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Srinivas Ramanuj Das Vs. the Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtOrissa High Court
Decided On
Case NumberO.J.C. 37 of 1964
Judge
Reported inAIR1966Ori135
ActsIncome Tax Act, 1961 - Sections 256(1), 297, 297(2) and 298; Income Tax Act, 1922 - Sections 66(1); General Clauses Act - Sections 6; Income Tax (Removal of Difficulties) Order, 1962
AppellantSrinivas Ramanuj Das
RespondentThe Commissioner of Income-tax
Appellant AdvocateM. Mohanty, Adv.
Respondent AdvocateD. Mohanty, Standing Counsel
DispositionPetition dismissed
Cases ReferredIndira Sohanlal v. Custodian
Excerpt:
- motor vehicles act, 1988 [c.a. no. 59/1988]section 173(1) proviso; [d. biswas, amitava roy & i.a.ansari, jj] appeal without statutory deposit but within limitation/or extended period of limitation maintainability - held, if the provision of a statute speaks of entertainment of appeal, it denotes that the appeal cannot be admitted to consideration unless other requirements are complied with. the provision of sub-section (1) of section 173 permits filing of an appeal against an award within 90 days with a rider in the first proviso that such appeal filed cannot be entertained unless the statutory deposit is made. the period of limitation is applicable only to the filing of the appeal and not to the deposit to be made. it, therefore, appears that an appeal filed under section 173 cannot.....barman, j.1. the point involved in this writ petition is one of limitation under the new income-tax act, 1961 (act no. 43 of 1961) which came into force with effect from april 1, 1962. the income-tax appellate tribunal, patna bench (camp-puri) dismissed the asses-see's four consolidated reference applications purported to have been made under section 256(1) of the new act, as time-barred.2. the material facts are these : the said four reference applications requiring the tribunal to make a statement of the case and refer certain questions of law are said to have arisen out of tribunal's consolidated order in. i. r. a. nos. 2480, 2481, 2482, 2483 and 2484 of 59-60 in respect of assessment years 1953-54, 1954-55, 1955-56, 1956-57 and 1957-58. the appeals in respect of assessment for this.....
Judgment:

Barman, J.

1. The point involved in this writ petition is one of limitation under the new Income-tax Act, 1961 (Act No. 43 of 1961) which came into force with effect from April 1, 1962. The Income-tax Appellate Tribunal, Patna Bench (Camp-Puri) dismissed the asses-see's four consolidated reference applications purported to have been made under Section 256(1) of the new Act, as time-barred.

2. The material facts are these : The said four reference applications requiring the Tribunal to make a statement of the case and refer certain questions of law are said to have arisen out of Tribunal's consolidated order in. I. R. A. Nos. 2480, 2481, 2482, 2483 and 2484 of 59-60 in respect of assessment years 1953-54, 1954-55, 1955-56, 1956-57 and 1957-58. The appeals in respect of assessment for this period of 5 years were filed under the provisions of the Income Tax Act, 1922 (hereinafter referred to as Act of 1922). On May 25, 1963 the Tribunal disposed of the said appeals under Section 33 of the Act of 1922, On June 22, 1963 the assessee received the consolidated order of the Tribunal in the said appeals. The time-limit of 60 days for filing an application to the Tribunal for reference to the High Court expired on August 21, 1963. It was not until August 22, 1963 that is one day after the expiry of the lime-limit that the assessee petitioner's applications for reference. to the High Court were received at the Tribunal Office at Patna. Admittedly the said applications were filed beyond time by one day.

Then the assessee bad filed four petitions for condonation of delay in filing the reference applications. It was submitted on behalf of the assessee that the reference applications, were posted by Air Mail on August 19, 1963 and should have in due course reached the Tribunal Office at Patna by August 21, 1963, that is to say within time. The Tribunal, however refused to condone delay and dismissed the applications as barred by limitation on the ground that this case on facts is governed by the Act of 1922 and that the Tribunal has no power to extend the time limit fixed by Section 66 (1) of the Act of 1922.

3. In support of his contention that the applications are not barred by limitation the assessee relies on Section 256 of the new Act read with the proviso thereto which lays down-

'256. Statement of case to the 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 254, by application in the prescribed form, accompanied where the application is made by the assessee by a fee of rupees one hundred, require the appellate Tribunal to refer to the High Court any question of law arising out of such order and, subject to the 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 :

Provided that the Appellate Tribunal may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the period hereinbefore specified allow it to be presented within a further period-not exceeding thirty days.' The assessee's point is that he is entitled to the benefit of a further period of thirty days as laid down in the proviso to Section 256 and that he was prevented by sufficient cause from presenting the applications within the specified period of sixty days.'

4. The question is : Is this case to be governed by the new Act of 1961 or is it a case where the old Act of 1922 will apply? It is to be noted that by Section 297 the old Act of 1922 was repealed subject to certain savings. The provisions of Section 297, so far as material, are these:

'297. Repeals and Savings--(1) The Indian Income-tax Act, 1922, is hereby repealed.

2. Notwithstanding the repeal of the Indian Income-Tax Act 1922 (hereinafter referred to as the repealed Act):

(a) Where a return of Income tax has been filed before the commencement of this Ss. by any person for any assessment year proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed;

(b) where a return of Income is filed after the commencement of this Act otherwise than in pursuance of a notice under Section 34 of the Repealed Act by any person for the assessment year ending on the 31st day of March, 1962, or any earlier year, the assessment of that person for that year shall be made in accordance with the procedure specified in this Act;

(c) any proceeding pending on the commencement of this Act before any Income-tax authority, the appellate Tribunal or any court, by way of appeal, reference or revision, shall be continued and disposed of as if this Act had not been passed;

(d) where in respect of any assessmenl years after the year ending on the 31st day of March, 1940;

(i) a notice under Section 34 of the repealed Act had been issued before the commencement of this Act, the proceedings in pursuance of such notice may be continued and disposed of as if this Act had not been passed;

(ii) any income chargeable to tax had escaped assessment within the meaning of that expression in Section 147 and no proceedings under Section 34 of the repealed Act in respect of any such income are pending at the commencement of this Act, a notice under Section 148 may, subject to the provisions contained in Section 149 or Section 150, be issued with respect to that assessment year and all the provisions of this Act shall apply accordingly;

(e) Section 23A of the repealed Act shall continue to have effect in relation to the assessment of any company or its share-holders for the assessment year ending on the 31st day of March, 1962, or any earlier year, and the provisions of the repealed Act shall apply to all matters arising out of such assessment as fully and effectually as if this Act had not been passed;

X X X X X (m) where the period prescribed for any application, appeal, reference or revision under the repealed Act had expired on or before the commencement of this Act, nothing in this Act shall be construed as enabling any such application, appeal, reference or revision to be made under this Act by reason only of the fact that a longer period therefor is prescribed or provision is made for extension of time in suitable cases by the appropriate authority.'

5. Now the point is: Are the assessee's applications for reference to High Court mere continuation of the proceeding for the assessment of the assessee for the years in question which commenced long before the new Act came into force as aforesaid and thus governed by the old Act of 1922? In other words, the question is whether the reference applications are to be governed by the new Act or the old Act. If the reference applications are continuation of assessment proceedings then the assessee is not entitled to any extension of time beyond the time-limit of sixty days for making the applications under Section 66(1) of Act of 1922. On the other hand, -if these reference applications are governed by the new Act then the assessee is entitled to the benefit of the proviso to the corresponding Section 256(1) of the Act which gives the Appellate Tribunal the discretion to allow the applications to be presented within a further period not exceeding 30 days if the Tribunal is satisfied that the applicant was prevented by sufficient cause from presenting the applications within sixty days.

6. This leads to the consideration of the effect of Section 297 of the New Act on 'Repeals and Savings'. What is the meaning of the phrase 'proceedings' for the assessment as used in Section 297(2)(a) of the new Act. If that expression includes proceedings by way of reference under Section 66(1) of the repealed Act of 1922, then such proceedings for reference must be taken to have been expressly saved under Section 297(2)(a). It is abudantly clear from the scheme of the new Act that Section 297(2) was enacted with the object, inter alia, of saving certain procedures for proper computation, determination and imposition of tax liability on assessees. including those by way of appeal or revision or reference. The words 'proceedings for the assessment' in Section 297(2)(a) are wide enough to include inter alia, reference under section 66(1) of the repealed Act of 1922. The word 'assessment' has to be read in a comprehensive sense and in that sense must be deemed to include proceedings for reference arising out of the assessment in question. Clauses (c) and (d) of Section 297(2) must be deemed to have been enacted by way of abundant caution and did not curtail the generality of the powers saved under Clause (a) of Section 297(2). Even without the enactment of Clauses (c) and (d), Clause (a) of Section 297(2) would have sufficed for their purposes.

7. The view that proceedings for the assessment of the assessee include those, inter alia, by way of reference is simply supported by decisions both of the Federal Court and the Supreme Court.

8. The Federal Court in Kamakhya Narain Singh v. Commr. of Income Tax, Bihar, AIR 1947 FC 48 expressed this view in the context of the following facts: The Income-tax officer made the assessment order on February 14, 1940, Regulation I of 1941 was made by the Government of Bihar on June 13, 1941 and was published in Bihar Official Gazette on June 17, 1941. At that time the appeal of the assessee appellant was pending before the appellate Asst. Commissioner. That appeal was dismissed on March 3, 1942. Regulation IV of 1942 received the assent of the Governor-General on June 30, 1942 and was published in the Gazette on July 7, 1942. This was when the appeal of the appellant was pending before the Income-tax appellate Tribunal. That Tribunal dismissed the appeal on March 31, 1943. It was argued on behalf of the assessee appellant in that case that Regulation I of 1941 and Regulation IV of 1942 were ineffective, so far as the assessee appellant was concerned, because his assessment was completed when the Income-tax Officer made the order on February 14, 1940. It was argued that the appellant's appeal to the appellate Assistant Commissioner was dismissed on March 3, 1942 and thereupon the assessment proceedings came to an end: the subsequent making of Regulation IV of 1942 by the Governor cannot put life into what was already dead.

In the opinion of the Federal Court this argument is unsound. It was held that the assessment proceedings had not come to an end nor were they dead: the appellants had kept the proceedings alive by filing appeals and the proceedings were thus pending for decision: the right to appeal against orders of assessment by the Income-tax Officer or the Appellate Assistant Commissioner are valuable rights. So also in another case, Chatturam v. Commr. of Income-tax, Bihar AIR 1947 FC 32 in the context of the position that when Regulation I of 1941 was made, the assessees' appeals before the Assistant Appellate Commissioner were pending, the Federal Court held that those appeals were preferred under the provisions of the Income-tax Act, 1922 and were an integral part of the machinery of assessment; it cannot be contended therefore that the assessment proceedings were over and the Regulation could not apply to the proceedings covered by those appeals. Their Lordships decided accordingly.

9. The Supreme Court reiterated this principle. In A. N. Lakhman Shenoy v. Income-tax Officer, Ernakulam, AIR 1958 SC 795 where in determining the meaning of 'assessment' in Section 13(1) of the Finance Act, 1950, the Supreme Court held that the collocation of the words 'levy, assessment and collection' indicates that what is meant is the entire process by which the tax is ascertained, demanded and realised.

10. The basic principle underlying these decisions is (as in the case of civil litigation) that the institution of the suit carries with it the implication that all rights of appeal then in force are preserved to the parties thereto till the rest of the career of the suit. Garikapati Veerava v. Subbish Choudhry, AIR 1957 SC 540, 553 (para 23).

11. What is the position here? The Income-tax Act, 1922 as it stood did give the assessee under Section 66(1) the right to make an application requiring the Appellate Tribunal to refer to the High Court any question of law arising out of an impugned order. In other words if the assessee was dissatisfied with the decision on appeal, the assessee could ask for a case to be stated on any question of law for the opinion of the High Court and if his request was refused, he might apply to the High Court for an order requiring a case to be stated and to be referred to the High Court. This right the assessee had under Section 66(1) of the Old Act as in continuation of the proceedings for the assessment of the petitioner as assessee which commenced long before the new Act came into force. Section 66(1) of the old Act is this:

'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 Sub-section (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 statement 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.' In Section 66(1) there was no provision under which the appellate Tribunal can allow the application for reference to be presented within a further period not exceeding thirty days if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within sixty days. Under Section 66(1) the Appellate Tribunal had no discretion but to dismiss the application filed beyond the time-limit of sixty days as time-barred.

12. In the present case, the broad reasoning on which the Income Tax appellate Tribunal had dismissed the petitioner's application for reference as quoted from their order was this:

'We think that the words 'appeal, reference or revision' in Section 297(2)(c) had been used by way of extra caution. When the appeals were decided by the Tribunal under the provisions of the old Act, all further proceedings relating to these appeals would, in our opinion, be governed by the provisions of the said Act (Act of 1922). These reference applications arising out of the order in the appeals disposed of under Section 33 of the old Act, would, in our opinion, be governed by the provisions of Section 66 of the old Act.'

In our opinion this reasoning is correct. In the present case, a return of income tax had already been filed before the commencement of the new Act by the assessee for the assessment years 1953-58 in question and therefore in terms of Clause (a) of Section 297(2) proceedings for the assessment of the petitioner for the years in question must be taken as continued as if the new Act had not been passed.

13. In order to remove any difficulty which may arise in giving effect to the provisions of the new Act, power was given to the Central Govt. to remove such difficulties under Section 298 which provides:

'298. Power to remove difficulties. (1) If any difficulty arises in giving effect to the provisions of this Act the Central Government may, by general or special order, do anything not inconsistent with such provisions which appears to it to be necessary or expedient for the purpose of removing the difficulty.

2. In particular, and without prejudice to the generality of the foregoing power, any such order may provide for the adaptations or modifications subject to which the repealed Act shall apply in relation to the assessment for the assessment year ending on the 31st of March, 1962, or any earlier year.'

14. In exercise of the powers conferred by Section 298, the Central Government by S.O. 2564 (Ministry of Finance) dated the 8th August, 1962 made an order called the Income-tax (Removal of Difficulties) Order, 1962. Clause 4 of the said Order as relevant for our purpose is this:

'4. Appeal, Reference or Revision proceedings in respect of orders passed under the repealed Act.

(1) Proceedings by way of the first or subsequent appeals, reference or revision in respect of any order made under the Indian Income-tax Act, 1922 (11 of 1922) (hereinafter referred to as the repealed Act) shall be instituted and disposed of as if the repealing Act had not been passed.

(2) Any such proceeding instituted under the repealing Act after the 31st day of March, 1962 and before the date of this Order shall be deemed to have been instituted under the repealed Act and shall be disposed of as if the repealing Act had not been passed:

Provided that if any such proceeding has been disposed of before the date of this Order under any provision of the repealing Act, it shall be deemed to have been disposed of under the corresponding provision of the repealed Act and any appeal, reference or revision in respect of the proceeding so disposed of shall be instituted and disposed of as if the repealing Act had not been passed.'

15. Then the questions posed are: Who is to decide whether any such difficulty has arisen in giving effect to the provisions of the Act? What is the effect of such decision once made The Supreme Court answered the questions thus : While dealing with the true scope and the effect of Section 12 of the Finance Act XXV, 1950 (corresponding to Section 298 of the Income-tax Act, 1961) the Supreme Court held that it was for the Central Govt. to determine if any difficulty of the nature indicated in Section 12 of the Finance Act, 1950 has arisen and then to make such order or give such direction, as appears to it to be necessary to remove the difficulty. The Supreme Court also laid down that what is necessary in law is that before an order can be made by the Central Govt. under Section 12, the Central Government must be satisfied that in certain cases difficulties have actually arisen in giving effect to the provisions of the Indian Income Tax Act; once on such satisfaction an order is made it is not again necessary for the application of the order in a particular case that difficulty must be found to have arisen; a separate order under Section 12 (Section 298 in the present case) has not got to be made for each particular case; the order once made on the satisfaction of the Central Government that in some cases difficulties have arisen in giving effect to the provisions of the Indian Income Tax Act the order operates under its own terms and so in giving effect to the order it is not necessary for the Income-tax Officer to see first whether any difficulty has arisen.

The Supreme Court expressed the opinion that whether any difficulty did actually arise in a particular case under consideration in applying the appropriate Income Tax Act or not, the Central Government order for the removal of difficulties must be applied according to its terms; it is therefore not necessary to examine whether any such difficulty has arisen in any particular case. The Commr of Income Tax, Hyderabad v. Dewan Bahadur Ram Gopal Mills Ltd; AIR 1961 SC 338; Mahalaxmi Mills Ltd. v. Commr. of Income Tax Bombay, North Kutch and Saurashtra, (1963) 50 Income-tax Reports 741 (749).

16. The Central Government Order S. O. 2564 under Section 298 quoted above is a complete answer to the assessee's contention that he is entitled to the benefit of the proviso to Section 256(1) of the new Act allowing a further period of thirty days beyond the specified time-limit of sixty days for making the reference application. We do not accept the assessee's contention that the Income-tax (Removal of Difficulties) Order is inconsistent with the provisions of the Act of 1961. Even without the enactment of Clauses (c) and (d) of Section 297(2) which were enacted by way of abundant caution as aforesaid, Clause (a) of Section 297(2) by itself is wide enough to include reference application under Section 66 (1) of the repealed Act of 1922. That being the position in law Clause (4) of the Income Tax (Removal of Difficulties) Order does not go beyond the saving contained in Section 297(2). That clause had been included in the Removal of Difficulties Order so as to silence all criticisms against the wide connotation of the word ' assessment'.

17. There is nothing to show that the Central Government Income Tax (Removal of Difficulties) Order is in any way inconsistent with the provisions of the Act as contended by the assessee. We are of opinion that Clause (4) of the Income Tax (Removal of Difficulties) Order 1962 was abundanti cautela a mere clarification by the Central Government. This clarification is in conformity with the view we have taken of the interpretation of Section 297(2)(c).

18. In this view of the case the writ petition filed by the assessee petitioner fails and is dismissed.

Misra, J.

19. Petitioner is the Mahanta of Dakhinparswa Math, Puri, and was assessed to income tax for 4 years, 1953-54, 1954-55, 1955-56 and 1956-57.' The relevant facts are that a consolidated order in Income Tax Appeals Nos. 2480 to 2483 of 1959-60 of the Income Tax Appellate Tribunal, Patna Branch, was received by the petitioner on 22-6-1963. The Income Tax Act (Act No. 43) of 1961, (hereinafter referred to as the new Act) came into force on 1-4-1962. The aforesaid appeals were pending by the time the new Act came into force. The petitioner filed four applications under Section 256 (1) of the new Act which were received at the Tribunal's Office on 22-8-1962. Admittedly the applications were filed beyond time by one day, the period of limitation being 60 days. The petitioner filed four applications for condonation of delay. Cause for the delay was mentioned to be that the applications were posted by AIR Mail on 19-8-1963 and should have reached Tribunal's Office at Patna on 21-8-1963.

The Tribunal came to the conclusion thatif it had direction in the matter for condonationof delay, the direction should have been exercised in favour of the petitioner. The applications for condonation of delay were, however,rejected on 22-11-63 on the view that Section66(1) of the Income-tax Act, 1922 (hereinafter referred to as the old Act) had application and not Section 256(1) of the new Act,and that under the old Act the Tribunal hadno power to condone delay. The writ application has been filed under Articles 226 and 227of the Constitution assailing the order of theTribunal dated 22-11-1963 as being withoutjurisdiction and erroneous in law on the faceof the order.

20. The only question for decision is whether the old Act or the new Act applies, in the facts and circumstances of the case. To appreciate the contention Section 66 (1) of the old Act and Section 256(1) of the new Act may be quoted so far as relevant,

'Section 66 (1) Within sixty days of the date upon which he is served with notice of an order under Sub-section (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 statement of the case and refer it to the High Court.'

' Section 256(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 254, by application in the prescribed form, accompanied where the application is made by the assessee by a fee of rupees one hundred, require the appellate Tribunal to refer to the High Court any question of law arising out of such order and, subject to the 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.

Provided that the appellate Tribunal may, if it is satisfied that the applicant was prevented by sufficient cause from presenting the application within the period hereinbefore specified, allow it to be presented within further period not exceeding thirty days. '

On a close comparison of the aforesaid provisions, it is manifest that the period of limitation for reference to High Court is sixty days under both the Acts. Under the old Act, the Tribunal had absolutely no power to condone delay even if it was for sufficient cause. The proviso under Section 256(1) clothes the Appellate Tribunal with power for the first time to condone delay for a period not exceeding 30 days after the expiry of the period of limitation if it is satisfied that the appellant was prevented by sufficient cause from presenting the application within 60 days.

The finding of fact is in favour of the petitioner that there was sufficient cause to condone the delay of one day. If the new Act has application the Tribunal's order is liable to be quashed and the petitioner would be entitled to have a reference of his case to the High Court if any question of law arises out of the appellate order.

21. Section 297 of the new Act deals with Repeals and Savings. As the controversy centres round this section, it may be quoted in its entirety.

'297. Repeals and Savings.--(1) The Indian Income-tax Act, 1922 (11 of 1922) is hereby repealed.

(2) Notwithstanding the repeal of theIndian Income Tax Act, 1922, (11 of 1922)(hereinafter referred to as the repealed Act),--

(a) Where a return of income has been filed before the commencement of this Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed;

(b) where a return of Income is filed after the commencement of this Act otherwise than in pursuance of a notice under Section 34 of the repealed Act by any person for the assessment year, ending on the 31st Day of March, 1962, or any earlier year, the assessment of that person for that year shall be made in accordance with the procedure specified in this Act;

(c) any proceeding pending on the commencement of this Act before any Income Tax Authority, the appellate Tribunal or any court by way of appeal, reference or revision, shall be continued and disposed of as if this Act had not been passed;

(d) where in respect of any assessment year after the year ending 31st day of March, 1940, --

(i) a notice under Section 34 of the repealed Act had been issued before the commencement of this Act, the proceedings in pursuance of such notice may be continued and disposed of as if this Act had not been passed;

(ii) any income chargeable to tax had escaped assessment within the meaning of that expression in Section 147 and no proceeding under Section 34 of the repealed Act in respect of any such income, are pending at the commencement of this Act, a notice under Section 148 may, subject to the provisions contained in Section 149 or Section 150, be issued with respect to that assessment year and all the provisions of this Act shall apply accordingly.

(e) Section 23A of the repealed Act shall continue to have effect in relation to the assessment of any company or its share-holders for the assessment year ending on the 31st day of March, 1962, or any earlier year, and the provisions of the repealed Act shall apply to all matters arising out of such assessment as fully and effectually as if this Act had not been passed;

(f) any proceeding for the imposition of a penalty in respect of any assessment completed before the 1st day of April, 1962, may be initiated and any such penalty may be imposed as if this Act had not been passed;

(g) any proceeding for the imposition of a penalty in respect of any assessment for the year ending on the 31st day of March 1-962, or any earlier year, which is completed on or after the 1st day of April 1962, may be initiated and any such penalty may be imposed under this act;

(h) any election or declaration made or option exercised by an assessee under any provision of the Repealed Act and in force immediately before the commencement of this Act shall be deemed to have been an election or declaration made or option exercised under the corresponding provision of this Act;

(i) where, in respect of any assessment completed before the commencement of this Act, a refund falls due after such commencement or default is made after such commencement in the payment of any sum due under such completed assessment, the provisions of this Act relating to interest payable by the Central Government on refunds and interest payable by the assessee for default shall apply;

(j) any sum payable by way of income-tax, super-lax, interest, penalty or otherwise under the repealed Act may be recovered under this Act, but without prejudice to any action already taken for the recovery of such sum under the repealed Act;

(k) any agreement entered into, appointment made, approval given, recognition granted, direction, instruction, notification order or rule issued under any provision of the repealed Act shall, so far as it is not inconsistent with the corresponding provision of this Act, be deemed to have been entered into, made, granted, given or issued under the corresponding provision aforesaid and shall continue in force accordingly.

(1) any notification issued under Sub-section (1) of Section 60 of the repealed Act and in force immediately before the commencement of this Act shall, to the extent to which provision has not been made under this Act, continue in force until rescinded by the Central Government;

(m) where the period prescribed for any application, appeal, reference or revision under the repealed Act had expired on or before the commencement of this Act, nothing in this Act shall be construed as enabling any such application, appeal, reference, or revision to be made under this Act by reason only of the fact that a longer period therefor is prescribed or provision is made for extension of time in suitable cases by the appropriate authority.'

22. There is sharp controversy as to whether Section 6 of the General Clauses Act would be called in aid despite clear provisions as to the effect of the repeal in Section 297 of the new Act. The true legal position as to the applicability of Section 6 of the General Clauses Act, when there is repeal of an enactment followed by a fresh legislation, is no longer in doubt. In (S) AIR 1956 SC 77 Indira Sohanlal v. Custodian, Evacuee Property Delhi; their Lordships observed :

' Section 6 would be applicable in suchcases also unless the new legislation manifestsan intention incompatible with or contrary tothe provisions of the section. Such incompatibility would have to be ascertained from aconsideration of all the relevant provisions ofthe new law.'

Their Lordships further said that where therepealing section purports to indicate the effectof repeal on previous matters, provides for theoperation of the previous law in part in negative terms, as also for the operation of thenew law in the other part and in positive termsthe said provisions may well be taken to beself-contained and indicative of the intention toexclude the applicability of section 6, GeneralClauses Act.

23. It would be profitable to examine some of the clauses in Section 297(2) of the new Act to see if an intention has been indicated to exclude the applicability of Section 6, General Clauses Act. Clause (a) lays down that where a return of income has been filed before the commencement of this Act by any person for any assessment year, the proceedings for the assessment of that person for that year may be taken and continued under the old Act. In contra-distinction to Clause (a), even in respect of assessment year, ending on the 31st March, 1962, or any earlier year, the assessment of that person shall be made in accordance with the procedure specified in the new Act, if the return of income is filed after the commencement of the new Act, except in respect of proceedings under Section 34 of the old Act (see Clause (b)). Thus whether the assessment proceedings would be governed by the old Act or the new Act in respect of the same assessment year prior to 1-4-1962, depends upon the dale of the filing of the return of income.

Clause (c) refers to any proceedings pending on the commencement of the new Act by way of appeals, references or revisions. Such pending proceedings shall be continued and disposed of under the old Act. Clause (d) (i) lays down that if a notice under Section 34 of the old Act had been issued before the commencement of the new Act in respect of any assessment year after 31-3-1940, the proceedings in pursuance of such notice would be continued and disposed of under the old Act. Clause (e) prescribes that Section 23A of the old Act shall continue to have effect in relation to assessment of a company or its share-holders for the assessment year ending 31-3-1962, or any earlier year and the provisions of the old Act shall apply to all matters arising out of such assessment as fully and effectually as if the new Act had not been passed. It is significant to note the difference in the language in Clauses (c) and (e). While Clause (c) refers to proceedings by way of appeals, references or revisions pending on the commencement of the new Act, Clause (e) ralates to all matters arising out of such assessment. The expression 'all matters arising out of such assessment' is wide enough to include proceedings by way of assessment, appeals, references and revisions.

It is unnecessary to further examine the rest of the clauses separately. It would be sufficient to say that Section 297(2) purports to indicate the effect of repeal on previous matters in clearest terms. It provides for the operation of the old Act in part and in negative term. It also provides for the operation of the new Act in the other part and in positive term. On the authority of the aforesaid Supreme decision, Section 297 of the new Act may, therefore, be taken as self-contained and, indicative of the intention to exclude the application of Section 6, General Clauses Act. I must say with respect that the observations to the effect-

' If it had been necessary so to do, I would have no hesitation in holding that such power would be saved under Section 6, Clauses (e) and (c) of the General Clauses Act, there being no indication to the contrary in the repealing Act of 1961.'

in paragraph 21 of AIR 1964 Cal 76 are not correct, though its ultimate conclusion is acceptable, I am clearly of opinion that section 6, General Clauses Act cannot be called in aid in this case.

24. Mr. Mohanty's main contention that Section 297(2)(c) has no application to references which were not pending on the commencement of the new Act is well founded. The language of the sub-section would not justify a conclusion that it would have application to appeals, references or revisions filed after 1-4-1962. It is only those proceedings by way of appeals, references or revisions pending on the commencement of the new Act that shall be continued and disposed of under the old Act.

Mr. D. Mohanty, however, contends that a reference is a continuation of the appeal and the appeal is not finally disposed of so long as the reference is pending. The contention is sound. The decision of the Appellate Tribunal cannot be looked upon as Final until the High Court decides the reference, exercises its. advisory jurisdiction, gives direction to the Tribunal on the question of law and the Tribunal reconsiders the matter and decides it--see AIR 1956 Bom 509. The conclusion that a reference is a continuation of the appeal does not, however make Clause (c) applicable to reference filed subsequent to 1-4-1962. The restrictive language used in the clause applies only to a limited class of proceedings on the commencement of the new Act, which alone shall be continued and disposed of under the old Act. The concepts of appeal, reference or revision have been disjunctively used to cover all such different proceedings pending on the commencement of the new Act.

The same conclusion is to be reached by an analysis of Clauses (d) and (e). Under Clause (d) (1), even in respect of assessment year after the year ending 31st March 1940, the proceedings taken in pursuance of a notice issued under Section 34 of the repealed Act before the commencement of the new Act would be continued and disposed of under the old Act. The expression ' proceeding in pursuance of such notice ' is wide enough to include proceedings by way of appeals, references or revisions. Similarly in Clause (e), the expression 'all matters arising out of such assessment ' is very wide and would cover proceedings by way of appeals, references or revisions. Reading the language of Clauses (c), (d) and (e) in juxtaposition the conclusion is irresistible that Clause (c) must be confined only to pending proceedings by way of appeals, references or revisions. The legislative intention must be determined with reference to the plain language used in clauses. If Clause (c) purported to be of the widest amplitude, language used in Clauses (d) (i) and (e) could have been used in Clause (c). On the aforesaid reasons, the contention of the learned Standing Counsel for the department that Clause (c) would cover reference filed subsequent to the commencement of the new Act must be rejected.

25. The learned Standing Counsel placed reliance on Income Tax (Removal of Difficulties) Order, 1962 (hereinafter referred to as the Order ) in support of his contention that the references will be governed by the old Act. Clause (4) of the Order runs as follows :--

'4. Appeal, reference or revision proceedings in respect of orders passed under the repealed Act-

(1) Proceedings by way of the first or subsequent appeals, reference or revision in respect of any order made under the Indian Income Tax Act. 1922 (11 of 1922) (hereinafter referred to as the repealed Act) shall be instituted 'and disposed of as if the repealing Act had not been passed.

(2) Any such proceeding instituted under the repealing Act after the 31st day of March, 1962 and before the date of this Order shall be deemed to have been instituted under the repealed Act and shall be disposed of as if the repealing Act had not been passed.

Provided that if any such proceeding has been disposed of before the date of this Order under any provision of the repealing Act, it shall be deemed to have been disposed of under the corresponding provisions of the repealed Act and any appeal, reference or revision in respect of the proceeding so disposed of shall be instituted and disposed of as if the repealing Act had not been passed. The Central Government made the Order in exercise of its powers conferred by Section 298 of the new Act, Clause (4) in terms supports the contention of the learned Standing Counsel.

Mr. M. Mohanty, however, contends that Clause 4 of the Order is ultra vires Section 298 of the new Act. Section 298 may be quoted :--

'298. Power to remove difficulties. (1) If any difficulty arises in giving effect to the provisions of this Act the Central Government may, by general or special order, do anything not inconsistent with such provisions, which appears to it to be necessary or expedient for the purpose of removing the difficulty.

(2) In particular, and without prejudice to the generality of the foregoing power, any such order may provide for the adaptations or modifications subject to which the repealed Act shall apply in relation to the assessments for the assessment year ending on the 31st day of March, 1962, or any earlier year. '

This section was enacted conferring power on the Central Government to remove difficulties if the conditions laid down therein are fulfilled. Such a provision is designated as 'Henry VIII' Clause. Mr. M. Mohanty rightly did not dispute the constitutionality of Section 298 of the new Act. Similar provision was upheld as constitutional in AIR 1961 SC 338. He, however, contended that Clause (4) of the Order is ultra vires Section298 inasmuch as no difficulty arises in giving effect to the provisions of the new Act and that Clause (4) of the Order is inconsistent with the provisions of Section 297 of the new Act. This contention, requires careful examination.

The learned Standing Counsel placed reliance on Section 297(2)(a) in support of art argument that proceedings for assessment include any proceeding by way of appeal, reference or revision and that Clause (4) of the order is not inconsistent with Section 297(2)(a) but is merely clarificatory. According to him, the difficulty arose as to whether proceedings-for assessment include proceedings for appeal, reference or revision arising out of an original assessment and as to the applicability of the new or the old Act. Clause (4) of the Order was accordingly made for the purpose of removing the difficulty and is not inconsistent with Section 297(2)(a) or with any other clause.

26. The crux of the question is if the proceedings for assessment include proceedings, by way of appeal, reference or revision until the termination of the original assessment proceeding. In AIR 1961 SC 609, the following principle regarding construction of fiscal statute was laid down-

In interpreting a fiscal statute, the Court cannot proceed to make good deficiencies if there be any: the Court must interpret the statute as it stands and in case of doubt in a manner favourable to the tax-payer. But whereas in the present case, by the use of words capable of comprehensive import, provision is made for imposing liability for penalty upon the taxpayer guilty of fraud, gross negligence or contumacious conduct; an assumption that the words were used in a restricted sense so as to defeat the avowed object of the legislature qua a certain class will not be lightly made.

Their Lordships approved the dictum laid down in AIR 1938 PC 175 to the effect :

One of the peculiarities of most Income-tax Acts is that the word ' assessment' is used as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the Act for imposing liability upon the tax payer. The Indian Income Tax Act is no exception in this respect.

In AIR 1947 FC 48 an argument had been advanced that even though an appeal was pending, the assessment proceeding had come to an end. The contention was rejected by their Lordships by the following observations :--

The assessment proceedings had not come to an end nor were they dead. The appellants had kept the proceedings alive by filing appeals and the proceedings were thus pending for decision. The rights to appeal against the orders of assessment by the Income tax Officer or the Appellate Assistant Commissioner are valuable rights.

'To the same effect was the decision in AIR 1947 FC 32. In AIR 1958 SC 795 the word ' assessment' was construed in a comprehensive sense and was taken to include ' reassessment '. Under the new Act in Section 2(8) 'assessment' was defined as including re-assessment by way of recognition of the law propounded by the Supreme Court.

27. On the aforesaid authorities the Legal position appears to be well-settled that assessment proceedings include proceedings arising by way of appeal, reference or revision. The expression ' proceedings for assessment' in Section 297(2)(a) of the new Act must be construed in the widest amplitude consistent with the meaning given to such expression by the Privy Council, Federal Court and the Supreme Court, and would therefore, include all proceedings arising out of the assessment by way of appeal, reference or revision. In this view of the matter Clause (4) of the Order is not inconsistent with Section 297(2)(a) or any other clause. Section 297(2)(c) of the new Act, covering the class of proceedings by way of appeal, reference or revision pending on the commencement of the new Act must necessarily be construed as having been made ex abundant cautela.

Mr. Mohanty, however, argues that in the context and in sequence in which various clauses in Section 297(2)(a) of the new Act have been arranged making meticulous provisions tor all contingencies, assessment proceeding would not include within their sweep any proceeding by way of appeal, reference or revision. The contention cannot be said to be wholly frivolous. But for reasons already discussed I am inclined to accept the contrary view. It is only because of the possibility of divergent views being taken on the matter, a difficulty arose. For the purpose of removing such difficulty, he Central Government made the Order. Clause (4) of the Order is not inconsistent with any of the provisions of the new Act and is, therefore, not ultra vires Section 298 of the new Act.

28. To sum up I hold that Clause (4) of the Order is valid and constitutional and is not ultra vires Section 298. On this conclusion the references ore governed by the old Act and are barred by limitation. The Tribunal's view is correct, and must be upheld.

29. In the result, I agree that the writ application be dismissed but, in the circumstances, without costs.


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