P L D 1967 Karachi 681 (PLP)

WAHIDUDDIN AHMED, J.-This is a reference under sec tion 66(2) of the Income-tax Act, 1922 made by the Income- tax Appellate- Tribunal in pursuance of an order of this Court dated 13th February 1962. Under the directions of this Court the learned income-tax Appellate Tribunal has referred the following questions for the opinion of this Court :- "(1) Whether the finding of the Tribunal that the appeal filed by the petitioners against the assessment order for the assessment year 1950-51 before the Appellate Assistant Com missioner was time-barred arises out of its order dated the 21st March 1958? (2) If so, whether in the circumstances of the case the Tribunal was justified, in holding that the appeal against the assessment for the assessment year j950-51 to the Appellate Assistant Commissioner was barred by limitation? and (3) Whether in the circumstances of the case the Tribunal was justified in holding that the Appellate Assistant Commis sioner, "A" Range, Karachi in refusing to condone the delay, in filing the appeal exercised his discretion judicially?"

2. The facts giving rise to this reference are that the three appli cants Messrs Haji Abdul Rahim Haji Abdullah, Seth Muhammad Suleman and Haji Seth Abdul Gani Dada are partners of Messrs Dada Sons & Co. The assessment year involved is 1950-5I. The assessment of the company as also of each of the three partners was completed on 27th September, 1951, and notice of demand was served on them on 16th October, 1951. During the assess ment proceedings it was understood that assessment shall be completed very soon and therefore, on 14th December 1950, application for certified copies of the assessment orders was filed by Messrs Ahmed B. Khan on behalf of the assessee. It was only on 21st duly 1953, that copies of the assessment orders were made available to the assessees, and on 1st August 1953, appeals were filed before the Appellate Assistant Commis sioner. The Appellate Assistant Commissioner held the appeals to be time-barred on the ground that the application for copies made on 14th December 1950, was not a valid application in that it was made by Messrs Ahmed B. Khan & Co. who were not authorised in this behalf. Against this order of the First Appellate Officer the assessee went in appeal to the Tribunal who held that though the appeals in fact were time -barred, the Appellate Assistant Commissioner should have con sidered the question of condonation of delay. Thereafter the matter came up before the Appellate Assistant Com missioner who dismissed the appeals in limine holding that no case for condonation within the meaning of section 30(2) of the Income-tax Act had been made out. The Assessees appeal against this order was dismissed by the Tribunal, who agreed with the finding of the Appellate Assistant Commissioner. Thereupon the assessees filed application under section 65(1) of the Income-tax Act for referring the questions of law said to arise from the order of the Tribunal dated 21st March 1958. But the learned Tribunal by its order dated 7th August 1958 refused to refer the question on the ground that the question of limitation did not arise from their order dated 21st March 1958 and the question of condonation of delay being of fact could not be referred.

3. The assessees then approached the High Court and succeeded in showing that the question sought to be referred were in fact questions of law and did arise from the Tribunal's order. To the two questions formulated by the assessees a third ques tion was added by this Curt. It was in these circumstances that the above questions have been referred for the opinion of this Court.

4. In support of the first question Mr. Ali Athar, the learned counsel for the assessees, has contended that it is quite correct that the question of limitation was at first disposed of by the order of the Tribunal dated 31st December 1956 when the matter was remanded to the Appellate Assistant Commissioner for consideration of the question whether it was a fit case for condonation of delay. The learned counsel however, contended that for the second time when the matter was taken to the Income-tax Tribunal from the order of the Appellate Assistant Commissioner dated 24th August 1957, both the questions whether the Appeal was barred by time or it was a fit case for condo nation of delay was argued before the Income-tax Appellate Tribunal. According to the learned 'counsel the question of limitation is so closely connected to the question of condona tion of delay that it was necessary to discuss both the points before Income-tax Appellate Tribunal. In this connection the learned counsel has referred us to a passage reproduced by the Income-tax Tribunal in its order dated 21st March 1958 in which they reiterated their following observation in the earlier appeal: "It is explained that the assessee has not been guilty of any laches or carelessness and that his action was influenced by a bona fide mis-apprehension. The Appellate Assistant Commissioner has not considered the question of condonation. He thinks that since the appeal was filed long after the expiry of the period of limitation he could not condone the delay. This is a wrong approach. The question of sufficiency or otherwise of the cause preventing the assessee from filing the appeal within the period of limitation has to be considered in the light of the circumstances that may be put forward by the assessee. The question of two days, two months or two years is immaterial provided that the assessee is able to account for the delay, however, long it may be. Since the Appellate Assistant Commissioner has not exercised his discretion at all, we remit the case to him for a considera tion of all the facts that may be brought to light and he may then consider the question of whether it is a fit case in which the delay should be condoned." The learned counsel further referred us to the following portion in the order dated 21st March 1958 in support of his contention that the question of limitation was again brought to the notice of the Tribunal but they declined to entertain it. In this connection the learned Tribunal observed as under :- "It is again suggested before us that it has been the practice with Income-tax Practitioners to make premature application for assessment orders and the Department has tacitly en couraged this practice. Mr. Shaban requests that the President of the Income-tax Bar may be called to give evidence which might throw some light on the subject. The request should have been made to the Appellate Assistant Commissioner and it is not possible for us to entertain such an application at this stage. There is no material in support of the sugges tion that such practice exists or that the appellant was in any way misled by any such thing. On the other hand, the materials on the record point to the contrary."

5. On the other hand, Mr. Nusrat the learned counsel for the Department, has contended that the question of limitation was finally decided by the order of the Tribunal dated 31st December 1956. He contended that by reproducing the above passage from their earlier order the learned Tribunal was only referring to the circumstances in which for the second time the appeal came up before them. In respect of the second passage referred to above, the learned counsel contended that this point was only discussed in connection with the question of condonation of delay and not for considering the question whether the appeal filed before the Appellate Assistant Commissioner was within time or not.

6. It will be noticed that in the present case the assessee challenged the order of the Appellate Assistant Commissioner dismissing their appeal as barred by time and the Tribunal by their order dated 31st December 1956, agreeing with the view of the Appellate Assistant Commissioner, remanded the case back for consideration of the question whether it was a fit case for condonation of delay. It cannot, therefore, be doubted that on the question of limitation the Tribunal had expressed its final opinion by order dated 31st December 1956. It however, appear to us that the assessee again pressed this point before the Tribunal on the second occasion and it was in that connection that the Tribunal reiterated their view in their order dated 21s March 1958. Thus it cannot be said that the question of limi tation was not discussed by the Tribunal again on the second occasion. In our view the very fact that Mr. Shaban again suggested before the Tribunal that it was the practice with Income-tax Practitioners to make premature application for assessment orders and the Department bad tacitly encouraged this practice and requested that the President of the Income-tax Bar Association may be called to give evidence which might throw some light on the subject and the Tribunal's refusal to entertain any such suggestion clearly indicates that the question of limitation was again agitated before the Tribunal and was dis cussed in the order of the Tribunal dated 21st March 1958. -In fact we find much force in the contention of the learned counsel for the assessee that the question of limitation and the condo nation of delay was so closely connected with each other that one could not be disposed of without considering the other. The argument that the Tribunal having expressed its final opinion on the question of limitation was not competent later on to reconsider its view expressed on that point has not impressed us. In our opinion, the question whether the appeal filed by the assessee before the Appellate Assistant Commissioner was barred by time after the remand was still an open question. In case the delay was condoned, the appeal would have been held to be within time. Thus the Tribunals view on the question of limitation could not be considered to be finally sealing its fate. In such circumstances, it was open to the assessee to canvass the question of limitation in all its aspects again before the Tribunal: There is no such bar in section 33 in this respect. Even in cases arising under Order XLI, rules 25 and 26, C. P. C. the weight of opinion is that if after remand the appeal again comes up for hearing, the Appellate Court is not bound by its previous finding. This principle, though in a different context, was extended in an Allahabad decision Messrs Laxmi Co. Kanpur v. The Commissioner of Income-tax, U. P. (A I R 1960 All. 278) to Income-tax Cases. In the absence of any provision in the nature of section 105(2), Civil P. C. in the Income-tax Act, the principle enunciated by the Judicial Committee in Forbes v. Ameerunnisa Begum (10 M I A 340), that a party can take an objection about an irregu larity at the final stage in appeal can be invoked in Income tax Cases. We would, therefore, hold that the finding of the Tribunal that the appeal filed by the assessees before the Appel late Assistant Commissioner was barred by time does arise from its order dated 21st March 1958.

7. The second question for consideration is whether the Income-tax Appellate Tribunal was justified in holding that the appeal filed by the assessee was barred by time. In this connection it will be noticed that the assessment order by the Income- tax Officer was passed on 27th September 1951. The demand notice was served on the assessees on 16th October 1951. The assessee filed an application for copy of the assessment order on 14th December 1950. Copy of the assessment order was furnished to the assessees on 21st July 1953. The appeal was filed before the Appellate Assistant Commissioner on 1st August 1953. Thus it will be noticed that the application for the copy of the assess ment order in the present case was filed long before the comple tion of the assessment order under the impression that the account books had been examined by the Income-tax Officer and the assessment was going to be completed shortly. Accord ing to the view of the Tribunal the application made by the assessee had no validity in the eye of law because it had been filed for something which at that time did not exist ; and, there fore, the assessees were not entitled to the exclusion of time taken for obtaining the copy of the assessment order under section 67-A. In our opinion, the learned Tribunal in coming to this conclusion fell into an error because the learned counsel for the Department was unable to show us any rules from which it can be gathered that an application for copy of assessment order should be made after an assessment order is passed. In the absence of any bar in the rules or in the enactment about the manner in which an application for supplying copy of the assessment order should be filed, we find no ground to hold c that the assessees were not entitled to file an application for copy of the assessment prior to the passing of the assessment order. It is always open to the litigant public by abundant caution to apply for the copy of the assessment order before it is passed unless a contrary rule is framed. There being no prohibition in the Income-tax Act or in the rules, it is difficult for us to hold that the application for supply of copy filed by the assessees on 14th December 1950, was not a valid applica tion. Had it been the position, the Department would not have furnished a copy to the assessee on 21st July 1953. Once the Department had acted on this application it does not lie in its mouth to urge that the above application was not a valid application. As observed in Piare Lal v. Karta Ram (A I R 1936 Lah. 550) a litigant cannot be made to suffer for the laches and. inaction of any Department. In this connection Agha Haider, J., while considering the question of limitation, observed :- "A litigant cannot be made to suffer for the laches and inaction of any Department connected with the administration of justice, hence there is no reason why in the present case the defendant-appellant should lose his right of appeal for the dilatory methods of the copying Department. I have already laid down in 37 P L R 784 (Rura Mal v. Ram Chand, 1936 Lah. 200) that the copying Department is not the agent of the applicant for copies but of the particular Department of the Government which is in charge of the Deputy Commissioner."

8. Mr. Nusrat, the learned counsel for the Department contended that it was open to the assessee to file an appeal without filing a copy of the assessment order. That may be so. But once an assessee decides to wait for the copy of the assessment order and does not file an appeal on the basis o the demand notice, he is entitled under section 67-A of the Income-tax Act for the exclusion of the time requisite for obtaining a copy of such order. In a case arising under section 12(2) of the Limitation Act which is in similar language as section 67-A their Lordships of the Privy Council in Jijibhoy N. Surrty v. T. S. Chettyar (AIR 1928 P C 103) held that in reckoning the time for presenting an appeal, the time required for obtaining a copy of the decree and judgment must be excluded, even though by the rules of the Court it is not necessary to obtain such copies. We would, therefore, hold that the learned Tribunal was wrong in holding that the appeal filed by the assessee was barred by time.

9. In our opinion, the finding of the learned Tribunal on the third question also is. open to question. The Tribunal has rejected the plea of the assessees on the question of condo nation of delay on the ground that they had acted mala fide. This inference was raised on the ground that the assessees' Income -tax adviser had applied under section 45 of the Income-tax Act for abeyance of the demand in rasp; ct of the foreign income. It is, however, not disputed before us that in the demand notice of consolidated demand of Rs. 15,888 was made from the assessees without specifying any amount in respect of the foreign income. The assessees' case is that their Income-tax adviser bad informed them that the Department had not yet made any assessment in respect of the foreign income. The Tribunal has rejected this plea on the ground that there was no other reason for Mr. Ahmed B. Khan, who was the Income-tax adviser, to move an application under section 45 of the Income-tax Act. Un fortunately, the Income-tax Tribunal has not sent this important document along with the reference as we expected under the law. During the course of the hearing we asked Mr. Nusrat, the learned counsel for the Department, for producing the above-mentioned document in order to find out the circumstances in which it was written. But Mr. Nusrat was unable to produce the letter of Mr. Ahmed B. Khan dated 17th November 1951 in spite of several adjournments. Thus it is not possible for us to hold under what circumstances this letter was written and to fix the assessees with any responsibility on this account. Mr. Ali Athar, the learned counsel for the assessees, contended that an application under section 45 of the Income-tax Act can also be given in contemplation of filing an appeal. In view of the contention of the learned counsel, it was necessary for the Tribunal to send along with the reference the letter of Mr. Ahmed B. Khan dated 17th November 1951. In these circumstances, we are not prepared to draw any adverse inference on the basis of the above letter against the assessee.

10. The simple question, therefore, for consideration is, whether in the circumstances of the present case, even if it is held that the appeal was barred by limitation the assessee are entitled to condonation of delay. In our opinion, the assessees have made out sufficient cause for condonation of delay. The very' fact that the Department slept over their application for supply of copy of the assessment order from 14th December 1950 to 21st July 1953 shows that the Department was itself negligent in the discharge of its duties in supplying the neces sary copy. There is no explanation why the Department failed to carry out its duty diligently. It was open to the Department not to accept the application made on 14th December 1950, on the ground that it was premature. It is not disputed by the Department that no such order had been passed. In these circumstances it was the duty of the Department to supply the copy of the assessment order on this application after the assessment order had come into existence. It cannot, therefore, be said that the assessees were not misled by the conduct of the Department in not supplying the copy of the assessment order within a reasonable time. In cases where the copy is applied for within limitation and it is only because of inordinate delay in the preparation of the copy that the appellants are unable to present the appeal, that is considered as sufficient ground for condonation of delay. This view finds support in the decision of the Lahore High Court in Mst. Bhuri and others v. Mst. Asghari Begum (A I R 1926 Lah.458). In these circumstances, we would hold that the assessees bad shown good and sufficient cause for condonation of delay and it was a fit case in which the appellate authority should have condoned the delay. We are satisfied that the Income-tax Authorities have exercised the discretion vested in them in this respect on arbitrary consideration.

11. In the light of the above discussion we would answer the questions referred to the Court in the following manner (1) Question No. 1 in the affirmative. (2) Question No. 2 in the negative. (3) Question No. 3 in the negative.

12. In the result, the reference is allowed. The Department will pay the cost of these proceedings. S. Q. Reference allowed.