P L D 1962 (W (PLP)

ANWARUL HAQ, J.‑This order will dispose of Civil References No. 222 of 1958 and Nos. 149 and 150 of 1959. The applicant in the last two references, namely, Abdul Ghafoor is the father while the applicant in the first one is his son Abdul Ghani carrying on business under the name and style of Messrs Abdul Ghani‑Abdul Ghafoor & Brothers. The questions raised by the father and son are not the same but they arise out of facts which are inter‑connected, and can, therefore, be conveniently considered together.

2. Reference No. 222 of 1958, is under section 66 (2) of the Income‑tax Act of 1922 and has been submitted by the Income‑tax Appellate Tribunal in pursuance of directions given by a Division Bench of this Court (S. A. Rahman, C. J. and Wahiduddin Ahmad, J.) on 10‑2‑

58. The other two references, although described as such by the Office, are in fact applications by Abdul Ghafoor under section 66 (2) requesting this Court to require the Appellate Tribunal to state the case and to refer it to the High Court.

3. It appears that the father Abdul Ghafoor was originally carrying on business at Bombay. Towards the close of 1947 he decided to shift to Karachi, and with this end in view he installed his son Abdul Ghani at Karachi under the business name of Messrs Abdul Ghani‑Abdul Ghafoor & Bros., for wholesale transactions in cloth. The cloth was brought from Bombay and sold in Karachi. Abdul Ghafoor himself visited Karachi in November 1947 and then returned to Bombay to wind up his business there. The first person to be assessed to income‑tax in Pakistan was the son Abdul Ghani. In response to a notice issued under section 22 (2) of the Income‑tax Act he disclosed a gross profit rate of 23% on a total turn over of Rs. 21,34,592 in respect of the import of artificial silk, parachute cloth etc., from India, during the assessment year 1949‑

50. The Income‑tax officer found the accounts of Abdul Ghani's firm to be wholly undependable and he considered the margin of profit to be "ridiculously low", having regard to the market conditions in the relevant account year (that is the calendar year 1948) when cloth was not generally available in the market. The Income‑tax Officer, by his order dated 31‑1‑51, estimated the sales at Rs. 23,00,000, the gross profit at 1G% and the net income at Rs.2,05,433, Abdul Ghani appealed to the Appellate Assistant Commissioner of Income‑tax, who agreed generally with the conclusions arrived at by the Income‑tax Officer but directed the latter "to re‑examine the accounts and make a fresh assessment according to law", as it appeared to the learned Appellate Assistant Commissioner that the question still remained to be decided whether "the sales as per accounts now declared to be Rs. 18,33,587 could be accepted". The assessment made by the Income‑tax Officer was set aside.

4. Both the assessee and the Department felt aggrieved by the decision of the Appellate Assistant Commissioner, and appealed to the Income‑tax Appellate Tribunal. The assessee's appeal was dismissed as barred by time whereas the Department's appeal was allowed. The Tribunal made their own estimate of the sales and fixed the turnover at Rs. 22,25,000 in round figures. They accepted the profit rate of 10%, as fixed by the Income‑tax Officer.

5. Abdul Ghani then filed an application under section 66 (1) of the Income‑tax Act requiring the Tribunal to refer to the High Court the following two questions of law: (1) Was the Bench legally correct in deciding the case on merits when it allowed the Department's appeal ? (2) Whether in the circumstances of the case when the applicant was not afforded full opportunity under section 23 (2) of the Income‑tax Act, the order of the Bench is a legal order ?

6. This application was refused by the Tribunal by its order dated 9‑2‑

54. Apart from its rejection on merits, the Tribunal also took note of the fact that the application was barred by 17 days. Against this order the assessee filed an application in the High Court under section 66 (2) which was numbered as Civil Reference No. 38 of 1955. While accepting this application and directing the Appellate Tribunal to make a reference to the High Court on the two law points already mentioned, the learned Judges added a third question regarding limitation which has been formulated as follows in the referring order of the Tribunal dated the 17th of April 1958: "(3) Was the Tribunal correct in holding that the application for reference made under section 66 (1) of the Act was barred by limitation."

7. During the examination of the account books of the firm Abdul Ghani‑Abdul Ghafoor, the Income‑tax Officer noticed that the firm had shown heavy purchases to the tune of several lacs from Seth Abdul Ghafoor (sic) Suleman that is Abdul Ghani's father. A notice under section 22 (2) of the Income‑tax Act was accordingly issued to Abdul Ghafoor Suleman in June 1950, and investigation of the case undertaken. On 30th December 1950, Abdul Ghafoor voluntarily filed an income return for the assessment year 1949‑50, declaring an income of Rs. 50,

000. He did not produce any account books on the plea that none had been maintained. He, however, produced his bank pass books. Along with this voluntary return of income he sent a letter mentioning that for the first time he came to Karachi by the end of November 1947, along with his son Abdul Ghani, that Iris son started the business of Abdul Ghani‑Abdul Ghafoor at Karachi on 8‑12‑47, that he himself went back to Bombay in January 1948, to wind up his business and then he transferred his capital to Pakistan 1n the shape of hard cash, parachute cloth and other textile goods. The letter ended up by saying that all the goods were sold through Abdul Ghani‑Abdul Ghafoor.

8. The Income‑tax Officer found that Abdul Ghafoor Suleman had sold his goods at Karachi to various parties including his son's firm Abdul Ghani‑Abdul Ghafoor. The sales to the son's firm were found to be as follows: Upto the period 31‑3‑48 Rs. 9,48,791 From 1‑4‑48 to 31‑12‑48 Rs. 11,32,358 ... During the latter period the Income‑tax Officer added an additional turnover to, the extent of Rs. 10,02,548 on the basis of Abdul Ghafoor's bank deposits etc., Abdul Ghafoor was finally assessed by the Income‑tax Officer at the following turnovers for the two account years in question 1948‑49 Rs. 10,00,000. 1949‑50 Rs. 21,50,

000. The gross profit rate was fixed at 10 per cent.

9. Abdul Ghafoor Suleman went up in appeal to the Appellate Assistant Commissioner who set aside the assessment and remanded the case. Both the assessee and the Department then appealed to the Income‑tax Appellate Tribunal, which set aside the order of the Appellate Assistant Commissioner and directed him to rehear the parties. At the rehearing the assessee's appeal was rejected by the Appellate Assistant Commissioner. Abdul Ghafoor then filed separate appeals before the Income‑tax Appellate Tribunal for the charge years 1948‑49, 1949‑50 and 1950‑51, which were disposed of by the Tribunal on 2‑8‑

57. The appeal for the assessment year 1950‑51, was dismissed, and nothing more needs be said about it as it is not the subject‑matter of the present application before us. The appeals for the other two years were partly accepted inasmuch as the gross profit rate was reduced by the Tribunal to 7 % for 1948‑49 and to 5% for 1949‑50, as against the rate of 10% estimated by the Income‑tax Officer. The Tribunal refused to accept the contention of Abdul Ghafoor that the sale of cloth to his son Abdul Ghani had taken place at Bombay and not at Karachi.

10. Abdul Ghafoor then made two separate applications under section 66 (1) of the Income‑tax Act relating to the two assessment years in question, viz., 1948‑49 and 1949‑50, requiring the Income‑tax Appellate Tribunal to state the case and refer certain questions of law to the High Court. Both these applica tions were refused by the Tribunal by its order dated 3‑12‑

58. Now, by means of applications numbered Civil References 149 and 150 of 1959, Abdul Ghafoor Suleman has requested this Court to require the Tribunal to state the case under section 66 (2) of the Income‑tax Act and refer certain questions of law to this Court for opinion. In the original application made under section 66 (1) for 1948‑49, nine questions were formulated by the assessee, whereas in the application for the year 1949‑50, eight questions were indicated. At the time of hearing before the Appellate Tribunal, the late Mr. Chundrigar, who appeared for the assessee, gave up certain questions and modified others, with the result that the following five questions were considered by the Tribunal: (1) Whether on the facts found in this case the sales took place at Bombay or at Karachi ? (2) Whether an adverse inference could be drawn from the non‑production of accounts including bills of entry ? (3) The son of the applicant having been assessed on profits alleged to be arising from these very goods as having been imported by the son, whether the father could also be assessed with respect to the same income ? (4) Whether it was correct to treat the whole of the bank deposit as sales over and above those made to Abdul Ghani, the assessee's son ? and (5) Whether it was right to treat Rs. 2,50,000 as not being capital introduced by Abdul Ghafoor Suleman ?

11. In the applications made before us the request was for a consideration of all these five questions, but Mr. A. S. Pirzada, the learned counsel appearing for the applicant, has given up the last two questions and has confined his submissions to only the first three.

12. At the outset Mr. Pirzada, the learned Advocate for the petitioners, made two preliminary prayers. Firstly, with regard to Civil Reference No. 222 of 1958, (i.e. Abdul Ghani's case), he requested that a further question, on the lines of question No. 3 in Abdul Ghafoor's case, regarding double taxation of the same income in the hands of the father and the son, should be added. He contended that this question arose directly out of the facts which were common to both the assessments. He suggested that the case might be sent back to the Income‑tax Appellate Tribunal under subsection (4) of section 66 of the Income‑tax Act, and the Tribunal required to make suitable additions to the statement of the case, pertaining to the further question now indicated.

13. Secondly, with regard to the two applications of the father Abdul Ghafoor (vie. Civil References 149 and 150 of 1959) Mr. Pirzada prayed that question No. 2 be amplified. It will be recalled that this question, as pressed before the Appellate Tribunal and as stated for our consideration, is in the following words: "Whether the adverse inference could be drawn from the non‑production of accounts including bills of entry." Mr. Pirzada pointed out that the question, as it now stood, was neither comprehensive nor of any practical value to the assessee. He, therefore, asked us to amplify the question so as to include the first part thereof which was given up by the late Mr. Chundrigar at the time of the hearing of the application under section 66 (1) of the Income‑tax Act by the Appellate Tribunal. If this request is granted, the question would read as follows: "Whether the production of unimpeachable documents like bills of entry can be refused, and in spite of this refusal can a presumption be raised against the assessee for their non -production ?"

14. Both these prayers have been straneously opposed by Mr. Aziz, the learned counsel appearing for the Income‑tax Department. They raise important questions regarding the entire scope of section 66 of the Income‑tax Act, and of the powers conferred by that section on the High Court.

15. Section 66 of the Income‑tax Act is to the following effect: "66. (1) Within sixty days of the date upon which he is served with notice of an order under subsection (4) of section 33 the assessee or the Commissioner may, by application in the prescribed form, accompanied where application is made by the assessee by a fee of one hundred rupees, 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: Provided that, if, in the exercise of its powers under subsection (2), the Appellate Tribunal refuses to state a case 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 the refusal to state the case, withdraw his application and, if he does so, the fee paid shall be refunded. (2) If on any application being made under subsection (I) 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 be is served with notice of the refusal, apply to the High Court, and the High Court may, if it is not satisfied of 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 state the case and refer it accordingly. (3) If on any application being made under subsection (1) the Appellate Tribunal rejects it on the ground that it is time barred, the assessee or the Commissioner, as the case may be, may, within two months from the date on which he is served with notice of the rejection, apply to the High Court, and the High Court, if it is not satisfied of the correctness of the Appellate Tribunal's decision, may require the Appellate Tribunal to treat the application as made within the time allowed under subsection (1). (4) If the High Court is not satisfied that the statements in a case referred under this section are sufficient to enable it to determine the question raised thereby, the Court may refer the case back to the Appellate Tribunal to make such additions thereto or alterations therein as the Court may direct in that behalf. (5) The High Court upon the hearing of any such case shall decide the questions of law raised thereby and shall deliver its judgment thereon containing the grounds on which such decision is founded and shall send a copy of such judgment 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. (6) Where a reference is made to the High Court the costs shall be in the discretion of the Court. (7) Notwithstanding that a reference has been made under this section to the High Court, income‑tax shall be payable in accordance with the assessment made in the case Provided that, if the amount of an assessment is reduced as a result of such reference, the amount overpaid shall be refunded with such interest as the Commissioner may allow unless the High Court, on intimation given by the Commissioner within thirty days of the receipt of the result of such reference that he intends to ask for leave to appeal to the Supreme Court, makes an order authorising the Commissioner to postpone payment of such refund until the disposal of the appeal to the Supreme Court. (7‑A) Section 5 of the Limitation Act, 1908, shall apply to an application to the High Court under subsection (1) or subsection (2) or subsection (3)".

16. It will be seen that subsection (1) of section 66 con templates two essential conditions before a case can be referred to the High Court viz.: (a) a question of law should arise, and (b) it should arise out of the appellate order of the Income- tax Appellate Tribunal, passed under section 33 (4) of the Act. It is not necessary to say anything more at this stage about the first requirement, but about the second it must be said that it is not any question of law which may arise out of the case as such that can be required to be referred to the High Court. It must be a question which has been raised before, or con sidered by, the Tribunal. An authority on the subject one may refer to R. S. Munshi Gulab Singh & Sons v. Commissioner of Income‑tax, Punjab (P L D 1950 Lah. 476), Commissioner of Income‑tax v. Sind Light Fly. Co., Ltd. (A I R 1932 Sind 189), Anant Ram Kanhaitalal v. Commissioner of Income‑tax, U. P. ((1957) 32 I T R 75), G. M. Chennn Basappa v. Commissioner of Income‑tax, Hyderabad ((1958) 34 I T R 576), B. Guha & Co. v. Commissioner of Income‑tax, Delhi ((1958) 34 I T R 873), Jamna Dhar Potdar & Co., Lyallpur v. Commissioner of Income‑tax, Punjab (A I R 1935 Lah. 201) and Commissioner of Income‑tax, New Delhi v. Basumal Jagat Narain ((1960) 38 I T R 447).

17. It is the general practice for an assessee making an application under section 66 (1) to formulate the particular question or questions of law which he wishes to be referred to the High Court. It is true that this practice has developed more as a rule of convenience than as a rule of law, but ever, if the assessee was under no legal obligation to state the precise question of law on which he desires a reference. It will be his duty to indicate, as best as he can, the points which he wishes to agitate. The phrase "any question of law" appearing in subsection (1) cannot be interpreted to mean all questions of law" which may theoretically arise out of the appellate order of the Tribunal. It seems to us that the subsection does not contemplate that the assessee is only to make a vague applica tion to the Tribunal requesting it to refer to the High Court any or all questions of law that may arise out of its order. The assessee is the aggrieved party and it would be a reasonable inter pretation of the subsection to assume, if not to insist, that the assessee would indicate the points of law which he wishes to be referred to the High Court.

18. The next step is contemplated by this subsection is that the Appellate Tribunal shall within 90 days of the receipt of the assessee's application draw up a statement of the case and refer it to the High Court. It is clear that at the time of deciding whether or not a question of law arises and whether a reference should or should not be made to the High Court, the Appellate Tribunal shall not only consider the precise questions which may be formulated by an assessee, but also those which may appear to arise on the submissions made by the assessee in his application. In other words the position seems to emerge clearly that the questions of law which the assessee desires to be referred to the High Court must either be formulated by him at the time of making his application, or must be such as arise on the submissions made In his application, subject, of course, to the overriding condition mentioned earlier, viz., that they must arise out of the appellate order of the Tribunal.

19. If the Tribunal refuses to state the case on the ground that no question of law arises, the remedy of the assessee then lies in subsection (2) of section 66 to apply to the High Court. The High Court will act only "if it is not satisfied of the correctness of the decision of the Appellate Tribunal." Now, what is meant by the words "the decision of the Appellate Tribunal" as used in this subsection ? The learned counsel have referred to several decided cases to elucidate the meaning of this subsection. These authorities may briefly be noticed here with advantage. It may be stated that the subsections of section 66 were re‑numbered by the Indian Income‑tax (Amendment) Act, 1939 (VII of 1939), with the result that In the earlier cases wherever subsections (2) and (3) are mentioned, they are to be regarded as equivalent to the present subsections (1) and (2) respectively.

20. Mr. Pirzada, the learned counsel for the two petitioners before us, relied strongly on Narayan Atmaram Patkar v. Commissioner of Income‑tax, Bombay (A I R 1934 Bom. 378) and Vadilal Lullabhai Mehta v. Commissioner of Income‑tax, Bombay (A I R 1935 Bom. 170). In the first mentioned case their Lordships observed as follows: "The proper course for the parties to adopt, when they desire the Commissioner to refer a question of law to the Court, is to formulate the question which they desire to have so referred. It is clearly open to the High Court on an application under subsection (3), section 66 to direct the Commissioner to refer soma question other than that which the parties have formulated. But generally, the Court should be slow to go outside the question which the parties have themselves asked the Commissioner to state."

21. The same points arose for consideration in the second case relied on by Mr. Pirzada and one of the Judges comprising the Bench of the High Court was the same, namely, Beaumont, C. J. In the earlier case there was hardly any discussion of the questions involved, but in the 1935 case the matter ‑was discussed somewhat elaborately and the following conclusions were drawn: "Under section 66 (2) the assessee is not required to formulate precise questions of law, a task which few laymen are competent to perform. What he has to do within the required time, is to require the Commissioner to refer to the High Court any question of law arising out of the order or decision of the Assistant Commissioner, and then the Commissioner, has within 60 days, to draw up a statement of the case, and refer it, with his own opinion thereon, to the High Court. The High Court has power under subsection (3), section 66 to direct the Commissioner to state a case raising questions of law which have not been formulated before him. That an assessee requiring the Commissioner to refer questions of law to the Court ought to formulate those questions, is a rule of practice based on considerations of convenience, and designed to protect the Court from unnecessary applications under subsection (3) ; but the Commissioner is not bound to refer only the questions so formulated. When the Commissioner refuses to state a case under subsection (2) on the ground that no point of law arises, the High Court under subsection (3), if not satisfied with the correctness of the Commissioner's view, can require the Commissioner to state the case that is the case which he ought to have stated under subsection (2), and to refer the case to the Court. If the High Court thinks that questions of law arise, it ought to indicate to the Commissioner what those questions are, though the actual framing of the questions rests with the Commissioner. But the High Court under subsection (3) is no more limited than was the Commissioner under subsection (2) to the precise questions formulated by the assessee. " 22. r. Pirzada also referred us to the order of a Divisional Bench of this Court in Civil Reference No. 38 of 1955, thal is the case of Abdul Ghani, requiring the Appellate Tribunal to make a reference under section 66 (2) of the Act In the case the learned Judges added a third question regarding limita tion although this question was not formulated by the assessee. It will be seen, however, that in the order of the Tribunal refusing to state the case under section 66 (1), the question of limitation is discussed at some length and having held the application to be time‑barred, the Appellate Tribunal proceeded to consider the same on merits. In that case, therefore, it could be said that the question of limitation was before the Appellate Tribunal when it considered the matter under sub section (1) of section 66, and there was also a decision on it by the Tribunal.

23. The view taken by the Bombay High Court in the two cases cited by Mr. Pirzada is opposed to that adopted in several other authorities. For example, In the Commissioner of Income‑tax, Burmah v. C. P. L. E. Chettiar Firm ((1934) 11 I T R 201), Page C. J. observed that: "The High Court has no jurisdiction, on an application by an assessee under subsection (3) of section 66 of the Income -tax Act, to order the Commissioner of Income‑tax to state a case and refer any question of law for consideration by the High Court which the assessee has not duly required the Commissioner to refer under subsection (2) of the said section." In the body of judgment the learned Chief Justice drew attention to the following observations of Lord Blanesburgh when delivering the opinion of the Privy Council in Trustees Corporation (India) Ltd. v. Commissioner of Income‑tax, Bombay Presidency (A I R 1930 P C 151): "Their Lordships are fully alive to the circumstances in which the High Court was constrained to direct that these further questions should be referred to it for consideration and the result in the present case of the order then made merely serves to confirm the view of the Board that the High Court will, in future cases, be well advised to require before they seek to entertain any question under section 66, Income‑tax Act, that the preliminary requirements of the section are strictly complied with. The stringency of these requirements is clearly deliberate. It is the intention of the enactment that the High Court is not to be flooded with such applications. The objection is salutary and in their Lordships' judgment the High Court will be well advised, before they entertain any question under the section, always to see that the preliminary statutory conditions have been fully observed."

24. Again In Noperam Gopal v. Commissioner of Income‑tax, Bihar & Orissa (1942 10 I T R (Pat.) 288), their Lordships of the Patna High Court expressed the following view: "The jurisdiction of the High Court in income‑tax matters is very limited. The Court can call upon the Commissioner under section 66 (3) of the Act to state a case upon a particular question if the latter has refused to do so. But if he has not been called upon to state a case on a particular question and he has not refused to do so, the High Court cannot call upon him to state a case."

25. With the greatest respect to the learned Judges of the Bombay High Court who decided the cases cited as A I R 1934 Bom. 378 and A I R 1935 Bom. 170, we are unable to accept their conclusions which, if we may say so, do not appear to be based on a consideration of the language of the law, but rather on general considerations. We find ourselves in respectful agreement with the views expressed by the Rangoon and the Patna High Courts. In our view the "decision" referred to in the subsection is the decision of the Tribunal refusing to state the case on the ground that no question of law arises. The word "decision" occurring in subsection (2) does not refer to the appellate order of the Tribunal but to its order on the appli cation presented to it under subsection (1) of this section. The High Court will act only if it finds that the decision of the Appellate Tribunal given under subsection (1) is not correct. In other words, it seems to be a condition precedent for the exercise of the jurisdiction of the High Court that there should be in existence a decision of the Tribunal on an application made to it. If a particular question is not raised before the Tribunal in an application presented under subsection (1) of section 66 and the Tribunal has not had an opportunity of expressing Its opinion on that question, it cannot be said that there Is a decision of the Tribunal, the correctness of which Is to be judged by the High Court, acting on an application under subsection (2) of the section. It follows, therefore, that if a question of law is not raised by an assessee, nor does it appear to arise from the sub missions made by him, when applying under subsection (1) of section 66, then that question does not come within the purview of subsection (2) of section

66. To put it in different words, the language used in subsection (2) makes It clear that the High Court, acting under subsection (2) of section 66, has no juris diction to entertain an application on a question which was not raised under subsection (1) of section 66, for the reason that there is, in respect of such a question, no decision of the Appellate Tribunal with regard to which the High Court may hold that it is not satisfied of its correctness. The same remarks would apply to a question which may have been initially under subsection (1) but not pressed before the Tribunal.

26. Subsection (3) deals only with the procedure for referring to the High Court the sole question of limitation, and does not appear to present any difficulty in the matter of Interpretation.

27. The only other subsection of section 66 which needs to be noticed in the present case is subsection (4) which has been invoked by Mr. Pirzada for making a back reference to the Appel late Tribunal In the case of Abdul Ghani, so as to state additional facts with regard to the double taxation of the same income. It seems to us that subsection (4) does not lend itself to the inter pretation sought to be put upon it by Mr. Pirzada. This provision is clearly intended to obtain an addition or alteration in the statement of the case made earlier by the Appellate Tribunal, if the High Court is not satisfied that the statement Is sufficient to determine the question raised thereby. The questions which require determination are those which have already been settled with reference to subsection (1), (2) or (3) of the section, and subsection (4) does not contemplate the Inclusion of any new question in the statement of case, nor of the inclusion of such additional facts which would give rise to a new question of law. The additions or alterations contemplated by this subsection are those which are directly relevant to the determination of the questions already raised on the case under the preceding subsections.

28. We are now in a position to deal with the two preli minary prayers made on behalf of the petitioners. It will be seen that in the case of Abdul Ghani the question of double taxation was never raised before any of the Income‑tax authorities including the Appellate Tribunal. On the view which we take of the scope and application of subsection (4) of section 66, it Is clear to us that the additional question regarding double taxation of the same income in the hands of the father and the son cannot nova be smuggled into the case by adopting the device of making a back reference to the Appellate Tribunal for the ostensible purpose of obtaining an additional statement of the case. This is a completely new question which would also hit by the provisions of sub section (2), for the reason that there is no decision on it by the Appellate Tribunal.

29. With regard to the amplification of question No. 2 in the case of Abdul Ghafoor Suleman, the answer is again provided by subsection (2) of section

66. It is admitted that the late Mr. Chundrigar, who appeared for Abdul Ghafoor before the Appellate Tribunal, did not press the first part of the question regarding the legality or otherwise of the refusal of the Tribunal to admit in evidence documents like bills of entry etc, The result was that the Tribunal did not consider this part of` the question, nor did it give any decision thereon. The position therefore is as if this part of the question was never raised before the Tribunal in proceedings under section 66(1). This being the case, we have no jurisdiction to require a reference on this part of the question.

30. Having disposed of the preliminary requests of the learned counsel for the assessees, we may now proceed to take up the actual questions that have already been formulated in these applications. We shall first take up Abdul Ghani's case, vie. Civil Reference No. 222 of 1958.

31. The first question to be considered in this case is that of limitation. The other two questions would arise only if this question is answered in favour of the assessee.

32. The appellate order of the Tribunal was made on 23‑7‑53 and appears to have been communicated to the assessee on 17‑9‑

53. The period of 60 days allowed under subsection (1) of section 66 was to expire on the 17th of November 1953. The assessee made an application under section 66 (1) on the 16th of November 1953, that is within the period of limitation. This application was, however, found to be on a form which has been described as `obsolete' by the Appellate Tribunal. The assessee had copied out this form from the Income‑tax Manual corrected upto the 30th of August 1952 and issued by the Central Board of Revenue of the Government of Pakistan. Under subsection (1) of section 66 the application has to be in the prescribed form, and the assessee believed that the form given in the Income‑tax Manual published under official authority was the prescribed form. The Appellate Tribunal, however, observed that this particular form had been substituted by another form in 1947, and that was the truly prescribed form. The assessee was required to submit a second application, which he did on the revised form. This application was, however, submitted 17 days after the expiry of the period of limitation. Now, it seems to us that when the assessee acted on the form given in the latest Official Income‑tax Manual then available, be had a right to believe that he had submitted the application on the prescribed form. Even if the Tribunal considered it necessary to require the assessee to submit his application on the revised form, it could not amount to submitting a fresh application after the period of limitation. The application had already been submitted on the 16th of November 1953, and if through a mistake on the part of the Department itself, the correct form .was not included in the Income‑tax Manual, it could not be said for that reason that the application had not been filed at all. In any case, the requirement that the application should be filed in the prescribed form is a mere technicality which does not affect the substance of the application. The requirement appears to us to be merely procedural and directory in nature, and not of a mandatory character, so that its non‑compliance would not invalidate the application itself. It is significant that subsection (1) does not contain any penal clause in case there is any failure to comply with this requirement. The right to require a reference to the High Court is a substantive right conferred by the statute and cannot be allowed to be taken away by mere non‑compliance with a technicality. In this view we are fortified by the observations of their Lordships of the Supreme Court in Eastern Rice Syndicate v. Central Board of Revenue (P L D 1959 S C (Pak.) 364). In that case their Lordships disapproved of the action of the Central Board of Revenue in rejecting appeals on the mere ground of non‑deposit of heavy penalties as required by certain provisions in the Sea Customs Act.

33. The result is that in our view the application made by the assessee Abdul Ghani under section 66 (1) of the Income‑tax Act must he held to be within time as it was made on the 16th of November 1953 even though on a form which could not truly be described as the prescribed form. The fault, if any, lay with the Central Board of Revenue, and the rectification of the mistake cannot be treated as submission of afresh application.

34. The next question requiring consideration is: "Was the Bench legally correct in deciding the case on merits when it allowed the Department's appeal ?" The question does not appear to be very happily worded, and Mr. Aziz rightly pointed out that the Appellate Tribunal cannot but be regarded to have acted legally when it decided the petitioners' case on merits. It seems, however, that the Intention behind the question is to challenge the jurisdiction of the Appellate Tribunal in the matter of making the assessment itself when the appeal before it was directed only against a remand order passed by the Assistant Commissioner.

35. The powers of the Appellate Tribunal are set out in subsection (4) of section 33 of the Income‑tax Act, which may be reproduced here for facility of reference: "(4) (a) The Appellate Tribunal shall give both parties to the appeal an opportunity of being heard. (b) If the Appellate Tribunal is not satisfied that the assess ment or order which is the subject of appeal ought to be interfered with, it shall reject the appeal and the assessment or order shall stand good. (c) If the Appellate Tribunal is satisfied that an assessment which is the subject of appeal ought to be reduced or annulled, it shall reduce or annul the assessment accordingly. (d) If the Appellate Tribunal is satisfied that an assessment which is the subject of appeal is insufficient, it shall increase the assessment accordingly. (e) If the Appellate Tribunal is satisfied that an assessment which is the subject of appeal ought to be set aside, it shall set aside the assessment and direct the Income‑tax Officer to make a fresh assessment. (f) As respects any other matter, if the Appellate Tribunal is satisfied that an order which is the subject of appeal ought to be interfered with, it shall cancel or vary the order accordingly and shall issue such consequential directions as the case may require. In the case of an order imposing a penalty the power to vary the order shall include the power to enhance the penalty. (g) The Appellate Tribunal shall communicate its order on the appeal to the assessee and to the Commissioner."

36. When the matter previously came up before this Court, on Abdul Ghani's application requesting that the Appellate Tribunal be required to state the case (that is Civil Reference No. 36/55), it appears that the parties were agreed that the only clause under which the Appellate Tribunal could have heard the appeal directed against an order of remand passed by the Appellate Assistant Commissioner, was issued (f) of subsection (4) of section 33, reproduced above. The contention of Mr. Pirzada is as follows: Under this clause the Tribunal can either cancel or vary the order under appeal, and can issue such consequential directions as the case may require. Since the order under appeal was the order of remand, the Tribunal could either set aside the order of remand or could vary it in any manner it considered appropriate, and having done so it could further Issue consequential directions with a view to securing implementation of its own order. These powers, according to Mr. Pirzada, do not, however, extend to substituting its own assessment by the Tribunal. In other words, the contention is that when the Tribunal is acting under a particular clause of subsection (4) of section 33 of the Income‑tax Act, it has no power or jurisdiction to pass an order which may be permitted under one or more of the remaining clauses of the subsection.

37. We are of the view that this is much too narrow an interpretation of the powers conferred on the Appellate Tribunal. There is no indication in subsection (4) that the different clauses thereof are mutually exclusive, and that when the Tribunal proceeds to pass an order under one, it cannot act under the other at the same time. We can envisage a case where the Tribunal may simultaneously pass orders under clauses (c), (d) and (e) with respect to the various components of an assessment. Clause (f) appears to be of a residuary nature. Under clause (b) the Tribunal can reject the appeal and the assessment or order shall stand good, under clause (c) the Tribunal can reduce or annul the assessment, under clause (d) the Tribunal can enhance the assessment, and under clause (e) the Tribunal can set aside the assessment and direct the Income‑tax Officer to make a fresh assessment. It will be seen that clauses (b), (c), (d) and (e) deal with specific situations where the assessment made by the subordinate authorities is directly under appeal, clause (f) on the other hand deals with cases which may not be covered by clauses (b), (c), (d) and (e). In such cases the Tribunal has full powers to cancel or vary the order under appeal, but if after cancelling or varying such an order the Tribunal considers that an order under any of the preceding clauses of the subsection is also indicated, we do not see any ground for holding that it cannot act for the reason that its jurisdiction must be held to have been already exhausted.

38. We think that the Tribunal rightly remarked in its order dated the 9th of February 1954, that the subject‑matter of the appeal before the Appellate Assistant Commissioner was "an assessment", and it remained the subject‑matter of the appeal before the Tribunal as well, although the order under attack in appeal was the remand order of the Appellate Assistant Commissioner. The prayer made by the Income‑tax Department in appeal was that the remand order of the Appellate Assistant Commissioner be set aside and the assessment restored. Thus, even the prayer made it clear that the assessment was the subject matter of the appeal. In fact, it does not need any argument to say that where there has been an assessment by the Income‑tax officer and the parties are agitating in respect of that assessment or of matters arising out of that assessment, the subject‑matter of appeal continues to be the assessment in question. On that view of the matter as well the Appellate Tribunal would be within its jurisdiction to act under any of the clauses of subsection (4) which deals with assessment as such.

39. In other words, the position seems to us to be that the powers conferred on the Appellate Tribunal under the various clauses of subsection (4) of section 33 of the Income‑tax Act are cumulative and not mutually exclusive. There is no legal bar in the way of the Tribunal acting simultaneously under one or more of these clauses and exercising the powers which it considers appropriate in the circumstances of the case. We are also of the view that in cases like the present, the subject matter of appeal continues to be the "assessment" irrespective of the fact that the order directly under appeal may be a remand order setting aside the assessment, or containing some other directions. The Tribunal, therefore, has the jurisdiction to not only cancel or vary an order of remand passed by the Appellate Assistant Commissioner but also at the same time to reduce or enhance or annul the assessment as contemplated by clauses (c), (d) and (e). For all these reasons our answer to the question posed here is that the Bench was legally correct in "deciding the case on` merits", that is in setting aside the order of remand passed by the Appellate Assistant Commissioner and substituting its own assessment for that arrived at by the Income‑tax Officer. There was no obligation on the Tribunal to refer the case back to the Appellate Assistant Commissioner for a rehearing.

40. The last question in Abdul Ghani's case is: "Whether, in the circumstances of the case when the applicant was not afforded full opportunity under section 23 (2) of the Income‑tax Act, the order of the Bench is a legal order ?" Now, this question again is not happily worded. While dealing with this question on the assessee's application under section 65 (1) the Appellate Tribunal observed that it did not arise out of the Tribunal's order, and no such grievance was ever made before the Tribunal or before the Appellate Assistant Commissioner. These remarks by the Tribunal show the meaning put on this question by it. Mr. Aziz, the learned counsel for the Income‑tax Department, rightly pointed out that this question did not arise out of the Tribunal's order. He also drew our attention to the fact that in the statement of the case there was no mention at all of any refusal by the authorities to allow to the assessee an opportunity under section 23 (2) of the Income‑tax Act. On these considerations, the question would seem to be irrelevant and not giving rise to any legal implications.

41. However, Mr. Pirzada, the learned counsel for the assessee, explained that the intention behind this question also was different from the one conveyed by the words used. He stated that the intention was to refer to the opportunity which the assessee would have got if the order of remand passed by the Appellate Assistant Commissioner had been allowed to stand or even if the case had been remanded back to that officer. Although, this is not apparent from the question as worded, we consider that even this contention is without substance. Once it is conceded that the Tribunal had power under clause (f) of subsection (4) of section 33 of the Income‑tax Act to cancel the order of remand, there could be no question of the assessee being given further opportunity of producing evidence before the income‑tax Officer. In our opinion, therefore, the order of the Tribunal is perfectly legal and no question of not affording full opportunity under section 23 (2) of the Income‑tax Act arises In the circumstances of the case.

42. Our opinion on the three questions referred to us in Abdul Ghani's case is, therefore, as follows: (1) The Tribunal was not correct in holding that the application for reference made under section 66 (1) of the Act was barred by limitation. (2) The Tribunal was legally correct in deciding the case on merits when it allowed the Department's appeal. (3) The question does not arise in the sense conveyed by the language used, but even otherwise the order of the Appellate Tribunal setting aside the order if remand and substituting its own assessment was legal and the question of affording further opportunity under section 23 (2) of the Income‑tax Act did not arise.

43. We may now take up the two applications of Abdul Ghafoor, namely, Civil References Nos. 149 and 150 of 1959. The first question is: "Whether on the facts found in this case the sales took place at Bombay or at Karachi ?" Prima facie this would appear to be a question of fact, but Mr. Pirzada contended that in this case a question of law arose inasmuch as the Tribunal had not correctly applied sections 19 to 24 of the Sale of Goods Act, 1930. He argued that the Income- tax authorities had wrongly considered the delivery of the goods to the buyer as being the essence of the matter.

44. It seems to us that no question of the application of section 19 to 24 of the Sale of Goods Act arises in this case, for the simple reason that the terms of the contract between the parties, that is Abdul Ghani and his father Abdul Ghafoor Suleman (which appears to be an oral one) have not been proved on the record of the case. There is no evidence as to when and where the contract was entered into and what were its terms. In order to avail himself of the principle enunciated in section 20 of the Sale of Goods Act, namely, that the property in the goods passes to the buyer when the contract is made and it Is immaterial whether the time of payment of the price or the time of delivery of the goods, or both, is postponed, it was necessary for the assessee to prove the terms of the contract. This not having been done, the Appellate Tribunal or the lower Income‑tax authorities were not in a posi tion to determine the question of the place of sale with reference to the provisions in the Sale of Goods Act. They had to rely on whatever evidence was otherwise available to them.

45. Mr. Pirzada then contended that on the facts found In this case the conclusion arrived at by the Appellate Tribunal was completely erroneous and amounted to a misreading of evidence, such as would raise a question of law. In the first place, he pointed out that the entries in the books of Abdul Ghani, crediting the goods in the name of his father Abdul Ghafoor Suleman, do not give rise to any irresistible inference that the goods continued to be the property of Abdul Ghafoor on their arrival at Karachi. He next referred to the fact that certain incidental charges were incurred at Bombay by Abdul Ghafoor but they were paid by Abdul Ghani, who had also deputed his employees to supervise the purchase of the goods at Bombay, and the payment of these incidental charges by Abdul Ghani would show tb6t the goods were purchased by him at Bombay and not at Karachi. The next fact relied upon by Mr. Pirzada was that Abdul Ghani had made remittances of money to his father at Bombay for payment of these goods which would also show that the sales took place at Bombay. Lastly, the learned counsel drew our attention to several contradictory statements appearing in the various orders of the Income‑tax authorities from which he wished to draw the conclusion that the son Abdul Ghani was all along being treated as an importer of the cloth, having purchased it at Bombay.

46. Now, it seems to us that the facts, as stated by the Income‑tax authorities in the various assessment orders, are fairly involved and contradictory statements do appear. From the order of assessment passed in the case of the son Abdul Ghani, it appears that Abdul Ghani was being treated as an importer that is as a person who had purchased the goods at Bombay and had brought them to Karachi. For instance, in the order passed by Mr. Azizullah, the Appellate Assistant Commissioner of Income‑tax on the 7th of May 1952, the following observations appear: "The position becomes distinctly worse when one takes into account the fact that purchases to the tune of over Rs. 20,00,000 were made from Bombay from the appellant's own father." Then in the order of the Income‑tax Appellate Tribunal dated the 23rd of July 1953, it is stated in paragraph 3 that: "the assessee imported artificial silk, parachute cloth etc. from India." Again in the concluding part of the same order the learned members of the Appellate Tribunal stated as follows "As regards the profit rate of 10yo we think that in the circum stances of the case it is fair. The quality of cloth dealt in and the market conditions prevailing in the relevant account year amply warrant the adoption of this rate. Cloth was scarce in the market and the dealers pounced upon this opportunity to make huge profits on sales of cloth like parachute, markin, artificial silk etc. They were imported from India in chartered planes and the Respondent's case is entirely different from wholesale dealers who purchased locally."

47. In their order refusing Abdul Ghafoor's application under section 66 (1) of the Income‑tax Act the Appellate Tribunal tried to explain aware the use of the word `importer' in their order relating to Abdul Ghani's assessment, by saying that this word was not used to carry the usual meaning of a man who purchased abroad outright with the object of bringing the goods to his country for sale on _his own responsibility. Having thus emphasised that the goods were sold by the father to the son at Karachi, they immediately proceeded to adopt a third position, viz., that the goods were sold not to the son but through the son. They stated that‑

"the goods were undoubtedly sold away at Karachi to the applicant's son, the applicant having transmitted the goods from Bombay, the son was utilised as a seller in Karachi." Again while reducing the gross rate of profit in the case of Abdul Ghafoor the Tribunal observed in their appellate order dated the 2nd of August 1957 that‑ "the transactions were wholesale and the goods were sold mainly through the assessee's son whose gross profit also has been estimated including the purchases from the father."

48. Reading through the various orders passed in the case of Abdul Ghani and that of Abdul Ghafoor, we clearly got the impression that the Income‑tax authorities were sometimes des cribing the son Abdul Ghani as an importer who purchased the goods at Bombay, while at other times they seemed to think that the goods had been brought to Karachi by Abdul Ghafoor himself and then sold through the son Abdul Ghani. While finally dealing with the case of Abdul Ghafoor the position was, however, adopted that he had sold the goods to his son Abdul Ghani at Karachi and for that reason he was assessed on the sale proceeds at Karachi. It would have been better if there had been a consistency in the findings recorded by the income‑tax authorities in the two cases. But having said that, we are still not persuaded that a case is made out for our interference in any manner. In the first place, the son himself declared that he purchased the goods from his father. The father declared in his letter to the Income‑tax Department that he had brought most of his capital from Bombay to Karachi in the shape of textile goods etc. and that these had been sold through his son Abdul Ghani. There is thus a contradiction between the statements made by the father and the son. While the father averred that he sold the goods through the son, the son stated that he had purchased the goods from the father, which is not the something as selling on behalf of the father. The Department has relied on the entries in the books of Abdul Ghani, which show that he credited the goods in the name of his father on their arrival at Karachi. Mr. Pirzada contended that these entries were capable of explanation on the basis that the goods had been imported by Abdul Ghani from his father at Bombay, and, therefore, the money realized had to be credited to the account of the father. That may be so, but the conclusion drawn by the Department that these entries showed that the property in the goods still remained with the father on the arrival of the goods at Karachi, can also be sustained. The incurring of incidental expenses by Abdul Ghani at Bombay does not appear to be conclusive either way. The remittances of money by Abdul Ghani to Bombay have rightly been explained by the Department by saying that moneys had to be transmitted to Bombay for the financing of these purchases whether they were made by Abdul Ghani at Bombay or by his father Abdul Ghafoor. Abdul Ghafoor did not care to produce any accounts whatsoever, nor were the bills of entry produced before the Income‑tax Officer or the Appellate Assistant Commissioner. These documents were sought to be produced before the Appellate Tribunal which however refused to accept them. To that aspect of the matter we shall revert later when we are dealing with the next question. Suffice it to say at this stage that the circumstances and facts relied upon by the Depart ment are capable of yielding an inference Oat the sales may have taken place at Karachi and not at Bombay. It seems to us that at the time of finalizing the assessment in the case of Abdul Ghani the Department was not directly concerned with determining the place At which the sales in favour of Abdul Ghani had taken place. For that reason we are not inclined to attach undue importance to the statements made on this point In the assessment orders relating tug Abdul Ghani. On the basis of entries in Abdul Ghani's books and the statements made by Abdul Ghafoor to the effect that he had brought his textile goods to Karachi, and by Abdul Ghani that he purchased the goods from his father, an inference of fact can be drawn that the sales had taken place at Karachi and not at Bombay. In other words, we have come to the conclusion that in holding that the sales took place at Karachi and not at Bombay the Appellate Tribunal cannot be regarded as having so completely misread the evidence on the record as to raise a question of law requiring reference to the High Court.

49. The second question is whether an adverse inference could be drawn from the non‑production of accounts including the bills of entry. We have already dealt with the prayer made by Mr. Pirzada for amplifying this question, and we have given reasons why we cannot do so. That the question, as it stands, is of little significance is admitted by Mr. Pirzada himself. It is clear that if relevant evidence is not produced by a party, an adverse inference can certainly be drawn against him under section 114 of the Evidence Act. In the present case the bills of entry and the books of account, if any, maintained by Abdul Ghafoor were evidence directly relevant to the question regarding the place of sale, but for one reason or the other these documents were not produced before the Income‑tax Officer or the Appellate Assistant Commissioner. When certain documents described as bills of entry were sought to be produced before the Appellate Tribunal, the latter refused to accept them. As we are not going into the question of the legality or otherwise of the refusal of the Tribunal, we have to assume that the bills of entry and the books of account were not produced. If that be the case, then the answer to the question is self‑evident, namely, that an adverse inference could be drawn. The question would, therefore, be purely of an academic interest. It is now well settled that the High Court would not require a reference on a question to which the answer was evident : (See (194) 10 I T R 505) nor where the question was purely academic : (1940) 8 I T R 495.

50. We now take up the last question pressed by Mr. Pirzada, namely‑ "the son of the applicant has been assessed on profits alleged to be arising from these very goods as having been imported by the son, whether the father also could be assessed with respect to the same income ?" Once the finding of the Appellate Tribunal is maintained that the sales took place at Karachi and not at Bombay, then it is clear that there are two distinct transactions which have taken place at Karachi. The first one is the sale of the cloth by Abdul Ghafoor to Abdul Ghani and the second one is the sale by Abdul Ghani to other parties at Karachi. In his voluntary return submitted for the year 1949‑50 Abdul Ghafoor himself admitted to an income of Rs. 50,000 on the sale of his goods, whereas for the same period Abdul Ghani declared a turnover of Rs. 21,34,

592. It will thus be seen that both the father and son were carrying on independent businesses at Karachi and were accordingly liable to be assessed separately to income‑tax. We think that the Tribunal has correctly remarked In their order rejecting Abdul Ghafoor's application under section 66 (1) that it is not the same income which has been assessed twice over, although for the purpose of assessing the gross profit rate on the entire business, the Tribunal has treated the two stages in the transaction together for the reason that the first stage was between father and son. On this view of the matter they assessed the gross profit for the father at 7 % on the common turnover of Rs. 10,00,000 relating to the assessment year 1948‑

49. For the subsequent year 1949‑50 they assessed the profit of the father at 5% and that of his son Abdul Ghani at 10%. The order of the Appellate Tribunal makes it clear that It was thinking of two distinct stages in the disposal of the goods belonging to Abdul Ghafoor : firstly, by Abdul Ghafoor to Abdul Ghani and secondly by Abdul Ghani to other parties. Abdul Ghafoor has been assessed on the income which has accrued to him in the first stage of the operation, namely, sale from him to Abdul Ghani. It thus appears that at is not the same income which is being assessed twice over in the hands of the father and the son. We agree with Mr. Pirzada that the explanation regarding the bifurcation of the income given by the Appellate Tribunal in their order under section 66 (1) is not to be found In their earlier appellate order, nor In the order of the Appellate Assistant Commissioner or the Income‑tax Officer. But the explanation given by the Appellate Tribunal in their order under section 66 (1) of the Income‑tax Act appears to us to be reasonable and sustainable on the facts of the case, with the result that we do not see that any question of law arises with regard to double taxation of the same income.

51. It was lastly contended by Mr. Pirzada that even if it be held that the sale of cloth from Abdul Ghafoor to Abdul Ghani took place at Karachi and not at Bombay, even then the entire profit on the two transactions had been Included in the gross profit rate of 10% assessed in the case of Abdul Ghani, and, therefore, Abdul Ghafoor was not liable to pay any more tax. As to what should be the gross rate of profit in any particular case, is a pure question of fact. The Income‑tax authorities in this case have come to the conclusion that if the two transactions are taken together, the gross profit rates should be 17 and 15 per cent respectively for the two assessment years in question. In the presence of this finding of fact we cannot hold that the gross profit rate must be limited to 10 per cent as assessed in the case of Abdul Ghani alone. From the assessment order in the case of Abdul Ghani It is clear that that was the profit rate allowed on his sales to third parties.

52. For all these reasons we are of the view that this is not fit case where we should require the Tribunal to state the case and made a reference to this Court under section 66 (2) of the g Income‑tax Act. Accordingly we would dismiss both the Civil References 149 and 150 of 1959.

53. Considering our replies to the questions raised in Abdul Ghani's case and the order we have just made with regard to the two applications filed by Abdul Ghafoor, we direct that the petitioners shall pay the costs of the respondent in all the three cases. K. B. A. Reference answered.