P L D 1963 Supreme Court 322 (PLP)

In the second case, which pertains to the assessment year 1955‑56, the impugned order was made on 29‑6‑

60. The appeal filed to the Assistant Commissioner, Income‑tax, is still pending. The appellant assessee then filed two writ petitions in the High Court raising specifically the point of jurisdiction. The petitions as mentioned above were summarily dismissed with the observation that these were not fit cases for the exercise of writ jurisdiction. A preliminary objection has been taken by the learned counsel for the respondent, Mr. Abdul Haq, that as the point of jurisdiction had not been raised before the departmental autho rities, the writ petitions were not entertainable by the High Court on that ground. Learned counsel contended that the Act provided a complete Code in respect of income‑tax matters and the assessee was confined to remedies available thereunder by way of appeal or revision. Any point of law involved in the case could also be adjudicated upon by the High Court on a reference made under section 66 of the Act. In support of his position learned counsel relied on a Privy Council judgment as Raleigh Investment Company Limited v. Governor‑General‑in‑Council PLD 1947 PC 19=741 A

50. In that case, the appellant had instituted a suit in the High Court at Calcutta in its ordinary original civil jurisdiction, claiming a declaration that certain provisions of the Act, which authorized the assessment and charging to tax of a non‑resident, in respect of dividends declared or paid outside British India but not brought into British India, were ultra vires of the legislative powers of the Federal Legislature and that the assessment made on the appellant was, therefore, illegal and wrongful. An injunction was asked for restraining the making of future assessments in respect of such dividends and for re‑payment of the tax paid. It was held that while in form, the relief claimed did not profess to modify or set aside the assessment, in substance, the suit was directed exclusively to a modification of the assessment and was barred by section 67 of the Indian Income‑tax Act, which provided that no suit shall be brought in any Civil Court to set aside or modify any assess ment made under the Act. It was observed by their Lordships of the Privy Council that effective and appropriate machinery was provided by the Act itself for the review of any assessment on grounds of law, including the question whether a provision of the Act was ultra vires, and it was in that setting that section 67 had to be construed. The phrase "assessment made under this Act" in section 67, meant an assessment finding its origin in an activity of the assessing officer, acting as such. The circumstance that he had taken into account an ultra vires provision of the Act was, in that view, immaterial in determining whether the assessment was made under the Act. The effect of the authority cited on behalf of the respondent was considered in The Pb. Province v. The Federation of Pakistan P L D 1956 F C

72. It was ruled by the Federal Court in that case that a suit brought by the Punjab Province to challenge its liability to income‑tax, on income derived from certain commercial activities of the Province, under section 204 of the Government of India Act, 1935, was not barred by section 67 of the Income‑tax Act or by section 9 of the Code of Civil Procedure. It was pointed out therein that where the Income‑tax Officer's order of assessment was wholly vitiated by complete lack of jurisdiction, the principle laid down by the Privy Council in cases of which Raleigh Investment Company Limited v. Governor‑General is a representative, would not apply. The order in such a case cannot be said to have been passed under the Act, within the meaning of section 67 of the Act and a suit even in a Civil Court would not have been barred. A fortiori, it follows that the extraordinary writ jurisdiction of the High Court could have been invoked in challenging an income‑tax assessment on the basis that the officer in question lacked jurisdiction to pass the impugned order. The writ jurisdiction was on the High Court by a constitutional provision and even if there be a conflict between such a provision and another statute, the constitutional provision must prevail. In the present two cases, writs of certiorari had been prayed for in the High Court for quashing the impugned orders, which were alleged to suffer from lack of jurisdiction. The circumstances in which certiorari may issue to quash the orders of administrative Tribunals that are required to act judicially, fell for consideration in two recent cases decided by this Court and reported as S. A. Haroon v. Collector of Customs, Karachi, P L D 1959 S C (Pak.) 177 and Pakistan v. Zia uddin P L D 1962 S C

440. In both cases certain orders passed by Customs autho rities had been challenged by means of writ petitions in the High Court. It was laid down that the general rule undoubtedly is that it is wrong on principle to entertain petitions for writs except in very exceptional circumstances, when the law provides a remedy by appeal to another Tribunal, fully competent to award the requisite relief. At the same time, it was held that in cases of absence or excess of jurisdiction or where the impugned order suffers from illegality on the face of the record, a certiorari may be granted even though the right of statutory appeal had not been availed of. A certain amount of flexibility is allowed by the law in the case of a prayer for a writ of certiorari as compared with a case for a mandamus. It was further observed that if the application for certiorari is made by a party aggrieved, then it ought to be granted ex debito justitiae and the High Court has not the general discretion which it would have, when the application is made by a member of the public, who is not personally concerned. This would specially be the case where the alternative remedy provided by the relevant statutes is not as efficacious, speedy or convenient ax the one available under the writ jurisdiction of the High Court, This principle would be found discussed in Ferris on Extraordinary Legal Remedies at pp. 185‑187, 1926 Edn. That relief in these cases could not have been obtained as quickly or with as such facility and convenience under the Act which provides for a series of appeals, revision and reference to the High Court on law points; on condition that the tax assessed is first paid, as by recourse to the writ jurisdiction of the High Court, can hardly be contested. It is at the same time conceded that the Income‑tax Officer was required to act judicially in applying the provisions of the Act. Even where a particular statute takes away certiorari (and that result can only be achieved by express negative words) the English Courts have decided that certiorari may be granted where the inferior Tribunal has acted without or in excess of jurisdiction, for in such a case the Tribunal has not brought itself within the terms of the statute taking away certiorari, vide Halsbury's Laws of England, Vol. 11, Third Edn. p. 138 paragraph

260. The contention in respect of jurisdiction is based on the language of subsection (2) of section 34 of the Act which so far as relevant, is set out below :‑ "No order of assessment under section 23 or of assessment or re‑assessment under subsection (1) of this section shall be made after the expiry, except in any case in which the assessee has concealed the particulars of his income or deliberately furnished incorrect particulars of such income, of four years from the end of the year in which the income, profits or gains were first assessable: Provided that where a notice under subsection (1) was issued within the time limit specified in that subsection, the assessment or re‑assessment, as the case may be, may be made in pursuance of such notices within one year from the date of service of such notice." It is claimed that in so far as the assessments were made in these two cases under section 23 of the Act, more than four years from the end of the relevant assessment year, the orders in question were bad as they were passed out of time specified in the above subsection. It is argued that the expression "four years" occurring in this subsection, should be interpreted to mean "four years of twelve months each". On the other hand, the position taken on behalf of the respondent is that the word "years" in this context must mean "assessment years" and by virtue of certain amendments made in the Act, the assessment order, at least in the second case, was perfectly legal. The facts and circumstances of the first case are fairly simple and there is no possibility of vindication of the respondent's position in respect of the assessment in that case. The word "year" was not defined in the Income‑tax Act till the promulga tion of the Finance Ordinance XXV of 1960 on the 30th of June 1960, which added a new clause after clause (16) of section 2 of the Act, to read as follows ‑‑ "year means‑ (a) as respects any period before the first day of April 1958, the period of twelve months beginning on the first day of April and ending on the thirty‑first day of March next following ; (b) as respects the period beginning on the first day of April, 1958 and ending on the thirtieth day of June 1959, the said period ; and (c) as respects any period beginning on or after the first day of July 1959, the period of twelve months beginning on the first day of July and ending on the thirtieth day of June next following," This clause, the amendment provided, shall be deemed to have been added, on and from the first day of April 1959, to section 2 of the Act. The definition, however, can have no relevancy to the first case in which the final date for assessment under sub section (2) of section 34 of the Act in respect of the assessment year 1954‑55, was the 31st of March 1959, which expired before the new definition of "year" could take effect. This is conceded by Mr. Abdul Haq on behalf of the respondent. The General Clauses Act, 1897, defines "financial year" in item 19 and "year" in item 59 of section 3 of that Act. These definitions, which are applicable to all Central Statutes, are made subject to anything repugnant in the subject or context of the enactment in which they occur, by the opening words of section

3. The definition of "financial year" as it originally stood in that Act, provided that it shall mean "the year commencing on the first day of April". By Act XXVI of 1958, this definition was amended to read "financial year shall mean the calendar year, that is to say, the year beginning on the first day of January and ending on the thirty‑first day of December". This Act was declared to come into force on the 1st day of January 1960. Before that date arrived, however, it was repealed by Ordinance XIV of 1959, which was promulgated on the 31st March 1959, and came into force at once. By this Ordinance, the definition of "financial year" in the General Clauses Act was replaced by the following: ‑ "financial year means‑ (a) as respects the period before the first day of April 1959; the year commencing on the first day of April and ending on the thirty‑first day of March ; (b) as respects the period from the first day of April 1959, to the thirtieth day of June 1959, both days inclusive, that period ; and (c) thereafter the year commencing on the first day of July and ending on the thirtieth day of June." This definition of "financial year" has no implications for the first case, because it makes no alteration in the duration of the financial year corresponding to the assessment year 1954‑

55. Every year, generally, a Finance Act was passed fixing the financial year with which the assessment year was coterminous and laying down the rates at which income‑tax was required to be levied during that year, by virtue of section 3 of the Income‑tax Act. The word "year" as defined in clause (59) of section 3 of the General Clauses Act, for the relevant period, continued to mean "a year reckoned according to the British calendar", which means a year of twelve months. As the order of assessment under section 23 of the Act was passed by the Income‑tax Officer in the first case on 29‑6‑1959, it was clearly one without jurisdiction for the time of four years commencing with the end of the assessment year 1954‑55, during which the Income‑tax Officer could have passed such an order, had long since expired on 31‑3‑1959. The question raised in the first appeal must, therefore, in any event, be answered in favour of the appellant and it appears on the face of the record that the impugned order of assessment was vitiated by complete lack of jurisdiction. We will next consider the position in the second case. As has been pointed out above, Act XXVI of 1.958 was never allowed to become effective as it was superseded by the General Clause (Amendment) Ordinance XIV of 1959. This altered the definition of "financial year", as noticed above. Finance Ordinance XV of 1959 which came into force on 1‑4‑59, made certain amend ments in the Act, but it did not alter the definition of "year" or "financial year". There was a change made in the definition o G "previous year" as given in clause (I1) of section 2 of the Act, which makes no difference to the arguments presented in this case. Certain amendments were also made in section 34 of the Act which are not relevant for our purpose. By section 6 of this Ordinance XV of 1959, certain rules were laid down for computa tion of income‑tax and super‑tax. Subsection (1) of this section is in the following terms: ‑ "

6. Income‑tax and super‑tax.‑(1) For the purposes of making assessments to income‑tax and super‑tax, the period beginning on the first day of April 1.958, and ending on the thirtieth day of June 1959, shall be deemed to be a year of assess ment (hereinafter referred to as the said assessment year) and, notwithstanding anything to the contrary contained in any law for the time being in force and subject to the provisions of subsections (3), (4), (5) and (6) of this section, assessments shall be made for the said assessment year in respect of all previous years, ending at any time between the first day of April 1957 and the thirtieth day of June 1958 (both days inclusive) and the provisions of section 17 of the Finance Act, 1958 (XXII of 1958), shall apply, so far as may be, as they apply to an assessment for the year beginning on the first day of April, 1958 and ending on the thirty‑first day of March, 1959: Provided that where, in the case of as assessee, there are more such previous years than one, assessment in respect of each such year shall be made separately and the provisions of the Income‑tax Act, 1922 (XI of 1922) and this section shall apply accordingly." If the Act had stood unamended, the four years' period con templated by subsection (2) of section 34, would have expired in this case, on the 31st of March, 1960, whereas the assessment order was actually made on the 29th of June 1960. Section 6 of this Ordinance however declares that the period beginning on the first day of April 1958, and ending on the thirtieth day of June 1959, shall be deemed to be a year of assessment. This would help the respondent's case only if the expression "four years" in subsection (2) of section 34 of the Act, is equated with "four assessment years" in support of which there appears no clear indication in the statute. One of the assessment years included in this four years' period would then be the particular year of 15 months mentioned in section 6 of the Ordinance and the period would be extended by 3 months. The same result is sought to be achieved by appealing to the definition of "year" inserted in the Act by section 6(1)(b) of Ordinance XXV of 1960 which was deemed to be effective from 1‑4‑

59. In the normal course, before these amendments were made, the four‑year period during which assessment was possible in respect of the assessment year ending with the 31st March 1956, would have terminated on the 31st March 1960. If, however, the new definition of "year" is pressed into service, the first two years after 31st March 1956, would each be of 12 months' duration, the third year starting with 1‑4‑58 would be one of 15 months and would terminate on the 30th June 1959, and thereafter the fourth year would extend from 1‑7‑59 to 30‑6‑

60. The impugned order was passed one day earlier than the last‑mentioned date. On behalf of the appellant it is strenuously contended that the expression "four years" in section 34(2) of the Act must still be construed to mean "four years of twelve months each" despite the above‑mentioned changes to the law. The appeal is to the context in this behalf. It is pointed out that in the proviso to sub section (2) of section 34 of the Act the word "year" can only mean "a year of twelve months", as it may start from the date of a notice under subsection (I) of section

34. In the substantive part of the subsection, it is urged, the same meaning should attach to the word "year" as in the proviso. There are some other sections of the Act in which limitation is provided for, namely, sections 33‑A, 34, 34‑A, 35, 46(7) and 50 of the Act. It is argued that in none of these sections, excluding section 34, the new definition of year will apply as the context of those enactments clearly establishes. The starting point of limitation in all these cases, except for section 50, is a particular date which may or may not coincide with the beginning of an assessment year or a financial year, presuming that the two latter are coterminous. In section 50 also it is plain that the Legislature could not have intended to extend the period during which a refund could be claimed, viz., the period of four years commencing on the last day of the financial year after the expiry of the previous year in which the income arose, accrued or was received et. By parity of reasoning, it is argued that the same connota tion of the word "year" should be adopted for interpreting the expression "four years" in the main part of subsection (2) of section

34. It is forcefully contended that no intention could be imputed to the Legislature of taking away vested rights, so to speak by a side‑wind or to validate what would ordinarily have been invalid orders of assessment, without having expressly provided to that effect. The definition of "year" was probably incorporated into the Act for Governmental accounting purposes connected with the change in the duration of the financial year. The argument has considerable force. Where the Legistature indeed contemplated the extension of a limitation period it apparently made an express enactment to that effect. Reference in this connection may be made to the amendments effected in the Sales Tax Act, 1951, by section 5 of the newly‑inserted Third Schedule to the Act. To section 28 of that Act, the following proviso was added, namely: ‑ "Provided that for the purposes of making any assessment under this section for the year beginning on the first day of April, 1954, and ending on the thirty‑first day of March 1955, the period beginning on the first day of April 1958 and ending on the thirtieth day of June 1959, shall be deemed to be one year." Here limitation seems to have been extended by three months, but only in respect of one assessment year, viz., 1954‑55, for the purposes of that Act. If the Legislature bad intended a similar extension: as regards the period of limitation prescribed by sub section (2) of section 34 of the Act, an identical device could have been here adopted. The new definition of "year" inserted in section 2 of the Act, would obviously be subject to anything repugnant in the subject or context and it is, therefore, not necessary that wherever the word "year" occurs in the Act, it should be construed uniformly in the sense of the new definition inserted in 1960, with effect from 1‑4‑1959. Mr. Mahmud Ali has pointed out on behalf of the appellant that if the object of incorporating this new definition of "year" in the Act was to give more time to Income‑tax Officers to complete assessments within an extended period, it was an extremely inapt procedure, to promulgate the Finance Ordinance XXV of 1960 which came into force on the 1st of July 1960, so far as the instant case is concerned. Even if the inter pretation contended for by the respondent were to be accepted, the limitation expired in this case on the 30th of June 1960, just before the new Ordinance became effective and there could be no possibility of any extended time for completing an inchoate assessment in respect of the assessment year 1955‑

56. If on the other hand, the intention was to validate what would otherwise have been invalid assessment orders, express words ought to have been used to put the matter beyond doubt and not left to the chance of an astute interpretation in favour of the Taxing Authority. The limitation in this case under subsection (2) of section 34 of the Act had started running on the 1st of April 1956, and that fixed the terminal date of the period of four years as the 31st of March 1960, with certainty under the law as it then stood. It is a well‑recognised principle of the law of limitation that once time begins to run from a specified date it cannot be interrupted or extended unless the Legislature intervenes and makes express provision to the contrary. No such express provision exists in the present case. By a mere process of construction it cannot be argued therefore that the new definition of "year", inserted by the Ordinance of 1960 in the Act, was calculated to effectuate a change in this respect, so as to convert the period of four years' limitation into years of unequal length and to introduce an element of uncertainty where previously stability existed. The altered definition of the word "year" brought in by the Ordinance of 1960, seems to have direct application only to the terminal date, of the year of assessment commencing on the 1st of April 1958, which receives an extension of three months so as to end with the 30th of June, 1959. An indication to this effect i provided by section 6 of the Ordinance of 1959. The new defini tion contains no words such as could operate to extend a period which had already commenced to run many years earlier, according to a fixed measure of time, namely, a year of twelve months. The Courts must lean against giving a statute retrospective operation on the presumption that the Legislature does not intend what is unjust. It is chiefly where the enactment would prejudi cially affect vested rights, or the legality of past transactions, or impair existing contracts, that the rule in question prevails. Reference may be made in this connection to page 206 of Maxwell on the Interpretation of Statutes, Eleventh Edition. Even if two interpretations are equally possible, the one that saves vested rights would be adopted in the interest of justice, specially where we are dealing with a taxing statute. The appellant herein had already acquired the vested right of escaping assessment, by lapse of time, when the 1960, Ordinance was enforced. In all pro bability, the Legislature never intended that the period of limitation prescribed in the Act should become variable with the changes in the "financial year" or "year" inserted in the Act for certain other purposes, namely, to accord with the new accounting year adopted by Government. The conclusion we have reached there fore is that the period of "four years" mentioned in subsection (2) of section 34 must continue to receive a stable interpretation and it must be held to mean a period of four years consisting of twelve months each. On this view clearly the assessment even in the second case was open to exception as having been made beyond the time during which the Income‑tax Officer had power to pass such an order. The result is that the appeals succeed. The High Court were not right in summarily dismissing the prayer for a writ of certiorari in each of these cases. We hereby direct that the two impugned orders be quashed as illegal and passed without jurisdic tion. In view of the difficult nature of the question of law involved, we would leave the parties to bear their own costs. A.H. Appeals accepted,