Income Tax Appellate Tribunal - Delhi
Commissioner Of Income-Tax vs Indiana Travels (P.) Ltd. on 17 January, 1990
Equivalent citations: [1990]32ITD719(DELHI)
ORDER
G. Krishnamurthy, President
1. These are applications under Section 256(1) of the Income-tax Act, 1961 moved by the Commissioner of Income-tax, Delhi-Ill, New Delhi stating that certain questions, said to be questions of law arise out of the order of the Tribunal dated 13-7-1989 in I.T. A, Nos. 4404 and 4688/Del/86 and requiring us to draw up a statement of the case and refer the said questions to the Hon'ble High Court for its opinion.
2. We have heard the learned Departmental Representative and the learned counsel for the assessee for some time on the issues involved in this case. Before we deal with the merits of the applications, we will have to first dispose of a preliminary objection raised by the Registry of the Income-tax Appellate Tribunal. The Registry pointed out that these applications were barred by time by 44 days. The office Registry submitted that the order under reference i.e. the order dated 13/7-1989 was served on the Chief Commissioner of Income-tax, Delhi on 28th of July, 1989 in accordance with the provisions of Section 254(3) of the Income-tax Act as amended by the Direct Tax Laws Amendment Act, 1987 w.e.f. 1-4-1988. The present applications were presented in the Tribunal on 9-11-l989. There was thus a delay of 44 days. The Chief Commissioner of Income-tax appears to have sent a copy of the order to the Commissioner of Income-tax, Delhi-Ill on 12-9-1989, The Commissioner of Income-tax who is the applicant before us now claims that the period of limitation should start from the date on which the order of the Tribunal was served on him namely 12-9-1989 and reckoned from, that date the applications filed were in time and were not barred by limitation. According to the report of the Registry, on the other hand the order of the Tribunal having been served on the Chief Commissioner of Income-tax on 28th July, 1989, the limitation period should start from that date and so reckoned the applications were out of time.
3. A notice pointing out the above defect was served on the Commissioner and the Commissioner submitted a reply dated 26-12-1989. In this reply, it has been asserted that the Reference Applications filed on 9-11-1989 were within the prescribed time limit of 60 days from the date of the receipt of the Income-tax Appellate Tribunal's order on the Commissioner. It was, further, asserted that the order of the Tribunal contained a service slip which was received by the concerned Commissioner only on 9-11-1989 and the limitation should count from the date of the receipt of the service slip and so counted the reference applications were well within time. The idea underlying the objection filed on behalf of the C.I.T. through his Income-tax Officer was that under Section 256(1) of the Income-tax Act, 1961, a reference application has to be filed within a period of 60 days from the date of the service of the order of the Commissioner and not from the date of the service of the order of the Chief Commissioner of Income-tax and, therefore, the limitation should start from the date when the order was received by the applicant Commissioner. During the course of bearing of the preliminary objection, it was contended on behalf of the Department that as per present practice evolved by the Tribunal, all orders of the Tribunal are first received by the Chief C.I.T. in the Central Revenue Building, who then passes on the orders to the concerned Commissioners. This practice was being followed in accordance with the understanding reached between the President of the Tribunal and the Chief Commissioner of Income-tax on this point in a bid to resolve certain problems arising out of delay in the service of the orders of the Tribunal. It was further stated that to this procedure a clear understanding was arrived at, that for all limitation purposes, the date of the service of the Tribunal's order on the concerned C.I.T. alone would be taken into account and that it was in accordance with this arrangement that the office of the Chief C.I.T. sent acknowledgement slips to the concerned C.I.T. along with the orders of the Tribunal and these acknowledgement slips bore the date of the service of the orders to the concerned C.I.T. and that date alone should be taken into consideration for the purposes of reckoning limitation. It was in pursuance of this practice that the order under reference was sent by the Chief C.I.T. to the concerned Commissioner and the limitation should count from that date.
On the other hand, the learned counsel for the assessee Sri C.S. Agarwal submitted that under Section 254(3) of the Income-tax Act, a copy of the order passed by the Tribunal has to be sent either to the Chief Commissioner or to the Commissioner unlike the earlier provision of law which was in force till 31-3-1988 according to which the orders of the Tribunal have to be sent only to the C.I.T. By virtue of the Direct Tax Laws Amendment Act, 1987 the provisions of Section 254(3) were amended w.e.f. 1-4-1988 to provide that the copy of the Tribunal's order should be sent to the Chief Commissioner or to the Commissioner. The Tribunal has the option either to send the copy of its order to the Chief Commissioner or to the Commissioner and if in exercise of that option, the order was served on the Chief Commissioner, the obligation on the part of the Tribunal to serve the orders stood discharged and, therefore, the date for counting the limitation should start from the date on which the order was served on the Chief Commissioner. The Department cannot now contend that the date of service by the Chief Commissioner or the Commissioner alone should be taken into consideration in as much as that was not contemplated under the Scheme of the Income-tax Act, although it was the C.I.T. that has to file the reference application within 60 days from the date of service of the order on him under Section 256(1) of the Income-tax Act. It was for the Chief C.I.T. to make arrangements to transfer the orders to the concerned Commissioner expeditiously so as to enable the concerned C.I.T. to file the reference applications within the time prescribed under the Act The Chief C.I.T. cannot afford to delay the transmission of the orders to the concerned -C.I.T. thereby prolonging the period of limitation prescribed under the Income-tax Act He, therefore, stressed that the service of order on the Chief C.I.T. should alone be taken into consideration and reckoning from that date, the reference applications were clearly out of time and the Tribunal not having the power to condone the delay beyond 30 days, the Reference Applications must be dismissed as not maintainable.
4. During the course of hearing and with a view to help resolve this tangle, we requested other Advocates who were present in the Court also to help the Tribunal to come to a proper conclusion on the subject, Shri R. Ganeshan offered to argue as amicus curiae he relied upon the arguments addressed by Shri C.S. Agarwal and in particular submitted that when the law was amended w.e.f. 1-4-1988 the expectation of the Legislature was that the Chief C.I.T. on whom the orders could be served was to take expeditious steps to forward the orders of the Tribunal to the concerned Commissioner well within time to enable him to make up his mind whether to file a reference application or not and the Legislature never wanted to extend the period of limitation by the delay that is caused in the office of the Chief Commissioner of Income-tax as this would impliedly mean promoting or condoning lethargy in the office of the Chief C.I.T. He also referred to some case law on the subject but we do not think it is necessary for us to dwell upon those points now.
5. Shri C.S. Agarwal inviting our attention to an instruction issued by the Central Board of Direct Taxes as early as on 3-3-1981 as Instruction No. 1387 in F. No. 270/ 152/80-IT J submitted that the Board never recognised even by implication the implied theory that is now being propounded by the C.I.T. that service alone on him should be taken as the date of service and not the service on the Chief C.I.T. A similar difficulty arose before the Law was amended w.e.f. 1-4-1988 and the matter reached the Bombay High Court by way Writ Petition. The Board considered the matter in all its aspects and after taking the advice of the Law Ministry, came to the view that since the Income-tax Appellate Tribunal was not in a position to know nor has the necessary machinery to ascertain as to the changes made in the jurisdiction of the Commissioner of Income-tax and since the Income-tax Act provided service of the orders of the Tribunal on the Commissioner, that service on one Commissioner whether he held jurisdiction or not of the concerned case, should be regarded as the proper service and enjoined a duty upon that C.I.T. to take steps forthwith to remit the order to the concerned C.I.T. so as to enable him to file the reference application within the prescribed time. It was also clearly pointed out in this instruction that the change in the address must be informed to the Registry of the Tribunal as expeditiously as possible but the responsibility has been placed upon the transferring Commissioner to forward the applications to the concerned Commissioner and the date of limitation had to commence only from the date on which the order of the Tribunal was served on the transferring Commissioner. Such being the case and when such was the understanding of the Board and instructions to that effect were given to the C.I.T. as early as in 1981, the present C.I.T. cannot plead that service on him alone should be taken into consideration, ignoring the service made on the Chief C.I.T. He, further, submitted that whatever might have been the understanding arrived at between the President of the Tribunal and the Chief C.I.T. to sort out certain problems, that arose at that time, they hold no more good after the law was amended and automatically lapsed because the Law must prevail over the agreement entered into. The C.I.T. cannot, therefore, take refuge under the arrangement arrived at thereby giving primacy to the private understanding than to the Law.
6. After a careful consideration of these arguments, we have reached the conclusion that the provisions of Law must have primacy over a private understanding and as per the legal maxim that there cannot be any estoppel against the Statute. The provisions made in the Statute must be given effect to. From 1-4-1988, the Tribunal has the option either to send the copy of the order to the Chief C.I.T. or to the Commissioner. It is true that under Section 256(1) of the Income-tax Act, it is the Commissioner alone who can move an application seeking a reference of the question of law to the High Court and such application has to be made within 60 days of the date upon .which the notice of the order was served upon him but the interpretation placed upon Section 256(1) by the C.I.T. leads to undesired results. The Act obliges the Tribunal to serve a copy of the order to the Chief Commissioner or the Commissioner. The Act does not specify cases where an order may be sent to the Chief Commissioner or to the Commissioner. Therefore, sending a copy of the order to the Chief Commissioner or the Commissioner is in the discretion of the Tribunal and a receipt of the order by the Chief Commissioner fully satisfies the obligation placed on the Tribunal by Section 254(3) as it now stands amended. Section 256(1) makes a reference only to the Commissioner and does not speak of the service of the notice of the order on the Chief Commissioner but that does not mean or nullify the effect of the receipt of the copy of the Tribunal's order by the Chief Commissioner. It could not be said of no consequence. The Legislature must be conscious of the provisions of Section 256(1) when it amended the provisions of Section 254(3) by providing that a copy of the order of the Tribunal may be sent to the Chief Commissioner as an alternative to the Commissioner. The amendment in Sub-section (3) could not have been intended to grant the revenue an undesired privilege of extending the period of limitation prescribed under Section 256(1) indefinitely. If that was so, the instruction given by the Board referred to above would have no meaning at all. If the contention of the Commissioner of Income-tax was accepted then the Chief Commissioner may keep the order with him indefinitely for any length of time thereby extending the period of limitation beyond 60 days. As is evident from the facts of the present case, the Chief Commissioner took a long time in sending the copy of the order to the concerned Commissioner although both of them were located in the same town. The anxiety of the Legislaure to give a quick disposal to the reference applications is writ large even in Section 256(1), as Sub-section (1) requires the Tribunal to draw up a statement of the case within 120 days of the receipt of the application and the proviso to Sub-section (1) authorises the Tribunal to condone a delay only up to a maximum period of 30 days. The assessee or the Commissioner may have very good and sufficient reasons for the delay in the filing of an application under Section 256(1) but the Legislature has restricted the Tribunal to condone the delay only up to 30 days and beyond that period of 30 days, there is no authority which can condone the delay. In this manner, the Legislature clearly expressed its intention that applications under Section 256(1) have to be moved and disposed "of with utmost despatch and promptitude. Such being the intention of the Legisluatre, the interpretation desired to be put by the C.I.T. would create an apparent conflict between the provisions of Sections 254(3) and 256(1) and frustrate the legislative intention of quick disposal of applications under Section 256(1). Therefore, when under Section 254(3) the Legislature provided that an order of the Tribunal may be sent to the Chief Commissioner as well, it clearly meant that the Chief Commissioner should act as the agent of the Commissioner with utmost promptitude and, therefore, a receipt of the order by the Chief Commissioner would amount to a receipt of the copy of the order by the Commissioner himself and, therefore, the C.I.T. would have to move the application within 60 days of the receipt of the order by the Chief Commissioner.
7. As regards the past practice to which reference has been made during the course of the hearing, it may be mentioned that this Tribunal at Delhi and also at other places was finding it extremely difficult to send copies of its orders to the concerned Commissioner because there was no machinery known to find out the concerned C.I.T. The orders were sent to the Chief Commissioner and sometimes to the Commissioner's address given in the memos and in several cases, the Commissioners received the orders but after a long lapse of time, returned them to the Tribunal stating that the concerned case did not fall within their jurisdiction. A strange situation developed where the Revenue was almost refusing to receive the orders passed by the Tribunal and, there was a large accumulation of the orders of the Tribunal for service. Since this situation almost stultified the process of Law, a meeting was arranged between the President and the Chief C.I.T. to sort out this problem and in that meeting, an understanding was evolved that the Chief C.I.T. Delhi would act as the agent of the Tribunal and orders should be served on him with a slip attached and that he would make arrangements to serve the orders on the concerned C.I.T. along with the slips and that the slips would be sent to the Tribunal as soon as they were served on the concerned Commissioner and it was in that context that it was agreed that the date of service on the concerned Commissioner by the Chief Commissioner would be regarded as the date of service for counting limitation Under Section 256(1). Such a practice was arrived at some time in the year 1986 or 1987 but long before 1-4-1988. That the amendment brought to Section 254(3) w.e.f. 1-4-1988 permitting the Tribunal to serve orders on the Chief Commissioner also, the understanding automatically lapsed and the Chief Comniissioner was receiving orders w.e.f. 1-4-1988 not in terms of the understanding but in compliance with the specific provisions of Section 254(3). The understanding would not, therefore, hold any more good and valid and would be contrary to the provisions of Section 254(3). Further, the understanding was that the Chief Commissioner would immediately take steps to send the orders to the concerned Commissioner and not that he could keep these orders pending with him for long periods without communicating it to the concerned Commissioner. The power granted to the Tribunal to condone the delay of 30 days was also sought to be exercised liberally in its favour because of the difficulty in locating the concerned Commissioners. The instruction given by the Board referred to above also refers to the period of limitation and also the power granted to the Tribunal to condone the delay and the Board made a special request to the Commissioner in that instruction that whenever there was delay in forwarding the applications by the transferring Commissioner to the transferee Commissioner, a request must be made to condone the delay. We are, therefore, clearly of the opinion that after 1-4-1988, there could not be and there was no understanding as stated by the Commissioner and, therefore, the office objection that the applications were barred by time was correct and we uphold the same, the delay being more than 30 days, this Tribunal has no power to condone the same.
8. We may add here that as pointed out in the instruction of the Board that difficulties in the service of the copies of the orders of the Tribunal on the concerned Commissioners were experienced even earlier to the amendment. In the case before the Board, the ITO Bombay was authorised by the Commissioner Under Section 253(2), filed the appeal on 12-ll-1974 in the Tribunal. Thereafter on 30-10-1975, the jurisdiction, over the case was transferred from Bombay charge to Pune charge by the Board as per its order dated 30-10-1975. The Tribunal disposed of the appeal on 17-6-1977. The Registrar Income-tax Appellate Tribunal sent a copy of the order to the Commissioner, Bombay on 7-7-1977. The judicial section of the CIT's office returned the copy of the order to the Registrar of the Tribunal on 23-8-1977 pointing out that the jurisdiction over the case was transferred to the ITO, Pune and that the order should be sent to the CIT, Pune. Thereafter the Registrar served the order on the C.I.T. on 1-9-1977. A reference application Under Section 256(l)was filed by the CIT, Pune on 29-10-1977 in the form prescribed for filing the reference application. The CIT Pune gave the receipt of the notice of the order, perhaps by mistake as 7-7-1977 though the said mistake was pointed out to the Tribunal by filing a misc. petition and by explaining that the order of the Tribunal was received by the CIT, Pune on 1-9-1977. The Tribunal dismissed the misc. application as well as the reference application as time barred. The Tribunal pointed out that even though in column 10 of the form of appeal, the ITO stated the address to which the notices must be sent to him, he did not convey to the Registry the change in the address. The Board then filed a writ petition against the Tribunal's order before the Bombay High Court. Dismissing the writ petition, the Bombay High Court made the following observation:
The order of the Tribunal shows that the representative of the/Commissioner was not in a position to clarify in spite of the query from the Tribunal and to the date of the order in which the jurisdiction was transferred from ITO Bombay to ITO Thane, the jurisdiction could as well have been transferred on any date before 23-8-1977. It is not clear why the copy received by the Commissioner, Bombay on 7-7-1977 was not returned forthwith to the Tribunal and why it was not sent till 23-8-1977. In the absence of any material on record, it is not possible for us to hold that the Tribunal was wrong in serving the copy of the order Under Section 254(3) on the Commissioner, Bombay. If no error can be traced in that act of the Tribunal, the limitation for the purpose of Section 256(1) is bound to commence from that date.
The Bombay High Court also pointed out that since the change of the address was not communicated to the Tribunal, the Tribunal could not be found fault with. Thus the entire blame for not communicating to the Tribunal the change in the address and for the CIT Bombay for not returning the order forthwith to the Tribunal was placed upon the revenue in dismissing the reference application. It was, thereafter, that the Board felt certain instructions must be given and thus the Instruction No. 1387 dated 3-3-1981 emerged. It was pointed out that the concerned ITO before transferring the case records to another ITO in different Commissioners charge will inform the change of the address to the Registrar, Income-tax Appellate Tribunal by a prescribed letter, a copy of such letter should be endorsed to the ITO Judicial with reference to the judicial file number.
The fact of such a letter having been sent to the Registrar should be mentioned in the transfer memo in the prescribed form. It was pointed out that the above procedure should apply to both the appeals filed by the Department as well as by the assessee. The responsibility to see that the letter was properly served on the Registrar of the Income-tax Appellate Tribunal was placed by this instruction upon the transferring ITO. It then pointed out:
(a) The Commissioner who has transferred the case when served with a copy of the Tribunal's order will immediately return the same to the Registry of the Tribunal informing that since w.e.f. a particular date, the case stood transferred to a particular Commissioner, it was he who holds jurisdiction over the case and that the service of the order should be made on him. A copy of the communication should also be endorsed to the concerned Commissioner along with a copy of the Tribunal's order made out.
The transferee Commissioner will thereupon decide as to file a reference application or not and if he files a reference application, it should be within 60 days from the date of service on the Transferring Commissioner. The Board then pointed out that in case it is not possible to do so, a request should be made to the Appellate Tribunal to allow pie application to be presented within a further period of 30 days. Then the Board pointed out that in case where the transfer of jurisdiction took place after the Tribunal had passed the order Under Section 254(1), the service of the Tribunal's order on the transferring Commissioner would be valid notwithstanding the transfer of the case records to another Commissioner's charge before the date of such service.
It again placed the responsibility upon the transferring Commissioner to immediately forward the Tribunal's order to the concerned Commissioner for necessary action by pointing out that the limitation would run from the date of the service of the order on the transferring Commissioner. A role has also been assigned to the Departmental Representative to ascertain the change in the jurisdiction and inform the Tribunal on a prescribed proforma for that purpose for use by the D.Rs.
9. When such were the clear instructions of the Board which shows the anxiety of the Board to conform to the limitations prescribed under the Income-tax Act and when this instruction was given as early as 3-3-1981, we see no reason as to why the Commissioner of Income-tax are not following this procedure to which they were bound and yet committed delays in the filing of the reference applications and taking pleas which are untenable and unsustainable. The instruction given by the Board clearly postulates that the intention of the Legislature was to reckon the date of limitation from the date when the order of the Tribunal was served on the Chief Commissioner and not on the Commissioner and there was no machinery provided in the Act or in the Rules or in the instructions given to condone the delay that had taken place by the Chief Commissioner to the Commissioner on the same analogy as from the transferring Commissioner to the Commissioner. The instruction given by the Board in 1981 was not brought to the notice of the President at the time when the meeting with the Chief CIT took place and the above formula was arrived at which was apparently against the instruction of the Board.
10. Having regard to the above, we dismiss these reference applications as not maintainable as barred by limitation.