Page 157 - ELT_15th May 2020_VOL 372_Part 4th

2020 ] OM SAI TRADING COMPANY v. UNION OF INDIA 547

lief; in other words, the Income Tax Officer must on information at his disposal be-
lieve that income has been under-assessed by reason of failure fully and truly to
disclose all material facts necessary for assessment. Such a belief, be it said, may not
be based on mere suspicion : it must be founded upon information.”
(Emphasis supplied)
28. The view stands reiterated in Income-Tax Officer I Ward, District VI,
Calcutta and Others v. Lakhmani Mewal Das, (1976) 3 SCC 757.
29. In Bhikhubhai Vithlabhai Patel and Others v. State of Gujarat and Anoth-
er, (2008) 4 SCC 144, while dealing with yet another legislation, i.e. Gujarat Town
Planning and Urban Development Act, the Court reiterated that there is nothing
like absolute or unfettered discretion and at any rate in the case of expression of a
statutory powers. With approval it reiterated the following passage expressed
and explained by Prof. Sir William Wade in Administrative Law (9th Edn.) in the
chapter entitled “Abuse of discretion” and under the general heading “the prin-
ciple of reasonableness” which reads as under :
“The common theme of all the authorities so far mentioned is that the
notion of absolute or unfettered discretion is rejected. Statutory power con-
ferred for public purposes is conferred as it were upon trust, not absolutely
- that is to say, it can validly be used only in the right and proper way
which Parliament when conferring it is presumed to have intended. Alt-
hough the Crowns lawyers have argued in numerous cases that unrestrict-
ed permissive language confers unfettered discretion, the truth is that, in a
system based on the rule of law, unfettered governmental discretion is a
contradiction in terms. The real question is whether the discretion is wide
or narrow, and where the legal line is to be drawn. For this purpose every-
thing depends upon the true intent and meaning of the empowering Act.
The powers of public authorities are therefore essentially different
from those of private persons. A man making his will may, subject to any
rights of his dependents, dispose of his property just as he may wish. He
may act out of malice or a spirit of revenge, but in law this does not affect
his exercise of his power. In the same way a private person has an absolute
power to allow whom he likes to use his land, to release a debtor, or, where
the law permits, to evict a tenant, regardless of his motives. This is unfet-
tered discretion. But a public authority may do none of these things unless
it acts reasonably and in good faith and upon lawful and relevant grounds
of public interest. The whole conception of unfettered discretion is inap-
propriate to a public authority, which possesses powers solely in order that
it may use them for the public good.
There is nothing paradoxical in the imposition of such legal limits. It
would indeed be paradoxical if they were not imposed.”
30. In Indian Nut Products and Others v. Union of India and Others, (1994)
4 SCC 269, while dealing with the similar provision, N.P. Singh, J. has opined as
under :-
“10. It is well-settled that if a statute requires an authority to exercise
power, when such authority is satisfied that conditions exist for exercise of
that power, the satisfaction has to be based on the existence of grounds
mentioned in the statute. The grounds must be made out on the basis of the
relevant material. If the existence of the conditions required for the exercise
of the power is challenged, the courts are entitled to examine whether those
EXCISE LAW TIMES  15th May 2020  157