Commissioner of Income Tax vs Income Tax Appellate Tribunal and Another

D.V. Sehgal, J.—The Commissioner of Income Tax, Delhi-V, New Delhi, the petitioner, has invoked the jurisdiction of this court under Article 226 of the Constitution through this writ petition impugning the orders dated August 5, 1978, annexure P-1, and dated November 17, 1978, annexure P-2, passed by the Income Tax Appellate Tribunal, respondent No. 1.

The petitioner by an application filed on Decembers, 1977, u/s 256(1) of the Income Tax Act, 1961 (hereinafter called "the 1961 Act"), sought reference of four questions claiming the same to be questions of law arising out of the order dated February 28, 1977, of respondent No. 1 passed u/s 33(4) of the Indian Income Tax Act, 1922 (hereinafter called "the 1922 Act"), in Income Tax Appeal No. 5436 of 1968-69 in respect of the assessment year 1946-47 pertaining to Satya Paul Virmani (Hindu undivided family), respondent No. 2, the assessee. Respondent No. 2 raised preliminary objections in writing seeking rejection of the reference application in limine on the following grounds :

(i) That in respect of an order passed by respondent No. 1 u/s 33(4) of the 1922 Act, a reference application could only be filed u/s 66(1)of that Act and not u/s 256(1) of the 1961 Act.

(ii) That the date of service of the Tribunal''s order dated February 28, 1977, on the petitioner as October 6, 1977, is not correct because the said order of respondent No. 1 was served on respondent No. 2 on March 9, 1977, and as such service of the same on the petitioner could not be as late as, mentioned in the reference application.

The preliminary objection No. (ii) was styled by respondent No. 1 as presumptuous and it was found that the service of the order dated February 28, 1977, had been effected on the petitioner on October 6, 1977. Therefore, the reference application was within time. However, the first preliminary objection prevailed with respondent No. 1. Following a judgment of a Division Bench of this court in S.P. Jaiswal Vs. Commissioner of Income Tax, the Tribunal concluded that no reference application could be validly filed u/s 256(1) of the 1961 Act in respect of an order of respondent No. 1 passed u/s 33(4) of the 1922 Act. It was thus held that the reference application presented on December 5, 1977, being an invalid one was non est. The petitioner moved a miscellaneous application before respondent No. 1 for recalling the order, annexure P-1, by setting out various grounds but the same was also dismissed by respondent No. 1, vide order dated November 17, 1978, annexure P-2.

The petitioner invoked the jurisdiction of this court by making a petition to this court u/s 66(2) of the 1922 Act which was registered as Income Tax Case No. 29 of 1979 (CIT v. Shri Satya Paul Virmani) (HUF) which is still pending. Since, however, doubt was entertained whether the aforesaid Income Tax case would be maintainable against the impugned orders, the present writ petition was filed.

Having heard learned counsel for the parties, I am of the considered view that respondent No. 1 was wrong in concluding that the application filed before it by the petitioner u/s 256(1) of the 1961 Act was non est. The provisions of Section 256(1) of the 1961 Act and Section 66(1) of the 1922 Act are in pari materia. The petition had been filed before respondent No. 1 which was the proper forum under both the aforesaid provisions of law. As held by a Full Bench of this court in R.A. Boga Vs. Appellate Assistant Commissioner of Income Tax, Amritsar and Another, the jurisdiction of any tribunal does not depend upon the provisions of law under which a party might have sought to invoke it or upon which the tribunal might purport to act. The Tribunal does not lose its jurisdiction, which it undoubtedly has, in a particular case because of wrong quotation of provisions of law. The jurisdiction of the Tribunal is based on a proper view of the functions and powers with which it is clothed under the law or the statute creating it. Respondent No. 1, therefore, ought to have entertained the reference application by treating it as an application u/s 66(1) of the 1922 Act. It was wrong in treating the same as non est on the sole ground that the application was purported to have been made u/s 256(1) of the 1961 Act.

An objection was raised by learned counsel for respondent No. 2 that the petitioner has already sought reference through his petition, i.e., Income Tax Case No. 29 of 1979, filed in this court by invoking the provisions of Section 66(2) of the 1922 Act. Learned counsel for the petitioner has rightly contended by referring to the observations made by the Division Bench in S.P. Jaiswal Vs. Commissioner of Income Tax, that where a reference application has been dismissed by respondent No. 1 as being not maintainable, a petition u/s 66(2) of the 1922 Act does not He for the issuance of mandamus for making a reference in the case as respondent No. 1 refused to go into the merits of the application for reference. He contends that an application u/s 66(2) ibid would lie only in a case where the respondent had refused to make a reference on the ground that no question of law arises from its appellate order. This position of law has not been disputed by learned counsel for respondent No. 2.

As a result, I allow this petition, quash the orders dated August 5, 1978, annexure P-1, and dated November 17, 1978, annexure P-2, passed by respondent No. 1 and direct respondent No. 1 to adjudicate upon the application made by the petitioner before it on December 5, 1977, u/s 256(1) of the 1961 Act by treating it as an application u/s 66(1) of the 1922 Act and determine on merits whether, in the given facts and circumstances, any questions of law as mentioned in the said application arise out of its order dated February 28, 1977, passed u/s 33(4) of the 1922 Act in Income Tax Appeal No. 5436 of 1968-69 in respect of the assessment year 1946-47 and it such questions of law do arise, to draw up a statement of the case and refer the same to this court in accordance with law. There shall be no order as to costs.

In view of the decision of this writ petition, Income Tax Case No. 29 of 1979 (CIT v. Shri Satya Paul Virmani (HUF)), is rendered infructuous. The same may be placed before a Division Bench within a fortnight for appropriate orders.