9911796707
TMI Blog1965 (2) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... YATULLAH., J. C. SHAH., S. M. SIKRI., R. S. BACHAWAT JUDGMENT The judgment of the court was delivered by GAJENDRAGADKAR C.J.--When this appeal was argued before a Division Bench of this court on October 23, 1964, it was urged on behalf of the appellant, the Keshav Mills Co. Ltd., that in view of the present decisions of this court in New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax and Petlad Turkey Red Dye Works Co. Ltd. v. Commissioner of Income-tax, the appeal must be allowed and the case sent back to the Bombay High Court for disposal in accordance with the principles laid down in the latter decision. At that stage, the learned Attorney-General for the respondent, the Commissioner of Income-tax, Bombay North, Ahmedabad, urged that he wanted this court to reconsider the said two decisions. He fairly conceded that if the said two decisions were to be followed, the appeal would have to be allowed and sent back as suggested by the appellant. The learned judges constituting the Division Bench took the view that an opportunity should be given to the learned Attorney-General to press his contention, and so, they directed that the appeal be placed before a Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale proceeds through British Indian banks through drafts ... 4,40,878 (iii) Sale proceeds collected by collecting cheques on British Indian banks and hundis on British Indian shroffs and merchants ... 6,71,735. It is with this last item that the present appeal is concerned. Aggrieved by the order thus passed by the Income-tax Officer, the appellant preferred an appeal before the Appellate Assistant Commissioner of Income-tax, Ahmedabad Range. The appellate authority held that the Income-tax Officer was in error in not excluding items (i) and (iii) respectively from computation of the taxable profits of the appellant. Thus, the appellant succeeded before the appellate authority in respect of the item in dispute. This decision of the appellate authority led to two cross-appeals, one by the Income-tax Officer and the other by the appellant before the Income-tax Appellate Tribunal--hereafter called the Tribunal. The Tribunal dismissed the appellant's appeal in respect of Rs. 4,40,878 and allowed the Income-tax Officer's appeal in part and held that the item of Rs. 12,68,460 had been wrongly excluded by the appellate authority. In respect of item (iii) relating to R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee and the merchants that the giving of cheques or hundis by the merchants to the assessee would result in an unconditional discharge of the liability of the merchants. The High Court also issued some other directions asking the Tribunal to clarify some of its relevant findings which appeared to the High Court to be somewhat confused. As a result of this order, the case went back to the Tribunal which in turn remanded it to the Income-tax Officer for getting the requisite information. On receiving the report of the Income-tax Officer, the Tribunal submitted its supplementary statement of case to the High Court on August 13, 1954. Whilst these proceedings were thus pending in the High Court, the decision of this court in Commissioner of Income-tax v. Ogale Glass Works Ltd. was pronounced. In that case, one of the points which arose for decision was whether the post office which takes the cheque from the sender to the addressee is the agent of the sender or the addressee ; and on this point, the court held that as between the sender and the addressee, it is the request of the addressee that makes the post office the agent of the addressee and after such request, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed and the case remitted to the High Court to be dealt with in accordance with the principles laid down by this court in the latter case. It is common ground that as a result of the two orders of remand passed by the High Court in the present reference proceedings, some material evidence which was not on the record when the question was framed by the Tribunal and sent to the High Court under section 66(1) of the Act has been collected and made a part of the supplementary statement of the case ; and basing himself on this fact, Mr. Palkhivala contends that the High Court had no jurisdiction to direct the Tribunal to collect additional material and form it a part of the supplementary statement under section 66(4) of the Act. It is in support of this contention that reliance is placed on the two decisions in question. Before addressing ourselves to the problem as to whether the view taken by this court in the said two decisions needs to be reconsidered and revised, it is necessary that we should refer to the said two decisions as well as other decisions on which both the parties have relied before us in the course of their arguments. The first decision on which Mr. Palkhival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the present reference proceedings have led to the collection of additional material and evidence and their inclusion in the supplementary statements of the case, the High Court has exceeded its jurisdiction under section 66(4). The other case on which Mr. Palkhivala strongly relies is the decision of this court in the Petlad Co. Ltd. In that case, one of the points decided by this court had reference to the extent of the powers and authority of the High Court under section 66(4). It was held that though the High Court had power to direct a supplemental statement to be made, it was beyond its competence to direct additional evidence to be taken. In other words, this court took the view that when the High Court makes an order of remand under section 66(4) and directs the Tribunal to furnish a supplemental statement of the case, it can require the Tribunal to include in such supplemental statement material and evidence which may already be on the record, but which had not been included in the statement of the case initially made under section 66(1). The result of this decision is that section 66(4) does not confer on the High Court power to require the Tribunal to take addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feels that for dealing with the said new aspects of the matter, a supplemental statement of the case should be called for, the High Court is authorised to call such a supplemental statement, provided, of course, the High Court does not require the Tribunal to collect additional material or evidence before submitting its supplemental statement. The same view has been expressed by this court in the case of Commissioner of Income-tax v. M. Ganapathi Mudaliar. According to this decision a supplementary statement of case may contain such alterations or additions as the High Court may direct, but the statement must necessarily be based on facts which are already on the record. While exercising its jurisdiction under section 66(4), the High Court has no power to ask for a fresh statement of case with a direction that the Tribunal should go into the matter again and record further evidence. There is one more decision to which reference may incidentally be made before we part with the series of decisions on which Mr. Palkhivala relies. In Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. this court had occasion to consider the scope and denotation of the expression " an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hown that a partition at the hands of the father of the said properties could not be effected without a written instrument ? The question of law formulated for the decision of the High Court was : " In all the circumstances of the case, having regard to the personal law governing the assessee and the requirements of the Transfer of Property Act (IV of 1882) and the Stamp Act (11 of 1899), has the deed of partnership dated February 12, 1933, brought into existence a genuine firm entitled to registration under the provisions of section 26A of the Act ? " While answering this question one of the points which had to be decided was whether the immovable properties were the self-acquisitions of the father or not. The Privy Council took the view that before a satisfactory answer could be rendered on the question framed, several facts had to be ascertained, and in its judgment the Privy Council has indicated the nature of these facts. " It is necessary to know ", says the judgment, " as regards (a) the business, machinery, plant and other movables ; (b) the factory buildings and land whether they were before 1931 the self-acquired property of the father or his ancestral property or joint f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) of the Act ? " In the High Court, there was a sharp difference of opinion between the judges who heard the reference ; but ultimately the answers went against the Tribune, and so, the dispute was taken to the Privy Council by the trustees of the Tribune Trust. At the first hearing of the said appeal before the Privy Council, it was considered by the Board to be desirable that the powers conferred by sub-section (4) of section 66 of the Act should be employed to obtain further information. Accordingly, by an Order in Council, dated July 29, 1937, it was directed in accordance with the advice tendered by the Board that the case ought to be remitted to the High Court of Judicature at Lahore with a direction that the said High Court shall refer the case back to the Commissioner under section 66(4), first for the addition of such facts during the lifetime of the testator, Sardar Dayal Singh, as may bear upon the proper interpretation of the expression " keeping up the liberal policy of the said newspaper " in clause XXI of the will of the said testator dated the 15th day of June, 1895, and, secondly, for the addition of such facts as to a compromise dated the 1st day of December, 190 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are compelling and substantial reasons to do so. It is general judicial experience that in matters of law involving questions of construing statutory or constitutional provisions, two views are often reasonably possible and when judicial approach has to make a choice between the two reasonably possible views, the process of decision-making is often very difficult and delicate. When this court hears appeals against decisions of the High Courts and is required to consider the propriety or correctness of the view taken by the High Courts on any point of law, it would be open to this court to hold that, though the view taken by the High Court is reasonably possible, the alternative view which is also reasonably possible is better and should be preferred. In such a case, the choice is between the view taken by the High Court whose judgment is under appeal, and the alternative view which appears to this court to be more reasonable ; and in accepting its own view in preference to that of the High Court, this court would be discharging its duty as a court of appeal. But different considerations must inevitably arise where a previous decision of this court has taken a particular view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... general administration of law or on public good ? Has the earlier decision been followed on subsequent occasions either by this court or by the High Courts ? and, would the reversal of the earlier decision lead to public inconvenience, hardship or mischief ? These and other relevant considerations must be carefully borne in mind whenever this court is called upon to exercise its jurisdiction to review and revise its earlier decisions. These considerations become still more significant when the earlier decision happens to be a unanimous decision of a Bench of five learned judges of this court. It is true that in the case of Bengal Immunity Company Ltd. v. State of Bihar this court by a majority of 4 : 3 reversed its earlier majority decision (4 : 1) in State of Bombay v. United Motors (India) Ltd. ; but that course was adopted by the majority of judges in that case, because they were persuaded to take the view that there were several circumstances which made it necessary to adopt that course. On the other hand, dealing with a similar problem in the case of Sajjan Singh v. State of Rajasthan, this court unanimously rejected the request made on behalf of the petitioners that its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion 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. " That takes us to sub-section (4), which reads thus : " If the High Court is not satisfied that the statements in a case referred under this section are sufficient to enable it to determine the question raised thereby, the court may refer the case back to the Appellate Tribunal to make such additions thereto or alterations therein as the court may direct in that behalf. " Section 66(5) provides that the High Court upon the hearing of any such case shall decide the questions of law raised thereby and shall deliver its judgment thereon containing the grounds on which such decision is founded and shall send a copy of such judgment to the Appellate Tribunal which shall pass such orders as are necessary to dispose of the case conformably to such judgment. It is clear that when the Tribunal draws up a statement of the case and refers a question of law to the High Court under section 66(1), the said question must arise out of its order, and the statement of the case would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence already on the record. If the question that can be raised under section 66(1) and section 66(2) can arise only out of the order of the Tribunal and if the statement of the case required to be drawn up by the Tribunal under the said two provisions would inevitably be confined to the facts and material already on the record, it seems unlikely that section 66(4) would authorise the High Court to direct the Tribunal to collect additional material or evidence not on the record. The scheme of the Act appears to be that before the Income-tax Officer all the relevant and material evidence is adduced. When the matter goes before the Appellate Assistant Commissioner, he is authorised under section 31(2) to make such further enquiry as he thinks fit, or cause further enquiry to be made by the Income-tax Officer before he disposes of the appeal filed before him. Section 31(2) means that at the appellate stage additional evidence may be taken and further enquiry may be made in the discretion of the Appellate Assistant Commissioner. When the matter goes before the Appellate Tribunal under section 33, the question about the admission of additional evidence is governed by rule 29 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if further evidence is allowed to be taken under the directions of the High Court under section 66(4), it is likely that tax proceedings may be prolonged interminably, and that could not be the object of the Act as it is evidenced by the relevant provisions to which we have already referred. These mainly are the grounds on which the earlier decisions of this court in the New Jehangir Mills case and the Petlad Co. Ltd. case substantially rest. On the other hand, it must be conceded that the words used in section 66(4) are wide enough and they may, on a liberal construction, include the power to call for additional evidence by directing the Tribunal to file supplementary statement of the case. It is true that section 66(4) in terms does not confer such a power and it may be that having regard to the scheme of section 66(1) and (2), one would have expected specific and express terms conferring such power on the High Court in section 66(4) if the legislature had intended that the High Court would be competent to call for additional evidence ; but there are no terms of limitation in section 66(4), and it would be reasonably possible to construe section 66(4) as enabling the High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Attorney-General contends. It must be conceded that the view for which the learned Attorney-General contends is a reasonably possible view, though we must hasten to add that the view which has been taken by this court in its earlier decisions is also reasonably possible. The said earlier view has been followed by this court on several occasions and has regulated the procedure in reference proceedings in the High Courts in this country ever since the decision of this court in the New Jehangir Mills case was pronounced on May 12, 1959. Besides, it is somewhat remarkable that no reported decision has been cited before us where the question about the construction of section 66(4) was considered and decided in favour of the Attorney-General's contention. Having carefully weighed the pros and cons of the controversy which have been pressed before us on the present occasion, we are not satisfied that a case has been made out to review and revise our decisions in the case of the New Jehangir Mills and the case of the Petlad Co. Ltd. That is why we think that the contention raised by Mr. Palkhivala must be upheld. In the result, the order passed by the High Court is set aside and ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
