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TMI Blog2004 (5) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities to reopen assessments which had become final due to the bar of limitation prior to April 1, 1989 and this position was equally applicable to re-assessments proposed on the basis of orders passed under the IT Act or under any other law. The court held that the provisions of a fiscal statute, more particularly, one regulating the period of limitation, must receive a strict construction. The law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigants for an indefinite period on future unforeseen events. Proceedings which had attained finality under existing law due to bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings which had already concluded and attained finality. In these circumstances, when a period of limitation of four years is provided under section 254(2) for rectifying an order, no rectification can be made after that period on the principle of equity and justice or on the basis of theory that justice should be done, even if heaven falls, as in our opinion, even peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o situations in which the Tribunal can rectify a mistake -(1) Suo moto and (2) on an application by either party. Placing reliance on the decision of the Nagpur Bench in the case of Bhillai Engg. Corpn. Ltd. he submitted that in the first situation which is discretionary, the time limit of four years is provided and for the second situation which is a mandatory exercise on mistake being brought to its notice by either party, no time limit is provided. He further submitted that section should be segregated and it should be read as it stands. He referred to the decision of the Hon'ble Gujarat High Court in the case of Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2003] 262 ITR 146 at 153-154 for the two types of powers of Tribunal. He then referred to other analogous sections in the Act where the time limit is provided, viz., sections 154(7), 269N, and 269UJ and submitted that wherever Legislature wanted otherwise, a specific provision is made. He also referred to the provisions of sections 275(1)(c) and 158BE(7) of the Act. He then referred to the provisions of section 35 of the Indian Income-tax Act, 1922 wherein the words 'within a like period' are used for the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... barred by limitation where the application for rectification is filed within four years time limit because it is the duty of the Tribunal to dispose of the application of the assessee filed within time and the rights of the party cannot lapse because of latches of the Appellate Tribunal. Contrary to the above, there are two decisions wherein it was held that no orders can be passed as the four years period had lapsed, viz. (i) Dr. Rajah Sir M.A. Muthiah Chettiar v. ITO [1985] 11 ITD 288 (Mad.); (ii) Rai Bahadur Shreeram Durgaprasad & Fatechand Narsingdas (Export Firm) v. ITO [1986] 19 ITD 734 (Nag.). The consistent view of the ITAT was that a proceeding in which the application under section 254(2) was filed beyond the period of four years it would not be maintainable as was held in Rai Bahadur Shreeram Durgaprasad & Fatechand Narsingdas (Export Firm)'s case. 7. He further submitted that the Nagpur Bench was swayed by the cause of justice on procedural aspects overlooking to the fact that the Law of Limitation is as much a part of jurisprudence and the justice machinery, as any other law. This, the Bench has itself noted in paragraph 3 of its order that "The requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the Statute and in construing the Statute, the Court should first read it without the punctuation. He further submitted that the fundamental principle of interpretation of Taxing Statutes is the principle of strict construction. Taxing statutes have to be interpreted differently from beneficial legislation (e.g. Labour Laws). Reference was drawn to the decision of the Supreme Court in the case of K.M. Sharma v. ITO [2002] 254 ITR 772. The ITAT Nagpur Bench has thus extended the limitation period of proceedings under section 254(2) which does not have the sanction of Law. 9. We have heard the parties and considered the rival submissions. Section 254(2) giving rise to the controversy in the present case reads as under: "The Appellate Tribunal may, at any time within four years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1) and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer." 10. On a plain reading of above sub-section, it is clear that the provision envisages two situations under which Appellate Tribunal is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er making action compulsory, i.e., as a matter of duty. The portion of sub-section covered by situation (b) is not independent of situation (a). The language of the statute is clear and unambiguous and is required to be given effect to. 13. In our opinion, therefore, there is no scope to argue that amendment required to be made when mistake is brought to the notice of the Appellate Tribunal can be made at any time and period of limitation of four years from the passing of order under section 254(1) of IT Act has no application. No amendment can be made beyond period of 4 years. 14. Nagpur Bench decision referred to in the application has opined that the time limit of four years applies to suo motu rectification by the Tribunal and when the rectification is done in accordance with the prayer of either of the parties, there is no lime limit. It is a brief order and is reproduced for the sake of convenience: "3. ...After Tribunal may, there is coma. Thereafter the words are at any time within four years. This setting of the section suggests that the words "at its own" are implied, therefore, the time limit of four years is in the context of suo motu rectification. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oply of law on which the Tribunal based its decision. To be precise it was the concept of ownership. The concept has been, redefined by the Apex Court. The Tribunal is bound to follow the law propounded by the Hon'ble Supreme Court. We, therefore, for the palladium of justice condone the delay in filing the miscellaneous application and proceed to decide the issue on merits." 15. On a careful reading of the above, it appears that the Nagpur Bench has taken into consideration four aspects of the matter - (1) that the use of the word 'may' after the words 'The Appellate Tribunal' indicate that the power to rectify at its own is implied; (2) that therefore the time limit of 4 years is for suo motu rectification and not when prayed for either of the party; (3) that the delay of the counsel in making application for rectification is a reasonable cause and the Tribunal can condone the same; and (4) that justice should be done even if the heaven falls and the cause of justice should not be much subservient to the rules of procedure. 16. As regards the first aspect that the Tribunal has power to rectify of its own, the contention of the Revenue is that the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he second aspect that "therefore, time limit of four years is in the context of suo motu rectification. Where rectification is to be done in accordance with prayer of either of the parties such limit is not much relevant" is not born out on a fair reading of the provision. We are not in a position to accept that view. Otherwise also, if the view of the Nagpur Bench is taken as correct, there will be flood gate of miscellaneous applications and the orders passed even by the First President of the Tribunal Mr. Justice Munir given in 1940 could be rectified today or in the years to come or for time immemorial on the application of either party. No order could ever be final if that view is upheld. Such a view can lead to chaos. This could never be the intention of the Legislature. 18. Reference is invited to the wordings of section 35(1) of Indian Income Tax Act, 1922 dealing with rectification of mistake by CIT, AAC and Assessing Officer, wherein a different phraseology is used on the basis of which it is contended that in absence of similar words 'within like period' no time limit can be inferred for rectification on request of either party. This provision reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, the Commissioner (Appeals) and the Appellate Tribunal may, of his, or its, own motion or on an application by the assessee in this behalf, amend any order passed by him or it in any proceeding under this Act within four years from the end of the financial year in which such order was passed." In the legislative enactment of 1974, the period of four years to carry amendment of order passed is explicitly and clearly provided; leaving no scope for arguments, like the one advanced before us. Clarity and maturity of legislative draftsmanship is evident in the subsequent enactment. Having regard to identical objects of provisions quoted above, we see no reason or logic nor any was advanced before us, why unlimited period to carry amendment could be allowed to parties to seek rectification before the Appellate Tribunal when limited period of four years is provided to other Tribunals and authorities. Above reference does not support the case of the applicants. 21. The provisions with time limit other than for rectification referred to are:- (i) Section 154(7) Save as otherwise provided in section 155 or sub-section (4) of section 186 no amendment under this section shall be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t;at any time before the time for presenting an appeal against such order has expired", in section 269N, "no amendment shall be made under this section after the expiry of six months from the end of the month in which the order sought to be amended was made" in section 269UJ; "after the expiry of the financial year in which the proceedings, - are completed, or six months from the end of the month - whichever period expires later" in section 275(1)(c) 23. In the case of G.S. Dall & Flour Mills the Supreme Court dealt with a situation where the exemption granted to a new Industrial Undertaking pursuant to the notification was under consideration. There were two successive notifications for granting the exemption. Under the first notification, 'traditional industries' were excluded for the benefit whereas the second notification was silent about such exclusion. The State Government did not grant the exemption to 'traditional industries' under the new notification because they were not entitled to exemption under the 1st notification. In that connection, the supreme Court observed that "There are other difficulties in reading the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not there. Such importation would be not to construe, but to amend, the statute. Even if there be a casus omissus the defect can be remedied only by legislation and not by judicial interpretation. Once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be." The language of section 254(2) of the Act, in our opinion, is clear and unambiguous and an order cannot be rectified after four years from the date of the order, be that in a proceedings taken suo motu by the Tribunal or pursuant to the request of either party. 25. In the case of K.M. Sharma the assessee received interest of Rs. 76,84,829 pursuant to the judgment of the District Magistrate dated 31-7-1991 on compensation of the land acquired in December, 1967. The Assessing Officer served notices under section 148 of the Act for 16 assessment years 1968-69 to 1971-72 and 1981-82 to 1992-93 for bringing to tax the interest which had escaped assessment in those years. The assessee contended that the assessments had already become barred by limitation under section 149 as on 1-4-1989 for which the relevant period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Tribunal dated 28-4-1997 is barred by limitation and the Tribunal cannot make any rectification of its order on the prayer of the assessee as the time limit for four years from the date of the order has already expired. We do not find any merit in the application of the assessee. It has accordingly to be dismissed. 27. The Nagpur Bench, it seems, was influenced by the zeal of doing justice which they thought should be done even if heaven falls and by the fact that the delay in making application was on account of counsel of the assessee which was also thought fit to be condoned. This in our view was contrary to the verdict of the Supreme Court in Boota Mal v. Union of India AIR 1962 SC 1716 rendered in the year in which the present provision came into effect, viz., though the fixation period of limitation may some time result in hardship but on that account there should be no resort to a consideration of equitable principles. Strict grammatical meaning of the words of the provisions appear to be the only safeguard. Maxwell in Interpretation of Statutes 17th Edition page 9 also says "it is the primary rule of interpretation of Statutes that where the language is pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l remedies and he is not alert enough to make his claim with promptitude, such a person should not be aided by the State in the enforcement of his claim. This is in keeping with the other Latin maxim 'Vigilantibus non dormientibus jura subsvenient'. In the instant case it was further pointed out that statutes of limitation serve to ensure private justice, suppress fraud and perjury, quicken diligence and prevent oppression. 31. The object of providing limitation in a statute is to expect litigants to be diligent in seeking remedies in Courts of Law or from statutory authorities. It is to secure the quiet and repose of the community that litigation should not be in a state of constant uncertainty, doubt and suspense. 'Interest reipublicae ut sit finis litium'. The interests of the State require that a period should be put to terminate all litigation. Yet another consideration is that a party who is insensible to the value of civil remedies and who does not assert his own claim with promptitude has little or no right to require the aid of the State in enforcing it. 'Vigilentibus - non dormientibus jura subveniunt'. The law assists the vigilant not those who s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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