P L D 1971 Lahore 632 (PLP)

3. Before proceeding further, it is necessary to reproduce subsections (1) and (2) of section 66 of the Act. They read as follows :‑ "Section 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 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 state ment of the case and refer it to the High Court Provided that if, in the exercise of its powers under sub section (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 (1) the Appellate Tribunal refuses to state the cases on the ground that no question of law arises, the assessee or the Commis sioner, as the case may be, may within six months from the date on which he 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) . . . . . . . . . . . . (4) . . . . . . . . . . . . (5) . . . . . . . . . . . . (6) . . . . . . . . . . . . (7) . . . . . . . . . . . . (7‑A) .

4. A perusal of the subsections reproduced above will show that before a High Court requires a Tribunal to submit a reference to it, the following conditions must be fulfilled, namely :‑ (i) That the initial order of the Tribunal should be under section 33(4) of the Act, (ii) that against the order the applicant should have moved the Tribunal under subsection (1) of section 66 for making a reference to the High Court, (iii) that reference claimed should be with regard to any question of law arising out of the Tribunal's initial order, referred to in point No. (i) above, (iv) that the Tribunal should have rejected that application and refused to state the case on the ground that no question of law arises from its initial order passed under section 33(4), and referred to in point No. (i) above, and (v) if the High Court is not satisfied with regard to the correctness of the decision of the Tribunal in the matter of refusing to make a reference, then the High Court may enquire the Tribunal to state the case and refer the same to it. "

5. In the earlier paragraphs of this judgment we have reproduced the relevant extract from the initial order of the Tribunal, dated the 14th of April 1969 (Copy Annex P.4), passed under section 33(4) of the Act. We have also reproduced at the same place the relevant portion of the decision dated the 24th of March 1970 (copy Annex P. 6) of the Tribunal, refusing to make a reference. We are now to see as to whether the grounds given by the Tribunal for refusing to make a reference in its decision dated the 24th of March 1970, are correct or not. The Tribunal has given the following grounds in that behalf: -- (a) That at the time of arguing the second appeal before the Tribunal, the only point which was pressed was that in the order of the Income‑tax Officer, dated the 31st of January 1967 (Copy Annex P. 1), there was no express mention of the fact that he had at all exercised the discretion vested in him by law to refuse the registration of the firm. The Tribunal said that this discretion had been definitely exercised inasmuch as an order to this effect was categorically passed by the Income‑tax Officer refusing registration and quoting section 23(4) in that behalf and it was with this reply that the Tribunal had disposed of the point raised before it at the relevant time. (b) That the point now sought to be referred, namely, regarding the manner of exercise of jurisdiction by the Income tax Officer in refusing registration was not the, subject of dispute before the Tribunal. We find that the reasons given by the Tribunal are quite sound and are supported from the impugned orders themselves. It has been held in numerous cases that no reference could be claimed from the Tribunal on a point which was not raised before it. When confronted with the above situation, learned counsel for the petitioner argued that the wording of subsection (1) of section 66 shows that a reference could be claimed from the Tribunal about "any question of law arising out of such order", and regardless of the fact whether the point was directly raised or not, if it was otherwise "arising" out of the Tribunal's order passed under section 33(4), then an applicant was within his right to claim a reference. This point has been the subject of consideration in a number of cases and it is not necessary to quote all of them over here. In Commissioner of Income‑tax, Bombay v. Scindia Steam Navigation Co. Ltd. ((1961) 4 Taxation 103) of the head note, it was held that: ‑ " . . those questions must arise out of the order of the Tribunal. It is, therefore, clear that under section 66(2), the Court cannot direct the Tribunal to refer a question unless it is one which arises out of the order of the Tribunal and was specified by the applicant in his application under sec tion 66(1). (1) When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order. (2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order. (3) When a question is not raised before the Tribunal but the Tribunal deals with it that will also be a question arising out of its order. (4) When a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that ft may arise on the. findings given by it." Similar views are expressed in The Scindia Steam Navigation Co. Ltd. v. Commissioner of Income‑tax (P L D 1959 Kar. 527), Messrs Muhammad Idrees Barry & Co. v. The Commissioner of Income‑tax, Punjab and N.W.F.P. (P L D 1959 S C (Pak.) 202), Commissioner of Income‑tax, Madras v. Arunachalam Chettiar (A I R 1953 S C 118) and Oriental Investment Co. Ltd. v. Commissioner of Income‑tax, Bombay (AIR 1957 S C 852). Proceeding to apply the above tests to the facts and circumstances of the present case, since the case was argued before the Tribunal only on the factual aspect of discretion C having been exercised or not (and not on the legal place which is now sought to be introduced), the Tribunal was justified in holding that the question ‑was not one arising out of its order.

6. Even otherwise it is well‑settled that the jurisdiction of the High Court under section 66(2) of the Act is discretionary as is clear from the use of the word "may" therein, and is very limited in scope and merely advisory in nature. In the exercise of such a special jurisdiction and discretion, a High Court is not to answer purely hypothetical and academic questions which are L not material for the case and on the facts found will be of no help to the applicant; nor a reference should be called for when the answer to the alleged question of law is self‑evident or is already covered by decisions of Courts on the subject. These are sound principles whichinter alia regulate the discretion of the High Court in declining to call a reference from the Tribunal. See The Pro vincial Library v. The Commissioner of Income‑tax, East Pakistan (P L D 1958 S C (Pak.) 81), M. E. R. Malak v. Commissioner of Income‑tax, C. P. and Bahar (A I R 1932 Nag. 68), Mathuraprasad Motilal & Co. v. Commissioner of Income, tax, Madhya Pradesh and Bhopal, Nagpur (A I R 1957 Nag. 6), Abdul Kadir Sahib v. Commissioner of Income‑tax Mysore (A I R 1953 Tra. Coch. 526), Vithal Reddy Rangareddy v. Hyd. Government through The Commissioner, E. P. T. (A I R 1953 Hyd. 250) and Chaturbhuj v. Commissioner of Income‑tax, U. P. and C. P. (A I R 1941 Oudh 445).

7. Examining the present case in the light of the above principles, we may refer to the order of the Income‑tax Officer, dated the 31st of January 1967 (Copy Annex. P. 1), wherein he refused registration of the firm. Its relevant portion reads as follows :‑ "This is the case of a firm exhibitor who owns Odeon Cinema, Lahore. No return was filed under section 22(1). A notice under section 22(2) was issued on 1‑1‑1963 which was served on 24‑1‑1963. Even then the assessee filed no return. The case was fixed for the first time on 29‑4‑1966 for hearing on 6‑5‑

66. The notice under section 22(4) was properly served upon the assessee on 30‑4‑1966. The assessee's A. R. appeared and requested for adjournment. The case was accordingly adjourned to 21‑5‑1966. No one attended on this date. The case was again fixed under section 22(4) for 30‑5‑1966 and the notice was duly served on the assessee on 25‑5‑1966. None appeared and the case was fixed again under section 22(4) for 7‑6‑1966. The notice was properly served on 1‑6‑1966. This notice was again not complied with. The case was then refixed on 28‑12‑1966 for hearing on 18‑1‑1967. The notice was served on 9‑1‑1966 under section 22(4) of the Income‑tax Act. No one appeared on this date. Finally a notice under section 22(4) was issued on 20‑1‑1967 for hearing on 31‑1‑1967. It was served on 24‑1‑1967. None has appeared to day even. In these circumstances, I complete the assessment ex parte under section 23(4) of the Income‑tax Act in the status of U. R. F. and refuse the assessee's application under section 26‑A." The order with regard to assessment year 1963‑64 is as follows: -- "This is the case of a firm exhibitor who is running Odeon Cinema, Abbot Road, Lahore. No return was filed under section 22(1). A notice under section 34 was issued and served on the assessee on 27‑5‑1965. Even this notice has remained un-complied with notice under section 22(4) was issued for the first time on 29‑4‑1966 for hearing on 6‑5‑1966. This was served on 30‑4‑1966. No one attended on the fixed date. The case was again fixed for 30‑5‑1966 under section 22(4) and the notice was served on 25‑5‑1966. None appeared. On 28‑12‑1966, the case was refixed for 18‑1‑1967. This notice was served on 9‑1‑1967. No one attended. Finally, the case was fixed for 31‑1‑1967 and notice was properly served on 24‑1‑1967. None appeared even to day. In view of the above facts and circumstances, I complete the assessment ex parte under section 23(4) of the Income‑tax Act in the status of U. R. F. and refuse the assessee's application under section 26‑A. From the Inspector's report dated 28‑12‑1962‑ it will appear that the books are never written in due course and accounts are not properly maintained. This is also patent from the report of the Inspector who visited the Cinema on 1‑8‑1966." These orders show that the Income‑tax Officer had complied with all the necessary requirements of law before making ex parte best judgment assessment. He had issued the necessary notices and on factual plan the grounds and reasons given by him have not been taken exception to before us. The stage was ripe for him, therefore, while making the ex parte best judgment assessment to refuse registration of the firm under section 23(4) of the Act, already reproduced above. The same grounds on the basis of which he proceeded to make the ex parte best judgment assessment could constitute the basis for refusal of registration. This was so held in Firm Raghunandan Prasad Manohar Lai v. Commissioner of Income‑tax U. P. Lucknow (A I R 1957 All. 75) The actual passage in the judgment reads as follows :‑ "

8. The applicant's next contention that in the present case the Income‑tax Officer has not exercised his discretion at all, is based upon fact that in refusing to register the firm, he had merely repeated the arguments upon which he based his assessment to the best of his judgment. The section does not lay down that the refusal to register may not be based upon any one or more of the grounds which led to the assessment being made to the best of the judgment of the Income‑tax Officer." No law to the contrary has been brought to our notice. Our own reading of subsection (4) of section 23 also shows that provides two penalties against a delinquent assessee. One is of making an ex parte best judgment assessment and the other is (confining to the facts of this case) of refusing registration. Once he had made out a ground for proceeding ex parte, that was enough for refusing registration as well. The case is just like a situation, where, for instance a law says that for a creation act of omission or commission, the delinquent may be imprisoned and also fined. Now when the charge is proved then if the Court while passing an order of sentence also passes an order of fine, it is not required to give separate reasons for the same. The commission of the offence is sufficient by itself to warrant both the penalties. In the instant case as well, since omission to file return and produce accounts was there, an order for refusal to register the firm could well be passed. Learned counsel submits that since in a case of contem plated cancellation of registration, the proviso to subsection (4) of section 23 provided a further separate notice, a similar additional notice regarding intention to refuse registration should have been issued to the assessee. This cannot be accepted. The very fact that the Legislature while mentioning both these situations at one and the same place provided for an additional F notice with regard to one and not with regard to the other, shows that in cases where no such additional notice was provided for, it did not desire the issuance of such further notice.

9. From what has been written above, it is clear that this is not a fit case in which this Court should exercise its discretion under section 66(2) of the Act and call for a reference from the Tribunal. The applications are rejected in limine. Applications dismissed.