1972 (1) TMI 17 - HC - Income Tax

Tribunal rejected the first application of the assessee for referring the case to the High Court on the ground that it was barred by time because the remittance of Rs. 100 was not received within time. It was also held that this application for reference was not sufficient for referring all the questions asked for in the application as they related to two cross-appeals and that a second application for reference was also necessary - held that Tribunal was wrong in asking the petitioner to make a choice and also rejecting the first application as time-barred

Issues Involved:
1. Timeliness of the application for reference under section 66(3) of the Indian Income-tax Act, 1922.
2. Validity of a single application for reference covering two cross-appeals.

Detailed Analysis:

1. Timeliness of the Application for Reference

The Tribunal rejected the first application of the assessee for referring the case to the High Court on the ground that it was barred by time because the remittance of Rs. 100 was not received within time. The assessee sent the application and the money order on 28th October 1968, but the money order was received by the Tribunal on 4th November 1968, beyond the limitation period which expired on 1st November 1968.

The assessee argued that the despatch of Rs. 100 along with the application constituted substantial compliance with the requirement of the deposit. The department contended that section 66 required the money to be accompanied with the papers and received within the limitation period.

The court analyzed section 66(1) of the Indian Income-tax Act, 1922, which mandates the application to be accompanied by a fee of one hundred rupees. The court noted that the section does not specify the exact procedure for depositing the fee. The court referred to a note under rule 22A of the Indian Income-tax Rules, 1922, suggesting that the fee should be credited in the Treasury or a bank and the triplicate challan sent to the Tribunal. The court concluded that the method of depositing the fee is flexible and any reasonable process can be utilized, including sending the money order.

The court acknowledged a divergence of opinion among High Courts but sided with the view that despatching a money order constituted sufficient compliance. The court held that in the circumstances of the case, there was substantial compliance with the provisions of the Act, and the fact that the money order was received a few days late did not make the application time-barred and incompetent.

2. Validity of a Single Application for Reference Covering Two Cross-Appeals

The Tribunal also held that a single application for reference was not sufficient for referring all the questions as they related to two cross-appeals, requiring the assessee to file a second application. The assessee complied under protest and filed a second application relating to the appeal by the Income-tax Officer.

The court examined whether it was necessary to file two separate applications for making a reference of the questions arising out of the order. The court referred to section 66(1), which mentions the service of the notice of an order under sub-section (4) of section 33. The court emphasized that the appeal before the Tribunal is against the order passed by the Appellate Assistant Commissioner, not the reasons or arguments.

The court opined that in cases where there is one assessment order resulting in two cross-appeals, the ultimate order affecting the original assessment is one order. Therefore, it is necessary to file only one application under section 66 of the Act. The court rejected the department's contention that separate applications were required for each appeal number.

The court clarified that this reasoning applies to cases involving one assessment order and cross-appeals, not to cases involving different assessees or different periods for the same assessee, where separate operative orders are involved.

Conclusion

The court concluded that the Tribunal was wrong in rejecting the first application as time-barred and in requiring the assessee to file a second application. The court directed the Tribunal to treat the application dated 28th October 1968 as having been made within time and covering all questions raised by the petitioner in relation to the two cross-appeals.

Costs

Parties were directed to bear their own costs in these two cases.

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