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Kella Appalaswamy and Sons Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtOrissa High Court
Decided On
Case NumberSpecial Jurisdiction Case No. 183 of 1974
Judge
Reported in42(1976)CLT115; [1977]106ITR487(Orissa)
ActsIncome Tax Act, 1961 - Sections 253, 253(3), 253(5) and 253(6)
AppellantKella Appalaswamy and Sons
RespondentCommissioner of Income-tax
Appellant AdvocateB.K. Mohanti, Adv.
Respondent AdvocateStanding Counsel
Cases ReferredState of Gujarat v. Ramprakash P. Puri
Excerpt:
.....of that case. like all rules of procedure this rule demands a construction which would promote this cause. looked at from this angle, it must be held that there was no limitation at all and assessee's appeal satisfied all the requirements of law and was entitled to be disposed of on merits......steps long before limitation was to set in and it was unfortunate that while the memorandum of appeal was received long before limitation set in, the money order remittance was delayed in transit unusually and was received in the office of the tribunal beyond time. assessee, therefore, prayed that, in the circumstances of the case, the tribunal may accept the position that there is no delay or alternately the delay may be condoned.6. sub-section (5) of section 253 empowers the tribunal to admit an appeal after the expiry of the relevant period referred to in sub-section (3) if it is satisfied that there was sufficient cause for not presenting the appeal within that period. the tribunal, however, refused to exercise that power by saying :'the rule set out does not specify the mode of.....
Judgment:

R.N. Misra, J.

1. On being moved by the assessee under Section 256(1) of the Income-tax Act of 1961 (hereinafter referred to as 'the Act'), the Income-tax Appellate Tribunal, Cuttack Bench, has stated this case and referred the following question for the opinion of the court :

'Whether, on the facts and in the circumstances of the case, the order of the Appellate Tribunal rejecting the appeal as time barred is proper and correct in law ?'

2. Assessee is. a firm carrying on business at Jeypore in the District of Koraput. Aggrieved by the demand raised for the assessment year 1965-66, the assessee preferred a first appeal before the Appellate Assistant Commissioner. The appellate order was received by the assessee on November 23, 1970, and the assessee sent the memorandum of second appeal along with the money order receipt evidencing the remittance of the requisite fee by registered post from Jeypore to the office of the Appellate Tribunal at Cuttack on 13th of January, 1971. The memorandum of appeal accompanied by the money order receipt was received in the office of the Tribunal on the 15th of January, 1971, but the money order remittance was received on January 27, 1971. The Tribunal dismissed the appeal as being barred by limitation.

3. The manner of filing of second appeal has been provided under Section 253 of the Act; Sub-sections (3) and (6) thereof are relevant and those provisions are as follows :

'(3) Every appeal under Sub-section (1) or Sub-section (2) shall be filed within sixty days of the date on which the order sought to be appealed against is communicated to the assessee or to the Commissioner, as the case may be.'

'(6) An appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner and shall, except in the case of an appeal referred to in Sub-section (2) or a memorandum of cross-objections referred to in Sub-section (4), be accompanied by a fee of rupees one hundred.'

4. Rule 6 of the Income-tax (Appellate Tribunal) Rules, 1963, made under Section 255(5) of the Act provides :

'(1) A memorandum of appeal to the Tribunal shall be presented by the appellant in person or by an agent to the Registrar at the headquarters of the Tribunal, at Bombay, or to an officer authorised in this behalf by the Registrar, or sent by registered post addressed to the Registrar or to such officer.

(2) A memorandum of appeal sent by post under Sub-rule (1) shall be deemed to have been presented to the Registrar or to the officer authorised by the Registrar, on the day on which it is received in the office of the Tribunal at Bombay, or, as the case may be, in the office of such officer.'

5. There is no dispute that the Assistant Registrar attached to the Cuttack Bench is an authorised officer within the meaning of Rule 6. From the dates indicated above, it would appear that the last date for filing of the appeal expired on January 22, 1971. A week before that date, the memorandum of appeal accompanied by the money order receipt evidencing remittance of Rs. 100 as fee had been received by the appropriate authority. There is no dispute that the assessee remitted the money from the post office at Jeypore on 13th of January, 1971, but the remittance was actually received in the office of the Tribunal on January 27, 1971. Before the Tribunal, the assessee offered an explanation for the delay and took the stand that he had taken steps long before limitation was to set in and it was unfortunate that while the memorandum of appeal was received long before limitation set in, the money order remittance was delayed in transit unusually and was received in the office of the Tribunal beyond time. Assessee, therefore, prayed that, in the circumstances of the case, the Tribunal may accept the position that there is no delay or alternately the delay may be condoned.

6. Sub-section (5) of Section 253 empowers the Tribunal to admit an appeal after the expiry of the relevant period referred to in Sub-section (3) if it is satisfied that there was sufficient cause for not presenting the appeal within that period. The Tribunal, however, refused to exercise that power by saying :

'The rule set out does not specify the mode of payment of the Tribunal fee but as per the provisions in Section 253, already adverted to, it implies that the Tribunal can regard the memorandum of appeal to have been validly filed, whatever be the mode adopted, only when it is accompanied by prescribed fee or when prescribed fee has been paid. In this case while it is true that the memorandum of appeal unaccompanied by the prescribed fee was received within the time, the fee itself was received much later and there being no mode of payment of appeal fee prescribed, the post office could not be construed as agent of the Tribunal for receiving the fee and transmitting it to the Tribunal. It follows, therefore, that when the appellant sent the money order by post office, he constituted the post office as his agent for transmitting the prescribed fee to the Tribunal and the payment could be regarded as having been made only when actually received by the Tribunal. In the circumstances, the explanation offered clearly shows that the delay in the receipt of the prescribed fee by the Tribunal was on account of delay by postal authorities in transmitting the fee remitted by the appellant. The Orissa High Court in Brajabandhu Nanda v. Commissioner of Income-tax : [1962]44ITR668(Orissa) has held that the postal delay cannot be a sufficient cause with regard to condonation of the delay in filing the appeal. In the circumstances, we dismiss the appeal as time-barred.'

7. Barman J. (as he then was), speaking for the Full Bench of this court in Brajabandhu Nanda's case : [1962]44ITR668(Orissa) of the report, observed :

'The only point for decision herein is the point of limitation. In view of the latest Full Bench decision in Govinda Chowdhury v. Commissioner of Income-tax : [1960]40ITR93(Orissa) overruling the previous Division Bench decision of this court in Sri Popsing Rice Mill v. Commissioner of Income-tax : [1949]17ITR420(Orissa) , I am of opinion that the said points referred to this court for opinion are not questions of law. It is a matter of discretion for the Tribunal to condone delay on sufficient cause being shown as it may think fit in the facts and in the circumstances of the particular case'.

8. In the instant case, the Tribunal has taken the view that delay in postal delivery cannot be considered as constituting sufficient cause and has relied upon the aforesaid Full Bench decision of this court in support of the proposition. At page 673 of the report, the conclusions of the Full Bench were indicated in the following way:

'The answer to the first question is accordingly in the affirmative, that is to say, that in the facts and circumstances of the case there was not sufficient cause for not presenting the appeals within the prescribed period ; and the answer to the second question is in the negative, that is to say, that the delay in postal delivery cannot be considered as constituting sufficient cause for not presenting the appeals within the prescribed period.'

9. Obviously, the answer rendered by the Full Bench was in the facts and cicrumstances of that case. As the facts of that case show, on the 56th day, the assessee had transmitted the memorandum of three appeals by registered post from Cuttack to the Registrar of the Appellate Tribunal at Bombay and the appeals were received on April 7, 1954, one day after the expiry of the period prescribed under Section 33 of the Indian Income-tax Act of 1922. The Tribunal while rejecting the application for condonation of delay had taken the view that there was no justification for the appellant to wait till the 56th day because it should have known that under ordinary circumstances transmission of documents sent under registered post from Cuttack to Bombay would take more than four days. In Govinda Chowdhury's case : [1960]40ITR93(Orissa) the Full Bench of this court took the view, reversing an earlier decision of this court in the case of Sri Popsing Rice Mill v. Commissioner of Income-tax : [1949]17ITR420(Orissa) that the postal department was an agent of the sender and not of the Appellate Tribunal--the addressee. Relying on the said principle and in the facts of the case, this court in Brajabandhu Nanda's case : [1962]44ITR668(Orissa) came to the conclusion that the postal delay could not be accepted as constituting sufficient cause for non-presentation of the appeal within the prescribed period. We are afraid, the Tribunal has failed to appreciate the import of the decision and has surrendered the discretion vested in it by statute under confusion. The proposition laid down by the Tribunal would mean that a statutory mode of presentation of appeals available to assessees would be rendered ineffective. Consider a case where on the second day of receipt of the decision of the Appellate Assistant Commissioner, the assessee transmits the memorandum of appeal to the Tribunal. On account of unforeseen supervening circumstances, the papers are not received within the prescribed period. Would it be appropriate to hold that because delay in postal delivery cannot be considered as constituting sufficient cause on the authority of Brajabandhu Nanda's case : [1962]44ITR668(Orissa) the delay in the preferring of the appeal is not condonable. We do not think there can be a second opinion in the matter ; if the Tribunal in such a case does not condone the delay, a grave error must be found to have arisen and the situation would call for intervention.

10. Looking at the matter from this angle, we are of the view that the Tribunal has failed to exercise jurisdiction vested in it under Sub-section (5) of Section 253 of the Act having been misled by the conclusion indicated by the Full Bench of this court in Brajabandhu Nanda's case : [1962]44ITR668(Orissa) . The conclusion was not a rule for every case but was the conclusion reached on the facts and in the circumstances of that case. Where jurisdiction vests even if it be discretionary and the authority acts in a manner not being cognizant of its own jurisdiction, the conclusion is vitiated. We have no doubt that, in the facts of the case, such a situation has arisen.

11. Jeypore in the District of Koraput from where the memorandum of second appeal was sent by post and the seat of the Tribunal at Cuttack are not too distant. With the modern methods of improved communication, normal postal transit between the two ends does not take more than two days. That fact has also been established in this very case because the memorandum of appeal despatched on 13th January, 1971, has been received in the Tribunal's office on 15th January, 1971. Taking judicial notice of the manner in which money order remittances are sent, there is no justification for the money order remittance taking more than a day or two beyond the period required for the postal mail. Taking this aspect of the matter into consideration, where an assessee transmitted the appeal nine days before limitation was to set in, in the facts of the case, it cannot be said that there was any negligence or default on the part of the assessee. As a reasonable person, bona fide intending to prefer an appeal against the decision of the Appellate Assistant Commissioner, the assessee, in usual course and taking due precaution in the matter, despatched the memorandum of appeal and remitted the requisite fee. The postal delay in this case is of an unusual type and cannot be taken to be an event of the ordinary run. If the Tribunal had looked at the matter with an open mind and being conscious of the fact that it has jurisdiction to condone the delay, we do not think it would have come to the conclusion that the appeal deserved to be dismissed as being barred by limitation.

12. There is yet another aspect of the matter in favour of the assessee. As already stated, the assessee enclosed the money order receipt with the memorandum of appeal and that receipt had been received in the office of the Appellate Tribunal on the 15th January, 1971, along with the memorandum of appeal. The Tribunal has found that remittance of the fee prescribed under Section 253(6) of the Act by money order is not prohibited under the Rules. Nothing has been shown to us to take a contrary view. In these circumstances, reliance has rightly been placed by learned counsel for the assessee on a Bench decision of the Madhya Pradesh High Court in the case of J. K. Agents Pvt. Ltd. v. Commissioner of Income-tax : [1972]86ITR793(MP) . The learned Chief Justice, after reviewing various decisions of different courts and after considering the note that was then attached to Rule 22(a) of the Income-tax Rules of 1922, has observed :

'This note, therefore, clarifies the words of the section itself and thereby indicates that the provision of the section regarding accompanying of fee of Rs. 100 does not necessarily mean that a cash amount of Rs. 100 must in each case accompany the application and must reach the office. The alternative expressly provided as a suggestion is the process of deposit either in the treasury or in one of the banks mentioned. The challan has to be passed by the Income-tax Officer and not by the office of the Tribunal so that if such a challan is accompanied with the papers, the money does not really reach the office of the Tribunal. The office merely receives an assurance that the money has reached the Government through some department. It has also to be noted that there are certain things which have been prohibited by this note, e.g., payment by cheques or other negotiable instruments. It is silent about payment being sent by money order or through other methods not specified either way. These provisions make it clear that the method by which the money has to reach the Tribunal is flexible and that any reasonable process can be utilized for sending the money to the Tribunal. It is expressly provided under the Rules that the application and the papers themselves can be sent by registered post. Where the assessee resides outside the station, he sends the papers by registered post. Obviously, the cash cannot accompany the application and he has to send it either through post office or through some bank. If under the note to the form a payment to the bank and the receipt thereof is considered as sufficient payment within time, we see no reason why the assessee, who has made a payment to the post office and has attached the receipt of such payment with the papers, should not be treated as having substantially complied with the requirements of the Act.'

13. The conclusion of Dayal C.J. does not stand alone in the field. We do not propose to refer to the cases relied on in the said decision or otherwise cited at the Bar because, in our view, the approach is very appropriate and wholesome. It must always be remembered as was pointed out by Lord Buckmaster in Montreal Street Railway Company v. Normandin [1917] AC 170 that all rules of this type are nothing but provisions intended to secure proper administration of justice. It is, therefore, essential that they should be made to serve and be subordinate to that purpose. In the case of State of Gujarat v. Ramprakash P. Puri : [1970]2SCR875 , the Supreme Court pointed out that procedure is the hand-maid and not a mistress of law, intended to subserve and facilitate the course of justice and not to govern or obstruct it. Like all rules of procedure this rule demands a construction which would promote this cause. Looked at from this angle, it must be held that there was no limitation at all and assessee's appeal satisfied all the requirements of law and was entitled to be disposed of on merits.

14. For the reasons we have indicated above, our answer to the question referred, therefore, is:

'On the facts and in the circumstances of the case, the order of the Appellate Tribunal rejecting the appeal as barred by time is incorrect in law. Assessee shall be entitled to costs of the reference. Hearing fee is assessed at rupees two hundred.

Das, J.

15. I agree.


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