1957 Dacca 535 (PLP)

AMIN AHMED, C. J.‑

This application for leave to appeal to the Federal Court is on behalf of an assessee' It is directed against an order of a Division Bench of this Court, dated the 10th of February 1955, refusing the application of the assessee under subsection (2) of section 66 of the Income Tax Act for directing the Income Tax Appellate Tribunal to state the case and makes a Reference to this Court. The facts of the case may be briefly stated as follows: The petitioner is a contractor carrying on his business at Barisal. During the assessment year 1946‑47 some agricul tural lands were purchased benami in his name by Messrs. R. K. Kaviraj & Company of Morrelganj in the District of Khulna for a sum of Rs. 37,

00. This property was subse quently acquired by Government by Notification, dated the 25th of September 1954. Before the Income‑tax Officer the petitioner swore an affidavit stating that he had no interest in the said properties. But in spite of his objection he was assessed for the said sum of Rs. 37,

000. On appeal to the Appellate Assistant Commissioner, instead of getting any relief, after inspecting the accounts and other materials, the Commissioner enhanced this amount to Rs. 69,000 i.e., raised it to the extent of a further sum of Rs. 32,

000. Against this decision, an appeal was taken to the Income Tax Tribunal; but this appeal was also dismissed. The petitioner moved the Appellate Tribunal under section 66 (1) of the Income Tax Act to refer the following questions as formulated by the petitioner and set out in paragraph 19: "(a) Whether in the facts and circumstances of the case the sum of Rs. 69,050, the deposits of the firm Messrs R. K. Kaviraj & Co., was rightly added to the income of the appellant as his own? "(b) Whether the Income Tax Appellate Tribunal was justified in including the sum of Rs. 35,785 to the contract receipts of the appellant? "(c) Whether there was any material before the Income Tax Officer on which it could be properly held that the addition of Rs. 35,785 was correctly made? "(d) When Messrs R. K. Kaviraj & Co., admitted that the entries in their books had nothing to do with the assessee, was the Appellate Assistant Commissioner competent to treat them as ‑undisclosed incomes of the appellant?" This application for Reference was also rejected. There after the petitioner made an application under section 66 (2) of the Income Tax Act, and moved the Division Bench of this Court presided by his Lordship the then Chief Justice A. Ahmad and Rahman J, for a Rule directing the Appellate Tribunal to state the case on the points as formulated by the petitioner. Their Lordships summarily rejected this appli cation. Hence this present application for leave to appeal to the Federal Court under sections 109 and 1 0 of the Code of Civil Procedure as mentioned in the petition. At the commencement of the hearing of the appeal Mr. Mesbahuddin, the learned Advocate for the Commissioner of Income Tax, raised a preliminary point that this Court has no jurisdiction to grant leave to appeal to the Federal Court in a case where the Court has rejected an application under subsection (2) of section 66 of the Income Tax Act. The learned Advocate relies on the provisions of subsection (2) of section 66‑A of the Income Tax Act which runs thus: "An appeal shall lie to His Majesty in Council from any judgment of the High Court delivered on a Reference made under section 66 in any case which the High Court certifies to be a fit one for appeal to His Majesty in Council." Besides relying on the wordings of these provisions of law, the learned Advocate has relied on the following cases, namely, the case of Chettyar E. M. Firm v. Commissioner of Income Tax (A I R 1930 Rang. 274) (judgment of Page C. J., and Ba U. J.); the case of Commissioner of Income Tax, Madras v. Voora Sreeramulu Chetty (A I R 1939 Mad. 903) (judgment of Leach C. J., Gentle and Sommayya JJ.); the case of Sri Mahanih Harihar Gir v. Commissioner of Income Tax, Bihar and Orissa (A I R 1941 Pat. 225), (judgment of Manohar Lall J. sitting with Harries C. J. and Fazal Ali J.); the case of Seth Prem Chand Satramdas v. The State of Bihar (1951 S C R 161) (judgment of Fazal Ali J.). We may mention that Mr. Guha, the learned Advocate for the petitioner, has very candidly conceded that he is unable to cite any case law, according to which he can establish that the present application for leave is competent, and the learned Advocate has been good enough to cite the following latest cases which of are against him: the case of Messrs. P. A. Raju Chettiar do Brothers v. Commissioner of Income Tax, Madras (A I R 1951 Mad. 590); the case of Jamnadas Prabhudas, Bombay v. Commissioner of Income Tax, Bombay City (A I R 1952 Bom. 479); and the case of Commissioner of Excess Profits Tax, West Bengal v. Ruby General Insurance Co. Ltd. (A I R 1954 Cal. 477) (judgment of Chakravartti C. J.). It seems that the point as to whether an application for leave against an order passed under subsection (2) of section 66 of the Income Tax Act lies or not, is not covered by any case of Pakistan that we know of nor has it been referred to at the Bar. So, it is necessary for us to discuss the preliminary objection raised at the Bar at some length, and also to consider some of the cases cited by the learned Advocates. According to subsection (2) of section 66‑A of the Income Tax Act an appeal lies only if the following con ditions are fulfilled: (1) that there must be a Reference to the High Court under section 66 of the Income Tax Act; (2) that on such Reference being made to the High Court, the High Court delivers its judgment; and (3) that the High Court must certify when an appeal is sought to be preferred to the Supreme Court against such a judgment on Reference that it is a fit case for appeal to the Supreme Court. Apart from the cases cited to which we shall refer pre sently, it is clear that subsection (2) of section 66‑A of the Income Tax Act requires that there must be, to start with a Reference made to the High Court, and if no Reference is made to the High Court under section 66, and if the High Court passes any order other than that on any Reference such an order or, judgment does not come to the purview of subsection (2) of section 66‑A. Barring this provision for this limited appeal against decision of High Court in Income Tax matter there is no other provision for an appeal against other orders passed by the High Court, and even in rile case covered by subsection (2), it will be noticed that the Legislature has enacted that such an appeal can be partnered only if the High Court would certify it to be a fit one for appeal, as it is also provided under section 109 (c) of the Code of Civil Procedure. It can be said straightaway that this application for leave under sections 109 and 110 of the Code of Civil Procedure is entirely misconceived as these provisions do not apply to the case of Income Tax which is governed by the special Statute; namely, the Income Tax Act. It has been held in more than one case, to some of which we shall refer, that when the High Court allows an application for directing the Tribunal to state a case and make a Reference or rejects an application for directing the Tribunal to state a case, it exercises its power only as an advisory or consultative body, and its order is not a final order. We may refer to the following observation of Page C. J., in the case of ‑ Chettyar E. M. Firm v. Commissioner of Income Tax. "In my opinion the object and effect of sections 66 and 66‑A, Income Tax Act; 1922, was to provide special machinery whereby the Commissioner or the assessee should be enabled to obtain the opinion of the High Court upon any question of law arising in the course of the assessment. The juris diction with which the High Court is invested under the Income Tax Act, 1922, however, is of an exceptional nature, and I apprehend that the intention of the Legislature in enacting sections 66 and 66‑A was to provide that the only procedure available for obtaining a Reference by way of case stated should be that prescribed under those sections. In my opinion the effect of sections 66 and 66‑A is that no appeal lies from an order of the High Court under section 66 (2), except as provided in section 66‑A. In 1922 the Legislature remodeled section 51, Income Tax Act, 1918; and in 1926 after the decision of the Privy Council in Tata Iron & Steel Co., Ltd. v. Chief Revenue Authority of. Bombay (A I R 1923 P C 148), and Alcock Ashdown & Co. Ltd. v. Chief Revenue Authority of Bombay (A I R 1923 P C 138). By section 8 of Act XXV, 1926, it was pro vided that under section 66‑A (2) a limited appeal should be permitted. to the Privy Council from a judgment of the High Court on a Reference made under section 66 where the High Court certified that the case was a fit one for appeal to His Majesty in Council. No provision, however, was made in section 66‑A for an appeal to His Majesty in Council from an order of the High Court under section 66 (3), refusing to require the Commissioner to state a case, and I am of opinion that the High Court has no jurisdiction to grant leave to appeal to His Majesty ‑ in Council from such an order. Further, it appears to me that there were sound reasons for granting an appeal from a judgment of the High Court, where the High Court had entertained a Reference, and providing no appeal where the High Court refused to order the Com missioner to state and refer a case. Proceedings connected with the assessment of income tax normally and mainly are concerned with issues of fact, and where neither the Commis sioner nor the High Court are of opinion that any question of law has arisen in the course of the assessment, it may well be that the Legislature did not think it convenient or desir able that the Judicial Committee should be called upon to review an order, which in the opinion of the High Court turned solely upon question of fact; see per Lord Macnaghten in the Rangoon Botataung case (I L R 40 Cal. 21), and for that reason granted an appeal only where a case had been stated, and a Reference entertained by the High Court. In either case of course the right to apply to His Majesty in Council for special leave would not be affected. "If the law were otherwise, the position would be an anomalous one. Under section 66‑A (2) h appeal lies to His Majesty in Council from a judgment `delivered on a reference' only where the High Court certifies the case to be a fit one for appeal to His Majesty in Council, and these words are textually the same as the concluding words of section 109 (c), Civil P. C. and coupled with the carefully limited referential words to the Civil P. C. in subsection (3), suffice in their Lordship's judgment to exclude from any right of appeal, cases which fall within the requirements of section 110 of the Code, and are operative to confine that right to cases which are certified to be otherwise fit for appeal to His Majesty in Council, per Lord Blanesburgh in Delhi Cloth & General Mills Co. v. Income Tax Commissioner, Delhi (A I R 1927 P C 242). As to section 66‑A (2) Leach, C. J. in the case of Commissioner of Income Tax, Madras v: Yoora Sreeramulu Chetty (which is a Special Bench case) observed as follows: -- "Section 66‑A (2) provides that an appeal shall lie to His Majesty in Council from any judgment of the High Court delivered on a Reference made under section 66 in a case which the High Court certifies, to be a fit one for appeal: Mr. Patanjah Sastri, on behalf of the Commis sioner of Income Tax, concedes that the Court has no jurisdiction to grant a certificate under section 66‑A . . . . .. . . . . . . . . If there is no appeal from a final order in an income tax matter, apart, of course, from the appeal now given under section 66‑A (2), it is difficult to understand how there can be an appeal from an interlocutory order in such a matter. I regard the direction which was given to the Commissioner of Income Tax to state a case as being an interlocutory order in a matter in which the Court was required to act in an advisory capacity, and the Reference to the Full Bench formed part of the interlocutory pro ceedings. The Tata case‑Tata Iron & Steel Co., Ltd. v. Chief Revenue Authority of Bombay is final on the question whether there is an appeal when the Court is acting merely in an advisory capacity under the Income Tax Act, and it covers the present case." In the same case Gentle, J. observed:‑ "In my opinion this matter is not a final judgment decree or order within the contemplation of Clause

39. Since it has been held by their Lordships of the Judicial Committee in I L R 47 Born. 724 that there is no appeal under Clause 39, Letters Patent, from a decision of the High Court in an Income Tax matter, it must follow that there can be no appeal and no authority for this Court to grant a certi ficate permitting an appeal to His Majesty in Council under the provisions of Clause 40, Letters Patent." In the case of Sri Mahanth Harihar Gir , v. Commissioner of Income Tax, Bihar and Orissa (which is also a case of a Special Bench of the Patna High Court), Manobar Lall, J. sitting with Harries, C J and Fazl Ali, J. delivered the judgment. In this case Manohar Lall, J. referred to (1877) 3 Q B D 1; 39 I A 197; I L R 40 Ca1. 21; 50I A 212; 1 I T C 206 (P C); I L R 47 Born. 724; 63 I A 403 (decision of Sir George Rankin), 1940 P N N 770; A I R 1940 P C 158; I L R 1940 Kar. 335 (P C); 57 I A 152; 4 1 T C 378 (P C); and 6 I T C 472; and the case Chettyar E. M. Firm v. Commissioner of Income Tax, Burma; A I R 1930 Rang 274 (decision of Sulaiman, C. J. and Bajpai, J.); and reviewed all the important cases relating to the point. We may quote the following from the judgment:‑ "It is now well settled by the highest authority that the right to appeal must be given by express enactment and cannot be implied. In (1877) 3 Q B D 1; L J 47 Q B D 10; 37 L T 391; 26 W R 299 (Sandback Charity Trustees v. North Staffordshire Railway Co.), Lord Bramwell, then Lord Justice observed: "An appeal does not exist in the nature of things. A right of appeal from any decision of any Tribunal must be given by express enactment." This dictum was approved by their Lordships of the Judicial Committee in Rangoon Botataung Co., Ltd. v. Collector of Rangoon (I L R 40 Cal. 21). A special and limited appeal to the Judicial Committee was provided by the Act after its amend ment in 1926. That provision is to be found in section 66‑A which provides by its second subsection that: "An appeal shall lie to His Majesty in Council from any judgment of the High Court delivered on a reference made under section 66 in any case which the High Court certifies to be a fit one for appeal to His Majesty in Council." It is common ground that section 66‑A has no application to the present case because the High Court did not deliver any judgment on any Reference made under section

66. All that the High Court did by its order, dated the 5th August 1940, was to refuse to require the Commissioner of Income Tax to state a case. It is for this reason that the application is made to this Court for leave to appeal to His Majesty in Council not under any provision of the Act, but under Clause 31 of the Letters Patent of this Court. Before con sidering whether the applicant is entitled to come under Clause 31 of the Letters Patent, it will be useful to consider what is the nature of the jurisdiction, which this Court exercises under section 66 of the Act. In Tata Iron and Steel Co., Ltd. v. Chief Revenue Authority, Bombay Lord Atkinson in delivering the judgment of the Judicial Committee held, while dealing with the effect of similar provision of sections 51 (2) of the then Income Tax Act, that "the decision, judgment or order made by the Court under section 51, Income Tax Act, in this case, was merely advisory, and not in the proper and legal sense of the term final, and therefore, it was held that the appeal to His Majesty in Council was incompetent". Then in the concluding portion of the judgment His Lordship states: "I respectfully desire to adopt the following observations of the learned Chief Justice of the Madras High Court while disposing of a similar contention in 6 I T C 472 (474); "I should like to point out also one very strange result, which would follow if such an appeal did lie. The High Court might have before it an utterly frivolous application to direct the Commissioner of Income Tax to refer certain questions to the High Court for the High Court's opinion. The High Court would reject that application. Noverthe less, if the sum involved were Rs. 10,000 and upwards, the petitioner would have an appeal as of right to the Privy Council. Contrast this with the position of an assessee who has come to the High Court with a petition asking for a Reference, which the High Court deals with, and is of the opinion raises points of law, which should be referred by the Commissioner of Income Tax to the High Court, and directs a Reference to be made, and on the Reference to the High Court answers those questions against the assessee. That assessee has not got an appeal as of right to the Privy Council at all, although prima facie he had an arguable case on a point or points of law;, and he can only appeal to the Privy Council if the High Court certifies that the case is a fit one for appeal. He is thus in a much less favour-able position than the person who presents to the High Court an utterly frivolous application for a Reference to the Income Tax Commissioner. That seems to me to be a rather striking example of what would be the result of the contention put before us today if it were the correct one. In my opinion no appeal lies". Apart from the view taken by the Lahore High Court in Feroze Shah Kaka Khel v. Commissioner of Income Tax, Punjab and N. W. F. Provinces (5 I T C 198.), the current of authority of the other High Courts seems to be in favour of the view that no appeal lies to High Majesty in Council under the Letters Patent from an order of the High Court dismissing an application under section 66 (3) of the Act to direct the Commissioner of Income Tax to state a case even though the subject‑matter involved is Rs. 10,000 or more in value (as is admittedly the case in the application under consideration)". The ruling of the case of Seth Prem Chand Satramdas v. The State of Bihar, though relates of section 21(3) of the Bihar Sales Tax Act, 1944, seems to apply also to the facts of the present case, for the same question as in the present case was raised before the Supreme Court, and most of the cases on the point have been referred to by their Lordships including the case of Sri Mahanth Harihar Gir v. Commissioner of Income Tax, Bihar and Orissa, to which we have just referred, and to the decision of which also his Lordship Fazl Ali, J. was a party. This is a case in which the appellant made an application to the High Court requiring the Board of Revenue to state a case, and referred to the High Court, but his application was summarily rejected. The appellant made an application for leave to appeal to the Federal Court, which the High Court granted, and this the High Court did by following the decision of the Lahore High Court in the case of Feroze Shah v. Income Tax Commissioner, Punjab, N‑W. F. P., Lahore. Their Lordships of the Supreme Court of India held that the High Court had no jurisdiction to grant the leave, and after reviewing the cases, among other things, observed at follows:‑ "It seems to us that the order appealed against in this case, cannot be regarded as a final order, because it does not of its own force bind or affect the rights of the parties . . . . . . It cannot also be held that the order was passed by the High Court in this case in the exercise of either original or appellate jurisdiction. It is not con tended that the matter arose in the exercise of the appellate jurisdiction of the High Court, because there was no appeal before it. Nor can the matter, properly speaking, be said to have arisen in the exercise of the original jurisdiction of the High Court, as was held by the Judges of the Lahore High Court in the case to which Reference was made, because the proceeding did not commence in the High Court as all original suits and proceedings should com mence. But the High Court acquired jurisdiction to deal with the case by virtue of an express provision of the Bihar Sales Tax Act. The crux of the matter, therefore, is that the jurisdiction of the High Court was only consultative and was neither original nor appellate." The other three cases cited by Mr. Guha, namely, the case of Messrs. P. A. Raju Chettiar and Brothers v. Commissioner of Income Tax, Madras the case of Jamnadas Prabhudas, Bombay v. Commissioner of Income Tax, Bombay City and the case of Commissioner of Excess Profits Tax, West Bengal v. Ruby General Insurance Co., Ltd. are later cases, and have all followed the rulings, which we have discussed at length, and after examining all these cases, we have no doubt that apart from the wording of subsection (2) of section 66‑A of the Income Tax Act, almost all the High Courts except the Lahore High Court in the case of Feroze Shah v. Income Tax Commissioner, Punjab, N.‑W. F. P., Lahore (a decision of the Full Bench), have unanimously held that no application for leave to appeal to the Federal Court lies under sections 109 and 110 of the Code of Civil Procedure, and that even in case of Reference made to the High Court under section 66, appeal under subsection (2) of section 66‑A of the Income Tax Act lies only if the High Court certifies that the case is a fit one for appeal. As on the facts of the case we have set out, it is not a Reference of the nature contemplated by section 66 of the Income Tax Act, but an order refusing to direct the Appellate Tribunal to make a Reference, it is clear that no appeal lies against such an order. So, the preliminary objection must prevail. In the result, this application for leave to the Supreme Court is rejected with costs, which we assess at five Gold Mohurs. RAHMAN, J.‑

I agree. K. B. A. Application rejected.