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Civil Reference No. 22 of 1960, decided on 29th November 1962
S. 26‑A read with rule G(2) first proviso‑Application for renewal of registration for assessment years 1951‑52 to 1953‑54 filed after 31st January 1955, held, time -barred‑Proviso does not particularise assessment year 1955‑56 only Interpretation of statutes‑Achievement of object of enactment must be seen.
S. 26‑A read with rule 6(2) proviso‑Contemplates applications for registration and not for condonation‑ of delay.
S. 66(2)‑Question not required to be stated by Appellate Tribunal‑Assessee not competent to raise before High Court.
S. 26‑A read with rule 6(2) Renewal application‑Late ling after grant of registration for earlier year‑Good ground for condonation in circumstances of case‑Obiter.
Noorul Arifin for Applicant.
I. N. Pasha for Respondents.
Dates of hearing :. 20th and 21st November 1962.
‑This is a reference by the Income‑tax Appellate Tribunal, Karachi Bench, Karachi under sections 66(1) oft he Income‑tax Act. The Tribunal has referred the following question for our decision
"Whether on the true construction of the first proviso of rule 6(2) of the Income‑tax Act, the Renewal Applications for the assessment years 1951‑52, 1952‑53 and 1953‑54 filed by the assessee on 4th October 1955 were time‑barred."
The material facts giving rise to the reference are these :‑
The assessee Messrs Pak Chemical and Motor Company, Karachi is a Firm. The assessee's first assessment was for the assessment year 1950‑51. It made an application for registration of the firm under section 26‑A of the Income‑tax Act on 3rd March 1955. The assessment proceedings for that year were completed on the 8th March 1955 and the firm was registered under section 26‑A of the Act on the same date. For the assessment years 1951‑52, 1952‑53 and 1953‑54 the assessee filed returns on 4th October 1955. It also filed applications for renewal of registration of the firm on the same date.
2. The Income‑tax Officer refused registration for renewal of the firm for all the three assessment years on the ground that the applications bad not been submitted within the prescribed time. The Income‑tax Officer was of the view that the applica tions for renewal. of the registration should have been filed under the amended Income‑tax Rules, 1922 on or before the 31st day of January 1955. The assessee filed an appeal against the order of the Income‑tax Officer to the Appellant Assistant Commis sioner. The Appellate Assistant Commissioner in his consolidated order accepted all the three appeals of the assessee, mainly on the ground that there was sufficient cause for not filing the applications for renewal of the registration on or before the 31st January 1955.
3. The Department filed an appeal against the order of the Appellate Assistant Commissioner before the Income‑tax Appellate Tribunal. The departmental appeals were accepted and disposed of in a consolidated order of 3rd August 1959. The Tribunal found under the first proviso to rule 6 of the Income-tax Rules the last date for filing applications in respect of different assessments was on or before the 31st January 1955. It, however, came to the conclusion that as there were no applications before the Income‑tax Officer for condonation of delay in not filing the various applications for renewal of the registration' within the prescribed time, the Appellate Assistant Commissioner had no power to condone the delay. The departmental appeals were therefore accepted.
4. The assessee made three applications in respect of the three assessment years that have been mentioned earlier under section 66(() of the Income‑tax Act for reference of two questions to the High Court. The assessee later on did not press the Tribunal to refer one of the questions that it had framed with the result that the Tribunal has referred to us only one question which we have already reproduced.
5. In order to appreciate the three‑fold contentions raised by Mr. 1. N. Pasha; the learned Advocate appearing for the assessee, which we would presently mention, it would be necessary to reproduce some of the Income‑tax Rules of 1922 (hereinafter called the Rules) made under section 59 of the Income‑tax Act, 1.922 (hereinafter called the Act). The Rules were amended on the 6th August 1954 by the Central Board of Revenue under section .59 of the Act. The amended Rules were, gazetted on the 13th August 1954. It is not necessary for the disposal of the present reference to reproduce the Rules as they stood before the 6th August 1954.
6. The relevant Rules necessary for the disposal of this reference are Rules 2, 5 and 6. They run as under :‑
2. (1) Any firm constituted under an instrument of partner ship specifying the individual shares of the partners, may make an application for registration for purposes of section 26‑A of the income‑tax Act, 1922 (XI of 1922) (hereinafter in these rules referred to as the Act). Such application shall be signed by all the partners (not being minors), who were partners in the firm immediately before its dissolution and by the legal representative of any partner, who is deceased.
(2) The application referred to in sub‑rule (1) shall be made‑
(a) as respects any assessment for any year ending on or before the 31st day of March 1955, on or before the 31st day of January ' 1955 ; and
(b) in other cases, before the end of the previous year;
Provided that where such application is made for the first time, and the firm is not registered under the Partnership Act, 1932 (IX of 1932), or where the deed of partnership is not registered under the Registration Act, 1908 (XVI of 1908), it shall be made within a period of six months of the constitution of the firm, or before the end of the previous year in which the firm was constituted; whichever is earlier;
Provided further, that where the application is made for, renewal of registration under 'rule 6 for any year; it shall be filed before the 30th day of June of that pear;
Provided further that the Income‑tax Officer may entertain an application made after, the expiry of the, time‑limit specified in this, rule if he is satisfied that the firm yeas prevented by sufficient cause from tricking the application within, the specified time.
5. The certificate off registration, granted under rule 4 shall have effect only, for the :assessment to be made for the year mentioned therein.
6. (a) Any farm to whom a certificate of .registration has been granted, under rule 4 may apply for the renewal of the registration for a subsequent year. Such application shall be signed by all the partners (not being minors) of the firm or, where the application is trade after the dissolution of the firm, by all persons (not being minors) who were partners in the firm immediately before its dissolution and by the legal representative of any such person deceased.
(2) The application referred to in sub‑rule (1) shall be made before the 30th day of June, of the year for which the assessment is to be made;
Provided that as respects any assessment for the year ending on or before the 31st day of March 1955, such application may be made on or before the 31st day of January 1955;
Provided further that the Income‑tax Officer may entertain an application made after the expiry of .the date specified above if he is satisfied that the firm was prevented by sufficient cause from making the application within the prescribed time limit.
7. The learned Advocate for the assessee raised the following three points before us :‑
(1) that the word the' before year' in the 'first proviso to rule 6(2) would connote that the application for renewal was to be filed on or before the 31st January 1955 only for the assessment year 1955‑56 ;
(2) that the assessee could not apply for renewal of the registration unless the firm was registered. The firm was registered on 8th March 1955 and therefore the assessee could not make an application as required by the rules on or before the 31st January 1955 ;
(3) that this Court may call upon the Tribunal to state the case whether under the Rules it was necessary for the assessee ' to have made an application for condonation of delay in filing the application for renewal.
We would now dispose of these questions in order.
8. The learned Advocate for the, assessee very strenuously contended that the word the before year' in the first proviso to rule 6(2) has the effect of particularising the year 1955. He contended that the assessment order referred to in the proviso does not mean any year that may end on or before the.31st day of March 1955. It is contended that it means the assessment year 1955‑56 alone. The argument was further elaborated by stating that if the intention was to refer to any year other than 1955 the word years' would have been used instead of year'. There is not much force in the contention of the learned Advocate.
9. It would be useful to reproduce the observation of Lord Loreburn, L. C. while considering the contention based on the word person' that women were included in the word person' and therefore they were entitled to vote. He observed in Nairn v. University of St. Andrews (1909 A C 147 at p. 161) as under :‑
"It is a dangerous assumption to suppose that the Legislature foresees every possible result that may ensue from the un guarded use of a single word, or that the language used in statutes is so precisely accurate that you can pick out from various acts this and that expression and, skilfully piecing them together, lay a safe foundation for some remote inference."
Keeping this observation of Lord Loreburn in view we would now proceed to examine the contention of the learned Advocate for the assessee whether because of the word the' before the word year' the reference is only to the year 1955 and not to the years previous to it. The amended Rules came into effect from the 13th August 1954. A perusal of the Rules would show that the object of those who framed the Rules was that the firms should be registered at the earliest so as to avoid spurious firms coming into being. The idea being to give the benefit of the Act to only those partners who were really the partners of the firm. It would appear from sub‑rule (2)(a) of rule 2 reproduced above that the Central Board of Revenue desired that an application for registration for the purpose of section 26‑A of the Act should be made in respect of any assessment for any year ending on or before the 31st day of March 1955 on or before the 31st day of January 1955. The Central Board of Revenue had fixed a dead line namely, 31st January 1955 to be the date by which the firms must apply for registration. In the present case, for instance, the assessee under rule 2(2) should have made an application for registration of the firm under section 26‑A of the Act in respect of all the assessment years, namely 1950‑51, 1951‑52, 1952‑53 and 1953‑54 on or before the 31st January 1955. After the registration of the firm in respect of say the assessment year 1950‑51 the other applications could have been treated as applications for renewal of the registration. Under the Rules the certificate of registration granted shall have effect only for the assessment to be made for the year mentioned in the certificate and not for others. A firm to which a certificate of registration had been granted could apply for renewal of the registration for a subsequent year. Whatever the year may be it would be a particular year for which the assessee could apply for renewal of the registration. It would, therefore, not be grammatically wrong to particularise that year by the word the'. The assessee may apply for any assessment under the first proviso to rule 6(2), but it is to be for a particular year namely which will be the' year ending on or before the 31st day of March 1955.
10. One of the rules of interpretation is that the provision of an enactment should be so interpreted so as to achieve the object for which it was made. If the contention of the learned. Advocate for the assessee is accepted there would be cases in which under the rule no application for renewal could be made. So far as rule 6(2) is concerned, it could not apply for instance to the circumstances of the present case because the application for renewal had to be made on the 30th day of June for which the assessment was to be made. In this case ‑ the latest assessment year was 1953‑54. The amendment having come into effect from 13th August 1954 no application for renewal could be made for the assessment year 1953‑54 by 30th June of the year for which the assessment was to be made. If the contention of the learned Advocate is accepted that the said proviso is confined only to the year 1955 there will be provision under which at Application for renewal of the registration in respect of 1953‑54 could be made. On the other hand, if the first proviso to rule 6(2) is interpreted to mean any year before the 31st of March 1955 the case of the assessee would be covered.
11. On the general principle of avoiding injustice and absurdity any construction. would, if possible, be rejected (unless the policy and object of the Act required it) which enabled a person to defeat or impair the obligation of his contract by his own act, or otherwise to profit by his own wrong. (Maxwell, 11th Edition, page 200).
In this case the amendment having come into effect on the 30th August 1954 the assessee could comply with the rules. He cannot' be allowed to take advantage of his negligence so as to contend that the first proviso to Rule 6(2) was limited to the year 1955 only and therefore there was no rule under which the firm could apply for renewal.
12. It has been conceded by the learned Advocate for the petitioner that in sub‑rule (2)(a) of rule 2 "ending on or before the 31st day of March 1955" the word "before" has the force of extending the period to any year which may occur before the 31st of March 1955. There is no valid reason to give a different meaning to the word "before" occurring in the first proviso to rule 6(2).
13. We would again revert to sub‑rule (2)(u) of rule 2. It is conceded by the learned Advocate for the assessee that an assessee can apply for registration of the firm for any year which may end on or before the 31st March 1955: In that case supposing a firm was registered for the assessment year 1952 in September 1954 the question would be under what provision of the rule could it apply for renewal of its registration for the year 1953. The assessee could not apply under rule 6(2) for renewal of its registration obviously because it had to be made by the 30th June of the year for which assessment was made. On the other hand, if the contention of Mr. Noorul Arifin for the Department is accepted the assessee could apply for renewal under the first proviso to sun‑rule (z) of rule 6. We are of the view that the contention of the Department is correct and that the first proviso to sub‑rule (2) of rule 6 is not confined to the assessment year 1955 alone. It could extend to any year that may end no or before the 31st March 1955.
14. It has been contended that the assessee could not apply before the 31st of January 1955 for renewal of its registration as the firm was registered on 5th March 1955. It may be so. That D may be a good ground for the Income‑tax Officer to entertain the application for renewal or the registration made after the expiry of the date namely 31st of January 1955. Moreover, this question does not arise in answering the question referred to us. The question referrer to us is whether on the true construction of the first proviso of rule 6(2) of the Income‑tax Rules, the Renewal Applications for the assessment years 1,951‑52, 1952‑53 and 1953‑54 filed by the assessee on the 4th October 1955 were time‑barred. All that we have' to see is whether the applications made on 4th October 1955 on the construction of the first proviso to rule 6 (2) were within time or otherwise. It was for the assessee to have urged before the Appellate Tribunal that the firm having not been registered on or before the 31st January 1955 the assessee could not make an application for renewal as prescribed by the rules. No such contention was raised before the Appellate Tribunal. We cannot go beyond the reference so as to determine as to what would be the effect of non‑registration of the firm on or before the 31st January 1955.
15. Lastly, Mr. Pasha, the learned Advocate for the assessee, requested us to call upon the Appellate Tribunal to state the case whether under the rules it was necessary for the assessee to have made an application for condonation of delay in filing the applications for renewal of the registration The learned Advocate contended that proviso 2 to sub‑rule (2) of rule 6 does not require, as observed by the Appellate Tribunal, that an application for condonation of delay is necessary. In this connection the Tribunal observed as under:‑
"We have carefully read the amended Rule 6 and our interpretation of the last proviso is that while the Income‑tax Officer is empowered to condone the delay in making applica tion for registration beyond time when sufficient cause is shown is subject to one overriding restriction, namely, that the Income-tax Officer must be moved by an application for condonation of the delay and that the Income‑tax Officer could not suo moto or on oral request condone the delay. The word may entertain an application' (italicised by us) in the last proviso clearly suggest that condition precedent for condonation of the delay is an application by the assessee and the word appli cation' means a written application."
The last proviso referred to reads as under :‑
"Provided further that the Income‑tax Officer may entertain an application made after the expiry of the date specified above if be is satisfied that the firm was prevented by sufficient cause from making the application within the prescribed time‑limit."
The above clearly speaks of an application made for renewal of the registration and does not speak of 'aft 'application fort condonation of delay as construed by the Appellate Tribunal. We are, however, of the view that under subsection (2) of section 66 of the Income‑tax Act we cannot ask the Tribunal to state the case on this question as the Tribunal was not requested to refer this question to us. It cannot, therefore, be said that the Appellate Tribunal has refused to state the case on this point. Moreover, the High Court under section 66121 of the Act has to be moved within six months from the date on which the assess, is served with notice of the refusal.
16. For the reasons given above, we would answer this reference in the affirmative. In the circumstances of the present case we would order the parties to bear their own costs.
Reference answered in affirmative.
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