Paul Mathew And Co v. Income Tax Officer Alwaye — 1984 DIGILAW 138 (KER)

JUDGMENT 1. The petitioner is a firm of transport contractors. It is an assessee borne on the files of the 1st respondent Income Tax Officer, A-ward, Alwaye. It was granted registration under S.185 of the Income Tax Act, 1961 for the assessment year 1971-72. This benefit continued for the years 1972-73 to 1976-77 as the assessee filed declarations in form No. 12. Subsequently, the 1st respondent passed an order cancelling the registration for the above years. The petitioner filed appeals before the Commissioner of Income Tax (Appeals), Ernakulam. The appeals were dismissed. The petitioner filed second appeals. Pending the appeals before the Appellate Tribunal, on motion by the petitioner, the appellate Tribunal passed a common order of stay of collection of tax as per the revised assessment orders (Ext. P-1, dated 27th February 1982). By Ext. P-1, stay of recovery proceedings, was ordered subject to certain conditions. Finally, the Appellate Tribunal dismissed the appeals. On motion made by the petitioner, the Appellate Tribunal referred certain questions of law for the opinion of this court, evidenced by Ext. P-2 order, dated 12th November, 1982. After the dismissal of the appeals by the Appellate Tribunal recovery proceedings were taken by the Revenue. The petitioner prayed for stay of recovery proceedings as evidenced by Ext. P-3, petition dated Nil. According to the petitioner, the questions of law referred by the Appellate Tribunal as per Ext. P-2, were pending for consideration in the High Court (R.A. No. 350 to 356 corresponding to ITR 464 to 470 of 1982) and till the decision is rendered by the High Court in the referred cases, and thereafter the Appellate Tribunal passes an order as envisaged by S.260(1) of the Income Tax Act, it cannot be said that the appeals have been "finally disposed of" by the Tribunal. Till such orders are passed by the Appellate Tribunal, the appeals filed before the Appellate Tribunal are pending, In this view, since the appeals are still pending, the stay ordered by the Appellate Tribunal as per Ext. P1 is still in force (even during pendency of Referred cases in this court) and so recovery proceedings are incompetent and without jurisdiction. The respondents have not disposed of Ext. P-3 petition and recovery proceedings are being pursued. So, this Original Petition was necessitated, assailing the recovery proceedings, taken by the Revenue. P1 is still in force (even during pendency of Referred cases in this court) and so recovery proceedings are incompetent and without jurisdiction. The respondents have not disposed of Ext. P-3 petition and recovery proceedings are being pursued. So, this Original Petition was necessitated, assailing the recovery proceedings, taken by the Revenue. In the O. P. the petitioner has prayed for the issue of a writ of mandamus directing the respondents not to pursue the recovery proceedings for the recovery of the tax levied on the petitioner while giving effect to the order of the Commissioner of Income Tax (Appeals) pending "final disposal of the appeals by the Tribunal" conformably to the judgment of the High Court in ITR No. 464 to 470 of 1982 and for other reliefs. 2. Counsel for the petitioner contended that when once references are pending in this court, the appeals filed before the Tribunal are not "finally disposed of". It is only after a decision is rendered in the referred cases by this Court under S.259 read with S.260 of the Income Tax Act and as a equal thereto the Appellate Tribunal also passes "final orders" as contemplated by S.260(1) of the Act the appeals are "finally disposed of". Till such final disposal of the appeals by the Appellate Tribunal, the appeals are or should be deemed to be pending. On these premises, it is contended by petitioner's counsel, that the order of stay granted by the Appellate Tribunal, as evidenced by Ext. P-1, will be operative and effective till the consequential orders are passed by the Appellate Tribunal under S.260(1) of the Act. Any recovery proceedings during the pendency of the referred cases in this court is incompetent. Counsel relied on certain passages from the decisions reported in Income Tax Appellate Tribunal v. Cambatta and Co. P-1, will be operative and effective till the consequential orders are passed by the Appellate Tribunal under S.260(1) of the Act. Any recovery proceedings during the pendency of the referred cases in this court is incompetent. Counsel relied on certain passages from the decisions reported in Income Tax Appellate Tribunal v. Cambatta and Co. Ltd. 29 ITR 118 (Bombay), Esthuri Aswathiah v. Commissioner of Income Tax, Mysore 66 ITR 478 (SC), Commissioner of Income Tax v. Jubilee Mills Ltd. 68 ITR 630 (SC), East India Corporation Ltd. v. Commissioner of Income Tax 99 ITR 287 (Madras) in support of the above submissions and asserted that these decisions establish the proposition that only when the appellate Tribunal passes the consequential order under S.260(1) of the Act conformably with the decision of this Court rendered under S.259 and S.260 of the Act, the final decision in the appeal is rendered and in that view of the matter, Ext. P-1 order of stay granted by the Appellate Tribunal will be operative and alive till such an order is passed. 3. The argument of the counsel is ingenious. But, in my opinion, the true import of the relevant sections of the Income Tax Act and the decisions cited at the Bar, were not understood, in a proper perspective. The following sections, which are relevant, may be usefully quoted: "254(1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such order thereon as it thinks fit. * * * * (4) Save as provided in S.256, orders passed by the Appellate Tribunal on appeal shall be final. 256. The following sections, which are relevant, may be usefully quoted: "254(1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such order thereon as it thinks fit. * * * * (4) Save as provided in S.256, orders passed by the Appellate Tribunal on appeal shall be final. 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 S.254, by application in the prescribed form, accompanied where the application is made by the assessee by a fee of two hundred rupees 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 with in the period hereinbefore specified, allow it to be presented within a further period not exceeding thirty days. (2) If, on an application made under sub-s.(1), the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be, may, within six months from the date on which he is served with notice of such refusal, apply to the High Court, and the High Court may, if it is not satisfied with the correctness of the decision of the Appellate Tribunal, require the Appellate Tribunal to state the case and to refer it, and on receipt of any such requisition, the Appellate Tribunal shall slate the case and refer it accordingly. (3) Where in the exercise of its powers under sub-s.(2), the Appellate Tribunal refuses to state a ease 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 such refusal, withdraw his application, and, if he does so, the fee paid shall be refunded. (3) Where in the exercise of its powers under sub-s.(2), the Appellate Tribunal refuses to state a ease 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 such refusal, withdraw his application, and, if he does so, the fee paid shall be refunded. 259(1) When any case has been referred to the High Court under S.256, it shall be heard by a bench of not less than two judges of the High Court, and shall be decided in accordance with the opinion of such judges or of the majority, if any, of such judges. (2) Where there is no such majority, the judges shall state the point of law upon which they differ, and the case shall then be heard upon that point only by one or more of the other judges of the High Court, and such point shall be decided according to the opinion of the majority of the judges who have heard the case including those who first heard it. 260(1). The High Court or the Supreme Court upon hearing any such case shall decide the questions of law raised therein, and shall deliver its judgment thereon containing the grounds on which such decision is founded, and a copy of the judgment shall be sent under the seal of the Court and the signature of the Registrar to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conformably to such judgment." It is settled law that the jurisdiction of the High Court in answering a reference made to it under S.256 of the Income Tax Act is a special jurisdiction. It is consultative or advisory. It is not appellate or revisional or even supervisory. A reading of S.254, 256, 259 and 260 of the Income Tax Act will show that the decision rendered by the Appellate Tribunal under S.254(1) is final. This is subject to an order, that should be or may be passed as a equal to the decision rendered in a reference made under S.256. In a reference under S.256, as soon as the High Court passes an. order under S.259 read with S.260 of the Act, a copy of the order shall be sent to the Appellate Tribunal. This is subject to an order, that should be or may be passed as a equal to the decision rendered in a reference made under S.256. In a reference under S.256, as soon as the High Court passes an. order under S.259 read with S.260 of the Act, a copy of the order shall be sent to the Appellate Tribunal. Thereafter, the Appellate Tribunal has to pass orders as are necessary to dispose of the case conformably to such judgment of the High Court. The Appellate Tribunal should pass a "consequential order". This is so passed certainly in exercise of the appellate jurisdiction vested in it under S.254 of the Act. Be that as it may, the provisions of the Act, S.254, 256 and 260, only go to show, that as and when the High Court renders the decision on a reference, and the decision of the High Court is forwarded to the Appellate Tribunal, the Appellate order passed or rendered earlier by the Appellate Tribunal is "reopened or revived". The earlier appellate decision or order is revived or reopened, for the purpose of giving effect to the decision of the High Court rendered under S.256 read with S.260 of the Act. The Appellate Tribunal should or could pass the consequential order only in exercise of its appellate powers vested in it under S.254 of the Act. 4. I understand the decisions cited by the petitioner's counsel, only as laying down the proposition that when the Appellate Tribunal is in receipt of the judgment of the High Court under S.260 of the Income Tax Act, and the Appellate Tribunal exercises its jurisdiction, to pass such orders as are necessary to dispose of the case conformably to such judgment, (judgment of the High Court), the jurisdiction under which the consequential order is passed by the Appellate Tribunal is one under S.254(1) of the Act, i.e. "by reviving or restoring" the appeal. Apart from those points or aspects which are concluded by the judgment of the High Court of by the earlier order rendered by the Appellate Tribunal itself, if there are or remains any further point or aspects to be agitated, it is open to the assessee or to the Revenue to agitate such points or aspects?. In other words, the Appellate Tribunal does not pass an order under S.260(1) of the Act read with S.254(1) of the Act mechanically. In other words, the Appellate Tribunal does not pass an order under S.260(1) of the Act read with S.254(1) of the Act mechanically. It gives effect to the order passed by the High court under S.260(1) of the Act. In giving effect to the order passed by the High Court and in moulding the relief to be given on that basis, if there are points of aspects which are not concluded by the judgment of the High court or its own earlier decision, such points or aspects could be agitated at that stage when the consequential order is to be passed. I cannot accept the contention of the petitioner's counsel to the effect that when once a High Court renders a judgment on a reference, and the Appellate Tribunal is enjoined to dispose of the case, in conformity with such judgment, the Appellate Tribunal cannot do anything except to pass an order mechanically implementing the decision of the High Court. In other words, even though a particular point or aspect, was not the subject matter of the decision of the High Court or by the Appellate Tribunal earlier, it is not open to the Appellate Tribunal to entertain or decide such a point or aspect at this later stage. In passing the consequential order, to give effect to the order passed by the High Court under S.260 of the Act, the Appellate Tribunal exercises its appellate power and the appeal is revived or restored. The power should be exercised judicially and fairly. It can and should consider and dispose of such of those questions of aspects which were not the subject matter of the decision by the High Court or by the Appellate Tribunal itself on the earlier occasion. It cannot be said that whenever a reference is made to the High Court under S.256 of the Act, the appeal filed before the Appellate Tribunal, is not "disposed of" or "finally disposed of" but should be deemed to be pending; the position is that once an order is passed by the Appellate Tribunal under S.254(1) of the Act, it is final, subject of course, to the contingency of it being reopened or revived to comply with an order passed under S.256 read with S.260 of the Act. So understood, there is absolutely no difficulty in rejecting the contention of the petitioner that the order of stay passed by the Tribunal, evidenced by Ext. P-1 will be operative or alive till the disposal of the income tax referred cases by this Court and thereafter, till consequential orders are passed by the Appellate Tribunal under S.260(1) read with S.254 of the Act to give effect to the orders that may be passed by this Court. 5. The true import of the decisions cited by petitioner's counsel and the scope of the powers exercised by the Appellate Tribunal under S.260(1) of the Act in passing the "Consequential order" has been summarised in Kanga and Palkivala, Law and Practice of Income Tax, Seventh Edition, Vol. 1, page 1169 as follows: After a reference has been answered by the Court, it is the duty of the Tribunal under this section to pass such an order as is necessary to dispose of the case conformably to the judgment. Such an order would be passed under S.254 read with this section; and the Tribunal cannot thereafter review or revise its own order. But the order that the Tribunal can pass under this section is not merely a formal order; for instance, if the Court has held the ground of assessment to be incorrect, the Tribunal may pass an order confirming the assessment on another ground based on facts or findings already on record or may deal with the remaining points which were earlier left undecided." So also, A. C. Sampath Iyengar in his book 'Law of Income Tax', 6th Edition, Vol. 3, at pages 2019 and 2020 has discussed the position thus:- "Tribunal 'To Follow-up'. On the advice of the High Court or the Supreme Court being given to it, the Tribunal shall be guided by the decision and shall pass suitable orders conformably to such Judgment, dealing with appeal by way of rehearing, if necessary, and after affording both parties an opportunity of being heard. * * * * The nature of the orders which the Tribunal may have to pass when the appeal is thus revived will differ from case to case. In most cases, it may be only a formal order that is required. But it may be that the High Court has given specific directions and the Tribunal will have to comply with these. In most cases, it may be only a formal order that is required. But it may be that the High Court has given specific directions and the Tribunal will have to comply with these. The Tribunal must also follow Judicial interpretations of the concerned High Court which clearly apply, even if made in a different context. It may be that the decision of the High Court has disapproved of a view taken by the Tribunal and the case has to be reconsidered. It may be that the High Court's decision has made it necessary for the Tribunal to consider and dispose of contentions in the original appeal which it did not consider in the view it took. Like will be the case, where the appeal had been originally dismissed in limine or for default. The Tribunal must consider these matters and pass an appropriate order, failing which writ of mandamus will lie to direct the Tribunal to comply with the statute. For this purpose, it can remand the matter to the lower authorities for fresh findings or accept findings given by them earlier. The orders contemplated, however, are only orders on the appeals and for the years concerned." In my opinion, the above passages occurring in the text books-Kanga and Palkivala's 'The Law and Practice of Income Tax' and A.C. Sampath Iyengar's 'Law of Income Tax'-represent the correct position in law. 6. In the result, I have no hesitation to reject the contentions raised by the petitioner's counsel. There is no merit in the contentions advanced by counsel. The Original Petition is without force and it is dismissed with costs, including counsel's fee Rs. 250. Issue carbon copy of this judgment to counsel for the petitioner on usual terms.