he files a suit or takes other legal proceedings for the realisation of his security he is bound under s. 171 of the Indian Companies Act to obtain the leave of the winding up Court before he can do so although such leave would almost automatically be granted. It is a legitimate rule of construction to construe words in an Act of Parliament with reference to words found in immediate connection with them. It is also a well-recognized rule of construction that the Jeaislature does not intend to make a substantial alteratio~ in the law beyond what it explicitly declares either in express . words or by clear implication and that the general words o~ the Ac_t are not to be so construed as to alter the pre vious P?ltcy of the law, unless no sense o~ meaning can be applied to those words consistently with the intention of preserving the existing policy untouched . . Held, therefore, that having regard to the context in which the words 'any sale held without leave of the Court of any of the properties' added in s. 232(1) by lhe <~n.1~ndi~~ "\'.:! XXII of 1936 have been used in juxt apos1tton with any attachment, distress or execution put into force without leave of the Court against the estate or effects" it would be a legitimate construction to ( 1) (1955] 2 S.C.R. 374. 972 SUPREME COURT REPORTS [1972] 2 S.C.R. be put upon them that they refer only to sales held through the intervention of the Court and not to sales effected by the secured creditor outside the winding up and without the intervention of the Court, and that the amendment was not intended to bring within the sweep of the general words sales effected by the secured cre ditor outside the winding up. Held accordingly that in the present case the sale effected by respondent no. 2 as the receiver of the trus tees of the debenture holders in July 1954 was valid and binding on all parties concerned and could not be chal lenged as it was sought to be done by the Official Receiver." In this case the observations alreafiy reproduced from the judg ment of the Federal Court in Shakuntla's case (supra) were ap proved. It may also be pointed out that in this decision this Court observed that the winding up c6urt assures pro rata distribution of the assets of the company in the same way in which the court under the Presidency Towns Insolvency Act or the Provincial Insolvency Act ensures such distribution of assets. Section 232 ( 1) of the Act of 1913 which was held supplemental to s. 171 was also stated to have reference to legal proceedings in the same way as such proceedings were envisaged by s. 171. These two deci sions in our opinion do not lay down that assessment proceedings under the Income-true Act should be held to be within the con templation of s. 171 of the Indian Companies Act, 1913. The next decision to which reference has been made by Shri Desai fa Union of India v. India Fisheries (P) Ltd. (1). In that case the respondents, Fisheries (P) Ltd., had been directed to be wound up by the winding up court and an Official Liquidator had been ap pointed by an order of the High Court in October, 1950. The head-note in that case gives a clear idea of the facts and the deci sion. It reads : "The respondent company was directed to be wound up and an official liquidator appointed by an order of In December 1950 the High Court in October, 1950. the respondent was assessed tax amounting Rs. 8737 for the year 1948-49. A claim made for this tax on the official liquidator was adjudged and allowed as an ordinary claim and certified as such in April, 1952. The Liquidator declared a dividend of 9} annas in the Rupee in August, 1954 and paid a sum of Rs. 5188 to the Department, leaving a balance of Rs. 3549. (1965] 3 S.C.R. 678. ---"" (1) A B c D E F H A I c E F G II s. v. KANDASKAR v. v. N. DESHPANDE (Dua, J.) 973· In June, 1954, the Department made a demand from the respondent and was paid Rs. 2565 as advance tax for the year 1955-56. On a regular assessment being made for that year, only Rs. 1126 was assessed as pay able so that a sum of Rs. 1460, inclusive of interest, be came refundable to the respondent. However, the Income Tax Officer, purporting to exercise the power available to him under s. 49E of the Income Tax Act, 1922, set off this amount against the balance of Rs. 3549 due for the year 1948-49. A revision petition filed by respon dent in respect of this set off was rejected by the Com missioner of Income-tax. Thereafter, petition· under Art. 226 filed by the res pondent to set aside the orders of_the Income Tax Officer and Commissioner was allowed by the High Court, on the ground that the demand for Rs. 8737 in respect of 1948-49, being adjudged and certified came to have all the incidents and character of an unsecured debt pay able by the liquidator to the Department; it was therefore governed by the provisions of Company Law and no other remedy or method to obtain satisfaction of the claim was available to the creditor. In the appeal to this Court it was contended on be half of the appellant that s. 49E gave statutory power to Income Tax Officer to set off a refundable amount against any tax remaining payable and that this power was not subject to any provision of any other Jaw. Held the Income Tax Officer was in error in apply ing s. 49E and setting off the refund due to the respon dent. Th~ e~ect of ss. 228 and 229 of the Companies Act, 1?J3, 1s, mter alia, that an unsecured creditor must prove his debts and all unsecured debts are to be paid par! passu. Once the claim of the Department has to be proved and is. ~roved in .liquidation proceedings, it can not, by exerc1smg the nght under s. 49E get priority ov~r other unsecured creditors and thus defeat the very obiect of ss. 228 and 229 of the Companies Act. Fur !herrnore, if there is an apparent conflict between two mdependen.t provisions of law, the special provision must prevail. Section .49E is .a general provision appli cable to all assessees m all circumstances; ss. 228 and 229 deal with proof of debts and their payment in liqui- 974 SUPREME COURT REPORTS• [1972] 2 S.C.R. dation. Section 49E can be reconciled with ss. 228 and 229 by holding that s. 49E applies when insolvency rules do not apply." In our opinion this decision is of no greater assistance to the appel lant on the narrow point which requires determination by us. On the contrary to some extent it goes against Shri Desai because the assessment made in December, 1950, after the appointment It may be of the Official Liquidator was assumed to be in order. recalled that in Shiromani Sugar Mills case (supra) the assess ment made after the winding up order was not challenged though on the argument addressed by Shri Desai before us it could have been challenged. The ratio decidendi or the principle accepted and applied in none of the decisions cited supports the appellant's contention on the precise point of assessment of tax. Shri Desai has next referred us to a more recent decision of this Court in Ba/want Singh v. L. C. Bharuma/, Income-tax Officer, New Delhi. (1) In this case the Income·tax Officer was held to be a court for the purpose of s. 195(1 )(b), Cr. P. C. though it was added that the Income-tax Officer could not be treated as a re venue court and, therefore, neither s. 476 nor s. 479-A, Cr. P. C. would be applicable. This decision has been cited for the purpoiie of contending that if the expression "other legal proceeding" s. 446 is to be construed to mean a proceeding in a court, then, the Income-tax Officer must be considered to be a court when holding assessment or re-assessment proceedings. This conten tion may be disposed of with the observation that m~rely becall.9C the Income-tax Officer is considered to be a court for the purpose of s. 195(l)(b), Cr. P. C. it does not necessarily follow that the said officer must be considered to be a court for the purposes of s. 446 of the Act. There is no justification for extending scope of this decision beyond i\s own facts. The decisions which apparently seem to lend more direct support to the appellant's contention are Union of India v. Seth Spinning Mills Ltd., (In Liquidation)( 2 ) and Mysore Spun Silk Mills Ltd., (In Liquida tion), In re Official Liquidator v. Commissioner of lncort1¢-tax, Bangalore(•). Both of them are decisions by single Judges, the former by the Punjab High Court and the latter by \he Mysore High Court. In Seth Spinning Mills case (supra) it was ob served "that s. 171 of the Indian Companies Act, 1913 provideii that wben a winding up order has been made no suit or other legal proceeding shall be proceeded with or commenced against the company except by leave of the court and subj; ct to. suc)l tenns as the court mav impose. The language of this sect10n 1s wide en(mgh to include proceedings under the Income-tax Act. (i)[i968]-7o I.T~R. 89 (S~c.) (3) [1962] 46 I.T.R. 193. [1968] 68 J.T.R. 295. (2) ' I A B c D G H i A B c D E F G H ·s. v. KANDASKAR v. V. N. DESHPANDE (Dua, J.) 975 In view of this the No leave of the court has been obtained. claim of the petitioner for Rs. 4,000 on account of the penalty order passed on 14th April, 1956 cannot be entertained". In this case the Union of India th~ough the Commissioner of IncomC:.:tax had applied to the learned single Judge, who was apparently fimc tioning as a company Judge, praying that the department's claim amounting to Rs. 16,500 should have been admitted by the Official Liquidator and that his refusal to do so was not justified in law. This amount, it appears, consisted of the penalty imposed by the imposed by Income-tax Department. Part of the penalty was means of an order passed prior to the company's going into liqui dation but a sum of Rs. 4,000 related to the penalty imposed after the date of winding up. Tjle learned single Judge while dealing with that petition observed : "Section 171 of the Indian Cunpanies Act, 1913, provides that when a winding up order has been made no suit or other legal proceedings shall be proceeded with or commenced against the company except by leave of the court and subject to such terms as the court may impose. The language of thi! section is wide Income-tax enough to include proceedings under the Act. . No leave of the court has been obtained. In view of this, the claim of the petitioner for Rs. 4,000 on account of the penalty order passed on 14th April, 1956, cannot be entertained." In the Mysore case it appears that in the course of winding up of the mills in liquidation·Jarge sums of money came into the hand' of the liquidator which could not be immediately applied for dis tribution of dividends to Jhe creditors. Those moneys were in vested pursuant to the relevant provisions of the Companiei; (Court) Rules. The question arose whether in respect of the receipts of income the liquidator was liable to pay income-tax on those receipts. The learned single Judge, after discussing scheme of the Companies Act, observed : "The liquidator is only an officer of the court. Un like a receiver in the case of insolvency, properties of the insolvent do not vest in him but come within the control of the court. All his actions arc subject to the control pf the court for which purpose the court issues to him appropriate directions from time to time in the course of winding up. No court or other authority (subject to the exception contained in sub-section ( 4) of section 446 of the Companies Act) can take any proceedinzs or attach or otherwise reach any of the matters, the special winding up court liquidator as its treats the 976 SUPREME COURT REPORTS (1972] 2 S.C.R. officer specially charged with the duty of representing the company and protecting its interests in winding up. In the light of the above principles, it is the duty of the court to see that all liabilities of a company are pro- perly met in accordance with the provisions of the law and the special provisions in that behalf contained in the Companies Act. Liability to income-tax is also one of the liabilities which the court is expected to provide for in the course of winding up. Such being the position, the question is whether, be cause the liquidator does not answer the d~cription of the principal officer as defined in the Income-tax Act, the liability, if any, of the company for payment of in come-tax itself comes to an end and therefore the wind ing up court may ignore that liability." The Court thereafter observed that the corporate existence of the company continues even after the winding up order; but after the winding up order the question of payment oi income-tax has to be dealt with or answered on a joint application of the terms or provisions of the Income-tax Act and the Companies Act. After so observing the court proceeded : "that even after a winding up order is passed, the company continues to be a person within the meaning of section 4 of the Income-tax Act, that therefore any receipt in the course of winding up which would attract liability to income-tax under appropriate provisions of the Income-tax Act would be liable to income-tax or for payment of tax under Income-tax Act, but that be fore any action can be taken by the appropriate Income tax Officer under the Income-tax Act for the purpose of quantification or collection of the income-tax he should obtain the leave of the winding up court under section 446 of the Companies Act, and further that the collec tion Of the tax can only be by securing the orders of the winding up court for payment of tax in the light of the appropriate provisions of'the Companies Act." A B l> E F is concerned l n this case so far as collection of the tax assessed there can scarcely btl any difficulty ip agreei.ng with the view taken there. But it is only when the court said that for the pur pose of quantification of the income-tax also· leave under s. 446 of the Act has to be obtained that we have to consider if this view 11 A B c D E G H s. V. KANDASKAR Y, v. N. DESHPANDE (Dua, J.) 977 is correct. It is ocn this observation that Shri Desai has princi· pally -relied. The decisions of the Federal Court and of this Court already cited by Shri Desai, it may be recalled, do not support this view. Reference by Shri Desai has also 1*:en made to Abdul Aziz Ansari v. The State of Bombay(') in which assessment proceed ings under the Bombay Sales. Tax Act, 1946 were considered to be legal proceedings for the purpose of continuance of those proceed ings alter repeal of the Bombay Sales Tax Act, 1946 bys. 48(2) of the Bombay Sales Tax Act, 3 of 1953. We do not think this decision is of any assistance for considering the question whether assessment or re-assessment proceedings can be considered to be legal proceedings as contemplated by s. 446 of the Act. The learned counsel for the appellant has also drawn our attention to Shiromani Sugar Mi/ls v. Governor General ·in Coun cil(') where, after referring _to ft. 171 of the Companies Act, 1913 it was held by the Allahabad High Court, that initiation by the Income-tax Officer of steps to recover the amount of assess ment under s. 46 of the Income-tax Act of 1922 and the prosecu tion by the Collector of those steps amounted to "commencement" or "proceeding with" a "suit or other legal proceeding." Needless to point out that this is the view which the Federal Court on appeal upheld in the decision already referred to. ). it was said The further submission pressed by Shri Desai that s. 446 of the Act is a special provision and s. 148 of the Income-tax Act a gene•al provision of law was sought to be supported by reference It may here be pointed out that 1n to India Fisheries case( 8 that case it was, while dealing with s. 49E of the Income-tax !'.ct, that this Court observed that the revenue could ,not, by exercising the right under that section get priority over other unsecured creditors, and it wa; in this context that being apparent conflict between two independent provisions of In order to understand law the special provision must prevail. and aopreciate the binding force of a decision it is always l[}eces sary to see what were. the facts of the case in which the decision was given and wh•t was the point which had to be d~cided. Tims considered India Fisheries case( 8 to Shri Desai and we are unable to constme the observations in that deci sion to support Shri Desai's contention that s. 446 of the Act is a special provision as against s. 148 of the Income-tax Act under which Income-tax Officers hold nroce~dings for assessment or re-assessment of income-tax ~nd that therefore the former should prevail over tha latter. ---- . - - ··--- (1) A.1.R. 1958 Born. 279. (3) ) lends no assistance I.LR. 1945 Allahabad 352, [1965) 3 S.C.R. 678. (2) 978 SUPREME COURT REPORTS [1972] 2 S.C.R. Turning now to the Income-tax Act it is noteworthy s. 148 occurs in Chapter XIV which beginning with s. ~39 pres cribes the procedure for assessment and s. 14 7 provides assessment or re-assessment ()j' income escaping assessment. This section empowers the Income-tax Officer concerned subject to th~ provisions of ss. 148 to 153 to assess or re-assess escaped income. While holding these assessment proceedings the Income-tax Offi cer does not, in our view, perform the functions of a court a~ comtemplated by s. 446 ( 2) of the Act. Looking at the legisla tive history and the scheme of the Indian Companies Act, parti cularly the language of s. 446 read as a whole, it appears to us that the expression "other" legal proceeding" i'u sub-s. ( 1) and the expression· "legal proceeding" in sub-s. (2) convey the same sense and the proceedings in both the sub-sections must be such as. can appropriately be dealt with by the winding up court. The Income tax Act is, in our opinion, a complete code and it is particularly so with respect to the assessment and re-assessment of income-tax with which alone we are concerned in the present case. The fact that after the amount of tax payable by an assessee has been deter m~ned or quantified its realisation from a company in liquidation is governed biy the Act because the income-tax payable also being a debt has to rank pari passu with other debts due from the com pany does not mean that the assessment proceedings for comput ing the amount of tax must be held to be such other legal pro ceedings as can only be started or continued with the leave of the liquidation court under s. 446 of the Act. The liquidation court, in our opinion, cannot perform the functions of Income-tax Offi cers while assessing the amount of tax payable by the assessees even. if the assessee be the company which is being wound up by the court. The orders made by the Income-tax Officer course of assessment or re-assessment proceedings are subject to appeal to the higher hierarchy under the Income-tax Act. There are also provisions for reference to the High Court and for appeals from the decisions of the High Court to the Sunreme Court and then there are provisions for revision by the Commissioner of It would lead to anomalous consequences if the Income-tax. winding up court were to be held empowered assessment proceedings income-tax. The argument on behalf of the appellant by Shri Desai is that the winding up .court is empowerell in its discretion to decline to transfer the assessment proceedings in a given case blut the power on the plain language of s. 446 of the Act must be held to vest in that court to be exercised only if considered expedient. We are not argument. The lan)nJage of s. 446 must be so construed as to eliminate such startling crmsequences as investing the windin~ up court with the powers of an Income-tax Officer conferred Ojl him by the Income- to transfer the company to itself and assess impressed by i,n A B c D E F G JI I A B c D s. v. KANDASKAR v. V. N. DESHPANDE (Dua, /.) 979 tax Act, because in our view the legislature could not have in tended such a result. The argument that the proceedings for assessment or re· assessment of a company \\'hich is being wound up can only be started or continued with the leave of the liquidation court also, on the scheme both of the Act and of the Income-tax Act, unacceptable. We have not been shown any principle on which the liquidation court should . be vested with the power to stop assessment proceedings for determining the amount of tax pay able by the company which is being wound up. The liquida· tion court would have full power to scrutinise the claim of the' revenue after income-tax has been determined and its payment demanded from the liquidator. It would be open to the liquida· tion court then to decide how far under the law, the amount of Income-tax determined by the department should be accepied as a lawful liability on the funds of the company in liquidation. At chat stage the winding up court can fully safeguard the interests of the company and its creditors under the Act. Incidentally, it may be pointed out that at t]le bar no English decision was brought to our notice under which the assessment proceedings were held to be controlled by the winding up court. On the view in the case of Seth Spinning that we have taken, Mills Ltd., (In Liquidation )( 1) and the Mysore Spun Silk Mills Ltd., (In Liquidation)(') do not seem to lay down the correct rnle of law that the Income-tax Officers must obtain leave of the winding up court for commencing or continuing assessment or re- assessment proceedings. the decisions · For tlie f?regoing rea~ons we have no hesitation in dismissing the iJppeal with costs. s.c. Appeal dismissed. (I) 461.T.R. 193. (2) 68 I.T.R. 695.