Commissioner Of Income-Tax, Calcutta v. Bidhu Bhusan Sarcar (Deceased).

The Judgment of the Court was delivered by

Bose, C.J:— This is an application for a certificate under section 66A(2) of the Indian Income-tax Act read with article 135 of the Constitution in respect of a decision of a Divsion Bench of this court dated the 10th January, 1962, by which certain questions of law were answered in favour of the assessee in a reference under section 66(1) of the Indian Income-tax Act.

2. Bidhu Bhusan Sarcar, since deceased, used to be assessed in respect of his income in the district of 24-Parganas. On 22nd December, 1947, he filed a voluntary return before the Income-tax Officer, District 24-Parganas, in respect of the assessment year 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 Income-tax Officer, District I(2), Calcutta, with the result that the file of the assessee was transferred to the Income-tax Officer, District I(2), and it came within the jurisdiction of the Eighth Additional Income-tax Officer, District I(2). On 16th January, 1949, the Eighth Additional Income-tax Officer, District I(2), took action under section 34 of the Indian Income-tax Act presumably because he considered that the voluntary return filed on 22nd December, 1947, was invalid and could not be acted upon. The notice under section 34 was issued on 23rd February, 1950, but as no return was filed in response to the notice even up to 15th January, 1952, the Eighth Additional Income-tax Officer issued a notice under section 22(4) of the Indian Income-tax Act. It appears that prior to this on 31st March, 1949, the assessee filed another voluntary return for the assessment year 1947-48 to the Income-tax Officer, District I(2), declaring a loss of Rs. 11,33,940. In August, 1950, the Income-tax Officer, District I(2), acting on this voluntary return dated 31st March, 1949, issued a notice under section 23(2) of the Act. On 4th February, 1952, the Eighth Additional Income-tax Officer, District I(2), passed an order filing the case as there was already another file of the assessee in the same district. On 12th February, 1952, the Income-tax Officer, District I(2), cancelled the proceeding in respect of voluntary return dated the 31st March, 1949, on the view that a voluntary return of loss was not valid and he, thereafter, took action under section 34 and issued a notice under that section on 12/14th February, 1952. This proceeding resulted in an assessment under section 23(4)/34 on 31st January, 1953. Against this order of assessment the assessee filed an appeal before the Appellate Assistant Commissioner. In appeal it was pointed out by the Income-tax Officer that he had no jurisdiction over the assessee as there was already a file with the Eighth Additional Income-tax Officer. The Appellate Assistant Commissioner by an order dated the 27th December, 1955, set aside the assessment made on 31st January, 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 Appellate Assistant Commissioner, the assessee went up on appeal before the Appellate Tribunal. The grievance of the assessee before the Appellate Tribunal was that the Appellate Assistant Commissioner should have annulled the assessment without giving a direction for making a fresh assessment. The Tribunal accepted this contention and by its order dated the 23rd April, 1957, cancelled the assessment. In the meantime, on 30th December, 1955, the Commissioner of Income-tax passed an order under section 5(7A) of the Income-tax Act transferring the case of the assessee from the Eighth Additional income-tax Officer to the Income-tax Officer, District I(2), and thereafter the Income-tax Officer, District I(2), issued a fresh notice under section 34 of the Income-tax Act dated 11th February, 1956, and on 2nd May, 1956, he made an assessment under section 23(4)/34 of the Income-tax Act. The assessee took an appeal against this assessment order to the Appellate Assistant Commissioner. The contention raised before him was that the Eighth Additional Income-tax Officer had jurisdiction when he issued notice on 23rd February, 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 dated the 23rd February, 1950, should have been completed on or before 31st March, 1952, or 31st March, 1956, as the case fell within the purview of section 34(1)(a) or section 34(1)(b). Another contention which was pressed before the Appellate Assistant Commissioner was that the proceeding which was started pursuant to notice under section 34 dated the 23rd February, 1950, had not lapsed but remained alive at the time when the Commissioner of Income-tax by the issue of a special notification had transferred the file of the assessee to the Income-tax Officer, District I(2). The Appellate Assistant Commissioner accepted the contention of the assessee and held that the notice dated 11th February, 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 Appellate Assistant Commissioner, the Income-tax Officer filed an appeal before the Appellate Tribunal and contended that there is no bar under the law against the issue of more than one valid notice under section 34 and as the assessment dated the 2nd May, 1956, was actually completed within one year from the date of the issue of the notice dated the 11th February, 1956, the assessment was within time. The Appellate Tribunal came to the conclusion that the proceeding started by the Eighth Additional Income-tax Officer on the basis of the notice dated the 23rd February, 1950, having been directed to be “filed” was no longer a live proceeding and could not be continued by the principal Income-tax Officer and no valid assessment could be made in respect thereof. In this view of the matter the Tribunal allowed the appeal of the income-tax department and restored the order of the Income-tax Officer, District I(2). The assessee thereupon made an application to the Tribunal for a reference and the Tribunal referred the following questions of law to the High Court:

“1. Were the notice under section 34 issued by the principal Income-tax Officer on 11th February, 1956, and the assessment raised in pursuance thereof valid in law in view of the fact that the proceedings commenced by the Eighth Additional Income-tax Officer under section 34 on the basis of notice dated 23rd February, 1950, were filed?

2. Whether on the facts and circumstances of the case the assessment dated the 2nd May, 1956, made by the principal Income-tax Officer, District I(2), was barred by time?”

3. 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 January, 19621, the questions were answered in favour of the assessee. The Division Bench held that the notice dated 23rd February, 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. 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 Income-tax Act, 1922, that the “filing” of the case amounted to a termination of the proceeding which had been initiated by the Eighth Additional Income-tax Officer with the notice under section 34 dated the 23rd February, 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 section 34 issued on 11th February, 1956, by the Income-tax Officer, 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 assessment had not become barred by limitation. Reference was also made before us to Brindaban Chandra Basak v. Income-tax Officer and Belland v. Smt. Banarsi Debi [1962] 46 I.T.R 28. 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.

4. 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 article 135 of the Constitution cannot be invoked in the facts and circumstances of this case. Article 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 article 133 or article 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.”

5. It is well-known that by the insertion of section 66A(2) by the Income-tax (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 section 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).

6. 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 section 66A(2) of the Indian Income-tax Act. It will thus appear that in the present case the provisions of article 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 section 66 of the Indian Income-tax Act. Some of the relevant cases which have a bearing on this point have been considered by me in the case of Kallu Babu Lalchand v. Commissioner of Income-tax but in that case it was held by this court that article 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 section 66(2) of the Indian Income-tax Act for calling upon the Income-tax Appellate Tribunal to state a case and refer certain questions of law to the High Court.

7. The next objection which has been raised as to the maintainability of that application is that the provisions of section 66A(2) of the Indian Income-tax 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 proceeding on reference came to an end on January 10, 1962, but the Indian Income-tax Act, 1922, which contained the provisions for appeal embodied in section 66A(2) was repealed by section 297(1) of the Income-tax Act, 1961 (Act No. 43 of 1961) which came into force on the 1st April, 1962. It is submitted that section 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-section (2) of section 297 of the new Act. Reference is made to clause (c) of sub-section (2) which is as follows:

“Any proceeding pending on the commencement of this Act before any income-tax authority, the Appellate 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.”

8. It is argued that what is saved by sub-section (2) of section 297 from the effect of the repeal of the entire Act, is the pending proceeding at the time of the commencement of the new Act before the authorities or court mentioned in clause (c), but no such proceeding as is specified in clause (c) was pending in the present case and the fact that this clause and the other clauses in sub-section (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 section 6 of the General Clauses Act is excluded by reason of the different intention as appearing in the various clauses of subsection (2) of section 297 of the new Act. The attention of the court was drawn to a decision of the Orissa High Court in Chakoo Bhai Ghelabhai v. State of Orissa, where it was observed by Panigrahi C.J as follows:

“The ordinary rule is that section 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.”

9. It 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-section (2) of section 297 in my view do indicate a different intention as contemplated by section 6 of the General Clauses Act and ousts the operation of the general provisions contained in section 6, with the result that section 66A(2) which was completely obliterated by reason of the provision for repeal contained in sub-section (1) of section 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 section 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 August, 1962, which is known as the Income-tax (Removal of Difficulties) Order, 1962, and clauses 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 Income-tax 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 proceeding instituted under the repealing Act after the 31st day of 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 proceeding so disposed of shall be instituted and disposed of as if the repealing Act had not been passed.”

10. Sub-clause (1) of clause 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 Income-tax Act, 1922, has to be instituted and disposed of as if the repealing Act, that is, the Income-tax Act of 1961, had not been passed. In other words, the order which was made by the Division Bench on reference under section 66 of the Indian Income-tax 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 section 66A(2) of the Indian Income-tax Act, 1922. In respect of such matter, the provisions of section 261 of the new Act of 1961 are not attracted. Section 261 of the Income-tax 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 section 256 in any case which the High Court certifies to be a fit one for appeal to the Supreme Court.”

11. It is to be noted that the judgment delivered by the Division Bench in the present case on 10 th January, 1962, was one which was delivered under the provisions of section 66 of the repealed Act of 1922, and not under section 256 of the new Act of 1961 which came into force from the 1st of April, 1962. So if there had been no provision like sub-clause (1) of clause 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 section 66A(2) of the repealed Act of 1922 or under the provisions of section 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 section 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 section 298 of the Income-tax 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 section 66A(2) of the Indian Income-tax Act are not available to the petitioner.

12. The only other objection which was raised as to the competency of the application is the question of limitation. It was argued that article 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 of Patiala Cement Co. Ltd. v. Commissioner of Income-tax. 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 January, 1962, and on 12th January, 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 and it was on the 30th July, 1962, that the petitioners' solicitor succeeded in obtaining the certified copy of the judgment from the office of this court. This court closed for the long vacation from the 28th September, 1962, and reopened on the 19th November, 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 law and the objection of the respondent based on this ground must be overruled. That this is the correct legal position is made clear by the decision of this court in Commissioner of Income-tax v. Shah Wallace & Co. 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 article 179 rather than by article 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 section 12, a party in a case such as this is entitled to the time required to obtain a copy of the judgment. Nothing the Commissioner could have done would have given him a copy of the judgment sooner than he got it, namely, on the 26th of January, 1931. I am not of opinion, therefore, that the application is out of time.”

13. 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 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 clause (c) of section 109 of the Civil Procedure Code and which comes under clause (2) of section 66A of the Income-tax Act.”

14. In my view, for the reasons given above, this application must succeed. Let a certificate under section 66A(2) of the Indian Income-tax, 1922, read with article 135 of the Constitution be drawn up and issued. Costs of this application will be costs in the Supreme Court appeal.

Mookerjee, J.:— I agree.