ROSHAN-DI-HATTI v.

COMMISSIONER OF INCOME TAX

March 8, 1977

I 5 3

[P. N. BHAGWATI, R. S. SARKARIA AND S. MURTAZA FAZAL Au, JJ.J

Income Tax Act 1922-Sec. 34(1) (a)-Escaped income-Ueassess111ent- Burden of '{)oaf about source of inco1ne-Finding of facts of the Tribunal can be interfered under what circumstances-Conclusion without any 1naterials- No person act1nf; judicially and properly instructed as to the relevant law\ would co1ne to det:?nnilrntivn-lncon1e rax Appellate Tribunal-Whether Tribunal can ask questions to assessee informally-Whether part of record-lncon1e Tax Apvel!ate Tribunal Rules 29, 30 and 31.

The assessee,. a llindu Undivided Family, was carrying on business in gold nnd jewellery ni Lahore till June 1947.

In view of the impending partition of Jndia, Roshan La] d, ecided to move out of Lahore and accordingly transferred sums of Rs. 12,094/-, Rs. 13,000/- and Rs. 6,000/- from Lahore Banks to New Delhi Banks.

He left Lahore and proceeded to Mussoorie in June, 1947.

On his way, he stopped at Amritsar for a few days and opened an account with the Imperial Bank of India with a view to obtaining a locker in the Safe Deposit Vault but a locker was not available and hence he denosited a trunk \Vhich he had brought from Lahore containing gold ornaments, jewellery and cash with the Imperial Bank of India. The assesSee came to Delhi in October, l 947. and rented <! house.

In February, 1948, he succeeded in securing business premises "and started business on 30.3.1948.

The first entry in the books of account on 30.3.1948 showed gold ornaments of Rs. 1,19.320/-, Gold Rawa Rs. 1,69,020/- Stones worth Rs. 4,000/- Bank balance ""'ith the Imperial Bank of India, Delhi Rs. 35,053/- Bank Balance with Hindustan Commercial Bank, Delhi Rs. 221/- and Cash of Rs. 2,800/.

The assessee thus brought in an aggregate capital of Rs. 3,33,414/- in the business on 30.3.1948.

Jn 1957, it came to the notice of the Income Tax Officer that the assessee had made considerable income in his gold and jewellery business but had failed to pay any tax on such income and hence issued a notice to the assessec under s. 34(1)(a) of the Indian Income Tax Act, 1922, for bringing the income of the a:; sessee for the assessment year 1948-49 to tax.

The assessee filed his return.

In the course of the assessment proceedings the I.T.O. ca1led upon the assessee to explain the nature and source of the capital of Rs. 3.33,414/-.

The assessee contended that he brought the gold Rawa, ornarnenfs and cash reoresenring the capital when he migrated from Lahore and they were kept in -a sealed trunk with the bank at Amritsar and thereafter brought over ro Delhi and deposited in the Safe De_posit Vault of Hindustan Commercial Barik nt Ddhi.

When the business of the assessee was commenced, he surrendered the locker and brought the entire gold, jewellery and cash into the business.

The assessee observed that till he started his business in March 1948, neither the :-i.ssessee nor Roshan Lal had any other business or means of income fr0n1 \vhic; h the amount of Rs. 3,33,414/- could have been earned.

The assessee examined some witnesses.

The ITO also examined the brothers of Roshan Lal who stated that the father of Roshan Lal was a man of ordinary means who \Vas almost reduced to penury by about 1940 and that he had given a sum of Rs. 2000/- to his son Roshan Lal for starting gold and jewellery business in 1935 and he had also subsequently lent some monies to Roshan Lal on nominal interest.

The Income Tax Officer rejected the explanation offered by the assessee and came to the conclusion that it was not possible to believe that the assessee had been able to accumulate capital to the extent of Rs. 3.33,41f/- out of income from the business carried on.

The Income Tax Officer gave credit for a sum of Rs. 20,000 /- and treated the balance of Rs.

A 3,30,41-4/- as income of the assessee from undisclosed source. On appeal, the Appellate Assistant Commissioner allowed a further sum of Rs. 80,000/- on the fnl!o\v1ng grounds :

(1) That the assessee transferred a sum of Rs. 12.004/-, Rs. 13.000/- and Rs. 6.000/- from Banks as Lahore to the Bank at New Delhi.

This shows that the assessee was not a man of very small means while he was at Lahore.

(2) H.;- was having accounts in 4 different Banks and a man of

Ycry modest means would not have normally so many Bank accounts.

(3) While at Lahore. Roshan Lal had taken Life Insurance Policies

'..vorth Rs. 22,000/-.

A number of letters and receipts regarding business transactions in Lahore Indicated that the Lahore business was not as small as the Income Tax Officer had taken it to be.

The assessee stopped at Amritsar and opened an account and took Safe Deposit Vault where he deposited a sealed box. It is reasonable to presume that there must have been something quite valuable in the box.

A further appeal filed by the assessee. to the Tribunal failed.

The Trihunal, when the appeal came to be heard, put a. question to Roshan Lal as to how he had brought gold and jewellery from Lahore and enquired about the weight of the box. 'The Tribunal after bearing the arguments of the parties rejected the appeal. The main arguments which weighed with the Tribunal were :

(1) that the weight of the box was too less:

(2) that the assessee did not disclose his assets under the scheme of the Government of India published in the Press Note in January 1952, requiring a11 evacuees to declare the amounts of money brought by them from Pakistan.

(3) that the assessee did not file any income tax.returns in Lahore.

E The H.igh Court confirmed the finding of the Tribunal in the reference.

Allowing the appeal,

HELD: (1) The law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him.

[160 El

A GovindarajUlu Mudaliar v. Commissioner of lnco111e Tax (1958) 34 ITR 807 and Cou111zissioner of lncon1e Tax. U.P. v. Devi Prasad Vishwanath Prasad 72 !TR 194 followed. ·

(2) The concluion of the Tribunal on a finding of fact can be assailed only i.f it is shown that the Tribunal had acted without any material or upon a view of the facts which could not reasonably be entertained or the fa:ts found were such that no person acting judicially and properly instructed as to the relevant law would have come to that determination. (161 C-D].

Mehta Parikh &: Co. v. Commissioner of Income-Tax Bombay 30

ITR 18 L followed.

(3) The Tribunal was right in commenting that primary evidence with regard to the extent of the Lahore business of the assessee :was not forthcoming but it niust be remembered that the assessee was being called upon to nrove the extent of his business in a territory from which the member of the Hindu undivided family had to flee for their lives and from where, it was totally impossib'e to produce any Primary evidence. The finding of the AAC that the assessee was doing fairly well in the business in Lahore was not disturbed bv the Ttibunal.

The AAC found that it was reasonable to presume to at there was something quite valuable in the box and this finding was also not dissented by the Tribunal.

There was no inaterial to show that the orna-

ROSHAN-Dl-HATTI v. COMMR. OF I.T. (Bhagwati, J.) 155

n1ents, j>!we11ery and cash brought by the assessee and kept in the sealed trunk \vere of the value of only Rs. 1 lac and not more.

The circumstances that the assessee had not filed any Income Tax return could be of no avail to the Revenue because admittedly the assessee had brought substantial amount from Lahore.

[16J D-G]

(4) The Tribunal was wrong in relying upon certain answers given by Roshan Lal, about the wei.u; ht of the sealed box when he was questioned by the Tribunal at th~'. hearing of the appeal.

It must be pointed out straightway that the answer given by Roshan Lal could not be relied on by the Tribunal because there is a procedure prescribed in rules 29. 30 and 31 of the Income Tax Appellate Tribunal Rules for taking additional evidence before the Tribunal and if the members of the Tribunal wanted to examine Roshan Lal on any apects of the case. they should have followed this procedure.

The answers given by Roshan Lal disregarding the perscribed procedure could not forn1 part of the record and the Tribunal was not entitled to rely upon the same. [162 H, 163 A-Cl

(5) The Tribunal erred in relying on the Press Note because admittedly the assessee had brought a sum of Rs. 1 lac to .India and even that was not declared to the Government of India. [163 E-Fl

(6) There was no material on the basis of which the Tribunal could come to the conc1us1on 1hat the ornaments. jewellery and cash were not worth than Rs. 1 lac. It was not proved that Roshan Lal or the assessee had nny business or other mearrs of income in India until 30.3.1948.

The 2enuineness of the entry of l\.farch 1948 was also not challenged.

It is .utterly improbably amounting almost to impossibility that the assessee could have earned such a large amount of Rs. 2,33,414/- as profit within a few months in the disturbed conditions which then prevailed in India. [164 B-El

(7) The Tribunal acted without any nlaterial and in any event, the finding of fact reached by the Tribunal was unreasonable or such that no person acting judicially and properly instructed as to the relevant law would come to such finding.

[164 F-G]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 284 of 1972.

(From the Judgment and Order dated 3-5-1971 of the Delhi High Court in LT. Case No. 6-D of 1964)

A. K. Sen, V. S. Desai and Bishamber Lal, for the appellant.

G. C. Sharma and S. P. Nayar, for the respondent.

The Judgment of the Court was delivered by

BHAGWATI, J.-This is an appeal by special leave directed against

the Judgment of the Delhi High Court answering in favour of the Revenue a question which was directed to be referred by the Tnbunal under section 66 (2) of the Indian Income Tax Act, 1922. The con~ troversy between the parties arises out of an assessment made on the G assessee as a Hindu Undivided Family for the assessment year 1948-49, the corresponding accounting year being the financial year 1947-48.

The assessee was at the material time a Hindu Undivided Family with one Roshan Lail as its manager and karta.

Till June 1947 the assessee was carrying on business in old an~ jewel!ry at Chowk Surjan Singh in Lahore. In view of the 1mpendmg partition of India Roshan Lal decided to move out of Lahore and accordingly he transferred a um H of Rs. 12,094/- from the account of the assessee with the Lahore Branch of the P11njab National Bank Ltd. to the New Delhi Branch of that bank in June 1947. He also transferred from the Lahore

Branch of the Punjab National Bank Ltd. to the branch of that bank at New Delhi two sums of Rs. 13,000/- and Rs. 6,000/-, the former in his own name and the latter in Ille name of his wife and obtained fixed deposit receipts for these two amounts from the New Delhi Branch of the Bank in July 1947.

He left Lahore in June 1947 and proceeded to Mussoorie but on his way he stopped at Amritsar for a few days.

He opened an account with the Amritsar Branch of the Imperial Bank of India by depositing a sum of Rs. 300/- with a view to obtaining a locker in the safe deposit vault where he could depo, it

for sale custody a trunk which he had brought with him from Lahore co11taining gold ornaments, jewellery and cash. It seems that a locker was not available and hence he deposited the trunk in a sealed condition with the Amritsar Branch of the Imperial Bank of India on 25th June, 194 7.

The sealed trunk, according to the assessee, contained gold ornaments of the value of Rs. 1,19,320/-, gold rawa of the value of Rs. 1,69,020/- and stones of the value of Rs. 4,000/-. Roshan Lal then went to Mussoorie via Haridwar and stayed at Mussoorie until aboul October 1947. The case of the assessee was that during this period Roshan Lal did not carry on any business nor did he have any other means of income. In October 194 7 Roshan Lal came over to Delhi and rented a house in Kinari Bazar with a view to settling down in Delhi. He started looking for suitable premises for commencing business and it was only in February 1948 that lie succeeded in securing suitable premises at Dariba Kalan in Delhi. He tfien started gold and jewellery business in these premises in the name and style of Roshan-Di-Hatti on 30th March, 1948.

The business was joint family business of the assessee and the first entry made in the books of account of the assessee was dated 30th March, 1948 and it was as follows :

Gold Ornaments Rs. 1,19,320/- Gold Rawa Rs. 1,69,020/- Stones Rs. 4,000/- Bank balance with the Imperial Bank of India, Delhi Rs. 35,053/- Bank balance with Hindustan Commercial Bank, Delhi Rs. 221/- Cash Rs. 2,800/-.

The asseesee thus brought in an aggregate capital of' Rs. 3,33,414/- in the business on 30th March, 1948.

It appears that the assessee prospered in this gold and jewellery business of Roshan-Di-Hatti but it did not file any return of income nor paid any income tax.

It came to the notice of the Income Tax Officer some time in the beginning of 19 57 that the assessee had made considerable income in its gold and jewellery business bnt had failed to pay any tax on such income and hence the Income Tax Officer issued a notice to the assessee under section 34(1)(a) of the Indian Income Tax Act, 1922 for bringing the income of the assessee for the assessment year 1948-49 to tax.

The asscssee filed its retnrn of income and in the course of the assessment proceedings, the Income Tax Officer, called upon the assessee to explain the nature and source of the capital of Rs. 3,33,414/- brought by it into the business on 30th March; 1948.

The assessee pointed

out that gold rawa, ornaments and, cash representing thi!l capital were A brought by Roshan Lal when he migrated from Lahore and they were kept in a sealed trnnk with t!he Amritsar Branch of the Imperial Bank of India and when Roshan Lal came over to Delhi in October 194 7, he deposited the same in a locker in the safe deposit vault of Hindustan Commercial Bank at Delhi and when the business of the assessee was commenced, he surrendered the locker and brought the entire gold, jewellery and cash into the business. It was emphasised by the B assessee as a supportive fact that after Roshan Lal migrated from Lahore in June 194 7 until the assessee started the business of Roshan- Di-Hatti on 30th March, 1948, neither the assessee nor Roshan Lal had any other business or means of income from which the assets of Rs. 3,33,414/- could have been earned.

This explanation was given in the course of various statements made by the assessee from time to time before the Income Tax Officer.

The assessee also examined c Hira Lal, Father-in-law of Roshan Lal and filed affidavits of Mulk Ram, Billa Mal, Dalal, Wazir Chand, Devida' Mehra and Panna Lal before the Income Tax Officer for the purpose of showing that the assessee was having a large gold and jewellery business in Lahore before migration and that it did not carry on any business in India before starting the business of Roshan-Di-Hatti on 30th March, 1948.

The Income Tax Officer also examined Prem Nath and Kishan Chand, D brothers of Roshan Lal.

The statement of Prem Nath was to the effect that their father w.as a man of ordinary means who was almost reduced to penury by about 1940 and that he had given a sum of Rs. 2000 /- to his son Rosh an Lal for starting gold and jewelery business in 1935 and he had also 'ubsequently lent some monies to Roshan Lal at nominal interest.

Prem Nath deposed that for the purpose of the business of the assessee, Roshan Lal was occupying E a shop belonging to his father but he was not paying rent though demanded on the ground that he did not have sufficient income to pay the rent.

It was also stated by Prem Nath that before the partition of the country the standard of living of Roshan Lal and his family was no higher than that of Prem Nath who was getting a salary of Rs. 150/- per month.

The statement of Prem Nath was clearly directed towards showing that the assessee did not have any flourishing F business or large income prior to partition.

The Income Tax Officer, on the basis of this material before him, reiccted the explanation offered by the assessee and came to the conclusion that it was not possible to believe that the assessee had been able to accumulate capital to the extent of Rs. 3,33,414/- out of income from the business carried on by it in Lahore and since the nature and source of the capital of Rs. 3,33,414/- credited in the books of account of the business on G 30th March, 1948 was not satisfactorily explained, the Income Tax Officer, gave credit only for a sum of Rs. 20,0001and treated the balance of Rs. 3,13,414/- as income of the assessee from undisclosed sources.

The assessee appealed against this order of the Income Tax Officer and on appeal, the Appellate Assistant Commissioner took the view that, on the facts as disclosed by the material placed on record in the H proceedings, a much larger allowance should have been made in respect of the capital brought hv the assessee from Lahore and he allowed a further sum of Rs. 80,000/-. The reason given by the Appellate

Assistant Commissioner for taking this view are a little material and they may be reproduced as follows :

"There is documentary evidence to show that assessee transferred an amount of Rs. 12,094/- from the Punjab National Bank account at Lahore to the same bank in New Delhi in June 1947. It is also seen that he :i; so transferred two amounts Rs. 13,000/- in his own name and Rs. 6,000/- in his wife's name from the Punjab National Bank, Lahore, to the same Bank at Minto Road, New Delhi and fixed deposit receipts were taken for this total sum of Rs. 19,000/- from the Delhi Bank in July 1947. All these monies including the realised fixed deposits later on went into the assessee's account with the State Bank of India which reveals a credit balance of Rs. 35,053/- as on 30-3-1948. This at least shows that the assessee was not a man of very small means while he wrus at Lahore.

He was having four accounts in different banks at Lahore.

The particulars, however, are not available and it is also stated that most of these accounts were very small; but even then a man of very modest means would not normally have so many bank accounts. Moreover, while at Lahore Shri Roshan Lal had taken life insurance Policies Rs. 22,000/-. A number of letters and receipts regarding business transactions in Lahore were also filed which indicate that the Lahore business was not as small as the Irtcome Tax Officer has taken it to be.

There are some papers which relate to deals worth Rs. 10,000/- or more at one time.

There are also several vouchers relating to advertisement charges paid at Lahore: All these things together with the fact that the assessee was in position to transfer a sum of Rs. 31,000 /- approx. through banks indicate that he was doing fairly well in the business at Lahore.

How he could have managed to evade tax at Lahore for all these years, is a mystery; but from the circumstances of the case it appears that tbe assessee had certainly assessable incomes while he was doing business there during the pre-partition period.

There is another factor which has also to be given its due weight.

While leaving Lahore and coming over to India in June 194 7, the assessee stopped for few days at Amritsar.

There on the 25th June, 1947 he deposited a sea(ed box with the State Bank of India Amritsar Branch.

This box was withdrawn by him on the 20-10-47.

These facts are corroborated by the bank certificate.

The assessee claims that he had considerable amount of jewellery and gold etc. (part of his trading stock in Lahore) as well as crush, in this box that is why he did not take the risk of carrying it with him on his way to Mussoorie, but kept in deposit with the State Bank at Amritsar till snch time as he was able to settle down in India.

The contents of the sealed box are unknown to the bank and so it is not possible to ascertain what the box actually contained.

But it is reasonable to

ROSHAN-Dl-HATTI v. COMMR. OF I.T. (Bhagwati, J.) 159

presume that there must have been something quite valu- A able in the box as otherwise the assessee would not have kept it iu the custody of a bank like State Bank of India.

It must also be noted that as early as June, 1947, the assessee hired a locker in the Hindustan Commercial Bank Ltd., New Delhi.

It is clear therefore, that when in June, 194 7, the assessee was leaving Lahore he must have had with him quite a substantial amount either in the form of B jewellery etc., or cash, as otherwise he would not have taken the precaution of either depositing the sealed .box with the Stak Bank of India at Amritsar or opening a locker in a New Delhi Bank.

Considering all the evidence discussed above, I am of the opinion that the Income Tax Officer's allowance of Rs. 20,000/- only as capital brought over f'rom Pakistan is too low. It is true that the capital disclosed in the books as on :I0-3-1948 is mostly unverifiable and even assuming that the. assessee wms doing reasonably well in his business at Lahore, there are hardly any reasons to believe that he could have accumulated so much capital and could have brought a'; l that capital safely into India; but the circumstances of the case do in my view justify a much larger allowance for old capital than has been allowed by the Income Tax Officer.

In my opinion, a reduction of the assessment by Rs. 80,000/- will meet the requirement of the cruse."

The Appellate Assistant Commissioner thus reduced the figure undisclosed income of the assessee to Rs. 2,33,414/-.

But this relief was not enough and the assessee preferred a further appeal to the Tribunal.

When the appeal came to be heard by the Tribunal, Roshan Lal, who was present at the hearing, was asked by the Members of the Tribunai as to how he had brought gold and jewellery from Lahore and he stated that it was brought in train in a box of the size of 2t'x H'id' and he was.then asked what was the

weight of the box, to which he replied stating that the weight of the F contents of the box was about eight seers.

The Tribunal then, after hearing the arguments of the parties, rejected the appeal.

The main arguments which weighed with the Tribnnal in negativing the appeal of the assessee were : first, if the weight of the contents of the box was only eight seers, the value of gold and jewellery in the box could not be more than Rs. 66,000/- at the then current rate of gold at Rs. 90/- per tola; secondly, the Government of India had issued a G Press l\ote in January 1952 requiring all evacuees to declare the amounts of money brought by them from Pakistan and assuring them that in case they did so, no further enquiries would be made from them as to how they had earned the same and whether they had paid any tax on it and yet the assessee had not declared before the Revenue authorities until the commencement of the assessment proceedings in 1957 that it had brought the capital of Rs. 2,33,414/- from Pakistan; H thirdly, the assessee claimed to have a flourishing business in Lahore in the course of which it was supposed to have earned enough to enable it to save a capital of Rs. 3,33,414/- and yet it had not filed

any income tax return nor was it ever assessed to income tax m Lahore and fourthly, the depositions of Mulk Ram, Billa Mal, Dalal, Wazir Chand, Devidas Mehra and Panna Lal were vague and based on hearsay and they had no evidentiary value in the absence of contemporaneous primary evidence.

The Tribunal, accordingly, held that the assessee could not have brought assets worth more than Rs. 1,00,000/- from Lahore and the estimate made by the Appellate Assistant Commissioner did not calI for any interference and in this view, the Tribunal confirmed the assessment of the balance of

s. 2,33,414/- as the undisclosed income of the assessee for the assessment year 1948-49.

The assessee applied to the Tribunal for referring to the High Court the question of law arising out of its order but the Tribunal declined to make a reference on the ground that in its opinion no question of law arose out of its order.

This led to the making of an application to the High Court under section 66(2), but the High Court also took the same view and rejected the application.

The assessee thereupon preferred an appeal to this Court by special ]eave and in the appeal, an order was made by this Court referring the following question for the opinion of the High Court :

Whether there was material for coming to the conclusion that Rs. 2,33,414/-, out of the capital of Rs. 3,33,414/- credited in the books of account of the assessee on 31st March, 1948, represented income from undisclosed source ?

Pursuant to this order the Tribunal stated a case for the opinion of the High Court and the High Court answered the question referred to it in favour of the Revenue by holding that there was material on the basis of which the Tribunal could come to the conclusion that Rs. 2,33,414/- represented the undisclosed income of the assessee.

Hence the present appeal by the assessee with special leave obtained from this Court.

Now, the law is welJ settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him.

If he di:sputes the liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act.

In the absence of such proof, the Revenue is entitled to treat it as taxable income.

This was laid down as far back as 1958 when this Court pointed out in A. Govindarajulu Mudaliar v.

Commissioner of Income-tax(') that "there is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain an1ount of cash received during the accounting year, the Income Tax Officer is entitled to draw the inference that the receipts are of an assessable nature''.

To put it differently, where the nature and source of a receipt, whether it be of money or of other property, cannot be satisfactorily explained by the assessee, it is open to the Revenue to hold that it is the income of the assessee and no further burden lies on the Revenue to show that that income is from any particular source.

Vide Commissioner of Income Tax, U.P. v. Devi Prasad Vishwanath Prasad("). Herc,

(I) (1958) 34 l.T.R. 807.

(2) 72 I.T.R. 194.

in the present case, the assessee introduces in the books of account of its business on 30th March, 1948, capital of Rs. 3,33,414/- which consisted of gold rawa, gold ornaments, stones and cash.

The burden of accounting for the receipt of these assets was clearly on the assessee and if the assessee failed to prove satisfactorily the nature and sourc~ of these assets, the Revenue could legitimately hold that these assets represented the undisclosed income of the assessee.

The assessee offered the explanation that these assets had been brought by Roshan Lal when he migrated from Lahore in June 194 7 and they represented the entire savings of the assessee in Pakistan.

This explanation w.as disbelieved. by the Tribunal which took the view that, on the matenal on record, it was not possible to hold that the a.sessee must have brought more than Rs. 1,00,000/- from Lahore and hence the Tribunal added the balance of Rs. 2,33,414/- as undisclosed income of the assessee.

This conclusion reached by the Tribunal was clearly a finding of fact and hence it could be assailed only if it was shown that the Tribunal had acted without any material or upon a view of the facts which could not reasonably be entertained or the facts found were snch that no person acting judicially and properly instructed as to the relevant law would have come to that determination.

Vide Mehta Parikh & Co. v. Commissioner of Income-Tax, Bombay(').

/ Let us consider what were the primary facts established by the material on record.

The assessee was admittedly carrying on the business of Roshan-Di-Hatti in Lahore from 1935 until June 1947 when Roshan Lal migrated from Lahore.

It is true that the assessee was not paying any Income tax in Lahore but, as pointed out by the Appellate Assistant Commi, ssioner in his order, a number of letters and receipts regarding business transactions in Lahore were filed by the assessee which showed that the business in Lahore was not smaU

and there were documents and papers which referred to dealings involving Rs. 10,000/- or more at a time and there were also several vouchers produced by the asse, ssee relating to advertising charges paid at Lahore.

The business carried on by the assessee at Lahore was, therefore, a reasonably large business though its extent could not be verified by any rnliable material produced by the asscssee. The assessee undoubtdly filed affidavits of Mulk Ram, Billa Mal, Dalal, Wazir Chand, Devidas Mehra and Panna Lal, but, as commented upon by the Tribunal, these affidavits were vague and could not be regarded as having much evidentiarv value.

Still they did go to show that the Lahore business of theassessee was a fairly large business.

The Tribunal was no doubt right in commenting that primary evidence with regard to the extent of the Lahore business of the assessee was not forthcoming, but it must be remembered that the assessee was being called upon to prove the extent of its business in a territory from which the members of the Hindu Undivided Family had to flee !or

thir lives .and from where it '."as totally impossible to produce any pnmary evidence. Be that as it may, it was found as a fact by the Appellate Assistant Commissioner and this finding was not disturbed !'Y the Tribunal. that the assessee "was doing fairly well in the business

m Lahore": Roshan Lal, in anticipation of the partition of the country which was soon to follow, decided to move out of Lahore in June 1947 at a time when massacre and holocaust had not yet started

O)To ct-:-ICITIand he was in a position to remove his belongings. He migrated from Lahore with all his belongings and came over to Amritsar and he . brought with him a trunk which he wanted to keep in a locker in Safe Deposit Vault of the Imperial Bank of India.

He could not obtain a locker and hence he deposited the sealed trunk with the Amritsar Branch of the State Bank of India instead of carrying it with him to Mussoorie.

There is no documentary evidence to show as to what were the contents of the sealed trunk but, as pointed out by the Appellate Assistant Commissioner and not dissented by the Tribunal, "it is reasonable to presume that there must have been something quite valuable in the box as otherwise the assessee would not have kept in the custody of a bank like the State Bank of India".

There can be no doubt, as observed by the Appel':ate Assistant Commissioner, and not disputed by the Tribunal that the assessee "must have had with him quite a substantial amount either in the form of jewellery etc. or cash, or otherwise he would not have taken the precaution of either depositing the sealed box with the State Bank of India, Amritsar or opening a locker in a New Delhi Bank".

The clear finding of the Appellate Assistant Commissioner, affirmed by the Tribunal, therefore, was that Roshan Lal did bring ornaments, jewellery and cash with him when he migrated from Lahore in June 1947 and kept the sam~ in a sealed trunk with the Amritsar Branch of the State Bank of India.

If that be so, then on what material could it be said that the ornaments, jewell<:ry and cash brought by the assessee and kept in the sealed trunk were of the valne of only Rs. 1,00,000/- and no more.

What were the materials on the basis of which the claim of the assessee that Roshan Lal had brought gold, ornaments and cash of the value ot Rs. 3,33,414/- could be rejected?

The only materials relied upon by the Tribunal was that the assessee had never filed any income-tax return nor ever paid any tax on the income of its business in Lahore and the presumption must, therefore, be that the assessee did not earn any assessable income before migration from Lahore.

Now, it is true that where an assessee has not paid i•ncome tax, the presumption ordinarily must be that the assessee had no assessable income, but here the fact remains that the assessee transferred no less than an aggregate sum of Rs. 31,094/- from Lahore to New Delhi and also brought substantial amount either in the form of jewellery etc. or cash" and deposited the same in a sealed trunk with the Imperial Bank of India, Amritsnr Branch in June 1947. This obvionsly the assessee could not have done unless it had a reasonably large business in Lahore and, therefore, the fact that the assessee d; tl not pay income tax in Lahore cannot have much evidentiary value.

All that it would show is that, as pointed out by the Tribunal, "the assessee has not been very straightforward in his dealings with the income-tax departments".

The Tribunal also relied upon certain answers given by Roshan Lal when he was questioned by the Members of the Tribunal at the hearing of the appeal. It must be pointed out straight away that

these answers given by Roshan Lal could not be relied upon by the Tribunal for the purpose of coming to any conclusion adverse to the assessee, because there is a procedure prescribed in Rules 29, 30 and 31 of the Income-Tax Appellate Tribunal Rules for iaking additional evidence before the Tribunal and if the Members of the Tribunal wanted to examine Roshan Lal on any aspects of the case, they should have followed this procedure.

But unfortunately the Members of the n;•bunal, disregarding the prescribed procedure, put questions to Roshan Lal in an informal manner unauthorised by the Rules.

The answers given by Roshan Lal could not in the circumstances form part of the record and the Tribunal was not entitled to reply upon the same in arriving at its findings of fact.

It may be noted that the High Court also took the view that the procedure adopted by the Tlibunal was irregular and the answers given by Roshan Lal should be left out of account. c

One other circumstance on which the Tribunal relied was that notwithstanding the Press Note issued by the Government of India in January 1952 the assessee did not declare tha~ it had brought assets of the value of Rs. 3,33,414/- from Pakistan and this circumstance, according to the Tribunal, cast considerable doubt on the versiOn put forward by the assessee.

Now, the Press Note of Government of India was not produced before us but we will assume that it did promise a certain concession to the evacuees who declared the assets brought by them from Pakistan.

Even so, . we fail to see how it could be utilised as a circumstance militating against the explanation of the assessee.

Both according to the Appellate Assistant Commissioner as well as the Tribunal, the assessee did bring assets worth Rs. 1,00,000/- from Lahore in June 1947 and these assets were admittedly not disclosed by the assessee despite the Press Note issued by the Government of India.

Then, how could any inference bedrawn from the non-disclosure of the assets by the assessee that the assessee must not have brought assets representing the balance of Rs. 2,33,414/-? Whether the assets brought by t_he assessee were Rs. 1,00,000/- or Rs. 3,33,414/-, the fact remains that they were not disclosed by the assessee despite the Press Note of the Government of India and hence no adverse inference could be drawn from the fact of non-disclosure of the assets by the assessee.

It will, therefore, be seen that there was no material on the basis of which the Tribunal could come to the conclnsion that though the assessee had a fairly large business in Lahore and had brought its entire ornaments, jewellery and cash from Lahore and deposited the same in a sealed trunk with the Amritsar Branch of the Imperial Bank of India, these ornaments, jewellery and cash were worth not more than Rs. 1,00,000/-. One may also ask the question that if the assessee <lit! not bring assets worth more than Rs. 1,00,000/- from Lahore, where and how did it get the remaining assets of the value of Rs. 2,33,414/-? Roshan Lal had come away from Lahore as a refugee and conditions in post-partition Ind; a were also highly unsettled and the clear and nndoubted evidence was that neither Roshan Lal nor the assessee had any business or other means of

A income in India until 30th March, 1948. In this situation, it is impossible to believe that the assessee could have earned such a huge amount of profit as Rs. 2,33,414/- within a few months, even if it be assumed that some business was started by it in October 194 7 when Roshan Lal came down to Delhi.

The utter improbability, amounting almost to imposs;•bility, of the assessee having earned such a large amount of Rs. 2,33,414/- as profit within a few months in B the disturbed conditions which then prevailed in India was a circumstance which ought to have been taken into account by the Tribunal but which the Tribunal unfortunately failed to do. It may be po;"1ted out that it was not the case of the Revenue that the books of account of the business were subsequently written up and the entry crediting the capital of Rs. 3,33,414/- on 30th March, 1948 was not a genuine entry and the undisclosed profits 9f the subse- C quent years were sought to be concealed by the showing a bogus entry of Rs. 3,33,414/- as capital contribution on 30th March,

1948. If such had been the case, the present argument as to the improbability of the assessee having earned such a huge amount of Rs. 2,33,414/- within a few months, would not have been available to the assessee.

But the Revenue did not d;'Spute the correctness of the entry and accepted that assets worth Rs. 3,33,414/- were intro- D duced in the business on 30th March, 1948 and sought to include the amount of Rs. 3,33,414/- representing the value of these assets as undisclosed income of the assessee for the assessment year 1948- 49.

The only question could, therefore, be whether these aisets were brought by the assessee from Lahore in June 194 7 or they represented the concealed income earned by the assessee during the period June 1947 to 30th March, 1948.

The impossibility of the E assessee having earned such a huge amount of profit with;'l1 a few months immediately after migration to India in the disturbed and unsettled conditions which then prevailed must, therefore, necessarily support the inference that the assessee must have brought these assets from Lahore.

We are, therefore, of the view that in reaching the conclusion that out of the cap;'tal of Rs. 3,33,414/- credited in the books of the assessee on 30th March, 1948, assets of the value of Rs. 2,33,414/- represented undisclosed income of the assessee for the assessment year 1948-49, the Tribunal acted without any material or in any event, the finding of fact reached by the Tribunal was unreasonable or such that no person acting judicially and properly instructed as to the relevant law would come to such finding.

We accordingly allow the appeal, set aside the order of the High Court and answer the question referred by the Tribunal in the negative. The Commissioner will pay the costs of the appeal to the assessee.

P.H.P.

Appeal allowed.

ROSHAN-DI-HATTI

COMMISSIONER OF INCOME TAX

P. N. BHAGWATI

R. S. SARKARIA

Income Tax Act 1922

Sec. 34(1)

Roshan La

Lahore

Lahore Banks

New Delhi Banks

Mussoorie

Amritsar

Imperial Bank of India

Delhi

Imperial Bank of India, Delhi

Hindustan Commercial Bank, Delhi

s. 34(1)(a)

Indian Income Tax Act, 1922

Roshan

Roshan Lal

New Delhi

Government of India

Pakistan

Mehta Parikh

India

A. K. Sen

V. S. Desai

Bishamber Lal

G. C. Sharma

S. P. Nayar

BHAGWATI

section 66

Indian Income Tax Act, 1922

Roshan Lail

Punjab National Bank Ltd.

25th June, 194 7

Haridwar

Dariba Kalan

Roshan-Di-Hatti

30th March, 1948

Roshan-Di-Hatti

section 34(1)(a)

Indian Income Tax Act, 1922

30th March; 1948

Hindustan Commercial Bank

Roshan- Di-Hatti

Hira Lal

Mulk Ram

Billa Mal

Dalal

Wazir Chand

Devida' Mehra

Panna Lal

Prem Nath

Kishan Chand

Rosh an Lal

Punjab National Bank

Punjab National Bank, Lahore

Delhi Bank

State Bank of India

25th June, 1947

State Bank of India Amritsar Branch

Hindustan Commercial Bank Ltd.

Assistant Commissioner

Devidas Mehra

s. 2

section 66(2)

31st March, 1948

Commi

State Bank of India, Amritsar

Imperial Bank of India, Amritsnr Branch

30th March,

1948


VANGUARD ROLLING SHUTTERS

AND STEEL WORKS LTD. v.

COMMISSIONER OF SALES TAX, U.P.

March 8, 1977

[P. N. BHAGWATI AND S. MURTAZA FAZAL ALI, JJ.J

S'ales Tax-Contract for sale of material and works contract-Tests for distinguis!1f11g.

The nse'iee, \vho was a manufacturer of iron shutters, fabricates the different nart:; and comoonents and fits them into shutters.

The shutters are prepared ric, c1ding to the specific requirementfJ cf the customer and fixed in the custotner's p::emises.

Though the ma<; onary work connected with the fitting of the shutters \Vas done by the customer, it was done according to the contractor's instructions.

The contract was comr>lete after the shutters were taken to the ore1nises of the customer and affixed to tho building; and when htted into the-\Valls the shutters becom.e permanently embedded into the wall<; and are not detachable.

The price charged by the contractor from the customer was a lun1psum and did not show a break up of the rnaterials used or fabricated or the cost of services or labour.

The assessee claimed that the contract being a works contract, the proceeds from such contracts: are not exigible to tax.

But this plea vvas rejected by the Sales Tax Officer.

The asses<iee's appe::il was rejected by the Assi-stant Commissioner (Judicial). The Judge (Revisions) SalesTax upheld the assesee.'s contention.

On reference the High Court held that the contract was not a v.orks contract but a contract for the supply of gocxls sin1pliciter.

Allowing the .. assessee's appeal,

HELD '. The contract in the present case was a works contract and the transaction \Va"> not exiiible to tax.

The High Court was in error in holding that the assessee wa~ liable to pay tax on the sale proceeds of the contract.

[171 EJ

( 1) The question whether a contract can be said to be a works contract has to depend on the facts of each case.

It is difficult to lay down any rule of universal application but some of the important tests evolved by this Court are: [168 HJ

(i) Where the contra:ct was primarily a contract for the supply of materials at a price agreed to bet\veen the parties for the materials so supplied and the work or service rendered is incidental to the execution of the contract, the contract is one for sale of materials and the sal_e proceeds would be exigible to sales-tax. [169 A-Bl

(ii) Where the contract is primarily for work and Jabour, and materials

are supplied in execution of such contract, there is no contract for sale of G ni.ateriats but it is a works contract.

The circumstance that the materials have no evarate identity as a commercial article and it is only by bestowing \\'Ork and labour upon them, that is, by affixing them to the building Would be prilna facie indicative of a works contract.

Where certain materials are not :rr.erely suppi; cd but fixed to an immovable property so as to become a per~ nJanent fixtlire apd anl accretion to the said property, the contract prbna facie would be a works contract. [169 CJ Jn the instant case the transa<:tion was a composite, consolidated contract which was one and indivisible comprising labour and services executed for a H Jumpsum.

The contract could be completed when materials with various component parts had been taken to the site, fitted into one another and then finally fixed ibt0 a frame so that the fixture became permanent and a, part of

... the premises. This operation oould not be. sai, d to be merely incidential to the contract but was fundamental part of the contract itself. [168 I' & 170 A]

(2) It is not correct to say that the contract could not be a works contract because the price was paid in advance and the title passed to the customer as soon as the shutters were packed and despatched to the site.

Advance payment of the price was a term meant for the convenience of the parties as the contractor did not want to take any risk for delayed payment; the contract would be completed only after the shutters were finally assembled at the site and fixed according to specifications, which was essentially the responsibility of the contractor. (170 DJ

State of' Rajasthan v. Man Industrial Corporation Ltd. 24 -5:r C. 349, 355 and Srate of RajaSthan v. Nanu Ran1 26 S.T.C. 268 followed.

State of Madras v. Richardson and Cruddas Ltd. 21 S.T.C. 245 (S.C.) and Con1n1issioner of Sales Tax. M.P. v. Purshottam Premji 25 S.T.C. 38. referred to.

Mis T. V. Su11dran1 Iyengar & Sons v. The State of Madras 35 S.T.C. 24-[19751 2 S.C.R. 372 distinguished.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 106 of 1976.

(Appeal by Special Leave from the Judgement and Order dated 30.9.1975 of the Allahabad High Court in S.T.R. No. 698/70)

S. C. Manchanda, Mrs. Urmila Kapoor, !. D. Jain and Miss Kamlesh Bansal, for the appellant.

G. N. Dikshit and 0. P. Rana, for the respondent.

The Judgment of the Court was delivered by

F AZAL Au, J .-This is an appeoal by special leave by the assessee who was a contractor dealing in fabrication of Vanguard rolling shutters and steel works.

The assessee manufactures iron shutters according to specifications given by the parties and fixes the same at the premises of the customers. In the assessment year 1965-66 the assessee received an aggregate sum of Rs. 1,08,633-08 in the execution of such contracts. This amount was claimed by the assessee as not being liable to sales tax during the •assessment year 1965-66 on the ground that the same represented the proceeds of work contracts.

The Sales Tax Officer rejected the plea of the assessee and the Assistant Commissioner (Judicial) on appeal also affirmed the order of the Sales Tax Officer. But the plea of the assessee appears to have found favour with the Judge (Revisions) Sales Tax who decided that the amount was not exigible to sales tax, because the contracts in question were work contracts. Thereafter at the instance of the Commissioner, the Revising Authority made a reference to the High Court and referred the following question of law for its opini0n :

"Whether under the circumst•ances of the case and under the terms of the contract the supply of shutters and iron gates worth Rs. 1,08,633-08 was sale or amounted to work H contract ?"

The High Court, after hearing the parties and considering the materials on the record, came to the conclusion that the contract entered into

• I

VANGUARD ROLLING v. COMMR. OF S.T. (Fazal Ali, J.) 167

by'the appellant was not 'a work contract but a contract for the sup- A ply of goods simpliciter and the assessee, was, therefore, liable to pay ; tax.

The question referred to the High Court was answered accordingly.

The assessee's case was that having regard to the circumstances of the present case, the terms and conditions of the contract and the nature of the work done by the appellant the contract in que•tion B was out and out a work contract and not a contract for supply of goods or materials, In order to decide this question it may be neces- . sary first to give the salient features of the contract between the parties.

A specimen of the contract has been filed by the assessee ao Annexure 'A' in the Paper Book, the relevant portions of which may be extracted thus :

"Please erect at our premises .... Nos. of .... of the C following: dimension against the contract price of Rs. . .. . .

1. Full payment against delivery prior to despatch or documents by Bank. It is clearly understood that there will be no such thing as to make payment after fixing.

2. Material will be carried to the side of work at cost of the party.

Our responsibility ceases when the same leaves our premises. 3. x x x

4. We dlil not hold ourselves responsible for any structural damage or dispute with the landlord. Masomiry work done by the party at his cost according to our instructions.

5. x x x

6. No responsibilities for non.delivery or late despatch of goods due. to any reason beyond our control." It would appear from the terms extracted above, that the assessee was required under the contract to fabricate the rolling shutters in the first instance, to bring them to the site and thereafter to erect the same at the premises. In an application given to the Assistant Come missioner (Judicial), which is Annexure 'C' of the Paper Book, by the assessee he explains the various steps which the contractor had to take in order to fix the rolling shutters to the factory premises of the owner.

First the different parts and components of the rolling shuUers are fabricated. It is only when the various component parts are fitted into one that they constitute the rolling shutter as one unit, and taken separately they have no separate existence. It was further explained that the component parts do not constitute a rolling shntter unless they are affixed to and erected in the building in position and in the required manner. It was further alleged that the contract was not concluded merely by delivery of fabricated materials but. was completed only afkr the same were taken to the site and ftnally erected and affixed to the site of the building. In order to fix them

12--240SCI/77

to the premises certain masonary work had to be done by the owner and that too according to the instructions of the contractor. It was also averred that in erection of the shutters some parts were permanently. embedded into the walls and lintals and they become permanent fixtures which are 'not detachable. The allegations made in

Anneure 'C' have not been controverted by the State either in this Court or before the. High Court.

Moreover, the Indian Standard

Specication Book for Metal Rolling Shutters and Rolling Grills the particulars of the fittings of rolling shritters, whose authenticity has not been doubted by counsel for the parties, clearly shows that rolling shutters consist of curtains, lock plates, guide channels, bracket plates, rollers, hood covers, gears, worms, fixing bolts, safety devices, anchoring rods, central hasp and staple. Each guide channel has to be provided with a minimum of three fixing cleats or supports for attachment to the walls or column by means of bolts or screws. The guide channels are further attached to the jambs, plumb either iu the overlapping fashion, projecting fashion or embedded in grooves, depending on the method of fixing.

All these operations take place at the site after despatch of the component parts of the rolling shutter.

Hood covers are fixed in a neat manner and supported at the top at suitable intervals.

This also has to be done at the site. . Item 11.1 of the specifications shows that the rolling shutter curtain and bottom lock plate are interlocked together and rolled in one piece, but the other p&rts like guide channels, bracket plates, rollers etc., are despatched separately. Item 12.1 shows that all the rolling shutters are erected by the manufacturer or his authorizoo representative hi a sound manner, so as to afford trouble-free and easy operation, long life and neat appearance. Even after erection is done, grease is ap~ plied to the springs and on the sides of the guide channels.

Thus the process involved in the fabrication of a rolling shutter and its actual fixing to the premises at the site is a .continuous one and is completed only when erection is completed in every way.

The price charged by the contractor from the owner of the premises is one lumpsum with_<:>ut at all specifying as to what part is meant for the materials used or fabricated and what part for the services or labour put in by the contractor. It is, therefore, clear that in the facts and circumstances of the present case, the transaction is a composite consolidated contract which is one and indivisible comprising labour and servics executed for a lumpsum. It is also clear that the materials are not merely supplied to the owner so as to pass as chattel 'simpliciter, but are actually fixed to an immovable property and after the same arc fixed and erected they become a permanent fixture so as to become an accretion to the immovable property. In these circumstances, the conclusion is inescapable that the present contract cannot he said to be a pure and simple sale of goods or materials as chattels hut is a work contract. It is well settled ihat a work contract is a contract for construction of bridges, buildings etc., and infor a Iumpsum. The question as to under what circumstances a contract can be s1id to be a work contract is not free from difficulty and has to depend on the facts of each case. It is difficult to lay down any rule of universal application, but there are some well recognized tests which are laid down by decided cases. of this Court which afford

.~

........

~ '

VANGUARD ROLLING v. COMMR. OF S.T. (Faza.I Ali, J.) 169

guidelines for determining as to whether a contract in question is a work contract or a con.tract for supply of goods. One of the important tests is to find out whether the contract is primarily a contract

for supply of materials at a price agreed to between the parties for the materials s~ supphed and the work or service rendered is incidental to the execution of the contract. If so, the contract is one for sale of materials and the sale proceeds would be exigible to sales tax.

On the other hand where the contract is primarily a contract for work and labour and materials are supplied in execution of suck contract, . there is no contract for sale of materials but it is a work contract.

The circumstance that the materials have no separate identity as a commercial article and it is only by bestowing work and labour upon them, as for example by affixing them to the building in case of window-leaves or wooden doors and windows that they acquire commercial identity, would be prima facie indicative of a work contract.

So also where certain materials are not merely supplied but fixed to an immovable property so as to become a permanent fixure and an accretion to the said property, the contract prima facie would be work contract.

This is exactly what has happened in the present case.

In State of Rajasthan v. Man Industrial Corporation Ltd.('), after discussing the entire case law on the subject, this Court observed as follows :

"The test in each case is whether the object of the party sought to be taxed is that the chattel as chattel passes to the other party and the services rendered in connection with the installation are under a separate contract or are incidental to the execution of the contract of sale."

Although the aforesaid case appears to us to be on all fours with the facts of the present case, the High Court merely noticed the decision, but did not try to apply it to the facts of the present case. Jn Mm1 Industrial Corporation Ltd's case (supra) the contract was to prepare window-leaves according to specifications and fix them to the building.

F It was held that fixing the window leaves to the building was not incidental or subsidiary to the sale but an essential term of the contract, because the contract became complete only after the windows v:ere fixed as stipulated in the contract. Similarly ill. the instant case, the contract could not be completed merely by sending the matenals at the site but would be completed only after erection of the shutters had been made and the shutters fixed to the premises so as to beco1:ie G an accretion to the premises.

Mr. Dikshit appearing for the State submitted that in the present case the contract was merely for the supply of shutters in one unit after being fabricated by the contractor and the price was paid for the shutters, the question of fixing the shutters at the site was not an integral part of the contract but was only incidental to the supply of mate, rials and, therefore, the contract was not a work contract.

H We are, however, unable to agree with this contention, because as

(I) 24 S.T.C. 349, 355.

A . discussed above, the materials were sent with various component parts which had to be taken at the site, fitted into one another and then finally fixed into a frame. so tt.ut the fixture became permanent and a part of the premises.

The operation to be done at the site as required by the instructions in the Standard Book could not be said to be merely incidental to the contract but was a fundamental part of the contract itself. In our opinion, therefore, the decision in Man B Industrial Corporation Ltd's case (supra) fully covers the facts of the present case.

It was further argued by Mr. Dikshit learned counsel appooring for the State that it will appear from the terms of the contract that the price of the goods had to be paid in advance before delivery of the same to the wstomer which shows that the title to the shutters passed C to the customer as soon as the shutters were packed and despatched to the site and the price paid and therefore the contract in the instaut case cpuld not be a work contract. It is not possible to oaccept this contention, because the advance payment of the entire price was a term meant for the convenience of the parties as the contractor did not want to take any risk for delayed payment of goods, but the contract would be completed only after the shutter~ were fully D assembled at the site and fixed according to the specifications which was essentially the responsibility of the contractor.

In Richardson and Crudda.s Lta. v. State of Madras(') there was a similar recital in the contract for full price to be paid in advance and still the Madras High Court held that the contract was a work contract.

The decision of the Madras High Court was approved by this Court in Man Industrial Corporation Ltd's case (Supra) and affirmed by this E Court in Staie of Madras v. Richardson and Cruddas Ltd.(2 ) Fer these reasons the contention put forward by Mr. Dikshit on this sc01e is overruled.

In a later case of this Court in State of Rajasthan v. Nanu Ram(•) tenders were invited by the Chief Engineer from the contractors for supplying and fixing of wooden door and windows, sashas together with frames and painting them in the police lines building and for F supplying and fixing the wooden chowkhats and this was held to be a work contract. The decision 'in Man Industrial Corporation Ltd's case (supra) was followed by this Court in that case. Again in Commissioner of Sales Tax, M.P. v. Purshottam Premji(') this Court indicated the essential difference between a contract for work and services and a contract for sale of goods and observed as follows : G "The primary difference between a ontract. for work or service and a contract for sale of goods Is that m the former there is in .the person performing work or rendering service no property in the thing produced as a whole .... In the case of a contract for sale, the thing produced as a whole has individual existence as the sole property of the party who produced it, at some time before delivery, and the property H

(1) 16 S.T.C. 827.

(2) 21 $.T.C. 245 (S.C.).

(3) 26 S.T.C. 26g.

(4) 2{; S.T.C. 38..

...

' ·-

VANGUARD ROLlING v. COMMR. OF S.T. (Fazal Ali, !.) . 171

therein passes only under the contract relating thereto to the A other party for price."

The High Court placed great reliance on the decision in M/ s T. V.

Sundram Iyengar & Sons v. The State of Madras(').

In that case what had happened was that the contractor built bus bodies and fitted the same to the chassis provided by the customers and clharged tbe price for building the' body and fitting the same to the chassis. It was held by this Court that the contract was completed only when the complete bus with the body fitted to the chassis was delivered to the customer and, therefore, the supply of body being one single. unit constituted a sale of goods. That case is clearly distinguishable from the facts and circumstances of the present case.

In the first place, the supply of materials and completion of the contract was indisputably in respect of movable property, no immovable property was at all involved at any st1ge in .the process of completion of the contract.

The bus-body built by the contractor was moveable property manufactured by the contractor and had merely to be fitted to the chassis which was also movable property. Secondly, the bodies constructed and fitted to the clhas.sis were easily detachable. In the instant case, the shutters were fabricated and fixed to an immovable property so as to become a permanent fixture and they were also not detachable.

The High Court failed to have noticed these important features which distinguish the aforesaid decision from the facts of the present case.

We are of the considered opinion that the present-case is clearly covered by the two decisions of this Court referred to in Man Industrial Corporation Ltd's case and Nenu Ram's case (supra), and applying the same we hold that the contract in the present case was a work contract and the transaction was, therefore, not exigible to tax. The High Court was in error in holding that the assessee was liable to pay tax on the sale proceeds of the contract.

We, therefore, allow this appeal, set aside the order of the High Court and restore the order of the Revising Authority and hold that the assessee was not liable .to pay sales-tax. The appellant will be entitled to his costs throughout.

P.B.R.

Appeal allowed .

(I) 35 S.T.C. 24-IJ975] 2 S.C.l'l. 372.

COMMISSIONER OF SALES TAX, U

March 8, 1977

P. N. BHAGWATI

S. MURTAZA FAZAL ALI, JJ

CIVIL APPELLATE JURISDICTION

S. C. Manchanda

Urmila Kapoor

D. Jain

Kamlesh Bansal

G. N. Dikshit

0. P. Rana

F AZAL Au

Dikshit

Man B Industrial Corporation Ltd

Madras High Court

Man Industrial Corporation Ltd

Nenu Ram


SHIV MOHAN SINGH v.

STATE (DELHI ADMINISTRATION)

March 10. 1977

(Y. V. CHANDRACHUD AND V. R. KRISHNA IYER, JJ.]

Review-Exercise of the powers of Review inust be justified by lite co1npelling pressure of fresh circumstances within the limits of law-Suprenze Court Rules. 1966 Order XI-Penal Code (1860) S. 302-Sentence-Validity of death sentence. ~

Criminal Procedure Code, 1973 (Act /I of 1974)-Section 235(2)-Right to be heard al the stage of passing sentence-Considerations in sentencing.

The petitioner was convicted u/ s 302 I.P .C. and sentenced to death by the trial court which was confirmed by the High Court.

The Special Leave

pplication, to this Court was dismissed. A further petition for rehearing and a review petition thereafter having been dismissed, a petition for directions regarding remand of the case to the court of Sessions for reconsideration of the sentence in !he light of s.235(3) of the Criminal Procedure Code 1973, was made, simultaneously with mercy petitions to the President.

The mercy petitions to the President and the petition for direction to this Court having been rejected .. the petitioner's father moved the instant review petition.

Dismissin~ the petition the Court, HELD : ( 1) This court's review power has repeatedly been invoked in vain and ntu1ally a further exercise of the same power must be justified by the compelling pressure of fresh circumstances within the limits of law.

Recognised grounds such as manifest injustice induced by obvious' curial error or oversight or new and important matter not reasonably within the ken or reach of the party seeking review on the prior occasion, may warrant inter~ E ference to further justice.

(2) Under the Indian Penal Code death penalty has been ruled to be constitutkmal. The law having sanctioned it and this Court having refused special leave against conviction and sentence in this very case, it is a vanquished cause to argue for a vague illegality vitiating capital sentence as such.

[179 D-E]

Gregg v. Georoia, U.S. Supreme Court decided on July 2, 1976 held not F applicable.

(3) In India under present conditions deterrence through death ptnalty may not be a time-barred punishment in some frightful areas of barbarous. murder.

Illuslratively the court has mentioned that the brutal features of the criine and the hapless and helpless state of the victim steel the heart of the law to impose the sterner senten~. [180 A-B]

Ediga Annam1na v. State of A.P., [1974] 4 S.C.C. 443 explained.

( 4) The la\!;· is thus harsh and humane and when faced with arguments about the so.:1ai invalidity of the death penalty the personal predilections of the judge n1ust bow to the raw.

The Bench with all its will to break through is 't; ound by a jurisdictional servitude.

This fetter is that if there is no legal ground for the alleged grievances the court cannot grant relief.

The court enters a province of "powerless power' 1 and finds itself in a quandary between codified law and progressive thought.

The latter beckons, but the former binds.

[180 B, 177 F-G]

(5) l:Iearing i~ obligatory at the sentencing stage under the new Criminal Procedure Code.

The humanist principle of individualising punishment to suit the person and his circumstances is best served by hearing the culprit even on the nature and quantum of tho penalty to be imposed. [180 Fl

~ '

(6) The heinousness of the crime is a relevant factor in the choice of the sentence.

The circumstances of the crime, especially social pressures \vhich induce the crime 1; vhich may be epitomised as "a just sentence in an unjust

--- society" are another considerations. The criminal. not the crime, must figure prominently ir. shaping the sentence where a reform of the individual, rehabilitation into society and other measures to prevent recurrence, are weighty factors.

Sombre sentencing is the Fifth Act in the tragedy of a murder trial and for the judges of the Supreme Court, assumes a grim seriousness and poignant gravity.

The Penal Code does not give: the judge a free hand where B

n1urdcr has been n1adc out.

The choice is painfully-not quite scientifically though-li1nitcd. to but two alternativeG. [173 P, 180 A-C]

<Jbserration : [Sentencing under the Indian scheme is not yet realistically forward looking nor correctionally flexible, but Parliament in its wisdom n1ay examine this inadequacy].

CRIMINAL APPELLATE JURISDICTION : Review Petition No. 2 of C 1977.

(Petition for review of this Court's order dated 22-9-1976 in Cr!.

M.P. Nos. 1567, 1600-1601/76). .

Sita/ A. K. Dhar, for the petitioner.

R. N. Sachthey, for the respondent.

The Judgment of the Court was delivered by

KRISHNA IYER, J.-If 'survival after death' may aptly describe any litigative phenomenon, the present review proceeding may well qualify for that quaint claim. The relief of. review "elates to the death penalty imposed npon the petitioner by the trial court, confirmed in appeal, and dismissed even at the stage of special leave by this Court.

In the ordinary course, judicial finality, has thus been affixed on the capital sentence so awarded although Presidential clemency, which has been, sought and negatived, may still be open unµer Article 72 of Constitution.

Mercy, like divinity, is amenable to unending exercise but in this mundane matter it is for the Head of State to act and not for the apex Court.

Sombre sentencing is the Fifth Act in the tragedy of a murder trial and, for the Judges of the Supreme Court, aswmes a grim seriousness and poignant gravity since the petitioner's final appeal for judicial commutation, if rejected, may perhaps prove imminently fatal to his life. Even so, when we chronicle the events connected with the judicial proceedings in this Conrt it will be realised that our review power has repeatedly, been invoked in vain and naturally a further exercise of the same power must be justified by the compelling pressure ot fresh circumstances within the limits of the law.

The nature of. the judicial process, even at the tallest tower; is such that, to use Gardozo's elegant expressions, 'a jqdge even when he is free, is still not wholly . free; he is not to innovate at pleasure; he is not a knight-errant, roaming at will in pnrsuit of his own ideal of beanty or of goodness; he is to draw inspiration from consecrated principles'. Where the Jndge's values and those prevailing in society clash, the judge must, in theory, give way to the 'objective right'.

A The focus, therefore; must turn on the existence of grounds ot

manifest miscarriage of justice unavailable on the earlier occasions.

Before that, a brief reference may be made to the 'criminal' facts.

A treacherous murder of a tender school-boy by the petitioner, the circumstances of which were so heartless and heinous, terminated condiguly at the trial court and the High Court; the extreme penalt)l having been visited on the offender for his horrendous killing.

This Court refused special leave to appeal, drawing the dark curtain on the criminal proceedings.

The petitioner struggled to extricate himself from the executioner by a sequence of desperate steps.

On his behalf, a motion for re-hearing the special leave petition was fruitlessly made to this Court. A review petition was made again to this Court in vain. Yet another, out of the same motive but with modified reliefs, was made and dismissed.

Then followed an application for directions regarding remand of the case to the court of sessions for reconsideration of the sentence in the light of s. 235(3) of the Code of Criminal Procedure, 1973.

Dismissal of this proceeding did not deter the petitioner from persisting in moving this Court. That is how the present review petition has been put in on his behalf by his

father.

Mercy petitions to the President punctuated the court proceedings but they too were turned down.

The convict, nevertheless, clung on and, as stated earlier, his pathetic persistence in the plea for commutation has been pressed before us by counsel on two scores.

He has urged that a decision of this Court in Santa Singh v. State of Punjab(') of which he was not aware at the earlier stages entitles him to a remand to the Sessions Court for reconsideration of the sentence of death.

Secondly, he has also pressed upon us personal and social circumstances which have received jndicial approval as justifying the imposition of the lesser sentence of life imprisonmnt even where the offence of murder has been made out.

In the ordinary course, the supplicant's forensic battle for life must be repelled by us since this Court has refused leave, rejected review petitions and denied reconsideration.

Even so, realising that by this prolonging proceeding he is longing for dear life and clutching at legal straws, we have desisted from a dramatic rejection of the petition out- P, ght, anxious to set if there be some tenable ground which reasonably warrants judicial interdicts to halt the hangman's halter.

We were willing to strain, within permissible limits, to blend leniency with legality. 'The last breath' is the last hold of the law on the Jiving to do justice and at that point judges, while hating the crime, do not hate the man who committed it, such being the humanism of penal justice. Circuit Judge Christmas Humphreys told the B.B.C. Reporter recently that a judge looks "at the man in the dock in a different way, not just a criminal to be punished, but a fellow human being, another form of life who is also a form of the same one life as oneself'. In the context of Karuna and punishment for Karma the same Judge said:

(I) Criminal Appeal No. 230of1976 decided on 17-8-76.

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"The two things are not incompatible.

You do A punish him for what he did, but you bring in a quality of what is sometimes called mercy, rather than an emotional hate against the man for doing something harmful.

You feel with him; that is what compassion means."

(The Listener, d/25.11.1976, P. 692)

But if the harsh frontiers of the criminal are clearly drawn, to travel beyond is out of bounds. for the court.

The focus of counsel's first submission was turned on the compassion of the Code of Criminal Procedure, 1972 which obligates the court, under section 235, to hear the convict on the question of sentence.

The provision is salutary although its 11pplication to the present case is moot, in. the light of section 484 of the Code.

Witlfout pausing to decide wl1ether the new Code applies, we have extended to the petitioners the benefit of the benignant provision and allowed his counsel to present the circumstances he relies on to activate our commiserative jurisdiction.

lt is true that the New Code provides many additional facilities for persons accused of crim~, the paramount idea being to avoid an innocent man being mistakenly found guilty or punished disproportionately.

In the present case, the conviction has become conclusive and. only the question of sentence is being argued for extenuating consideration.

Even so, sometimes one is led to wonder whether the words of Learned Hand have some relevance to the Indian system.

The learned Judge said of the American system :

"Under our criminal Procedure, the accused has every advantage.

While the prosecution is held rigidly to the charge, the accused need not disclose the barest outline of his defence.

He is immune from questioning or comment on his silence; he cannot be convicted when there is the least fair doubt in the minds of anyone of the 12 Jurers.

Our procedure has always been haunted by the ghost of the innocent man convicted. It is an unreal dream. What w~

need to fear is the archaic formalism and the watery sentiment that obstructs, delays and defeats the prosecution of crime".

We advert to this aspect only to emphasize a sense of perspective in the judiciary when applying the protective procedural provisions of the Code.

Sentencing under the Indian scheme, is not yet realistically forward-looking nor correctionally flexible but Parliament in its wisdom, may examine this inadequacy.

The penalty of death is an irrevocable process and naturally our pensive thought was turned to the moral-jnral aspects of the utility and futility of this dmdly sanction of State a_gainst citizen of hanging a human being into a cold oadaver.

The miscellany of ideologicalociological-jural considerations, although not pertinent within the

narrow horizon of a. court of law, has. a fascinating and portentous significance when we remind ourselves that the Supreme Court goes beyond chopping little .Jaw into spacious jurisprudence on great occasions and our Penal Code is itself under review before Parliament.

This prolegomenon to the principles of capital sentence is our alibi for a brief divagation into the basics of infliction of death as a weapon of extinction society uses against its terribly deviant members as beyond deterrence.

Is the death penalty a purposeful punitive strategy or legitimate legal weapon, viewed against the advanced penological goals of reformation, deterrence and social defence? Why is death terrifying and what are the objects of punishment served by its infliction ? .

C The. literature on doing ju'stice at the sentencing stage is profound and proliferatin_g and penological controversy on death penalty has led to a Great Divj_e among sociologists, jurists and spiritualists. To go eggregiously wrong on punishment is to commit the 'crime' of sentence, r'" and, naturally, since taking the life of the prisoner neither prevents him nor reforms him (for he is no more), theorie's supporting capital punishment prove self-defeating.

Moreover, the irreversible step of D extinguishing the offender's life leave society with no opportunity to retrieve him if 'the conviction and punishment be found later to be founded on . flawsome evidence' or the sentence is discovered to be induced by some phoney aggravation, except the poor consolation of posthumous rehabilitation as ha's been done in a few other countries for which there is no procedure in our system.

May be, these are campaign points of abolitionists against capital sentence.

Envisioned from another fundamentally different angle, is the dread of death penalty a deterrant? Socrates would not recant, Jesus would not plead, St. Joan would not deny-with the cup of poison, bleeding crucifixion and burning 'stakes starting them in the face as punishment.

Why, Higher Truth, acting through its inspired agents, taunts human law; for, then the body gives little purchase over the soul, as Gandhiji demonstrated by defiance of British-Indian 'justice'.

And, more dramatically yet dimly, psychic, electronic and medical explorations, scientifically conducted, are reportedly revealing through fascinating flashes of research and recording and extraordinary but tested investigations into rebirth, that death is only discarnation, not utter dissolution, that after 'death' we survive and act in a demonstrable, subtle dimension of existence. No longer is this thesis projected as faith but sought to be proved as fact.

If, in the not distant G future, the greatest of all man's fears-fear of death-is dispelled by the finding of noetic science proving that you live after 'death' and can communicate with the 'living', that the confusion between discarnation and death can be scientifically explored and cleared, a revolution in the penological programmes of society would have dawned.

The trans-physical human future, as sciences unravel, may make our current penal strategies obsolescent.

At Court, current criminal law binds us willy-nilly and we have to abandon the subject suggestively.

The basic issue 'What is death ?', may engage us psycho-crimino· logically, although a wee-bit digressively for a moment, to assess the

SHIV MOHAN SINGH v. STATE (DELHI AoMN.) (Krishna Iyer, J.) I 77

social impact of the death penalty.

By and large, humankind holds fast to the belief that death is a total extinction of dear life and views its arrival through the executioner's rope or electric chair or firing squad with awesome horror.

With poetic pragmatism, Shakespeare expressed this common feeling when he referred, in tb.e context of death, to 'that undiscovered country from whose iourn no traveller returns'.

There are others, however--and among them are ancient seers, modern-divines and several psychic researchers i.n institutes who regard as super-sensory.

Reality or scientific vrity that there is life after life, that the phenonmenon of death may even have a liberating effect, that the -grosser existence is in corporeal life and the subtler in the incorporeal state and life-death-life is a continuum.

Our sages assert with vision that 'dcathbound littleness is not all we are' and great death as integral to the life process.

Many scientists are investigating what happens after death and lifting the dark veil with luminous evidence of ethenic survival.

Even so, most men-'even pious ones-are earthy materialists, and, in our work-a-day world, fake it an axiom that it is given to us to live but once.

The law, a people's practical scheme, which operates on the behavioral patterns and psyche of the humdrum run of mortals, steers clear of super-scientific and mystic maybes and grunds itself on the hard-headed realist's view that the sentence of death is the maximum punishment as it puts the criminal out of material existence.

Indeed, it. is a fiercely final step for mortals and; in a sense, abhorrent because survival after death, though slowly, murkily, falteringly, gaining scientific, ground, is still suspect and has not made headway into the thoughtways of jurisprudes and legislators, rationalists and practical people. If after-life and re-birth are verities, as many noetic scientists claim to prove beyond easy dismissal both penology and criminology will undergo re-evaluation.

For, as punishment 'death penalty' will cease to be terrible and criminologyically, crime will be inescapably punished in this life or on re-birth.

These futuristic projections are of no practical consequence now.

Jurispmdence has to react to and build upon established belief-systems, branches of human knowledge and behavioral sciences.

But these problems are more Tomorrow's challenge to philosophers, spiritualists, social and mental scientists, fundamental thinkers, parliamentarians and penal reformers.

The B, ench, with all its will to break-through, is bound by a jurisdictional servitude.

This fetter s, as stressed by Government counsel, that if there is no legal ground _er the alleged grievance, the Court cannot grant relief.

The Court enters a province of 'powerless power' and finds itself .in a quandary between codified law and progressive thought.

The latter . beckons, but the former binds.

We divagated into the import and portent of life and after-life on capital sentence not because these distant, dubious searches have immediate legal standing but merely to show how we may be swept

off our feet if we chase 'tomorrow' theories, especially since law in H court is hard realism.

To-day for the condemned prisoner, the day of execution is the dreadful last day of life.

Even so, critics like Becearia have said 'the death penalty cannot be useful, because of

the example of barbarity it gives men. . . . It seems to me absurd that laws which are an expression of the public will, which detest and punish homicide, should themselves commit it'. On the other hand, the deterrent and retributive theorists prevail amongst penologists and lextalionis continues in sublimated form Orthodox jurists have shared the view of Genesis 9: 6: "Whosoever sheddeth a man's blood, so shall his blood be shed." To epitomize, in this blurred area of criminal jurisprudence we are lost in the conflict between ideals, theories and research findings and the subject remains so fluid that legislative decision-making and jurisprudential debate must crystallize into a Code before the Court can activise these norms or incorporate them as judge-made l!!w.

The plea of counsel against death penalty has topical flavour and echoes the recent American debate. To abbreviate the discussion, we content ourselves with adverting to the judicial divisio'! of opinion in the Supreme Court of U.S.A. in Gregg v. Georgia (decided on July 2, 1976) wherein Mr. Justice Brennan, in his dissenting judgment, drove home his point thus :

"I emphasie only that foremost among the 'moral concepts' recognized in our cases and inherent in the clause is the primary moral principle that the state, even as it punishes, must treat its citiz~_!I~ in a manner consistent with their intrinsic worth as human beings a pnnis.hment must not be so severe as to be degrading to human dignity.

A judicial determination whether the punishment of death comports with human dignity is. therefore not only permitted bnt compelled by the clause.

Death is not only an unusually severe punishment, unusual in its pain, in its finality, and in its enormity, but it serves no penal purpose more effectively than a less severe punishment; therefore the principle inherent in the clause that prohibits pointless infliction of excessive punishment when less severe punishment can adequately achieve the same purposes invalidates the punishment."

Mr. Justice Marshall added the weight of his opinion :

"The wo . purposes that . sustain the death penalty as non-excessive m the court's view are general deterrence and retribution.

The Enrlich study, in short, is of little, if any assistance in assessing the deterrent impact of the death penalty.

The evidence I reviewed in Furman remains convincing, in my view, that 'capital punishment is not necessary as a deterrent to crime in onr society'.

The justification for the death penalty must be found elsewhere.

H The other principal purpose said to be served by the death pena!ty is retribution.

The notion that retribution can serve as a moral justification for the sanction of death finds credence in the opinion of my brothers Stewart, Powell,·

and Stevens, and that of my brother White in Roberts v.

Louisiam. It is thh; notion that I find to be the most disturbiug aspect of to-day's unfortunate decision.

The foregoing contentions-that society's expression of moral ontrage through the imposition of the death penalty pre-empts the citizenry from taking .the law into its ()Wn

hands and reinforces moral values-are not retributive in the purest sense.

They are essentially utilitarian in that they portray tjie death penalty as valuable because of its beneficial results.

These justifications for the de_; ith penalty are inadequate because the penalty is, quite clearly I think not necessary to the accomplishment of those res_ults.

There remains for consideration, however, whar might be termed the purely retributive justification for the death penalty-that the death penlty is appropriate, not because of ifs beneficial effect on society, but because the taking of the murderer's life is itself morally good. Some of the language of the plurality's opinion appears positively to embrace this notion of retribution for its own sake as a justification for capital punishment."

These American views of eminent judges deserve deferential notice but do not aid us in the decision of this Indian Appeal which relates to implement!ltion of a valid sentence since, under the Indian Code, death penalty. has been ruled to be constitutional.

The law having sanctioned it and this Court having refused special leave against conviction and sentence. in this very case, it is a vanquished cause to argue for a vague illegality vitiating capital sentence as such. To tbat extent the pall must fall.

Counsel for the. petitioner brought to our notice a number of recent decisions of this Court where judges have expressed themselves in favour of a sentcncill.g policy of life term as against death penalty.

In Ediga Annamma (1974 (4) SCC 443) the Court pointed to tli!e

retreat of death penalty as part of punitive strategy in many countries of the world.

Counsel cited rulings of this Court to show that where the murderer too young or too old or the haunting horror of being hanged has been hovering over his head for a few years or the condemned prisoner .is the sole bread-winner of the whole family, the lesser sentence of life imprisonment should be the judicial choice.

He brought to our notice the social and personal circumstances in the present case revant to the above approach.

Undoubtedly, the prisoner was a young man around 21 /22 years when he committed the crime.

He claims that his young wife will be helpless, that upon him depends t)1e family for livelihood, that his mother is blind, that all of them will have a miserable, indigent life if the petitioner were to be extinguished from earthly existence. He also emphasised that since 1974 the sentence of death had been shattering his morale. It must, however, be pointed out that counsel for the State refuted some of the more important of these grounds and went to the extent of even stating that the petitioner's wifg had remarried.

In Ediga Annamma this Court, while noticing the social and personal circumstances possessing an extenuating impact, has equally clearly highlighted that in India under present conditions deterrence through death penalty may not be. a time-barred punisb![lent in some frightful areas of barbarous murder.

Illustratively, the Court has mentioned that the brutal features of the crime and the hapless and helpless state of the victim steel the heart of the Jaw to impdse the sterner sentence.

The Jaw is thus harsh and humane and when faced with arguments. about the social invalidity of the death penalty the personal predilections of the Judge must bow to the law as by this Court declared, adopting the noble words of Justice Stenley Mask of California uttered in a death sentence case : "As Judge, I am bound to the Jaw as I find it to be and not as fervently wish it to be''.

(The Yale Law Journal No. 6, p. 1138).

A learned writer on the Indian Constitution has observed :-

" .... judges must enforce the laws, whatever they be, and decide according to the best of their lights; but the laws are not always jnst, and the lights are not always luminous.

Nor, again are judicial methods always adequate to secure justice." We have given deep consideration to the many circumstances pressed by the petitioner's counsel to review our earlier orders dismissing review and refosing special leave to appeal.

While we agree that Judges, like others are fallible and their findings are not 'untouchably' sacrosanct, we disagree that on an overall view of the many circumstances of the crime and the criminal in the present case, the sentence of death should be departed from.

Recognized grounds such as manifest injustice induced by obvious curial error or oversight, or new and important matter not >easonably within the ken or reach of the party seeking review on the prior occasion, may warrant interference, to further justice.

The scenario of events in this case rules out the arguments urged by counsel. Hear- . ing is obli"'atory at the sentencing stage under the New Criminal

Procedure Code.

The humanist principle of individualising punishment to suit the person and his circumstances is best served by hearing is obligatory at the sentencing stage under the New Criminal imposed.

In the present case, the date of commen; ement of the trial might rule out the applicability of the new Code. Moreover, he bad already come to this Court seeking special leave to appeal at a time when the new Code was in force.

He did not urge the ground of denial of opportunity to be heard at the sentencing stage. Assuming indulgently in his favour that he came to know the correct law on this branch only after the decision of this Court in Shallt Singh

(Supra), his earlier application for review was disposed of after that ruling was rendered by this Court.

Even then the present grievance of non-hearing was not pressed.

He has missed the bns and his contention based on the new Code is of doubtful substance.

Even so, having regard to the compassion that must temper the rigour _of rigid

~··

rules we have allowed counsel a fresh opportunity to put forward A before us, after taking instructiolls from his client, ?II the circumstances the Court should consider by way of ameliorative gesture and reduction of th~ death penalty to a life term incaraceration. The heinousness of the crime is a relevant factor in the choice of the sentence. The circumstances of the crime, especially social pressures which induce the clime which we may epitomise as 'a just sentence in an unjust society' are another consideration. The criminal, not B the crime, must figure prominently in shaping the sentence where a reform of the individual, rehabilitation into society and other measures to prevent recurrence, are weighty factors.

The Penal Code does not give the Judge a free hand where murder has been made out.

The choice is painfully-not quite scientifically though-limited to but two alternatives. We have given reasons why, as the law now stands, we decline to de1j1olish the death sentence.

We, therefore, C dismiss the review petition.

The judicial fate notwithstanding, there are some circumstances suggestive of a claim to Presidential clemency. The two jurisdictions are different, although some considerations may overlap.

We partiularly mention this because it may_ still be open to the petitioner to mvoke the mercy power of the President and his success or failure in D

tht endeavour may _decide the arrival or othe1wise of his doomsday.

With these observatlons we leave the 'death penalty' judicially 'untouched'. -

s. R.

Review P'tition dismissed.

SHIV MOHAN SINGH

STATE (DELHI ADMINISTRATION

Y. V. CHANDRACHUD

V. R. KRISHNA IYER, JJ.

Suprenze Court Rules

Order XI-Penal Code

S. 302

Criminal Procedure Code, 1973

Section 235(2)

s 302

Criminal Procedure Code 1973

Indian Penal Code

July 2, 1976

India

Criminal Procedure Code

Sombre sentencing is the Fifth Act

Supreme Court

Penal Code

Parliament

A. K. Dhar

R. N. Sachthey

KRISHNA IYER

Article 72

apex Court

Sombre sentencing is the Fifth Act

Gardozo

s. 235(3)

Code of Criminal Procedure, 1973

Christmas Humphreys

Code of Criminal Procedure, 1972

section 235

section 484

Socrates

Jesus

Joan

Gandhiji

Krishna Iyer

Shakespeare

Becearia

Supreme Court of U.S.A.

Brennan

Marshall

Furman

White

Ediga Annamma

Stenley Mask

Shallt Singh

Penal Code