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Citation Codes
Equivalent Citations
citation codes
Judges
  • Mr. M. C. CHAGLA
Acts
  • Rules 7, 8 and 36 of the Appellate Tribunal Rules, 1946. By Rule 36, Rules 7 and 8 of the Rules
  • Section 66 (3) of the Income-tax Act, 1922.
  • SECTION 5 INDIAN LIMITATION ACT
  • Sub-section (2 A) of Section 33.
  • Sub-section (4) of Section 33
  • Sub-section (1) of Section 66.
  • Sub-rule (2) of Rule 7
  • Judges Section 66 (1)
  • Rule 7.... 36. Rules 7,
  • Sub-rule (2)
  • Sub-rule (1)
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Judges
  • Mr. M. C. CHAGLA
Acts
  • Rules 7, 8 and 36 of the Appellate Tribunal Rules, 1946. By Rule 36, Rules 7 and 8 of the Rules
  • Section 66 (3) of the Income-tax Act, 1922.
  • SECTION 5 INDIAN LIMITATION ACT
  • Sub-section (2 A) of Section 33.
  • Sub-section (4) of Section 33
  • Sub-section (1) of Section 66.
  • Sub-rule (2) of Rule 7
  • Judges Section 66 (1)
  • Rule 7.... 36. Rules 7,
  • Sub-rule (2)
  • Sub-rule (1)
See more information ...
Smart Summary

Court Opinion Summary — Income-tax Act, 1922 (Section 66(3) application)

Factual and Procedural Background

The matter arises from an application under Section 66(3) of the Income-tax Act, 1922. The applicant had previously applied to the Income-tax Appellate Tribunal, Bombay, seeking to require the Tribunal to refer certain questions of law to the High Court under Section 66(1). The Tribunal (A Bench) dismissed that application on the ground that it was barred by time and held that it had no power to condone delay in filing applications under Section 66(1).

Chronology given in the opinion:

  • The appeal was decided on 28 June 1949.
  • Notice of the Appellate Tribunal's order under Section 33(4) was served on the applicant on 23 July 1949.
  • The applicant had, by agreement of the parties, until 21 September 1949 to apply to the Appellate Tribunal under Section 66(1).
  • The applicant posted his application on 20 September 1949 (from Darwha); the application reached the Registrar, Appellate Tribunal, on 24 September 1949 (the sixty-third day since the notice).
  • The Tribunal heard and dismissed the application on 18 November 1949 as time-barred.

The applicant then applied to the High Court seeking an order directing the Appellate Tribunal to treat the application as having been made within the time allowed by Section 66(1).

Legal Issues Presented

  1. Whether the Appellate Tribunal has the statutory authority to condone delay in filing an application under Section 66(1) of the Income-tax Act, 1922.
  2. Whether an application sent by post and posted within the limitation period but received after the statutory period should be treated as "made" or "presented" within the period — i.e., whether the postal rule (acceptance by post) or the deeming provision of Rule 7(2) (when read mutatis mutandis under Rule 36) should render such an application timely.
  3. Whether Rules 7 and 8 of the Appellate Tribunal Rules, 1946 (applied mutatis mutandis by Rule 36), allow omission of Sub-rule (2) so as to treat posting as sufficient without receipt for applications under Section 66(1).

Arguments of the Parties

Applicant's Arguments

  • The applicant relied on a contrary decision (Popsing Rice Mitt v. Income-tax Commissioner, Bihar and Orissa) in which the Orissa High Court accepted that an application posted on the 60th day but received late should be treated as timely; the applicant pressed that view and argued by analogy with the postal rule in contract law that posting within the period should suffice.
  • The applicant sought an order from the High Court directing the Appellate Tribunal to treat the application as one made within the time allowed by Section 66(1).

Appellate Tribunal's Position

  • The Tribunal dismissed the application as barred by time, holding that the statute does not confer any power on the Tribunal to condone delays in filing applications under Section 66(1).
  • The Tribunal construed Section 66(1) strictly and applied the deeming provisions deriving from Rules 7 and 8 (as they apply mutatis mutandis by Rule 36) to mean that an application sent by post is "deemed" to be presented only on the day it is received in the Tribunal's office.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Bansilal v. Income-tax Commissioner Cited as authority supporting the proposition that the Tribunal lacks power to condone delays in filing under Section 66(1). The court referred to this case (along with several others) as supporting the obvious proposition that the Tribunal cannot condone such delays; the reference was treated as confirmatory of the Tribunal's position.
Commissioner of Income-tax, Madras v. Ganga Raju (1926 I.L.R. 50 Mad. 335) Same general proposition: limits on Tribunal powers to condone delay under the statute. Referred to as additional authority reinforcing that the Tribunal's statement of law (no power to condone) is correct.
Income-tax Commissioner v. Sevugan Referred to support the proposition that delays cannot be condoned by the Tribunal under the statute. Used in the same cluster of citations to show established authority for the proposition.
Ganesh Prasad v. Income-tax Commissioner Listed among authorities supporting the Tribunal's position on lack of power to condone delay. Referred to as supporting authority.
Merchants Mohini Flour Mills Co. Ltd. v. Commissioner of Income-tax, Punjab Also cited for the same general principle concerning limitation and tribunal powers. Referred to as supporting authority.
Popsing Rice Mitt v. Income-tax Commissioner, Bihar and Orissa Held, on similar facts, that an application posted on the 60th day but received late should nonetheless be treated as timely; advanced a construction reading Section 66(1) with Rules 7, 8 and 36 and employing the postal analogy. The court examined and considered this contrary Orissa High Court decision but explicitly disagreed with its reasoning and conclusion.
Household Fire Insurance Company v. Grant (Court of Appeal) Established the postal rule of contract law (acceptance by post) relied upon by the Orissa Court as an analogy. The court considered the analogy but rejected its application to the statutory scheme governing Section 66(1), noting differences between contract law convenience and statutory limitation rules.
Gulabsingh v. Nathu (1944 I.L.R. 1944 Nag. 419, 421) Principle that courts are not empowered to devise techniques to save claims from the bar created by limitation statutes. Quoted and relied upon to support the conclusion that courts cannot create exceptions to statutory limitation rules.
General Accident Fire and Life Assurance Corporation Ltd. v. Janmahomed (1941 I.L.R. 1941 Bom. 202, 208 P.C.) Privy Council observations relied on regarding limitation and related principles. Referred to as supporting the court's view that limitation rules and the statutory scheme should be enforced as they stand.
Maqbul Ahmad v. Pratab Narain Singh (1935 I.L.R. 57 All. 242, 250 P.C.) Privy Council authority cited in connection with the court's limitation analysis. Referred to as supportive of the court's approach to limitation and its refusal to adopt the postal analogy in this statutory context.

Court's Reasoning and Analysis

The court proceeded through a structured statutory and rule-based analysis:

  1. Identification of relevant provisions: the court quoted and analyzed Section 66(1) (the sixty-day period in which an assessee may "require" the Tribunal to refer a question of law), Section 67A (which excludes the day of the order and time required to obtain a copy when computing limitation), and Rules 7, 8 and 36 of the Appellate Tribunal Rules, 1946 (which regulate presentation of appeals and deeming provisions for postal presentation).
  2. Interpretation of "require" and the timing of the "requirement": the court emphasized that Section 66(1) creates a terminus ad quem of sixty days within which the assessee must "require" the Tribunal to refer. The court reasoned that a person "requires" the Tribunal to act only when the Tribunal knows of the requirement — that is, when the application reaches the Tribunal. Thus the requirement is the Tribunal's receipt of the application, not merely the act of posting by the applicant while the letter remains in the post office.
  3. Application of Rules 7, 8 and 36 (mutatis mutandis): Rule 36 makes Rules 7 and 8 applicable mutatis mutandis to applications under Section 66(1). Rule 7(2) expressly states that a memorandum sent by post is deemed to have been presented on the day it is received in the Tribunal's office. The court held that Rule 36 does not permit omission of any part of Rules 7 and 8, and consequently Sub-rule (2) must be applied to applications under Section 66(1). Under that deeming provision, an application sent by post is "presented" (or the Tribunal is "required") only upon receipt.
  4. Statute versus rules and limits on judicial modification: the court treated the Rules as procedural devices that cannot override or change the substantive effect of the statute. Reading the Rules to exclude Sub-rule (2) or to give a different effect would amount to altering the statutory time limit. The court rejected the contention that the Act should be read "in the light" of the rules to permit omission of Sub-rule (2).
  5. Rejection of the postal-contract analogy: the court examined the Orissa decision which relied upon an analogy to the postal rule from contract law (Household Fire Insurance Co. v. Grant). The court disapproved application of that analogy to statutory limitation provisions, pointing out doctrinal differences between contractual mercantile conveniences and limitation statutes. The court noted potential absurd consequences if the postal rule were extended (for example, applicants proving after many years that they sent applications that never reached the Tribunal).
  6. Conclusion and view on remedy: the court concluded that even the Tribunal could not extend the statutory period by rules and that any remedy for hardship lies with the legislature. The court referenced Chagla, C.J.'s view (in an earlier Bombay case mentioned) that legislative amendment would be necessary to change the rule.

Holding and Implications

Holding: The High Court dismissed the application. The court held that the Appellate Tribunal was correct to treat the application as time-barred because under Section 66(1) read with Rules 7, 8 and 36, an application sent by post is deemed to be presented only when it is received in the Tribunal's office; the Tribunal has no authority under the statute to condone delays in filing such an application.

DISPOSITION: The application was dismissed (the court ordered dismissal without notice to the other side).

Implications:

  • Direct effect on the parties: the applicant's request that the High Court send the case back to the Appellate Tribunal to treat the application as timely was refused; the Tribunal's order that the application was barred by time was upheld.
  • On legal principle: the court explicitly rejected the alternative construction adopted by the Orissa High Court (Popsing Rice Mitt), declined to adopt the postal-acceptance analogy for this statutory context, and affirmed that Rules 7 and 8 (as applied mutatis mutandis by Rule 36) — including the deeming provision in Rule 7(2) — govern when an application is to be treated as presented for purposes of Section 66(1).
  • Remedial remark: the court noted that any change to mitigate the hardship identified would need to come from the legislature (an amendment to the statute or rules) rather than judicial re-interpretation.

Judges: Judgment delivered by Kaushalendra Rao, J.; a concurring short note: "I agree." (indicating agreement by the other judge).

Show full summary ...

    Commissioner Of Income Tax, C.P. ... v. Commissioner Of Income Tax, C P

    1. This is an application under Section 66 (3) of the Income-tax Act, 1922. The applicant had previously made an application to the Income-tax Appellate Tribunal, Bombay, requiring the Appellate Tribunal to refer to the High Court certain questions of law. The Appellate Tribunal (A Bench) dismissed the application as in its opinion the application was barred by time. The present application is made to request the High Court to send the case back to the Appellate Tribunal requiring it to treat the application as one made within the time allowed by sub-section (i) of section 66.

    2. The appeal of the applicant was decided on the 28th June, 1949, and notice of the order of the Appellate Tribunal under Section 33(4) of the Act was served on the applicant on the 23rd July, 1949. Admittedly, the applicant had time till the 21st September, 1949, within which to apply to the Appellate Tribunal under Section 66 (1) of

    3. The applicant posted his application on the 20th September, 1949, at Darwha, and it reached the Registrar, Appellate Tribunal, on the 24th September, 1949, i.e., on the sixty-third day. The application was heard on the 18th November, 1949, and was dismissed as barred by time.

    4. The Appellate Tribunal held that the Act gave no authority to the Tribunal to condone delays in the filing of applications under Section 66(1) of the Act.

    5. That the statement of the law by the learned Members of the Tribunal is impeccable cannot be gainsaid. Section 5 of the Indian Limitation Act, though applied to applications to the High Court by Sub-section (7 A) of Section 66 of the Act, has not been applied to applications under the first sub-section of that section. Nor is there any provision similar to the one to be found in Section 30 (2) or Section 33 (2A) of the Act, In the absence of any provision conferring this power on the Tribunal, the Tribunal could not but hold that the application was barred by time. Authority for such an obvious proposition is not needed but reference may be made to Bansilal v. Income-tax Commissioner , Commissioner of Income-tax, Madras v. Ganga Raju (1926] I.L.R. 50 Mad. 335, Income-tax Commissioner v. Sevugan ; see also Ganesh Prasad v. Income-tax Commissioner and Merchants Mohini Flour Mills, Co., Ltd. v. Commissioner of Income-tax, Punjab .

    6. This would have been the end of the case but for an argument based upon Popsing Rice Mitt v. Income-tax Commissioner, Bihar and Orissa , in which on similar facts a contrary view was expressed by Bay C.J., and Panigrahi, J. In that case too the application was sent by post and arrived at the Madras office of the Tribunal three days too late. The only difference between the present case and the Orissa case is that while in the Orissa case the application was posted on the 60th day the application in this case was posted on the 59th day. In neither case could the applicant hope that in the ordinary course of business the application would have reached in time. Naturally, the opinion of the Orissa High Court was pressed upon us for our acceptance. I have carefully considered the opinion of the learned Judges and find myself unable to agree with them.

    7. According to the learned Judges Section 66 (1) must be read with Rules 7, 8 and 36 of the Appellate Tribunal Rules, 1946. By Rule 36, Rules 7 and 8 of the Rules have to be applied mutatis mutandis to applications under Section 66 (1). The learned Judges notice two differences at the very start in the matter of appeals and applications. The first is that in the case of applications "actual presentation is not in the picture", and whereas presentation of an appeal is the terminus ad quern of the limitation, the receipt of an application is merely the terminus a quo of the period of 90 days during which the Tribunal has to make a reference to the High Court. According to the learned Judges the date of the "making of the application" and the date of requiring the Appellate Tribunal to state a case need not be "coeval", otherwise the section would have been framed as Sub-section (2 A) of Section 33. The section and the rules accordingly contemplate a possibility of delay, and therefore in reading Rule 7 mutatis mutandis one should read it without Sub-rule (2) in connexion with applications under Section 66 (1). The learned Judges read Sub-section (1) of Section 66 of the Act " in the light of Rule 7 " and also hold that the rules are "not imperative". The learned Judges call in aid the analogy of acceptance of an offer by post and hold in the result that since the Act does not prescribe any mode of computation, the time occupied "in transmission of the requirement by application" should not be computed as a part of the period of limitation of 60 days. With all due respect to the learned Judges neither their conclusion nor their reasons are acceptable to me.

    8. I begin first by quoting the relevant sections of the Act, and the Rules of the Appellate Tribunal. Section 66 (1) reads as follows:

    Within sixty days of the date upon which he is served with notice of an order under Sub-section (4) of Section 33 the assessee...may, by application in the prescribed form,...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:....

    9. Reference may be made also at this stage to Section 67A of the Act, which reads:

    In computing the period of limitation prescribed for an appeal under this Act or for an application under Section 66, the day on which the order complained of was made, and the time requisite for obtaining a copy of such order, shall be excluded.

    10. Rules 7, 8 and 36 read as follows:

    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 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...on the day on which it is received in the office of the Tribunal at Bombay....

    8. The Registrar...shall endorse on every memorandum of appeal the date on which it is presented, or deemed to have been presented under Rule 7....

    36. Rules 7, 8...shall apply, mutatis mutandis, to an application under Sub-section (1) of Section 66.

    11. In reading Rules 7 and 8 mutatis mutandis every effort should be made to adapt every part of these rules for the purposes of the application. It is not permissible to leave out any portion arbitrarily. The Rules do not say that Sub-rule (2) of Rule 7 should be left out, and hence every effort must be made to see that that sub-rule also can be adapted suitably. Reading Rules 7 and 8 in the light of Rule 36 we get the following result:

    7. (1) An application under Section 66 (1) of the Act shall be presented by the applicant in person or by an agent to the Registrar or sent by registered post addressed to the Registrar....

    (2) An application under Section 66 (1) of the Act sent by post under Sub-rule (1) shall be deemed to have been presented to the Registrar...on the day on which it is received in the office of the Tribunal at Bombay.

    8. The Registrar...shall endorse on every application under Section 66 (1) the date on which it is presented....

    12. It is true that the word "presentation" is not used in Section 66 (1). But when the legislature fixed a period of 60 days in which the asses-see (or the Commissioner) may "require" the Tribunal to refer a question of law, the legislature certainly had in mind a terminus ad quem. of the period. It is an elementary rule of construction of statutes that the judicature in their interpretation have to discover and act upon the mens or sententia legis. Normally, Courts do not look beyond the litera legis, and in this case it is not necessary to do any more.

    13. The section speaks of sixty days, and the starting point is certain I and there can be no dispute. Since the application under Section 66 (1) is to " require " the Tribunal to refer a case the obvious construction is that the " requiring " must be within 60 days. Now a person is " required " to do something only when he knows of it and not while the letter is lying in a post office unknown to him, The Tribunal is "required" to refer the questions when the application reaches the tribunal and not before. The sub-section nowhere uses the phrase " require by an application made within 60 days " which has been expounded in the Orissa High Court. The sub-section read grammatically means only that the Tribunal must be " required " within 60 days to refer the questions, and then the Tribunal must within 90 days make the reference. There is really no hiatus between the terminus ad quern of the limitation for applications and the terminus a quo of the 90 days in which the reference has to be made. For this second period the terminus a quo is also the receipt of the application. The section, in my opinion, is quite clear and does not admit of any other construction.

    14. Coming now to the Rules it is clear that these rules are framed under Section 5A (8) of the Act and merely regulate the procedure of the Tribunal. It is impossible to read the Act " in the light " of such rules. But even if the rules are taken into account there is no inconsistency.

    15. Bearing in mind that the rules in question merely regulate the procedure, they cannot override the statute. If the Tribunal had not framed Rules 7, 8 and 36 the applicants would have had to grope in the dark about the procedure to be followed. The rules merely give the alternative modes which can be resorted to. One such mode, conceived in the interest of the appellants or applicants, as the case may be, is that they can send the memorandum of appeal or the application by post. There is, however, a clear warning in Sub-rule (2) that in case the post is chosen as the venue the "presentation " shall be on the day the appeal reaches and in the case of an application the Tribunal shall be deemed " to be required " (using the phraseology of the Act) only when the application " reaches " the Tribunal. There is no warrant whatever for omitting Sub-rule (2) in this context, particularly when Rule 36 makes no such exception.

    16. An argument from analogy is apt to be misleading. The learned Chief Justice in applying the analogy of contracts has obviously in mind the decision of the Court of Appeal in Household Fire Insurance Company v. Grant (1879) 4 Ex. D. 216. That decision itself was not unanimous and was in conflict with several earlier decisions. What may be found to be convenient in the domain of contracts, regard being had to mercantile usage, is not necessarily of consequence in other spheres. I entirely agree with the learned Chief Justice that cases of hardship may arise, but equally there may be cases in which as in the Orissa case where the letter was posted on the 60th day or here where the letter was posted on the 59th day) the conduct of the applicants may be far from diligent. Letters have been known to be delayed for months in the post. In the Court of Appeal case the letter never, reached Grant and yet the contract was held to be complete. 'If the analogy is carried further, an applicant can prove after years that he had made an application and can claim redress even though the application never reached the Tribunal. Why such a case should be distinguished from those cases in which the letter is merely delayed is not, clear, and in principle it cannot be. The answer to such problems is to treat the entire rule (Rule 7) as applicable to applications and to apply the limitation contained in Section 66 (1), which as I have shown applies. In my opinion even the Tribunal cannot by rules extend the 1 period, and the remedy is only with the legislature, as was pointed out by Chagla, C.J., in the Bombay case referred to above. I agree with Chagla, C.J., that some amendment is absolutely necessary, but 1 till that is done Courts must give effect to the law as it stands.

    17. Beneficial construction has its own limitation. An argumentum ab inconvenienti is only to be resorted to when the law is ambiguous. Otherwise, as was stated by Bobde, J., in this Court in Gulabsingh v. Nathu (1944) I.L.R. 1944 Nag. 419, 421:

    "Courts have not been given power to devise their own technique for saving claims from the bar which the Statutes of Limitation create."

    18. This also follows from the observations of their Lordships of the Privy Council in General Accident Fire and Life Assurance Corporation Ltd. v. Janmahomed (1941) I.L.R. 1941 Bom. 202, 208 P.C. and Maqbul Ahmad v. Pratab Narain Singh (1935) I.L.R. 57 All. 242, 250 P.C.

    19. I would, therefore, dismiss this application without notice to the other side.

    Kaushalendra Rao, J.

    20. I agree.

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    Comments

    Commissioner Of Income Tax, C.P. ... v. Commissioner Of Income Tax, C P
    (Feb 24, 1950)