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Petitioner: GOVINDA CHOWDHURY VS Respondent: COMMISSIONER OF INCOME-TAX, BIHAR AND ORISSAHonorable Justice BARMAND. Bhuyan,R. N. Misra
1960 P T D 1279
1960 P T D 1279
[Orissa (India)]
Before Narasimham, C. J., Barman and Misra, JJ
GOVINDA CHOWDHURY
Versus
COMMISSIONER OF INCOME‑TAX, BIHAR AND ORISSA
S. J. C. Nos. 4 and 5 of 1956, decided on 11th April, 1960.
Income‑tax Act (XI of 1922)----
----S. 66 (1)‑Appellate Tribunal Rules, 1946, rr. 7 (2), 8, 36‑Reference‑Application to Appellate Tribunal‑Forwarded by post in time‑Received by Tribunal after expiry of 60 days‑Application whether barred: [Sri Popsing Rice Mill v. Commissioner of Income‑tax (1949) 17 I T R 420 overruled].
Notice of the order in appeal of the Appellate Tribunal under section 33 (4) of the Income‑tax Act was received by the assessee on 17th June, 1955. The assessee sent applications for reference under section 66 (1) by registered post on 12th August and the applications were received by the Tribunal on 18th August, while the last date for presenting the applications expired on 16th August. The Tribunal rejected the applications as barred by limitation.
Held, that in view of the clear and mandatory provisions of rule 7 (2) of the Appellate Tribunal Rules, there was no room for any liberal construction and the applications were presented out of time and were rightly rejected by the Tribunal.
Motilal‑Hiralal v. Commissioner of Income‑tax (1951) 19 I T R 96 ; Khushi Ram Raghunath Sahai v. Commissioner of Income‑tax (1953) 24 I T R 170 ; Commercial and Industrial Bank Ltd. v. Commissioner of Income‑tax (1954) 26 I T R 612 and Nagappa Chettiar v. Commissioner of Income-tax (1954) 26 I T R 741 fol.
Sri Popsing Rice Mill v. Commissioner of Income‑tax (1949) 17 I T R 420 overruled.
Per BARMAN, J.‑Under section 66 (7‑A) of the Income‑tax Act the benefit of section 5 of the Limitation Act is confined to an application under subsections (2) and (3) of section 66.
Bachulal & Co. v. Commissioner of Income‑tax (1955) 27 I T R 587 ; Bansilal Gulabchand v. Commissioner of Income‑tax (1948) 16 I T R 251 ; Commercial and Industrial Bank Ltd. v. Commissioner of Income‑tax (1954) 26 I T R 612 ; Commissioner of Income‑tax v. Ogale Glass Works Ltd. (1954) 25 I T R 529 ; Hojee Mahboob Bux Ehsan Illahi v. Commissioner of Income‑tax (1950) 18 I T R 72 ; Khushi Ram Raghunath Sahai v. Commissioner of Income‑tax (1953) 24 I T R 170 ; Molilal Hiralal Shisodia Firm v. Commissioner of Income‑tax (1951) 19 I T R 96 ; Nagappa Chettiar v. Commissioner of Income‑tax (1954) 26 I T R 741 find Sri Popsing Rice Mill v. Commissioner of Income‑tax (1949) 17 I T R 420 ref.
D. Bhuyan for Petitioner.
R. N. Misra for Opposite Party.
JUDGMENT
BARMAN, J.‑The point involved in this reference for decision of this Full Bench is one of limitation, arising out of two applica tions under section 66 (3) of the Income‑tax Act (XI of 1922), S. J. C. No. 4 of 1956 relating to the assessment year 1950‑51 and S. J. C. No. 5 of 1956 relating to the assessment year 1951‑52, The facts relevant for our purpose are short and simple. In both the cases notice under section 33 (4) was received by the assessee on June 17, 1955, and the notice was dated May, 30, 1955, informing him of the result of the appeal before the Tribunal. The assessee sent the reference applications under section 66 (1) by registered post on August 12, 1955, and the applications were received by the Tribunal on August 18, 1955, while the last date for filing the reference applications already expired on August 16, 1955. The Tribunal accordingly rejected the applica tions as being out of time.
The only point for consideration is whether on construction of section 66 (1) of the Income‑tax Act (XI of 1922) read with rules 7, 8 and 36 of the Appellate Tribunal Rules, 1946, the said applications were barred by limitation. The question is whether the posting of the applications in the post office amounted to making of the applications on the date on which they were posted or on the date they were received in the office of the Tribunal. In other words, to put it more simply, the question for determination is whether "the date of presentation" or "the date of posting" will be the essential date for the purpose of limitation. For convenience of appreciation and ready reference, section 66 (1) and rules 7, 8 and 36 of the Appellate Tribunal Rules, 1946, made in pursuance of subsection (8) of section 5‑A of the Act, are set out as follows:
"66. "Statement of case by Appellate Tribunal to High court.‑(1) Within sixty days of the date upon which he is served with notice of an order under subsection (4) of section 33 the assessee or the Commissioner may, by application in the prescribed form, accompanied where application is made by the assessee by a fee of one hundred rupees, require the Appellate Tribunal to refer to the High Court any question of law arising out of such order, and the Appellate Tribunal shall within ninety days of the receipt of such application draw up a state ment of the case and refer it to the High Court:
Provided that, if, in the exercise of its powers under sub section (2), the Appellate Tribunal refuses to state a case which it has been required by the assessee to state, the assessee may, within thirty days from the date on which he receives notice of the refusal to state the case, withdraw his application and, if he does so, the fee paid shall be refunded."
Rule 7. "(1) A memorandum of appeal to the Tribunal shall be presented by the appellant in person or by an agent to the Registrar at the headquarters of the Tribunal, at Bombay, or to an officer authorised in this behalf by the Registrar, or sent by registered post addressed to the Registrar or to such officer.
(2) A memorandum of appeal sent by post under sub‑rule (1) shall be deemed to have been presented to the Registrar or to the officer authorised by the Registrar, on the day on which it is received in the office of the Tribunal at Bombay, or, as the case may be, in the office of such officer."
Rule 8. "The Registrar, or, as the case may be, the authorised officer, shall endorse on every memorandum of appeal the date on which it is presented or deemed to have been presented under rule 7 and shall sign the endorsement."
Rule 36. "Rules 7, 8, 13, 20, 21, 22, 23, 26 and 33 shall apply mutatis mutandis to an application under subsection (1) of section 66."
The assessee‑petitioner strongly relied upon a decision of our High Court reported in Sri Popsing Rice Mill v. Commissioner of Income‑tax ((1949) 17 I T R 420). In the said decision it was held that rule 7 (1) should be read without sub‑rule (2) and that when the applicant had done all that he was required, in his power, to do by sending the application by registered post in time, in order to require the Tribunal to refer to the High Court any question of law arising out of its order, there was substantial compliance with the law and the application could not be rejected as barred by limitation even though it reached the Tribunal beyond the period of limitation. A different view, however, was taken by some of the other High Courts hereinafter discussed. There is a decision of the Bombay High Court in the case of Bansilal Gulabchand v. Commissioner of Income‑tax ((1948) 16 I T R 251), laying down that the High Court had no power to excuse delay ; the only question which has got to be determined in an application under section 66 (1) is whether the Tribunal was justified in rejecting the application as barred by limitation ; and the Tribunal had no power to condone the delay. In this context a recent decision of the Supreme Court in Commissioner of income‑tax v. Ogale Glass Works Ltd. ((1954) 25 I T R 529), also appears to throw some light on the question. In this state of the conflicting decisions, on a previous occasion a Division Bench of this Court had referred the question to be decided by another Full Bench of this Court with the observation that the matter involved an interesting question of law as to whether in a case,‑where a sum of money is remitted by money order by an assessee along with an application under section 66 (1) of the Income‑tax Act before the expiry of the period of limitation but is received in the office of the Income‑tax Appellate Tribunal after the expiry of the period of limitation,‑such an application will be a valid application for the purpose of subsection (1) of section 66 or otherwise whether it would be time‑barred. Before the said Full Bench, the occasion to decide this question of law did not arise as it was found that the amount was not at all sent by post on the date alleged and consequently the question of law was not decided and was left open : [Bachulal & Co. v. Commis sioner of Income‑tax ((1955) 27 I T R 587, 589, 590)]. In the present case, the Tribunal, in rejecting the said applications under section 66 (1) as out of time relied upon certain observations in the said decision of the Full Bench as supporting the order of rejection ; and the Division Bench, before which these applications came to be heard, considered that the matter be referred to a Full Bench and the question involved finally decided.
In view of the other High Courts in India having dissented from the decision of this High Court in Sri Popsing Rice Mill v. Commissioner of Income‑tax cited above, it has become necessary to reconsider the correctness of the said decision.
It was contended on behalf of the assessee that it is significant that in case of appeals against orders of the Appellate Assistant Commissioners, section 33 (2‑A) provides that the Tribunal may admit an appeal after the expiry of sixty days referred to in sub sections (i) and (2) if it is satisfied that there was sufficient cause for not presenting it within that period ; that in the absence of similar provisions of applications for reference to High `Court, section 66 (1) and rule 7 of the Appellate Tribunal Rules should be liberally construed so as to give similar power to the Appellate Tribunal to condone such delay in the making of applications under section 66 (1) of the Act. The learned counsel, while interpreting that under rule 36 of the Appellate Tribunal Rules, rules 7 and 8 along with other rules shall apply mutatis mutandis to an application under subsection (1) of section 66, contended that sub‑rule (2) of rule 7 should be ignored in case of an applica tion under section 66 (1). His point was that the words "mutatis mutandis" allow such necessary changes in the application of the rules, so as to permit ignoring altogether sub‑rule (2) of rule 7, because there is no provision for condonation of delay in the making of applications under section 66 (1), as there is in the case of applications under section 33 of the Act, as contained in subsection (2A) of the said section. It was further contended that the High Court had extensive jurisdiction under section 66 (3) to examine the correctness of the Appellate Tribunal's decision even with regard to condonation of delay in appropriate cases. In other words, according to the assessee‑petitioner, section 66 (3) gives power of condonation of delay as section 33 (2‑A).
All these contentions overlook the very language of the provisions as laid down by the Legislature in the Act and the rules thereunder as they stand. Sub‑rule (2) of rule 7 makes it clear that until the application is actually received by the Tribunal it will not be deemed to have been presented. The words "mutatis mutandis" cannot be so loosely construed as to ignore altogether sub‑rule (2) which, indeed, with necessary changes, can be made applicable in case of applications under section 66 (1). It sounds to me to be unreasonable construction to contend that sub‑rule (2) will not be at all applicable in case of an application under section 66 (1). That apart, the application of sub‑rule (2) appears to me to be mandatory for the words are "shall be deemed". Besides, any other construction would make the application of rule 8 altogether nugatory. There is a significant aspect in that rule 8 provides that the Registrar shall endorse on every application the date on which it is presented or deemed to have been presented under the rule 7 and shall sign the endorse ment. If, indeed, the date of posting be accepted as the date of presentation, then I do not see how the Registrar can endorse on the application the date on which it is presented, which, according to the assessee, is the date of posting, because the Registrar will not then be in a position to know on what date the application was posted. In my opinion, rule 8 appears to be the key to the entire position, indicating the intention of the Legislature. So it must necessarily mean that the date of presentation is the date when the application is actually received by the Registrar, when he can, on receipt, make the necessary endorsement as required by law.
With regard to the learned counsel's contention that under section 66 (3), the High Court, while examining the correctness of the Appellate Tribunal's decision, has the power to condone delay,‑this argument does not appear to be tenable for the very reason that the meaning of "correctness of the Appellate Tribunal's decision" in section 66 (3) cannot be extended so as to allow condonation of delay by the High Court‑which power the Appellate Tribunal itself has not been given under section 66 (1). It is clear from section 66 (7‑A) that section 5 of the Indian Limitation Act (IX of 1908) shall apply to an application to the High Court by an assessee under subsection (2) or sub section (3) of section 66. It is significant that subsection (7A) of section 66 has not been made applicable to an application under section 66 (1) of the Act. In other words, the benefit of section 5 of the Limitation Act is only confined to an application under subsections (2) and (3) of section 66 of the Act and not beyond them. Therefore, it is impossible to give such a construction, so as to admit an application which is prima facie barred by limitation when in fact no power is given to the Tribunal itself to condone delay in making an application under section 66 (1) as aforesaid. If the Tribunal had been given power of that nature and if the Tribunal had come to the conclusion that the assessee had failed to show sufficient cause for excusing any delay, then it would have been open to the High Court to go into that question and take a different view from the one taken by the Tribunal. But when the High Court finds that such power is not given to the Tribunal at all, it is difficult to understand how the High Court can even consider the application and direct the Tribunal to treat the application as made within the time allowed. This view appears to find support in a decision of the Bombay High Court in Bansilal Gulabchand v. Commissioner of Income‑tax, where Chief Justice Chagla in his judgment expressed that it is impossible to take the view that by reason of subsection (7A) of section 66 the High Court has been given power to excuse delay in presenting an application to the Tribunal under section 66 (1) because in terms subsection (7A) only refers to an application to the High Court by an assessee under subsections (2) and (3).
This leads us to the consideration of the correctness of the Division Bench decision of this Court in Sri Popsing Rice Mills v. Commissioner of Income‑tax, which, so far, has been an impediment to this Court taking a contrary view, inspite of the dissentient note of the other High Courts in India. In the said decision, their Lordships, while giving a benevolent construction to section 66 (1) of the Act and the relevant rules thereunder, held that reading section 66 (1) in the light of rule 7, so far as it prescribes the different modes of making an application to the Tribunal, the‑ words "require by application made to the Appellate Tribunal" may be construed to include sending an application to the Registrar or other authorised officer by registered post ; in doing so, the applicant does all that he is required, in his power, to do in order to require the Tribunal to refer to the High Court any question of law arising out of its order, subject to the application being, in the ultimate, received by the Tribunal ; that 'for the purpose of compliance with the condition in the enactment, it is enough that the applicant puts the application into such a machinery for transmission and the time occupied in transmission of the application should not be computed as part of the period of limitation of sixty days. With great respect, I am unable to agree with the view expressed by their Lordships in the said decision. I do not see how one of the modes of making an application being its transmission by registered post as permitted by sub‑rule (1) of rule 7, such an application sent by registered post can be deemed to have been "made" as soon as it is so posted. In the teeth of express mandatory provisions of sub -rule (2) of rule 7, such construction as given by their Lordships appears to be rather strained. What apparently weighed with their Lordships in the said decision was the consideration that in the case of a memorandum of appeal under section 33 (1) of the Act, if it is sent by registered post to an authorised officer at a time when it is expected by the appellant that in the normal course of transmission, it ought to be received in his office within the period of limitation but due to delay in the transmission not due to any fault of the applicant, the memorandum of appeal is received at a later stage, in such cases the Tribunal has been given power by subsection (2A) to excuse the delay and admit the appeal after the expiry of sixty days referred to in sub sections (1) and (2) of section 33, whereas on the occurrence of such a contingency in the case of an application under section 66 (1) the Tribunal is left without any corresponding power,‑which position, their Lordships obviously thought, would cause or was likely to cause hardship to an applicant under section 66 (1). Indeed, this appears to be a lacuna in the Act itself. In fact in an earlier decision of the Bombay High Court, hereinafter cited, Chief Justice Chagla expressed his sincere hope that the Legislature will attend to the question as soon as possible because this discloses a very serious lacuna in the Act ; and that the Legislature could not have intended that no power should be given either to the Tribunal or to the High Court in any case and in any circumstances to condone delay in making applications under section 66 (1). But this is more a matter for the Legislature than for us and we cannot do more than merely express a hope that the Legislature will suitably amend the Act in the near future if they so desire or if public policy demands it.
It appears to me that in Sri Popsing Rice Mill's case, the interpretation of the word "made" in section 66 (1) has somewhat been considerably strained to the extent of having been misused in that, according to their Lordships, the only condition that sub section (1) of section 66 lays down for requiring the Tribunal to state a case is to make an application ; and that the application should be made in a particular manner, such as, presentation, is not a condition precedent to the exercise of the Tribunal's jurisdiction or the appellate right to require a reference. Thus, it appears that their Lordships sought to make a distinction between "making" and "presentation" of an application. It is in this view of the construc tion, that their Lordships held that if the date of making an application or, in other words, the date of requiring the Appellate Tribunal by an application were meant to be coeval with the receipt of such application, it should have been so expressed in the subsection in the manner of subsection (2‑A) of section 33 or the like ; and that subsection (1) of section 66 contemplates the possibility of an interval of time between them. While dealing with this aspect of the matter, their Lordships assumed that the Legislature must have taken into consideration the unavoidable chances involved in the usual mode of transmission of an application through post. With great respect, I could not persuade myself to agree to this approach, while interpreting an Act of the Legislature. The duty of the Court is to administer justice according to law as it stands and not as it should be. Thus, the Court cannot go beyond the clear language of the express provisions of the statute. It is only where there is some ambiguity, which can admit of a reasonable explanation, that it is open to the Court to give a benevolent construction if it is possible.
Then again, with regard to sub‑rule (2) of rule, 7, their Lordships in Sri Popsing Rice Mill's case took the view that in applying rule 7 mutatis mutandis to the case of application, the rule shall be read as it should be, without sub‑rule (2) and their Lordships did not think it necessary, in its extended application, to define what presentation of an application is, as its presentation does not count nor is contemplated in section 66 ; and their Lordships further observed that the words "receipt of an application" mean actual receipt, be it on personal presentation to the officer con cerned or postal delivery to him" and do not stand in need of any definition. With great respect. I do not agree with this view. I am of opinion, that this line of reasoning completely ignores the express mandatory provisions of the rules made in pursuance of section 5‑A (8) of the Act. I cannot see how sub- rule (2) of rule 7 can be altogether ignored having regard to rule 36, nor do I agree with the view that the change "mutatis mutandis", suggested in sub rule (2) of rule 7, confined to reading "appli cation under subsection (1) of section 66" in the place of "memo randum of appeal" and the word "receipt" for the word "presenta tion", cannot be said to be "a necessary change."
Broadly speaking, interpretation has to be strictly in accordance with the terms of the statute. It is based on sound principles and public policy, particularly with regard to tile revenue laws of the country, that there is necessity for such mandatory provisions as contained in the different sections of revenue law such as the Income‑tax Act. To take any other view would render nugatory provisions which fix certain limit as to time by or within which appropriate proceedings may be taken recourse to, for such relief, as the law permits.
The reasoning on analogy from the underlying principle governing the communication of acceptance of a proposal in the Indian Contract Act is not, in my opinion, convincing. In the present case, we are to deal with statutory liability or duty of the applicant to make the application within the time limit fixed by the Act itself. Here, the agency principles in the contract will not be applicable for deciding the present case and thus viewed, the analogy is of no avail. This aspect is hereinafter more fully dealt with in the context of discussion of a Supreme Court judgment relied on by the assessee‑petitioner.
I am of opinion that sub‑rule (2) of rule 7 is mandatory, imperative and is not merely directory. It appears to me that to give liberal construction to such mandatory provisions would lead to practical difficulties and thus make the Act unworkable. In this view of the matter, I do not think that the decision in Sri Popsing Rice Mill's case is good law ; and accordingly the said decision stands overruled.
The other High Courts in India also dissented from the decision in Sri Popsing Rice Mill's case. Due of tile latest decisions is by Chief Justice Chagla of the Bombay High Court in Vishwa nath Gopal Oil Mills v. S. C. Prashar ((1957) 32 I T R 344) where it was observed that the Orissa High Court ignored sub‑rule (2) and construed section 66 (1) in the light of rule 7 (1) and in that context it was further commented that it is difficult to understand how when the rule in terms provides that the application shall be deemed to be received when the postal communication has been received by the Tribunal, it could be said that the application is duly made when the application is put in the course of transmission. It is to be noted that the lone solitary view of the Orissa High Court has not been so far accepted by the other High Courts before whom this question came up for consideration. The Nagpur High Court in Motilal Harilal v. Commissioner of Income‑tax ((1951) 19 I T R 96), the Punjab High Court in Khushi Ram Raghunath Sahai v. Commissioner of Income‑tax ((1953) 24 I T R 170), the Hyderabad High Court in Commercial and Industrial Bank Ltd. v. Commissioner of Income‑tax ((1954) 26 I T R 612), and the Madras High Court in Nagappa Chettiar v. Commissioner of Income‑tax ((1954) 26 I T R 741), have all taken the contrary view and, with respect, I prefer the view taken by the other High Courts to the view taken by our High Court in Sri Popsing Rice Mill's case discussed above.
Mr. D.…
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