Commissioner Of Income Tax v. Bidhu Bhusan Sarcar — 1963 DIGILAW 20 (CAL)

JUDGMENT H.K. BOSE, C.J. 1. This is an application for a certificate under s. 66A(2) of the Indian IT Act r/w Art. 135 of the Constitution in respect of a decision of a Division Bench of this Court dt. 10th Jan., 1962, by which certain questions of law were answered in favour of the assessee in a reference under s. 66(1) of the Indian IT Act. 2. Bidhu Bhusan Sarcar, since deceased, used to be assessed in respect of his income in the district of 24-Parganas. On 22nd Dec., 1947, he filed a voluntary return before the ITO, District 24- Parganas, in respect of the asst. yr. 1947-48 declaring a net loss of Rs. 330. Subsequently, on account of the change in the territorial jurisdiction, the assessee's place of business fell within the jurisdiction of the ITO, District I(2), Calcutta, with the result that the file of the assessee was transferred to the ITO, District I(2), and it came within the jurisdiction of the Eighth Addl. ITO, District I(2). On 16th Jan., 1949, the Eighth Addl. ITO, District I(2), took action under s. 34 of the Indian IT Act presumably because he considered that the voluntary return filed on 22nd Dec., 1947, was invalid and could not be acted upon. The notice under s. 34 was issued on 23rd Feb., 1950, but as no return was filed in response to the notice even upto 15th Jan., 1952, the Eighth Addl. ITO, issued a notice under s. 22(4) of the Indian IT Act. It appears that prior to this on 31st March, 1949, the assessee filed another voluntary return for the asst. yr. 1947-48 to the ITO, District I(2), declaring a loss of Rs. 11,33,940. In August, 1950, the ITO, District I(2), acting on this voluntary return dt. 31st March, 1949, issued a notice under s. 23(2) of the Act. On 4th Feb., 1952, the Eighth Addl. ITO, District I(2), passed an order filing the case as there was already another file of the assessee in the same district. On 12th Feb., 1952, the ITO District I(2), cancelled the proceeding in respect of voluntary return dt. the 31st March, 1949, on the view that a voluntary return of loss was not valid and he, thereafter, took action under s. 34 and issued a notice under that section on 12/14th Feb., 1952. On 12th Feb., 1952, the ITO District I(2), cancelled the proceeding in respect of voluntary return dt. the 31st March, 1949, on the view that a voluntary return of loss was not valid and he, thereafter, took action under s. 34 and issued a notice under that section on 12/14th Feb., 1952. This proceeding resulted in an assessment under s. 23(4)/34 on 31st Jan., 1953. Against this order of assessment the assessee filed an appeal before the AAC. In appeal it was pointed out by the ITO that he had no jurisdiction over the assessee as there was already a file with the Eighth Addl. ITO. The AAC by an order dt. the 27th Dec., 1955, set aside the assessment made on 31st Jan., 1953, with a direction that the assessment should be completed according to law by an officer having proper jurisdiction over the case. Against the decision of the AAC, the assessee went up on appeal before the Tribunal. The grievance of the assessee before the Tribunal was that the AAC should have annulled the assessment without giving a direction for making a fresh assessment. The Tribunal, accepted this contention and by its order dt. the 23rd April, 1957, cancelled the assessment. In the meantime, on 30th Dec., 1955, the CIT passed an order under s. 5(7A) of the IT Act transferring the case of the assessee from the Eighth Addl. ITO to the ITO District I(2), and thereafter the ITO District I(2), issued a fresh notice under s. 34 of the IT Act dt. 11th Feb., 1956, and on 2nd May, 1956, he made an assessment under s. 23(4)/34 of the IT Act. The assessee took an appeal against this assessment order to the AAC. The contention raised before him was that the Eighth Addl. ITO had jurisdiction when he issued notice on 23rd Feb., 1950, and unless and until the assessment was completed in pursuance of that notice which was a valid notice it could not be said that any income had escaped assessment. The further contention raised was that the assessment in pursuance of the notice dt. the 23rd Feb., 1950, should have been completed on or before 31st March, 1952, or 31st March, 1956, as the case fell within the purview of s. 34(1)(a) or s. 34(1)(b). The further contention raised was that the assessment in pursuance of the notice dt. the 23rd Feb., 1950, should have been completed on or before 31st March, 1952, or 31st March, 1956, as the case fell within the purview of s. 34(1)(a) or s. 34(1)(b). Another contention which was pressed before the AAC was that the proceeding which as started pursuant to notice under s. 34 dt. the 23rd Feb. 1950, had not lapsed but remained alive at the time when the CIT by the issue of a special notification had transferred the file of the assessee to the ITO, District I(2). The AAC accepted the contention of the assessee and held that the notice dt. 11th Feb. 1956, was void ab initio and the assessment should have been completed by 31st March, 1956, and it had become barred when the assessment was completed on 2nd May, 1956. As against the order of the AAC, the ITO filed an appeal before the Tribunal and contended that there is no bar under the law against the issue of more than one valid notice under s. 34 and as the assessment dt. the 2nd May, 1956, was actually completed within one year from the date of the issue of the notice dt. Feb., 1956, the assessment was within time. The Tribunal came to the conclusion that the proceeding started by the Eighth Addl. ITO on the basis of the notice dt. 23rd Feb., 1950, having been directed to be "filed" was no longer a live proceeding and could not be continued by the principal ITO and no valid assessment could be made in respect thereof. In this view of the matter the Tribunal allowed the appeal of the IT Department and restored the order of the ITO District I (2). The assessee thereupon made an application of the Tribunal for a reference and the Tribunal referred the following questions of law to the High Court : "1. Were the notice under s. 34 issued by the principal ITO on 11th Feb., 1956, and the assessment raised in pursuance thereof valid in law in view of the fact that the proceedings commenced by the Eighth Addl. ITO under s. 34 on the basis of notice dt. 23rd Feb., 1950, were filed ? 2. Whether, on the facts and circumstances of the case, the assessment dt. ITO under s. 34 on the basis of notice dt. 23rd Feb., 1950, were filed ? 2. Whether, on the facts and circumstances of the case, the assessment dt. the 2nd May, 1956, made by the principle ITO District (I) (2) was barred by time ?" This reference came up for hearing before a Division Bench of this Court presided over by G. K. Mitter and A. N. Ray, JJ. and by judgment delivered by this Division Bench on 10th Jan., 1962, in Bidhu Bhusan Sarcar vs. CIT (1966) 59 ITR 531 (Cal) : TC10R.555 the questions were answered in favour of the assessee. The Division Bench held that the notice dt. 23rd Feb., 1950, was a valid notice and the Revenue authorities could not extend the period of limitation after the expiry of eight years by issuing a second notice on the eve of the expiry of eight years to obtain a period of one additional year from the date of the service of the second notice. The assessment was, therefore, barred by limitation because the assessment should have been completed by 31st March, 1956. It is against this decision of the Division Bench that the petitioner now intends to prefer an appeal to the Supreme Court. 3. The points which the petitioner intends to urge before the Supreme Court are that the Division Bench should have held upon a correct interpretation of the relevant provisions of the Indian IT Act, 1922, that the "filing" of the case amounted to a termination of the proceeding which had been initiated by the Eighth Addl. ITO with the notice under s. 34 dt. 23rd Feb., 1950. The other question which the petitioner intends to urge before the Supreme Court and which is related to the first point intended to be raised is that the notice under s. 34 issued on 11th Feb., 1956, by the ITO, District I(2), was a valid notice and on the date the assessment in pursuance of this notice was made, namely, 2nd May, 1956, the proceeding for the assessment had not become barred by limitation. Reference was also made before us to Brindaban Chandra Basak vs. ITO (1962) 46 ITR 14 (Cal) : TC51R.2018 and Belland vs. Smt. Banarsi Debi (1962) 46 ITR 28 (Cal) : TC51R.1781 on the question of limitation. Reference was also made before us to Brindaban Chandra Basak vs. ITO (1962) 46 ITR 14 (Cal) : TC51R.2018 and Belland vs. Smt. Banarsi Debi (1962) 46 ITR 28 (Cal) : TC51R.1781 on the question of limitation. It appears from the decision of the Division Bench that in support of the respective contentions of the parties which involved determination of certain incidental questions, citations were made of a large number of cases bearing on the points and it was upon a consideration of these authorities cited that the learned judges came to the final conclusion and answered the questions in favour of the assessee. We are satisfied that the case involves substantial questions of law which make it a fit one for appeal to the Supreme Court. The amount of tax involved is also a very large one and is to the tune of about rupees thirteen lakhs, and the case is one of considerable private importance between the parties. But before any certificates as asked for can be granted, we have to consider certain preliminary objections which have been raised on behalf of the respondent as to the maintainability of this application. The first objection which is raised is that Art. 135 of the Constitution cannot be invoked in the facts and circumstances of this case. Art. 135 is as follows : "Until Parliament by law otherwise provides the Supreme Court shall also have jurisdiction and powers with respect to any matter to which the provisions of Art. 133 or Art. 134 do not apply if jurisdiction and powers in relation to that matter were exercisable by the Federal Court immediately before the commencement of this Constitution under any existing law." 4. It is well-known that by the insertion of s. 66A(2) by the IT (Amendment) Act, 1926 (Act 24 of 1926), a right of appeal to His Majesty-in-Council from any judgment of the High Court delivered on a reference made under s. 66 in any case which the High Court certified to be a fit one for appeal to His Majesty-in-Council was conferred. Later on after the Federal Court came into existence by virtue of the provisions of the Government of India Act, 1935, certain rights of appeal came to be conferred on the Federal Court by reason of the Federal Court Enlargement of Jurisdiction Act, 1947 (Act 1 of 1948). Later on after the Federal Court came into existence by virtue of the provisions of the Government of India Act, 1935, certain rights of appeal came to be conferred on the Federal Court by reason of the Federal Court Enlargement of Jurisdiction Act, 1947 (Act 1 of 1948). Subsequently, the Abolition of the Privy Council Jurisdiction Act, 1949 (Act V of 1949), was passed with the result that before the Constitution came into force, the Federal Court had the same jurisdiction that the Privy Council had under s. 66A(2) of the Indian IT Act. It will thus appear that in the present case the provisions of Art. 135 of the Constitution are attracted and the petitioner has, therefore, a right of appeal in respect of the judgment which was delivered by the Division Bench on a reference under s. 66 of the Indian IT Act. 5. Some of the relevant cases which have a bearing on this point have been considered by me in the case on Kallu Babu Lalchand vs. CIT (1962) 46 ITR 778 (Cal) : TC56R.829 but in that case it was held by the this Court that Art. 135 of the Constitution was not available to the petitioner inasmuch as the decision which was sought to be appealed against was not a decision or a judgment given on a reference but it was a decision or an order refusing an application under s. 66 (2) of the Indian IT Act for calling upon the Tribunal to state a case and refer certain questions of law to the High Court. 6. The next objection which has been raised as to the maintainability of the application is that the provisions of s. 66A(2) of the Indian IT Act cannot be invoked in the present case and therefore the petitioner has no right of appeal to the Supreme Court. It is pointed out that the assessment was complete and the pending proceedings on reference came to an end on 10th Jan., 1962, but the Indian IT Act, 1922, which contained the provisions for appeal embodied in s. 66A(2) was repealed by s. 297(1) of the IT Act, 1961 Act No. 43 of 1961 which came into force on the 1st April, 1962. It is submitted that s. 6 of the General Clauses Act, 1897, also does not apply to the present case inasmuch as a different intention appears from the terms of the provisions of sub-s. (2) of s. 297 of the new Act. Reference is made to cl. (c) of sub-s. (2) which is as follows : "Any proceeding pending on the commencement of this Act before any IT authority, the 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." It is argued that what is saved by sub-s. (2) of s. 297 from the effect of the repeal of the entire Act, is the pending proceedings at the time of the commencement of the new Act before the authorities or Court mentioned in cl. (c), but no such proceeding as is specified in cl. (c) was pending in the present case and the fact that this clause and the other clauses in sub- s. (2) make provision for saving of specified cases indicates that the intention of the legislature was to save only these specific matters from the effect of the repeal and no other matter, and consequently the operation of s. 6 of the General Clauses Act is excluded by reason of the different intention as appearing in the various clauses of sub-s. (2) of s. 297 of the new Act. The attention of the Court was drawn to a decision of the Orissa High Court in Chakoo Bhai Ghelabhai vs. State of Orissa (1956) 7 STL 36 (Ori), where it was observed by Panigrahi, C.J. as follows : "The ordinary rule is that s. 6 of the General Clauses Act will apply if there is no saving clause in the repealing enactment or 'unless a different intention appears'. If, however, the repealing enactment makes a special provision regarding pending or past transactions it is the latter provision that will determine whether the liability arising under the repealed enactment survives or is extinguished." 7. If appears to me that this contention of the learned Advocate for the respondent as to the effect of the repeal is not without substance. If, however, the repealing enactment makes a special provision regarding pending or past transactions it is the latter provision that will determine whether the liability arising under the repealed enactment survives or is extinguished." 7. If appears to me that this contention of the learned Advocate for the respondent as to the effect of the repeal is not without substance. The effect of the repeal of an enactment is as if it had never existed except as to matters and transactions past and closed, in the absence of any saving clause which manifests or implies a different intention. IF particular matters are kept alive by the saving clause, the repealed enactment is treated for all purposes as alive in respect of such matters. The saving clauses contained in sub-s. (2) of s. 297 in my view do indicate a different intention as contemplated by s. 6 of the General Clauses Act and ousts the operation of the general provisions contained in s. 6, with the result that s. 66A(2) which was completely obliterated by reason of the provision for repeal contained in sub-s. (1) of s. 297 of the new Act cannot be availed of by the petitioner for the purpose of initiating the proceeding for a certificate for appeal to the Supreme Court as contemplated in s. 66A(2) of the Act. But it is to be noted that to meet such contingencies as the present one, the Central Government has promulgated an order on the 8th Aug., 1962, which is known as the Income-tax (Removal of Difficulties) Order, 1962, and cls. 4(1) and 4(2) of the said order, which are relevant for the purpose of this case, may be set out hereunder : "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 IT 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 proceedings instituted under the repealing Act after the 31st 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 proceedings so disposed of shall be instituted and disposed of as if the repealing Act had not been passed." 8. Sub-cl. (1) of cl. 4 makes it clear that any proceeding by way of appeal, reference or revision in respect of any order made under the provisions of the repealed IT Act, 1922, has to be instituted and disposed of as if the repealing Act, that is, the IT Act of 1961, had not been passed. In other words, the order which was made by the Division Bench on reference under s. 66 of the Indian IT Act, 1922, will be governed, in matters of appeal from that decision or order to the Supreme Court, by the provisions for appeal to the Supreme Court, as contained in the repealed Act of 1922, that is, under the provisions of s. 66A(2) of the Indian IT Act, 1922. In respect of such matter, the provisions of s. 261 of the new Act of 1961 are not attracted. Sec. 261 of the IT Act, 1961, is as follows : "An appeal shall lie to the Supreme Court from any judgment of the High Court delivered on a reference made under s. 256 in any case which the High Court certifies to be a fit one for appeal to the Supreme Court." It is to be noted that the judgment delivered by the Division Bench in the present case on 10th Jan., 1962, was one which was delivered under the provisions of s. 66 of the repealed Act of 1922, and not under s. 256 of the new Act of 1961 which came into force from the dt. 1st April, 1962. So if there had been no provisions like sub-cl. (1) of cl. 1st April, 1962. So if there had been no provisions like sub-cl. (1) of cl. 4 of the Income-tax (Removal of Difficulties) Order, 1962, there would have been no right of appeal available to the petitioner before us either under s. 66A(2) of the repealed Act of 1922 or under the provisions of s. 261 of the new Act, the latter provision not being in terms applicable to the case of the petitioner because the judgment delivered was not under s. 256. It is to meet such cases and other cases and to obviate the difficulties created by such an anomalous situation that this Income-tax (Removal of Difficulties) Order, 1962, was promulgated by the Central Government in exercise of the powers conferred by s. 298 of the IT Act, 1961. In the circumstances it appears to us that there is no substance in the objection raised by the learned Advocate for the respondent that the provisions of s. 66A(2) of the Indian IT Act are not available to the petitioner. 9. The only other objection which was raised as to the competency of the application is the question of limitation. It was argued that the Art. 179 of the Limitation Act applies to an application for a certificate and the application has to be made within 90 days from the date of the judgment of the High Court. Reference is made to the case the Patiala Cement Co. Ltd. vs. CIT (1956) 29 ITR 219 (Pepsu) : TC56R.675. It appears however from the facts of the case now before us that there is no substance in this point. The judgment of the High Court was delivered on the 10th Jan., 1962, and on 12th Jan., 1962, the petitioners' solicitor applied for a certified copy of the judgment, but as there was considerable delay on the part of the office in supplying such certified copy, two letters had been written by the petitioners' solicitors on 12th June, 1962, and 12th July, 1962, to the Registrar, High Court, Original Side, complaining against the delay in supply of the certified copy of the judgment from the office of this Court. This Court closed for the long vacation from the 28th Sept., 1962, and reopened on the 19th Nov., 1962. On that date the present application was mentioned before this Court and was noted as made on that day. This Court closed for the long vacation from the 28th Sept., 1962, and reopened on the 19th Nov., 1962. On that date the present application was mentioned before this Court and was noted as made on that day. In the circumstances the application must be held to have been made within the period of limitation allowed by the law and the objection of the respondent based on this ground must be overruled. 10. That this is the correct legal position is made clear by the decision of this Court in CIT vs. Shaw Wallace and Co. (1932) ILR 59 Cal 251 : AIR 1932 Cal 587 Rankin C.J., in dealing with the question of the period of limitation applicable to an application for leave to appeal to the Privy Council, observed : "It appears to me, when one comes to look at the article in the Limitation Act applicable, that the case must be governed by art. 179 rather than by art. 181 and I think therefore that the date of the judgment in a case of this sort must be the date from which the time has to be counted. I also think that under s. 12, a party in a case such as this is entitled to the time required to obtain a copy of the judgment. Nothing the CIT could have done would have given him a copy of the judgment sooner than he got it, namely on 26th Jan., 1931, I am not of opinion, therefore, that the application is out of time." In dealing with the point whether the case before him was a fit one for appeal to the Privy Council, the learned Chief Justice made the following observations : "The sum of money at stake upon which the tax is claimed is very large and I am satisfied that the question as to whether income-tax is claimable on this money is a very important question both from the point of view of the assessees and from the point of the view of the treasury. Prima facie, I should have no difficulty in saying that this case is exactly of the type which is contemplated by cl. (c) of s. 109 of the CPC and which comes under cl. (2) of s. 66A of the IT Act." 11. In my view, for the reasons given above, this application must succeed. Prima facie, I should have no difficulty in saying that this case is exactly of the type which is contemplated by cl. (c) of s. 109 of the CPC and which comes under cl. (2) of s. 66A of the IT Act." 11. In my view, for the reasons given above, this application must succeed. Let a certificate under s. 66A(2) of the Indian IT, 1922, r/w Art. 135 of the Constitution be drawn up and issued. Costs of this application will be costs in the Supreme Court appeal.