1971 PLP 958 (PTD)

(g) any proceeding for the imposition of a penalty in respect of any assessment for the year ending on the 31st day of March 1962, or any earlier year, which is completed on or after the 1st day of April 1962, may be initiated and any such penalty may be imposed under this Act ; ..... (m) where the period prescribed for any application, appeal, reference or revision under the repealed Act had expired on or before the commencement of this Act, nothing in this Act shall be construed as enabling any such application, appeal, reference or revision to be made under this Act by reason only of the fact that a longer period therefor is prescribed or provision is made for extension of time In suitable cases by the appropriate authority." Clause (c) of section 297(2) applies only to the particular and specific proceedings which were pending on the commencement of the 1961‑Act, i.e., on April 1, 1962. As already stated it was the assessee's appeal to the Tribunal which was pending on that day and the same had, therefore, necessarily to be disposed of under the old Act as if the new Act had not been passed. The application for reference was admittedly not pending on the date of coming into force of the 1961‑Act. Clause (c) of subsection (2) of section 297 could, therefore, have no application to the proceedings in dispute. This leads to the question whether clause (a) applies to the application for reference made by the assessee. The answer to this question would in turn depend upon the true scope and correct construction of the expression "proceedings for the assessment" contained in clause (a). The case of the revenue is that this expression includes proceedings under section 256(1) of the 1961‑Act. On the other hand, Mr. Sibal has contended that "proceedings for the assessment" of his client finally culminated in the appellate order of the Tribunal and that, though the application for reference was made to obtain the opinion of the High Court on certain question of law and though it is quite possible that as a result of the reference it might have become necessary to reopen and recommence the assessment proceedings, the intervening link comprised of the application for reference and the consequent reference itself could not be termed "assessment proceedings". Mr. Sibal has, in this connection, placed reliance on the observa?tions of the Privy Council ("the word 'assessment' is used as meaning sometimes the computation of income, sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the Act for imposing liability upon the taxpayer") in Commissioner of Income‑tax v. Khemchand Ramdas ((1938) 6 I T R 414(PC)), which are stated to have been approved by their Lordships of the Supreme Court in C. A. Abraham v. Income‑tax Officer, Kottayam ((1961)41 I T R 425). It was held by the Supreme Court in that case as below: "A review of the provisions of Chapter IV of the Act sufficiently discloses that the word 'assessment' has been used in its widest connotation in that chapter. The title of the chapter is 'Deductions and Assessment'. The section which deals with assessment merely as computation of income is section 23 ; but several sections deal not with computation of income, but determination of liability, machinery for imposing liability and the procedure in that behalf. Section 18‑A deals with advance payment of tax and imposition of penalties for failure to carry out the provisions therein. Section 23‑A deals with power to assess individual members of certain companies on the income deemed to have been distributed as dividend, section 23‑B deals with assessment in case of departure from the taxable territories, section 24‑B deals with collection of tax out of the estate of deceased persons, section 25 deals with assessment in case of discontinued business, section 25‑A with assessment after partition of Hindu undivided families and sections 29, 31, 33 and 35 deal with the issue of demand notices and the filing of appeals and for reviewing assessment and section 34 deals with assessment of incomes which have escaped assessment. The expression `assessment' used in these sections is not used merely in the sense of computation of income and there is in our judgment no ground for holding that when by section 44, it is declared that the partners or members of the association shall be jointly and severally liable to assessment, it is only intended to declare the liability to computation of income under section 23 and not to the application of the procedure for declaration and imposition of tax liability and the machinery for enforcement thereof." On the other hand, Mr. Awasthy has referred to the following passage in the Division Bench judgment of the Calcutta High Court in Kalawati Devi Harlalka v. Commissioner of Income‑tax ((1966) 62 I T R 544): "The word `assessment' has been used in the Income‑tax Act in a comprehensive sense. The expression `proceedings for the assessment' in section 297(2)(a) has a wide connotation and embraces within its scope the various proceedings relating to assessment as envisaged in Chapter IV of the Act of 1922 including proceedings by way of appeal, reference and revision in a case where the return of income has been filed before the commencement of the Act of 1961. Clause (c) of section 297(2) does not restrict the scope of clause (a) to proceedings for original assessment." Mr. Awasthy finally referred in this connection to the authoritative pronouncement of the Supreme Court in Kalawati Devi Harlalka v. Commissioner of Income‑tax, to the effect that: "It seems to us that section 297 is meant to provide as far as possible for all contingencies which may arise out of the repeal of the 1922‑Act. It deals with pending appeals, revisions, etc. It deals with non‑completed assessments pending at the commencement of the 1961‑Act, and assessments to be made after the commencement of the 1961‑Act, as a result of returns of income filed after the commencement of the 1961‑Act." Notice must at this stage be taken of the provisions contained in section 298 of the 1961‑Act and of clause 4 of the Income‑tax (Removal of Difficulties) Order, 1962, promulgated by the Central Government and published in the Gazette of India, dated August 8, 1962: "298. (1) If any difficulty arises in giving effect to the provisions of this Act the Central Government may, by general or special order, do anything not inconsistent with such provisions which appears to it to be necessary or expedient for the purpose of removing the difficulty. (2) In particular, and without prejudice to the generality of the foregoing power, any such order may provide for the adaptations or modifications subject to which the repealed Act shall apply in relation to the assessments for the assess?ment year ending on the 31st day of March 1962, or any earlier year." Clause 4 of the 1962‑Order is in the following terms : "4. (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 (XI of 1922) (herein?after 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." The import, scope and effect of section 298 and of clause 4 of the Central Government's Order issued thereunder came up for consideration before the Calcutta High Court as well as before their Lordships of the Supreme Court in Kalawati Devi Harlalka's case, Bose C. J., who wrote the judgment of the Division Bench of the Calcutta High Court, held in this connection as below: "But it is to be pointed out that the vires of clause 4 of the Income‑tax (Removal of Difficulties) Order, 1962, has been challenged before us on the ground that such a provision is plainly beyond the power of the Central Government as conferred upon it by section 298 of the Income‑tax Act, 1961. The submission of the counsel for the appellant is that clause 4 is inconsistent with section 297 of the Act and it has sought to fill up a lacuna which existed in that section. But if my interpretation of section 297 (2)(a) is correct and the a 'proceedings for the assessment' are wide enough to include the proceedings by way of appeal, reference and revision, which are different steps in the machinery of assessment, then what clause 4 has done is simply to make explicit what was implicit in clause (a) and it is with the object of removing the doubt or difficulty, if any, existing in respect of the construction of clause (a) of section 297(2) that a specific provision like clause 4 was introduced in the Removal of Difficulties Order 1962. 1n this view of the matter it must be held that there is no force in the criticism or challenge of the learned counsel for the appellant that clause 4 is inconsistent with the provisions of section 297 or that by enacting such a provision the Central Government was not purporting to give effect to the provisions of the Act or was doing anything inconsistent with the provisions of the Act. That the power conferred by section 298 upon the Central Government is very wide in its amplitude will be clear by a reference to the decision of the Judicial Committee in the case of King‑Emperor v. Sibnath Banerjee (1945) L R 72 I A 241 (Reference was then made to certain observations of the Judicial Committee in its decision in Sibnath Banerjee's case) . . . The same observations are, in my view, applicable in interpreting subsections (1) and (2) of section

298. Under this section the Central Government may pass any order to resolve any difficulty that may arise in implementing the provisions of the Act of 1961. The only limitation put upon this power as is clear from subsection (1) of section 298 is that the order that may be passed by the Central Government, whether it is a general or a special order, should not be inconsistent with the provisions to implement which the same is passed. Subsection (2) of section 298 is illustrative and makes express provision authorising the Central Government to make provision, in such general or special order, as is contemplated in subsection (1) for adaptations and modifications subject to which the Act of 1922 shall apply in relation to the assessment for the assessment year ending on 31st March 1962, or any earlier year. Therefore, the contention of the learned counsel for the appellant challenging the vires of clause 4 of the Income‑tax (Removal of Difficulties) Order, 1962, must be rejected. In view of these findings on the question of construction of clause (a) of subsection (2) of section 297 of the Act and as to the vires of clause 4 of the Income‑tax (Removal of Difficulties) Order, 1962, it is not necessary to express any definite opinion on the point whether section 6 of the General Clauses Act, 1897, is available for the purpose of interpreting the provisions of the Act of 1961." Dismissing the appeal preferred by Kalawati Devi Harlalka against the above‑said decision of the Calcutta High Court, Sikri, J., who wrote the judgment of the Supreme Court, after referring to various decisions in which the word "assessment" had been used in the widest connotation, held [(1967) 66 I T R 680]: "It is quite clear from the authorities cited above that the word `assessment' can bear a very comprehensive meaning ; it can comprehend the whole procedure for ascertaining and imposing liability upon the taxpayer. Is there then anything in the context of section 297 which compels us to give to the expression `procedure for the assessment' the narrower meaning suggested by the learned counsel for the appellant ? In our view, the answer to this question must be in the negative. It seems to us that section 297 is meant to provide as far as possible for all contingencies which may arise out of the repeal of the 1922‑Act. It deals with pending appeals, revisions, etc. It deals with non‑completed assessments pending at the‑commencement of the 1961‑Act, and assessments to be made after the commencement of the 1961‑Act, as a result of returns of income filed after the commencement of the 1961‑Act. Then in clause (d) it deals with assessments in respect of escaped income ; in clauses (f) and (g) it deals with levy of penalties ; clause (h) continues the effect of elections or declarations made under the 1922‑Act ; clause (i) deals with refunds ; clause (j) deals with recovery ; clause (k) deals generally with all agreements, notifications and orders issued under the 1922‑Act ; clause (l) continues the notifications issued under section 60(1) of the 1922‑Act ; and clause (m7 guards against the application of a longer period of limitation prescribed under the 1961‑Act to certain applications, appeals, etc. It is hardly believable in this context that Parliament did not think of appeals and revisions in respect of assessment orders already made or which it had authorised to be made under clause (a) of section 297 (2)." Very recently the Supreme Court has again held in S. Sankappa v. Income‑tax Officer, Central Circle II, Bangalore ((1968) 68 I T R 760 (S C)), that the word "assessment" has been used in section 297(2)(a) of the 1961‑Act in a comprehensive sense and includes all proceedings starting with the filing of the return and ending with determination of the tax payable by the assessee. Proceedings under section 66(1) are, in my opinion, a mere link in the same chain. Mr. Sibal also submitted that clause 4 of the Income‑tax (Removal of Difficulties) Order, 1962, is void as being outside the scope of section

298. The contention of the learned counsel is that section 298 permits the passing of a general or special order for removal of any difficulty arising "in giving effect to the provisions of the 1961‑Act" and not for enlarging the scope of any of its provisions. Great emphasis has been laid by learned counsel on the restriction placed on the power of the Central Government under section 298 by the provision contained in the section itself to the effect that any general or special order passed by the Government must not be inconsistent with any provision of the Act. Mr. Sibal submits that the addition of the word "reference" in clause 4 of the Removal of Difficulties Order is hit by the above‑said restriction inasmuch as "proceedings for the assessment" do not include an application for reference and, in so far as "reference" has been mentioned in clause 4 of the 1962‑Order, it is inconsistent with clause (a) of subsection (2) of section

297. We do not, however, find any force in this sub?mission of Mr. Sibal in view of the widest possible connotation given by the Supreme Court to the expression "proceedings for assessment" occurring in clause (a) of subsection (2) of section 297 and in view of the law laid down in Kalawati Devi Harlalka's case. It was then contended that if clause (a) can be construed in the manner in which the revenue has canvassed before us, clause (c) of subsection (2) of section 297 would become wholly redundant and meaningless because clause (a) read with the 1962‑Order would provide for all proceedings arising out of income‑tax returns filed before April 1, 1962, being dealt with under the old Act. and there would have been no sense then in making a specific provision in clause (c) to the effect that proceedings pending on April 1, 1962, must be dealt with under the 1922‑Act. There is an obvious fallacy in this argu?ment. The proceedings referred to in clause (c), i.e , those which were pending on April 1, 1962, have to be dealt with under the old Act as if the 1961‑Act had not been passed. No discretions or option in the matter is given to any authority. This is so in spite of the fact that all the proceedings referred to in clause (c) would certainly be covered by clause (a) also, the scope of clause (a) being wider than that of clause (c). But the difference lies in the fact that whereas clause (c) operated automatically and is couched in mandatory terms, discretion has been given to the revenue in so far as the proceedings covered by clause (a) and not covered by clause (c) are concerned. This was the state of law brought about by the 1961‑Act. By the provision contained in clause 4 of the 1962‑Order the discretion conferred by section 297(2)(a) on the revenue has been exercised by the Government once for all for cases covered by that clause. As a result of that Order, clause (c) has, in a sense, become temporarily redundant. But this cannot possibly help the assessee in obtaining any relief. No other point has been argued in this case. For the foregoing reasons, it is held that: "(i) An application under section 66(3) of the Income‑tax Act, 1922, does not lie to a High Court against an order of the Income‑tax Appellate Tribunal refusing to entertain an admittedly time‑barred application under section 66(1) of the said Act even if it could be shown that the refusal of the Tribunal to extend time was not warranted by law ; (ii) Neither an application under section 66(2) of the 1922?Act nor an application under subsection (2) of section 256 of the 1961‑Act lies to a High Court for the issue of a mandamus for making a reference in a case where the Income‑tax Appellate Tribunal has refused to go into the merits of the application for reference on the ground that it is barred by time. Such an application lies in a case where the Tribunal has refused to make a reference on the ground that no question of law arises from its appellate order ; (iii) The power of judicial superintendence conferred on a High Court by Article 227 of the Constitution can be invoked for setting aside an order of a Tribunal holding it has no jurisdiction to decide a particular matter placed before it if it is found that in fact the Tribunal had the jurisdiction to adjudicate upon the matter and it erroneously refused to exercise statutory jurisdiction vested in it by law ; (iv) The Income‑tax Appellate Tribunal has no jurisdiction under any provision of law to extend the period of limitation prescribed for the making of an application under section 66(1) of the 1922‑Act. If the application is made beyond the prescribed time, the Tribunal has no discretion but to dismiss the same unless a statutory provision to the contrary is made or the provisions of section 5 of the Limitation Act are made applicable to those proceedings ; (v) The Income‑tax Appellate Tribunal has the jurisdiction to condone delay up to a maximum period of thirty days in making an application under subsection (1) of section 256 of the 1,61‑Act, if the Tribunal is satisfied that there was sufficient cause for the application not having been filed within time ; (vi) The expression "proceedings for the assessment of a person" used in section 297(2)(a) of the 1961‑Act is of the widest possible amplitude and the word "assessment" in the said phrase has been used in its widest connotation and in a very comprehensive sense so as to include therein all possible proceedings under the Income‑tax Act or the Finance Act relating to assessment up to the stage after which nothing remains to be done in connection with the assessment and computation of the tax in respect of the year in question ; and (vii) The combined effect of the operation of clause (a) of subsection (2) of section 297 of the 1961‑Act and of the Income‑tax (Removal of Difficulties) Order, 1962, issued under section 298 of the said Act is that all proceedings including an application for a reference to the High Court in relation to the assessment year in respect of which the return of income was filed before April 1, 1962, must be dealt with under the 1922‑Act as if the 1961‑Act had not been passed." As a result of the above findings this application is dismissed. We do not, however, make any order as to costs. Application dismissed.