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Brooke Bond India Ltd. Vs. Inspecting Assistant - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Kolkata
Decided On
Judge
Reported in(1986)15ITD508(Kol.)
AppellantBrooke Bond India Ltd.
Respondentinspecting Assistant
Excerpt:
.....the order of the commissioner which was passed on 11-11-1981. he contended that there was a doubt prior to the introduction of the aforesaid explanation and so the legislature has removed that doubt with effect from a particular date and not before that date. consequently, the doubt which existed prior to that date had to be resolved in favour of the assessee in view of the decision of the supreme court in the case of cit v. vegetable products ltd. [1973] 88 itr 192.4. shri g.p. nanda, the learned representative for the department, on the other hand, supported the order of the commissioner. he stated that this point has been considered by the commissioner in his order dated 11-11-1983. the commissioner has stated that section 125a(4) of the act stipulates that where ah iac.....
Judgment:
This appeal has been filed by the assessee against the order dated 11-11-1983 of the Commissioner passed under Section 263 of the Income-tax Act, 1961 ('the Act') for the assessment year 1978-79.

2. By this order, the Commissioner has set aside the entire assessment and directed the assessing officer to make a fresh assessment after giving proper opportunities of hearing to the assessee. The assessing officer in this case was the IAC who had made the assessment under Section 143(3) of the Act on 19-11-1981.

3. Shri P.T. Sanyal, the learned representative for the assessee, took us through the first of the 10 grounds taken in this appeal which reads as below ; That the order under Section 263 passed by the learned Commissioner of Income-tax, in respect of the assessment order dated 19-11-1981 is bad and without jurisdiction since the said assessment order was passed by the Inspecting Assistant Commissioner of Income-tax and not by an Income-tax Officer.

Shri P.T. Sanyal urged before us that the Commissioner did not have any jurisdiction to revise under Section 263 an order passed by the IAC.According to him, the said jurisdiction of the Commissioner is confined to the orders passed by the ITO only. He referred to the Explanation to Section 263(1) introduced by Section 47 of the Taxation Laws (Amendment) Act, 1984, with effect from 1-10-1984. According to him, the Explanation came into force from 1-10-1984 and so it was not available for supporting the order of the Commissioner which was passed on 11-11-1981. He contended that there was a doubt prior to the introduction of the aforesaid Explanation and so the Legislature has removed that doubt with effect from a particular date and not before that date. Consequently, the doubt which existed prior to that date had to be resolved in favour of the assessee in view of the decision of the Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192.

4. Shri G.P. Nanda, the learned representative for the department, on the other hand, supported the order of the Commissioner. He stated that this point has been considered by the Commissioner in his order dated 11-11-1983. The Commissioner has stated that Section 125A(4) of the Act stipulates that where ah IAC exercises the functions of an ITO, any reference, in the Act or the Income-tax Rules, 1962 ('the Rules') to the ITO shall be construed as reference to the IAC. Further, he stated that the aforesaid Explanation was a clarificatory legislation and it has declared the law as it had always been right from the beginning.

The mention of the date 1-10-1984 from which the said Explanation came into effect in his opinion makes no difference to the above basic position. He referred to the decision in the case of CIT v. Bejoy Kumar Almal [1977] 106 ITR 743 (Cal.) in this connection. In that case it was held that where a provision is enacted for the express purpose of explaining or clearing up issues as to the meaning of a previous enactment, such Explanation should normally govern the earli:r Act.

Such Explanation is confined to the subject-matter of the prior enactment and the presumption is that it is retrospective. That case was dealing with the Explanation to Section 26 of the Act. It may be mentioned that the said Explanation did not state that the law contained therein was being declared for the removal of doubt. Next, he referred to the Board's Circular published at [1984] 150 ITR St. 22.

This circular states that the new Explanation introduced with effect from 1-10-1984 enables the Commissioner to revise an order under Section 263 even when the said order is passed by the IAC exercising the function of the ITO under Section 125A and that the said amendment takes effect from 1-10-1984.

5. Shri P.T. Sanyal replied that the Board circular does not help the case of the department as it clearly states that the Explanation takes effect from 1-10-1984 and not from any earlier date which is clear from the amending Act itself. Regarding the decision in the case of Bejoy Kumar Almal {supra) he stated that it was not a declaratory legislation. Consequently, it cannot be said that there was any doubt regarding the matter before the said amendment came into effect. On the other hand, the Explanation to Section 263 expressly delares that there was a doubt prior to the amendment which was being clarified by the amendment. Further, the Court has held that normally there is a presumption that an explanatory provision is retrospective. But, where there is indication to the contrary the said presumption is rebutted.

In this case, he pointed out that the Legislature clarifies its intention to make a certain amendment retrospective right from the beginning when it does not mention any date with effect from which the amendment would come into force. Alternatively, the Legislature sometimes expressly states that the clarification shall be deemed to be existing always in the Act right from the beginning. In the absence of any such express legislation, he urged that the amendment will take effect only from the date from which the section expressly makes it effective, and not with effect from any prior date.

6. We have considered the contentions of both the parties. The short question that is raised in this ground is whether Section 125A(4) empowers the Commissioner to assume jurisdiction under Section 263 and revise an assessment order made by the IAC under Section 125A(1) even before 1-10-1984 There is no doubt that he can do so after 1-10-1984 because of the coining into force of the Explanation to Section 263 with effect from that date. But what is the legal position prior to that date We find that the case of Bejoy Kumar Almal {supra) deals with the Explanation to Section 26 which does not specifically state that it is declaring the meaning of any provision of the Act for the removal of doubts. Hence, in our opinion, the said decision cannot be pressed into service to further the case of the revenue. Similarly, the circular of the Board printed at [1984] 150 ITR St. 22 is also of no help in resolving the issue. We find that the Explanation to Section 263 like Explanation 2 to Section 37(2A) of the Act begins with the words 'For the removal of doubts, it is hereby declared. . .'. Both these Explanations are, therefore, clarificatory pieces of legislation expressly enacted to remove doubts which existed relating to their subject matter. In other words, the Legislature has recognised the fact that a doubt did exist prior to the amendment about the true meaning of the provision and so it enacted the clarificatory amendment in order to remove the doubt. Both the above Explanations are given effect to by the Legislature itself with effect from a specific date and not from any earlier or later date. The Explanation 2 to Section 37(2A) was introduced by Section 17 of the Finance Act, 1973 with retrospective effect from 1-4-1976. The Explanation to Section 263(1) is introduced by Section 47 of the Taxation Laws (Amendment) Act, 1984 prospectively with effect from 1-10-1984 (This Amending Act received the assent of the President of India on 14-9-1984). Though the former Explanation was given retrospective effect and the later Explanation was given prospective effect from a future date, yet both were clarificatory in nature in order to remove doubts recognised by the Legislature as existing prior to the amendment by the very language of the amendments and both the Explanations were given effect to from specific dates. In our opinion, it is significant that these Explanations were given effect from specific dates. In short contrast to the above position, we find that Section 4 of the Finance Act, 1983, states that 'the following clause shall be inserted and shall be deemed always to have been inserted. It is, therefore, clear that the intention of the Legislature while enacting Section 4 was that the said amendment would have retrospective effect not from any specific date but right from the beginning. In the absence of such clear language in Section 47, it is not possible to infer that the Legislature intended to give effect to the said amendment right from the beginning. In fact, the Explanation to Section 263 has not been given effect to even from the date on which the said amendment became law ; it has been given effect to from a future date subsequent to 14-9-1984. These facts evidently rebut the presumption in favour of retrospective operation of this clarificatory piece of legislation, as pointed out by the Court in the case of Bejoy Kumar Almal (supra).

7. For the above reasons, we come to the conclusion that the Explanation to Section 263(1) did not have effect prior to 1-10-1984 and so it was notavailable to the Commissioner for assuming jurisdiction under Section 263. f the said Explanation was not available for assuming jurisdiction, then the question arises as to whether the Commissioner can assume jurisdiction because of Section 125A(4) as stated in his order under appeal. We do not think so.

Firstly, in matters of assuming jurisdiction, there should be clear and unambiguous provision conferring jurisdiction on a particular authority. The Explanation to Section 263(1), by its express language, recognises the existence of a doubt in this regard. Had there been no such doubt, there would have been no need to enact the said amendment.

Section 125A(4) states that where the IAC performs the function of the ITO, then the reference to the 1TO in the Act shall be deemed to be reference to the IAC. However, the Sub-section does not end there. It goes on to say that in such cases, the IAC making the assessment need not obtain the prior approval of the IAC whenever any other provisions of the Act require such approval to be obtained. It may be that the purpose of Section 125A(4) was only to avoid the assessing IAC to obtain prior approval from himself and not for conferring jurisdiction on the Commissioner for the purpose of Section 263. The doubt which existed prior to the amendment might be the above doubt or any other doubt. It is not necessary for us to find out in what way Section 125A(4) left a doubt vis-a-vis the jurisdiction of the Commissioner under Section 263. But the Legislature has stated in clear language that such a doubt existed and so it introduced the Explanation to Section 263(1) with effect from 1-10-1984 and not with effect from any other date before or after. As has been held in the case of Vegetable Products Ltd. (supra), whenever there is a reasonable doubt about the meaning of a provision in a taxing statute, it has to be resolved in favour of the assessee. Thus, this argument of the learned counsel for the assessee has got force and supports the above conclusion of ours.

Hence, we come to the conclusion that the assumption of jurisdiction under Section 263 by the Commissioner on 11-11-1983 against an order of assessment passed by the IAC was bad in law and is not sustainable.

Hence, we cancel the said order.

8. In view of the above decision of ours, it is not necessary to consider the remaining grounds in this appeal.


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