1. The point involved in this reference tor decision of this Full Bench is one of limitation, arising out of two applications under Section 66(3) of the Income-tax Act (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 17-6-1955 and the notice was dated 30-5-1955 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 12-8-1955, and the applications were received by the Tribunal on 18-8-1955, while the last date for filing the reference applications already expired on 16-8-1955. The Tribunal accordingly rejected the applications as being out of time.
2. The only point for consideration is whether on construction of Section 66(1) of the Income-tax Act (Act XI of 1932) read with Rules 7, 8 and 36 of the Appellate Tribunal Rules, 1946, the said applications were barred by limitations. 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 possession' 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 Sub-section (8) of Section 5A of the Act, -- are set out as follows:
Statement of case by Appellate Tribunal to High Court:
'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 assesses 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.
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 head-quarters 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, 20, 21, 22, 23, 26 and 33 shall apply mutatis mutandis to an application under Sub-section (1) of Section 66'.
3. The assessee petitioner strongly relied upon a decision of our High Court reported in Sri Popsing Rice Mills Bhadrak v. Commr. of Income-tax, Bihar and Orissa : 17ITR420(Orissa) . 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 nut 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, Bombay : 16ITR251(Bom) 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 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 Commr. of Income-tax, Bombay v. Ogale Glass Works Ltd. : 25ITR529(SC) also appears to throw some light on the question. In this state of conflicting decisions, on a previous occasion a Division Bench of thisCourt 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 appellate Income-tax Tribunal after the expiry of period of limitation, -- such an application will be a valid application for the purpose of Sub-section (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 and Co. v. Commr. of Income-tax Bihar and Orissa : 27ITR587(Orissa) . In the present case, the Tribunal, in rejecting the said application 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 : 17ITR420(Orissa) cited above, it has become necessary to reconsider the correctness of the said decision.
4. It was contended on behalf of the assessee that it is significant that in case of appeals against orders of the Appellate Assistant Commissioner. Section 33(2A) provides that the Tribunal may admit an appeal alter the expiry of sixty days referred to in Sub-section (1) 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 for 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 68(1) of the Act. The learned counsel, -- while interpreting that under Rule 30 of the Appellate Tribunal Rules. Rules 7 and 8 along with other Rules shall apply mutatis mutandis to an application under Sub-section (1) of Section 66, contended that Sub-rule (2) of Rule 7 should be ignored in case of an application under Section 66(1).
His point was that the word '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 case of applications under Section 33 of the Act, as contained in Sub-section (24) 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(2A).
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 Rule 7 and shall sign the endorsement.
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 an 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(7A), that Section 5 of the Indian Limitation Act (Act XX of 1908) shall apply to an application to the High Court by an assessee under sub-section (2) or Sub-section (3) of Section 66. It is significant that Sub-section (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 possible 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 Golabchand v. Commissioner of Income-tax, Bombay : 16ITR251(Bom) where Chief Justice Chagla in his judgment expressed that it is impossible to take the view that by reason of Sub-section (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 Sub-section (7A) only refers to an application to the High Court by an assessee under Sub-sections (2) and (3).
5. This leads us to the consideration of the correctness of the Division Bench decision of this Court in : 17ITR420(Orissa) which, so far, has been an impediment to this Court taking contrary view, in spite 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 the normal course of transmission, it ought to be received in his office within the period of limitation but due to delay in the transaction not due by any fault of the appellant, the memorandum of appeal is received at a later stage,--in such cases the Tribunal has been given the power by Sub-section (1A) to excuse the delay and admit the appeal after the expiry of sixty days referred to in Subsections (1) and (2) of the 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 Lord-ships 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 Ms 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 if public policy demands it.
It appears to mo that in Sri Popping Rice Mill's case : 17ITR420(Orissa) 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 appellant's 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 construction, 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, (co-equal?) with the receipt of such application, it should have been so expressed in the sub-section in the manner of Sub-section (2A) of Section 33 or the like; and that Sub-section (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 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 : 17ITR420(Orissa) 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 application' mean 'actual receipt,' be it on personal presentation to the officer concerned 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 5A(S) 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 'application under Sub-section (1) of Section 66' in the place of 'memorandum of appeal' and the word 'receipt' for the word 'presentation', --cannot be said to '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 the 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 the 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 en analogy from the underlying principles 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 duly of the applicant to make the application with 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 : 17ITR420(Orissa) is good law, and accordingly the said decision stands over-ruled.
6. The other High Courts in India also dissented from the decision in Sri Popsing Rice Mills case : 17ITR420(Orissa) . One of the latest decisions is by Chief Justice Chagla of the Bombay High Court in Viswanath Copal Oil Mill v. S. C. Prashar : 32ITR344(Bom) 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 contest 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 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 Hiralal v. Commr. of Income-tax , the Punjab High Court in Firm Khushi Ram Raghunath Sahai v. Commr. of Income-tax ; the Hyderabad High Court in Commercial and Industrial Bank Ltd. v. Commr. ot Income-tax ; and the Madras High Court in Nagappa Chettier v. Commr. of Income-tax, : 26ITR741(Mad) 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 Mills case : 17ITR420(Orissa) discussed above.
7. Mr. D. Bhuvan, learned Counsel for the assessee petitioner, strongly relied on a decision of the Supreme Court in : 25ITR529(SC) in support of his contention that as soon as the application was posted, the post office became the agent of the addressee, namely, the appellate Tribunal. In this connection the petitioner relied on certain passages in the last three paragraphs of the judgment where their Lordships, while comparing the principles underlying the English decisions as clearly consonant with the provisions of the Indian Law, observed that there can be no doubt that as between the sender and the addressee, it is the request of the addressee that the cheque be sent by post that made the post office the agent of the addressee; after such request, the addressee cannot be heard to say that the post office was not his agent and therefore, the loss of the cheque in transit must fall on the sender on the specious plea that the sender having the very limited right to reclaim the cheque under the Post Office Act, 1898, the post office was his agent, when in fact there was no such reclamation; of course, if there be no such request, express or implied then the delivery of the letters or the cheque to the post office is delivery to the agent of the sender himself; apart from this principle of agency, there is arm her principle which makes delivery of the cheque to the post office at the request of the addressee a delivery to him and that is that by posting the cheque in pursuance of the request of the creditor, the debtor performs his obligation in the manner prescribed and sanctioned by the creditor and thereby discharges the contract by such performance.
It appears that, in that particular case, according to the course of business usage in general to which, as part of the surrounding circumstances, the parties must have intended that the cheques should be sent by post which is the usual and normal agency for transmission of such articles and according to the Tribunal's findings they were in fact received by the assessee by post; that apart from the implication of an agreement arising from such business usage, the assessee expressly requested the Government to 'remit' the amount of the bills by cheque; this, on the authorities cited in the said Supreme Court Judgment, clearly amounted in effect to an express request by the assessee to send the cheques by post and the Government did act according to such request and posted the cheques in Delhi. It is in this background that the Supreme Court had decided that the cheques posted in Delhi amounted to delivery of the cheques to the addressee.
The circumstances, however, in the case before us are different in that here it is the statutory liability under Section 66(1) of the Income-tax Act read with the relevant rules thereunder, that has to be determined. In such case, as I have already observed the agency principles will not apply. That apart, the basis on which the Supreme Court decided the above mentioned case was the request which was made by the addressee to send the cheque by post and thereby made the post oilier the addressee's agent for the purpose. In the present case, this circumstance is absolutely absent in that there is no occasion for any request by the Appellate Tribunal to the applicant under Section 66(1) of the Act to send the application by post. All that Rule 7(1) provides is that it is open to the applicant to send the application by registered post and Sub-rule (2) of Rule 7 then provides that in such case of sending by registered post it shall be deemed to be presented when it is actually received by the Tribunal. Thus viewed, the Supreme Court decision levied on by the assessee petitioner does not support his contentions.
8. Our view with regard to the mandatory character of Section 33(1) of the Income-tax Act read with the rules made thereunder is further supported, by the history of the legislation on this subject as appears from the Parliamentary Bills and Official records connected therewith. This historical aspect has certain special bearing, showing the intention of the Legislature with regard to this branch of the revenue law of the Country. It appears, as aforesaid, that as early as 1948 Chief Justice Chagla in the last paragraph of his judgment in : 16ITR251(Bom) while dealing, with a similar point as the present case before us, expressed the sincere hope that the Legislature will attend to the question as soon as possible because this disclosed a very serious lacuna in the Act.
Then again in 1950 Chief Justice Mallik of the Allahabad High Court in Hajee Mahaboob Bux Ehhen Illahi v. Commr. of Income-tax, U. P. : 18ITR72(All) while agreeing with the said observations of the learned Chief Justice of the Bombay High Court, reiterated that it is for the Legislature to amend the Act if it considers that Section 5 of the Limitation Act should be made applicable to applications under Section 66(1). Thereafter a Bill was introduced in Parliament on 6-6-1951 being Bill No. 56 of 1951 in which in clause 65 thereof substitution of a new section for Section 66 of the Income-tax Act, 1922 was recommended the proposed proviso to the new section being as follows:
'Provided that the Appellate Tribunal may, it at is satisfied that the applicant was prevented by sufficient cause from presenting the application within the period of sixty days hereinbefore specified, allow it to be presented within a further period of not exceeding fifteen days'.
(The Gazette of India dated 16-6-1951 Part II Section 2, pages 470, 486). It clearly appears that this proposed proviso is corresponding to Section 33(2A), allowing condonation of delay in the case of appeals. The proposed proviso to Section 66 of the Act as quoted above sought to fill in the lacuna in the Act as pointed out by Chief Justice Chagla and Chief Justice Mallik as aforesaid. Subsequently, however, as it appears from Bill No. 36 of 1952 as introduced in the House of People on 26-5-1952, the said re-commendation providing !'or a proviso to Section 66 of the Act was dropped.
The earlier Bill of 1951 which was introduced in June, 1951 had by then lapsed. It appears that certain provisions of the said Bill containing substitution of Section 66 with the said proposed proviso for condonation of delay had required detailed examination in the light of the comments received from Tarious quarters and in the meanwhile it had become necessary to introduce a shorter Bill in 1953 containing the amendments described in the subsequent Bill being Bill No. 38 of 1952 but significantly enough without the said amendment adding the proposed proviso as recommended in the previous year in Bill No. 53 of 1931 as aforesaid. (The Gazette of India dated 31-5-1952 Part II Section 2, page 202). Thus, the move taken to amend Section 66 by adding a proviso for condonation of delay as aforesaid whereby the Appellate Tribunal was given the power to condone the delay in the presentation of an application up to limit of fifteen days (recommendation No. 158 in a modified form as is evident from Notes on clauses of the said Bill No. 56 of 1951 in the Gazette of India dated 16-6-1951 Part II Section 2 page 486) appears to have been ultimately dropped. If the said recommendation had been accepted, it would have been a dispensing provision.
The said recommendation No. 158 does not appear to have been pressed further, with the consequence that the Indian Income-tax (Amendment) Act, 1953 (Act No. 25 of 1953), which was passed in the following year, did not contain the said proposed amendment as was recommended in the Bill No. 56 of 1951. This clearly shows the intention of the Legislature.
It could not be that the observation of the Chief Justice Chagla in 1948 and Chief Justice Malik in 1950 in the decision cited above, were not considered or overlooked by the Legislature. Indeed presumably on the observations of different High Courts showing the lacuna in the Income-tax Act, the Bill No. 56 of 1951 was introduced by way of giving relief to the applicant under Section 66(1). But the fact of the said Bill not being pursued or it being dropped, is significant to show that the Legislature did not intend to give such relief to the appellant. This removes all doubts in our mind as to the intention of the Legislature in this regard.
9. The result therefore, is that both these applications -- S. J. C. Nos. 4 and 5 of 1956 having been made out of time, are dismissed with costs. Hearing fee Rs. 100/-.
10. I agree with my learned brother that the decision of a Bench of this Court in : 17ITR420(Orissa) must be overruled. That decision has not been followed by any other High Court. On the contrary, as pointed out by my learned brother other High Courts have dissented from the view taken therein. In view of the clear provision of Sub-rule (2) of Rule 7 of the Appellate Tribunal Rules, there is no scope for giving any beneficial construction, especially on the question of limitation, or to hold that the date on which the petition is sent by post to the appellate Tribunal should be deemed to be the date on which the application under Section 66(1) of the Income-tax Act was made before the Tribunal.
11. I agree.