Skip to content


A. Gupta Trust Estate Vs. Commissioner of Wealth-tax - Court Judgment

LegalCrystal Citation
Subject;Direct Taxation
CourtGuwahati High Court
Decided On
Case NumberCivil Miscellaneous Case No. 5 of 1982 in Civil Rule Nos. 12(M), 36(M) and 37(M) of 1979
Judge
ActsWealth Tax Act, 1957 - Sections 27, 27(1), 27(2), 27(3), 27(3A), 27(4), 27(5), 27(6), 27(7) and 27(9); Limitation Act, 1963 - Sections 3 to 24 and 29(2); Indian Limitation Act, 1908 - Sections 29(2)
AppellantA. Gupta Trust Estate
RespondentCommissioner of Wealth-tax
Appellant AdvocateD.N. Baruah and S.K. Barkakati, Advs.
Respondent AdvocateJ.P. Bhattacharjee and B.P. Saraf, Advs.
Excerpt:
- - section 3 is an enabling as well as a disabling provision which, inter alia, provides that subject to the provisions contained in sections 4 to 24 of the limitation act, all applications made after the prescribed period 'shall be dismissed 'although limitation has not been set up as a defence. turning to the word 'applicant' as contained in section 2(a) of the limitation act, we find that the present definition is much wider and more comprehensive than the one defined in 'the old act 'in view of the changes in the definition of the word 'applicant 'in s, 2(a) as well as the introduction of the new word 'application' in section 2(b), it appears very clear that the legislative intent is to provide a period of limitation for all applications, original or otherwise, including..... lahiri, j.1. whether the provisions of section 5 of the limitation act, 1963, are applicable in proceedings under section 27(3) of the w.t. act, 1957 this absorbing and intriguing question has come up for our consideration in the proceedings which are off-shoots of civil rules nos. 12(m), 36(m) and 37(m) of 1979.2. the appellate tribunal refused to state the cases of the assessees under section 27(1) of the w.t. act, 1957, for short 'the act', on the ground that no question of law arose out of the appellate orders. admittedly beyond 90 days from the date on which the assessees were served with the notices of refusal, they filed applications to this court under section 27(3) of 'the act' for requiring the appellate tribunal to state the cases to the high court. in other words, the.....
Judgment:

Lahiri, J.

1. Whether the provisions of Section 5 of the Limitation Act, 1963, are applicable in proceedings under Section 27(3) of the W.T. Act, 1957 This absorbing and intriguing question has come up for our consideration in the proceedings which are off-shoots of Civil Rules Nos. 12(M), 36(M) and 37(M) of 1979.

2. The Appellate Tribunal refused to state the cases of the assessees under Section 27(1) of the W.T. Act, 1957, for short 'the Act', on the ground that no question of law arose out of the appellate orders. Admittedly beyond 90 days from the date on which the assessees were served with the notices of refusal, they filed applications to this court under Section 27(3) of 'the Act' for requiring the Appellate Tribunal to state the cases to the High Court. In other words, the assessees have made applications under Section 27(3) of ' the Act ' beyond the prescribed period of 90 days and also have filed applications under Section 5 of the Limitation Act, 1963, for extension of the prescribed period claiming that they had sufficient cause for not preferring the applications within 90 days.

3. Before we delve into the merits of the applications we are to ascertain whether this court has jurisdiction to extend the period of limitation prescribed by Section 27(3) of 'the Act' in exercise of powers under Section 5 of the Limitation Act. Section 5 of the Limitation Act empowers the court to entertain any application, other than one under O. XXI of the Code of Civil Procedure, even after the prescribed period, if the applicant satisfies the court that he had sufficient cause for not making the application within the prescribed period.

4. Let us examine whether the provisions of Sections 3 and 5 are applicable in proceedings under Section 27(3) of the W.T. Act. To determine the question, we must turn to Section 29(2) of the Limitation Act. Section 29(2) of the Limitation Act, inter alia, lays down that where any special or local law prescribes for any application a period of limitation different from the period prescribed by the Schedule to the Limitation Act, Section 3 of the Limitation Act shall apply, as if such period were the period prescribed by the Limitation Act. This appears in the first part of Section 29(2) of the Limitation Act. If the period of limitation prescribed in a special or local law is different from the period prescribed by the Limitation Act, the provisions of Section 3 apply. Section 3 is an enabling as well as a disabling provision which, inter alia, provides that subject to the provisions contained in Sections 4 to 24 of the Limitation Act, all applications made after the prescribed period 'shall be dismissed ' although limitation has not been set up as a defence. The court is, therefore, bound to dismiss an application filed beyond the period of limitation, subject to the provisions of Sections 4 to 24. There may be cases where the provisions of Sections 4 to 24 are not applicable but the provisions of Section 3 are applicable. In such a case the court is powerless to extend the period of limitation and must dismiss the same in the absence of special provisions in the said Act empowering the court to extend the period of limitation. Section 27(3) of the W.T. Act prescribes a period of limitation but does not expressly empower the High Court to dismiss an application filed beyond the period of limitation. However, if the provisions of Section 3 of the Limitation Act are applicable to proceedings under Section 27(3) of the W.T. Act, the High Court must dismiss such an application filed after the period of limitation, unless the provisions of Section5 of the Limitation Act are applicable to such proceedings. It is the common case of the parties that the W.T. Act is a special law and that it prescribes a period of limitation for filing application. However, these conditions are not sufficient to attract Sections 3 and 29(2) of the Limitation Act, because the limitation prescribed in the special Act must be different from the period prescribed by the Limitation Act. In this regard the provisions of Section 29(2) of the Limitation Act, 1908, for short 'the old Act', were practically similar. The Limitation Act, 1963, has been enacted to consolidate and amend the law for the limitation of suits and other proceedings and for purposes connected therewith. It will be seen that the provisions of Section 3 of the Limitation Act are controlled by and/or subject to the provisions of Sections 4 to 24 of the Limitation Act and the section must be read, interpreted and construed accordingly. Section 3, therefore, is not an independent section because its operation and effect are controlled by Sections 4 to 24. It appears that if a special or local law expressly excludes the operation of Sections 4 to 24 the question of applicability

of these sections need not be considered while acting under Section 3 of the Limitation Act. To decide the question whether the provisions of Sections 3 and5 of the Limitation Act are applicable to proceedings under Section 27(3) of the W.T. Act, it is essential to apprise the provisions of Section 29(2) of the Limitation Act, 1963, which we extract herein below :

' 29. (2) Where any special or local law prescribes for any suit, appeal or application, a period of limitation different from the period prescribed by the Schedule, the provisions of section 3 shall apply, as if such period were the period prescribed by the Schedule and for the purpose of determining any period of limitation prescribed for any suit, appeal or application by any special or local law, the provisions contained in sections 4 to 24 (inclusive) shall apply only in so far as, and to the extent to which, they are not expressly excluded by such special or local law'.

5. We are concerned only with 'application' and not with suits or appeal. Let us, therefore, consider whether an application under Section 27(3) of ' the Act' is ' an application ' contemplated under the Limitation Act. Section 27(3) of the W.T. Act provides that a party may, within 90 days from the date on which he is served with the notice of refusal or rejection, ' apply to the High Court ' requiring the Tribunal to state the case to the High Court. Therefore, to obtain the necessary relief under Section 27(3) of the W.T. Act, a party must make an application which must contain a prayer to the High Court. The term ' application ' ordinarily means the act of making a prayer or request for something. In that sense, therefore, an application or prayer of a party to the High Court under Section 27(3) of the W.T. Act is an application within the meaning of Section 29(2) of the Limitation Act. We find ample support of the view that we have taken from the Limitation Act itself. The word ' application ' has been defined and given a wide meaning. Section 2(b) defines the word 'application' as follows:

' 2(b) ' application ' includes a petition '.

6. The word has been given a wide meaning and framed to include all petitions, original or otherwise. The definition has been introduced for the first time in the new Act. The word ' application ' was not there in ' the old Act ' nor was there any provision which could govern petitions under the special or local law. We are of the opinion that by the introduction of the definition in Section 2(b) of the Limitation Act, the recommendation of the Law Commission's Report, the object of which was to provide a period of limitation for original petitions and applications under special or local law, has been accepted by Parliament. Turning to the word 'applicant' as contained in Section 2(a) of the Limitation Act, we find that

the present definition is much wider and more comprehensive than the one defined in ' the old Act '. In view of the changes in the definition of the word ' applicant ' in s, 2(a) as well as the introduction of the new word 'application' in Section 2(b), it appears very clear that the legislative intent is to provide a period of limitation for all applications, original or otherwise, including applications under special law. Therefore, applications of all sorts, whether governed by the general law, special law or local law and whether original or otherwise, would be governed by the provisions of the Limitation Act, provided the other conditions are fulfilled. Accordingly, we hold that the application under Section 27(3) of the W.T. Act is an application contemplated under the Limitation Act, 1963.

7. The next question is whether the wealth-tax is a special law or not. It has been conceded at the bar that the W.T. Act is a special law. The concession has strong force behind it. There is no doubt that this is a law, that is, a body of rules laid down for determining legal rights and legal obligations which are recognised by the courts. Unfortunately, the expression 'special law' has not been defined either in the Limitation Act or in the General Clauses Act. The division of laws into general, special or personal is a classification based on the extent of the operation of such laws. Ordinarily, a general law applies to the whole community. General law consists of the general or ordinary law of the land whereas, special or personal law consists of certain other bodies of legal rules which are so special and exceptional in their natural sources or application that it may be convenient to treat them as standing out of the general or ordinary law, as derogating from or supplementing them in special cases but not forming a constituent part of it. 'Special law' means law which is not applicable generally but applies to a particular or specified subject or class of subject, vide Salmond on Jurisprudence, page 88 (11th edn.). The W.T. Act has all the characteristics of 'a special law '. The W.T. Act is one of the laws dealing with direct taxes in India. It has charging provisions, it deals with the questions of assessment, determination of liability to assessment, settlement of cases, appeal and revision before the WTOs, constituted Appellate Commissioner and Appellate Tribunal and deal with payment and recovery of wealth-tax, refund, etc. It is thus not a general law and has all the attributes of a special law. Accordingly, we hold that the W.T. Act, 1957, is ' a special law '.

8. However, another essential element is necessary for the applicability of Sections 3 to 24 of the Limitation Act. Whether Section 27(3) of ' the Act' provides for a period of limitation different from that contained in the Limitation Act The precise question is whether Section 27(3) of the W.T. Act has prescribed a period of limitation 'different' from the Limitation Act,

The term 'different' means dissimilar, not identical, not alike, distinct, separate, etc. At first blush, it appears, the word ' different ' means that the provisions contained in the Limitation Act must prescribe a period of limitation and the (limitation under the) special or local law must be ' different ' from the said prescribed period. We have just resolved the question in State of Assam v. Naresh Chandra Das, AIR 1983 Gau. 24, where, it has been held that the period of limitation may be different under different conditions or circumstances. It may be different if the special or local law modifies or alters the period of limitation prescribed by the Limitation Act. It has also been held that if the Limitation Act omits to lay down any period of limitation, and the special or local law provides a period of limitation then to that extent the special law is ' different ' from the Limitation Act. Where a difference arises between a special law and the Limitation Act in respect of a period of limitation, by the omission in the Limitation Act to provide for a prescribed period of limitation in respect of a particular proceeding, it must be held that the special law has prescribed a period of limitation different from the period prescribed in the Limitation Act, within the meaning of Section 29(2) of the Limitation Act. We find that the view we have taken in Naresh Chandra, AIR 1983 Gau. 24, finds support from Canara Bank Ltd. v. Warden Insurance Co. Ltd., AIR 1953 Bom 35. While explaining the meaning of the expression 'period of limitation different from' as contained in Section 29(2) of the Limitation Act, 1908, Chagla C.J. and Gajendragadkar J. observed as follows (p. 36) :

'The period of limitation may be different under two different circumstances. It may be different if it modifies or alters a period of limitation fixed by the First Schedule to the Limitation Act. It may also be different in the sense that it departs from the period of limitation fixed for various appeals under the Limitation Act. If the First Schedule to the Limitation Act omits laying down any period of limitation for a particular appeal and the special law provides a period of limitation, then to that extent the special law is different from the Limitation Act. '

9. In Kaushalya Rani v. Gopal Singh, AIR 1964 SC 260, the Supreme Court has ruled that when there is no limitation prescribed by the Limitation Act for an appeal, application, etc., but a special law provides such limitation there arises a difference between the Limitation Act and the special law in respect of limitation affecting such appeal, application, etc. In Vidyacharan Shukla v. Khubchand Baghel, AIR 1964 SC 1099, their Lordships have laid down that Section 29(2) would apply even to a case where a difference between a special law and the Limitation Act arises by omission to provide for a period of limitation in respect of a particular proceeding in the Limitation Act.

10. For the foregoing reasons we conclude that an application under Section 27(3) of the W.T. Act is an application as contemplated in the Limitation Act. Section 27(3) prescribes a period of limitation which is different from the limitation set by the Limitation Act, 1963. As such, Section 3 of the Limitation Act is applicable to proceedings under Section 27(3) of the W.T. Act. We have, therefore, jurisdiction to dismiss this application if we do not find sufficient reasons for condoning the delay.

11. Now, the only question that remains for our consideration is the applicability of Sections 4 to 24 of the Limitation Act to proceedings under Section 27(3) of the Limitation Act. Section 27 has not expressly excluded the application of Sections 4 to 24 of the Limitation Act. We extract the provisions of Section 27(1) , (2)and (3) of the W.T. Act (as amended):

'27. Reference to High Court.--(1) The assessee or the Commissioner may, within sixty days of the date upon which he is served with notice of an order under section 24, or section 26, by application in the prescribed form accompanied, where the application is made by the assessee, by a fee of two hundred rupees require the Appellate Tribunal to refer to the High Court any question of law arising out of such order and, subject to other provisions contained in this section, the Appellate Tribunal shall, within one hundred and twenty days of the receipt of such application, draw up a statement of the case and refer it to the High Court.

(2) The Appellate Tribunal may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the period specified in Sub-section (1), allow it to be presented within a further period not exceeding thirty days.

(3) If, on an application made under Sub-section (1), the Appellate Tribunal,--

(a) refuses to state a case on the ground that no question of law arises; or

(b) rejects it on the ground that it is time-barred ;

the applicant may, within 90 days from the date on which he is served with a notice of refusal or rejection, as the case may be, apply to the High Court, and the High Court may, if it is not satisfied with the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case to the High Court, and on receipt of such requisition the Appellate Tribunal shall state the case : ... '

12. We have alluded that the object of the Limitation Act, 1963, is to bring all applications including those under special laws within the fold of the Limitation Act, 1963, A bare perusal of Section 27(3) clearly shows that

Sections 4 to 24 of the Limitation Act have not been excluded by the W.T. Act. The provisions of the W.T. Act provide no compulsive words that the application must be filed within 90 days, or otherwise it will be dismissed, i.e., it does not provide for the consequence of not presenting an application within the period. Therefore, we find no mandatory or compulsive language. It does not provide that no application shall be entertained by the High Court after the expiry of 90 days.

13. Even if we assume that the language of Section 27(3) of 'the Act' were compulsive in the sense that it has prescribed that no application shall be entertained by the High Court after the expiry of 90 days, it does not, by itself, displace the applicability of Section5 of the Limitation Act in proceedings under Section 27(3) of the W.T. Act. Whenever limitation is prescribed, we find some such compulsive or mandatory language, and such peremptory language by itself is not sufficient to displace the applicability of Section5, as it is necessary for Parliament to use express words to take away the rights under Sections 4 to 24 of the Limitation Act by necessary intendment. The act or intention of the Legislature must be clearly manifest in the provisions itself. We do not find any express words to displace the applicability of Section5 in Section 27(3) of the W.T. Act nor do we find any indication, wherefrom we can safely draw the conclusion that the applicability of the section has been taken away by Parliament.

14. It has been urged that Section 27(2) of the W.T. Act empowers the Appellate Tribunal to extend the period of limitation but sub-s. (3) is silent; this is an indication of non-applicability of Sections 4 to 24 of the Limitation Act. However, the contention has no force. The Appellate Tribunal is not a court, and Section 29(2) of the Limitation Act is not applicable to proceedings before it. Therefore, the Tribunal had to be granted power to extend the period of limitation by express provisions of law. That is why Section 27(2) of the Act expressly empowers the Appellate Tribunal to extend the period of limitation. In the absence of such a power, the Tribunal could not have extended the period of limitation under the Limitation Act, whereas a court can extend the period of limitation under Section 29(2) read with Section5 of the Limitation Act. As such, the contention is not acceptable.

15. It has been urged that the W.T. Act is a complete and self-contained code which does not admit the introduction of the provisions or principles of law contained in the Limitation Act. To answer the question we are to consider whether and to what extent the nature of the special provisions or the scheme of the special law excluded the provisions of Sections 3 to 24 of the Limitation Act. The W.T. Act does not contain any scheme or provisions expressly empowering the court even to dismiss an application under Section 27(3) of ' the Act'. The High Court is to take resort

to Section 3 of the Limitation Act to dismiss an application under Section 27(3) of ' the Act '. The W.T. Act does admit the introduction of the provisions of Sections 3 to 24 of the Limitation Act, 1963. Apart from prescribing a period of limitation ' the Act ' does not prescribe anything which are dealt in Sections 3 to 24 of the Limitation Act. Therefore, it is hardly possible to hold that the W.T. Act has impliedly excluded the provisions of Sections 3 to 24 of the Limitation Act.

16. However, the legislative history of Section 27 of the W.T. Act is somewhat intriguing. Section 27(9) of the W.T. Act, 1957, provided that Section5 of the Limitation Act would apply but the same has been omitted after the deletion of Sub-section (9). Therefore, it is urged that by the deletion of the provision the benefit of Section5 of the Limitation Act has been withdrawn. It has been urged that the intention of Parliament is clear that it does not desire to allow the High Court to extend the period of limitation under Section 27(3) of ' the Act '. We extract the provisions of Section 27(9) of the W.T. Act (since deleted) :

' (9) Section5 of the Indian Limitation Act, 1908, shall apply to an application to the High Court under this section. '

17. It will be seen that Sub-section (9) of Section 27 of the Act was introduced when the Indian Limitation Act, 1908, was in the field. The sub-section had to be brought expressly in the statute book to enable the High Court to extend the period of limitation in view of the provisions contained in Section 29(2) of the old Limitation Act which provided that Sections 4, 9 to 18 and 22 would apply only in so far as and to the extent to which they were not expressly excluded by special or local law and the remaining provisions of the ' old Limitation Act ' would not apply. However, the language of Section 29(2) of the Limitation Act, 1963, is different. Limitation Act of 1963 has come into force from January 1, 1964, and from that date the provisions contained in Sections 4 to 24 of the Limitation Act apply to all special or local laws, if not expressly excluded by such laws. If Sections 4 to 24 are not excluded expressly by special or local laws, Sections 4 to 24 of the Limitation Act are squarely applicable. This is the position obtainable from January 1, 1964. Section 27 of the W.T. Act was amended in 1964, which made certain amendments in Sub-sections (1) and (2), inserted Sub-section (3A), added a few words in Sub-sections (4), (5) and (6), Sub-section (7) has been substituted and Sub-sections (8) and (9) have been deleted. The Amendment Act 46 of 1964 came into effect from April 1, 1965. Sub-section (9) became otiose and so it was deleted. The Legislature desired to apply Sections 4 to 24 of the Limitation Act, not merely the provisions of Section5 and hence Sub-section (9) of Section 27 of the W.T. Act was omitted. Before the Amendment Act of 1964, the Direct Tax Administrative Enquiry Committee had submitted its recommendation relating to

necessary amendments to the wealth-tax laws which was accepted by the Government and made the amendments. The reasons for the deletion of Sub-section (9) of Section 27 are found in the Statement of Objects and Reasons and the Notes on Clauses of the W.T. (Amend.) Bill, 1964. We merely extract the clause dealing with Section 27(9) of the W.T. Act, which runs as follows : ' Sub-section (9) having become redundant has been deleted. '

18. Therefore, the reasons for deletion are obvious. The Limitation Act, 1963, came into force on January I, 1964, and provided that, in the absence of exclusion of the provisions contained in Sections 4 to 24 of the Limitation Act, they would apply. As such there was no necessity for retaining Sub-section (9) of Section 27 of the W.T. Act. Rather, it would have created problems regarding applicability of Sections 4, 6 to 24 of the Limitation Act. It is thus seen that Sub-section (9) of Section 27 of the ' the Act ' was intentionally deleted by Parliament as it became redundant which makes it very clear that Parliament desired to apply the provisions of Sections 4 to 24 of the Limitation Act to proceedings under Section 27(3) of the W.T. Act.

19. For the foregoing reasons we hold that the provisions of Section 3 as well as Sections 4 to 24 of the Limitation Act are applicable to proceedings under Section 27(3) of the W.T. Act and the High Court can extend the period of limitation under Section 27(3) of the W.T. Act acting under Section5 of the Limitation Act provided the applicant can satisfy that he had sufficient cause for not making the application within the prescribed period of limitation.

20. While reaching this conclusion we have considered the principles of law enunciated by the Supreme Court in Hukumdev Narain Yadav v. Lalit Narain Mishra, AIR 1974 SC 480, Hari Shankar Tripathi v. Shiv Harsh [1976] 1 SCC 897; [1976] UJ (SC) 242, where their Lordships have stated that the provisions of the Limitation Act are not applicable to Section 86 of the Representation of the People Act, 1951. Their Lordships have held that the Limitation Act does not apply to the election proceedings in the High Court as the Representation of the People Act is a complete and self-contained code which does not admit of the introduction of the principles or the provision of law contained in the Limitation Act, It has been held that Section 3 of the Limitation Act is inapplicable as Section 36 of the Representation of the People Act gives a peremptory command to the High Court to dismiss an election petition which does not comply with the provisions of Sections 81, 82 or 117 of the said Act. Section 3 of the Limitation Act was, therefore, expressly excluded. Similarly, there is a positive command that an election petition ' shall be dismissed ' for non-compliance of the aforesaid provisions. The next ground was that Section 85 which was repealed and re-enacted as Section 86 of the Representation of the People Act had conferred benefits similar to the provisions contained in Section5 of the Limitation

Act, but the said benefit was withdrawn by the repeal of the proviso. Though Parliament made amendments to the Representation of the People Act, 1951, yet it did not re-introduce the proviso and the clear intention was withdrawal of the benefits which had been granted say the proviso. There was nothing to show that the said repeal was done because the proviso became redundant or otiose. We have held that there is no such peremptory command, to dismiss an application, in Section 27(3) of 'the Act' nor has it made Section 3 of the Limitation Act inapplicable. We have also held that the W.T. Act is not a complete and self-contained code which does not admit the introduction of the principles or the provisions of the law contained in the Limitation Act, 1963. We have also explained that the intention of Parliament in deleting Section 27(9) of the W.T. Act was to apply the provisions of Sections 4 to 24 of the Limitation Act, 1963. As such, the principles enunciated in the cases just alluded to are not applicable in the instant case.

21. Now, we enter into the merits as to whether the petitioners have satisfactorily explained the delay in preferring the applications under Section 27(3) of the W.T. Act, 1957. The Revenue preferred three Wealth-tax Appeals Nos. 17, 18 and 19 of 1976-77. They were allowed on September 13, 1977. On December 16, 1977, the petitioners made applications for reference under Section 27(1) of ' the Act'. On March 11, 1978, the petitioners filed applications for rectification of the appellate order, dated September 13, 1977. On May 27, 1978, the applications for reference were dismissed 'ex parte ' and the learned Tribunal dismissed the prayers for rectification as well. On August5, 1978, the petitioners filed applications for vacating the order, dated May 27, 1978, as well as for re-hearing the applications for rectification, dated March 11, 1978. The matters were heard and the Tribunal by its order, dated November 7, 1978, dismissed the applications, dated August5, 1978, by two separate orders which were communicated to the petitioner on November 20, 1978. Thereafter, the petitioners filed one composite application on March 2, 1979, under Section 27(3) of 'the Act', to this High Court asking for a reference. However, on May 17, 1979, the petitioners filed an application for leave of this court to file three separate applications under Section 27(3) of ' the Act ', for the three assessment years 1971-72, 1972-73 and 1973-74. We do not find anything on record to show that any such leave was granted by this court. However, along with the first application under Section 27(3) of ' the Act ', the petitioner did not file any application for condoning the delay or extending the period of limitation. However, they filed an application under Section5 of the Limitation Act on June5, 1979. Learned counsel for the petitioners claims that the assessees were communicated with the order of rejection of the reference under Section 27(1) of 'the Act' only on July 29, 1978. We shall consider July 29, 1978, as the date of communication of the order of the rejection of

the application under Section 27(1) of 'the Act' and proceed to determine the question accordingly. If we turn to the applications under Section 27(3) of 'the Act', we find that the petitioners prayed to this court requiring the Tribunal to draw up statements of the case and refer for the determination of the High Court, the questions of law referred in para. 9 of the petition. We extract the questions formulated by the petitioners :

'(a) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the mere fact that the annuity received by the beneficiaries can be capitalised was not enough to hold the shares of the beneficiaries in the corpus is determinate or known so as to attract the assessment in the manner contemplated under Section 21(4) of the Wealth-tax Act, 1957?

(b) Whether, on the facts and circumstances of the case and on a proper construction of the provisions of Section 21 of the Act, the Tribunal was right in holding that the provisions of Section 21(4) are applicable in the circumstances of the case ?

(c) Whether the Tribunal was justified in holding that the right to receive annuity is quite different from a share in the assets of the trust as such.

(d) Whether, on the facts and circumstances of the case, the assessment on the trustee should be made under Section 21(1) or Section 21(4) of the Wealth-tax Act, 1957 ?

(e) Whether the assessee was assessable to wealth-tax for the wealth of the trust when the beneficiaries have already been assessed '

22. Therefore, the petitioners asked the court to refer the questions which were decided by the Tribunal on May 27, 1978. This court, in exercise of its power under Section 27(6), can decide only the questions of law arising out of the order of the Tribunal under Section 27(1) of the Act. It is not disputed before us that the applications under Section 27(3) are only against the orders, dated May 27, 1978. In our opinion, the period of limitation under Section 27(3) commences from the date of service of the notice of refusal or rejection of applications under Section 27(1) of the Act. In the instant case, the applications were rejected on May 27, 1978, and the notices of refusal were served on the petitioners on July 29, 1978. The period of limitation was ' 90 days' from the date on which the assessee was served with the notices of refusal or rejection, that is, 90 days from July 29, 1978. The petitioners claim in para. 7 of their petition that the applications were filed beyond the period of 90 days but they had acted on instructions received from their counsel, Mr. A.K. Banerjee, who advised them that the reference applications before this court could be preferred within 6 months from the date of the order. The petitioners contend that the confusion as

to the period of limitation was created by Mr. A.K. Banerjee, their counsel, as he thought that the reference applications were to be made under Section 256(2) of the I.T. Act, 1961. The petitioners have stated in their petition in the following terms :

' The petitioners state that Sri A.K. Banerjee made a bona fide mistake in advising the petitioners to move this Hon'ble court within six months from the date of the order passed by the Income-tax Appellate Tribunal and not within 90 days as prescribed under Section 27(3) of the Wealth-tax Act.'

23. The petitioners have stated that for the wrong advice so given there was a delay in presenting the application. However, the statements made by the petitioners were not supported by any statement of the counsel, so we granted time to the assessees. Learned counsel has filed an affidavit in support thereof. Mr. Banerjee, learned income-tax practitioner, has made a statement that he advised the assessees to prefer the appeals relating to the years before the AAC and re-presented them before the learned Appellate Tribunal. It was he who had advised the assessees for preferring the application to the Appellate Tribunal at Gauhati, under Section 27(1) of the W.T. Act for reference to this High Court for the determination of the questions of law and he drafted the said applications. However, the said references were rejected. After the rejection of the said application he advised the petitioners to move the High Court at Gauhati against the said order of dismissal under Section 27(3) of the W.T. Act. The pertinent assertions of the learned counsel about his mistake as contained in para. 8 of his affidavit read as follows :

' 8. As a practitioner of income-tax I submit that I advised my clients to refer questions of law to the Hon'ble High Court as provided under Section 256(2) of the Income-tax Act, 1961. The time provided for preferring the reference application under the Income-tax Act is 6 months from the date of the order. By mistake I advised the trustees that the time to file the reference application was 6 months without knowing the fact that the time for filing the reference application in the case of wealth-tax matter was 90 days under Section 27(3) of the Wealth-tax Act, 1957. I was confused and while giving the said advice I was under the wrong impression that the time-limit for filing reference petition under the Wealth-tax Act was also the same as under the Income-tax Act. The trustees acted according to my advice. The necessary reference petition and other pleadings were drafted according to my advice and filed in the Gauhati High Court.

In the above circumstances, the delay in filing the reference application may kindly be condoned. I myself supervised the entire matter and

delay in filing the reference application was caused by my mistake as hereinbefore stated.'

24. It shows clearly that Shri Banerjee Assumed that it was a reference under Section 256(2) of the I.T. Act and accordingly he had advised his clients to file the application within six months from the date of the order. Unwittingly he had advised the assessees that the period of limitation was six months whereas the period of limitation was 90 days, under Section 27(3) of ' the Act '. He said that he was confused while giving advice as he was all along under the impression that it was a reference under the I.T. Act. Learned counsel claims that the assessees acted on his advice and the reference petition and other pleadings were drafted by him. Learned counsel has stated that in view of the wrong advice given by him the delay was caused. Therefore, it appears clear that the learned counsel owned the responsibilities of giving advice to the assessees that the period of limitation was six months from the date of the order and not 90 days as provided in Section 27(3) of the Act, When the learned counsel has made positive assertions in his affidavit, we must accept them as exact, precise and correct. Learned counsel advised the assessees to prefer the application within six months from the date of the order of refusal, that is, six months from May 27, 1978. The said period of six months expired on November 27, 1978, and the first composite application under Section 27(3) was filed on March 2, 1979, long beyond the instructed period. Mr. D. N. Barua, learned counsel for the assessees, submits that Shri Banerjee, Advocate for the assessees, meant ' six months from the date of service of the order of refusal ' and not six months from the date of the order of refusal. To construe the statement as suggested by Shri Barua, we have to put certain words in the affidavit of Shri Banerjee, which are conspicuously absent in his affidavit. However, let us give allowance and accept the contention of Shri D. N. Barua, learned counsel for the assessees. Even if the advice of Shri Banerjee were so, we find, the learned Tribunal rejected the prayer for reference on May 27, 1978, and on July 29, 1978, the assessees were served with the notices of the refusal or rejection. Even the period of six months from July 29, 1978, expired on January 28, 1979, whereas the composite application under Section 27(3) of ' the Act' was filed on March 2, 1979, but registered on March 17, 1979. Therefore, even the professed instructed period of six months from July 29, 1978, expired on January 28, 1979, but the application was filed on March 2, 1979. Under these circumstances, even if we grant all allowances to the petitioners, accept the statements of Shri Banerjee, learned counsel in their entirety and even put in some more favourable words in the affidavit of Shri Banerjee, we find that the reference application was barred by limitation on and after January 29, 1979.

Admittedly, the first application was filed on March 2, 1979. There is absolutely no explanation as to what was the cause for not presenting the application within the period as instructed by the learned counsel for the assessees, namely, Shri Banerjee. We give full allowance and credence to every word spoken by the learned counsel, even we have added certain statements favourable to the assessees, yet we find that the period of limitation expired on January 29, 1979, and there is no explanation for the delay from January 29, 1979, to March 2, 1979. Therefore, even if we grant extension of the period up to the 28th or 29th January, 1979, giving a wide and extended meaning to the affidavit filed by the learned counsel, yet we find that there was no ground to condone the delay from January 29, 1979, to March 1, 1979. We are helpless. Under these circumstances, we are compelled to hold that the delay in preferring the applications under Section 27(3) of the W.T. Act cannot be condoned. Accordingly, the application stands dismissed. However, we make no order as to costs

25. Mr. D. N. Barua, learned counsel, has submitted that Shri Banerjee stated in his affidavit that he had instructed his clients to prefer the application under Section 27(3) against the order rejecting the prayer of the assessees for rectification. Admittedly, there is no such statement in his affidavit. A reference under Section 27(3) can be made only against an order passed under Section 24 of the Act and the question of law must arise out of the order passed under Sections 24 and 26. The law is very clear. No person instructed in law could have made such a statement and, naturally, Shri Banerjee, an advocate, could not have given such instructions. In fact he did not make such a statement. As such, the contention is turned down. We reiterate that the assessees themselves did not ask for any reference against the order arising out of the rectification proceedings.

26. We have quoted and unquoted the relevant statements made by Shri Banerjee. We do not find any inkling or indirect reference that Shri Banerjee had advised the assessees to file the reference applications from the date of any ancillary proceedings, including the proceedings arising out of the application for rectification.

27. In the result the petition is dismissed. There will be no order as to costs.

28. Before parting, we record our appreciation for the assistance rendered by Shri J. P. Bhattacharjee, Advocate-General, Nagaland, and Dr. B. P. Saraf, learned standing counsel for the Revenue, in dealing with the question of applicability of Section5 of the Limitation Act.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //