INCOME TAX APPEALS NOS. 558(IB), 629(IB) AND 26(IB) OF 1988-89, 20(IB), 63(IB), VS INCOME TAX APPEALS NOS. 558(IB), 629(IB) AND 26(IB) OF 1988-89, 20(IB), 63(IB),
1991 P T D 946
[Income-tax Appellate Tribunal Pakistan]
Present: Farhat Ali Khan, Chairman, Junejo M. Iqbal, Accountant Member and
Sayed Amjad Hussain Bokhari, Judicial Member
Income Tax Appeals Nos. 558(IB), 629(IB) and 26(IB) of 1988-89, 20(IB), 63(IB), 75(IB), 87(IB), 88(IB), 89(IB) and 90(IB) of 1989-90, 89(IB), 90(IB), 91(IB) and 92(IB) of 1990-91, decided on 20/07/1991.
(a) Words and phrases---
---- Word "shall" whether mandatory or directory in nature---Test.
To see whether the word "shall" is mandatory or directory in nature, law on the interpretation of statutes has laid down the following tests in this regard:
(1) The intent of legislature cannot be gathered from the use of the words "shall" or "may" as this is not conclusive and the words are interchangeable;
(2) It has to be seen whether permissive interpretation is possible;
(3) Whether any consequence of the non-compliance has been provided;
(4) Whether any injury or prejudice has been caused to the opposite party because of the non-compliance of the provision;
(5) The importance of the subject-matter of the provision and the effect of the non-compliance on the subject matter is also to be seen;
(6) What is the real intent of the legislature;
(7) Whether the provision and its compliance is of substance or mere of form and convenience; and
(8) Whether there is any absolute prohibition.
(b) Income Tax Ordinance (XXXI of 1979)---
----S. 134(5)---Wealth Tax Act (XV of 1963), Ss. 24 & 26---Word "shall" used in S.134(5), Income-tax Ordinance, 1979 and Ss. 24 and 26 of the Wealth Tax Act, 1963 is directory in nature---Appeal not filed in the prescribed form---Effect.
The word "shall" used in section 134(5) of the Ordinance and sections 24 and 26 of the Wealth Tax Act is directory in nature as intent of the legislature cannot be gathered from the use of the words "shall" and "may" which are used interchangeably. Further, no consequence for non-compliance with the provisions has been laid down. And no injury or prejudice to the opposite party is caused if the appeal is not filed in the prescribed form, as long as due intimation is sent to it in the manner laid down under the Income-tax Tribunal Rules. Besides, compliance with these provisions is a matter of form and convenience for the appellate authorities rather than prejudicially affecting the respondents. And lastly, there is no absolute prohibition for non-compliance with these provisions.
The word "shall" as used in subsection (5) of S. 134 of the Ordinance and the Rules- framed thereunder, in sections 24 and 26 of the Wealth Tax Act, Rule 6 of the Wealth Tax Rules as also in the Tribunal Rules, the directory nature of the word "shall" is self-evident inasmuch as there is neither any consequence given under these provisions for their violation nor is there any absolute prohibition for non-compliance nor is any injury or prejudice caused to the opposite party if the appeal is not filed in the prescribed form as long as due intimation is sent to it in the manner laid down under the Tribunal Rules. Anyhow, compliance with the provisions is a matter of form and convenience for the Appellate authorities rather than prejudicially affecting the respondents.
The right of appeal granted to the appellant under S.134 of the Ordinance has been expressedly granted by the legislature and it cannot be snatched away or sacrificed at the altar of procedural niceties dictated by the Income-tax Appellate Tribunal Rules. This however, does not mean that Rules have to be observed by default rather than by compliance. Each case has to be examined on its merits. No premium can be placed on any irregularity committed by an appellant. But at the same time, valuable right of appeal can also not be extinguished by an irregularity or an omission or defect which was either unintentional or error committed unwittingly or inadvertently. Surely, the Income-tax Appellate Tribunal is vested with discretionary jurisdiction which could be exercised in appropriate cases where sufficiency of cause preventing timely compliance with rules is shown to the satisfaction of the Tribunal.
After all, the object is to decide the rights of the parties and not to penalise them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights. There is no kind of error or mistake, which, is not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. The Courts do not exist for the sake of discipline but for the sake of deciding the matter of favour or of grace.
All Rules of this type are nothing but provisions intended to secure proper administration of justice. It is, therefore, essential that they should be made to serve and be subordinate to that purpose.
A procedure is a hand-maid and not a mistress of law intended to sub?-serve and facilitate the course of justice and not to govern or obstruct it.
No specific form is necessary for seeking relief at the hands of any Court or Tribunal if the necessary grounds are taken in the appeal memo.
A construction should not be adopted which deprives the parties of valuable rights.
Any defect or failure to comply with the requirement of the Rules falls within the category of an irregularity rather than an illegality, which could be fatal to the fate of an appeal. Such defects or irregularities are curable and rectifiable by an amendment taking effect. from the date when documents were originally filed and that the Tribunal can exercise its discretionary jurisdiction to condone such defects.
The violation of procedural rule regulating the hearing if results in a minor error and does not amount to denial of justice, should not be a ground for quashing the proceedings.
The proper procedure for any system of justice is to uphold and not to thwart the grant to the people of their rights.
Non-performance of statutory duty within the prescribed time does not affect the ability of the duty performed.
The provisions of law have to be complied with in substance and right of appeal should not be defeated.?
Even in those cases where a dispute is between a citizen and a citizen, the procedural laws are not to be strictly interpreted even if the word "shall" has been used. It further appears that only those fiscal provisions are to be interpreted strictly, which create some sort of liability on a citizen. However, the issue of a right of appeal is surely a statutory right. It is true that a particular procedure and form has been prescribed by the relevant laws yet such a right could not be defeated by a mere omission of some technicality though the provision is complied with in substance.
The cardinal principle of law of pleading is to bring the parties to the issue so as to avoid an element of surprise. It would depend on the good judicious sense of the Bench to decide as to whether a particular appeal under its own facts and circumstances should be rejected or not.
There might be cases of the nature where the provisions of law may have to be relaxed in order to meet the demands of justice and equity. However, there might be cases where appeals may not have been filed in the prescribed form for lack of proper interest without exercising due care or caution or just because the other party had filed an appeal for improper motives. As no doubt, many frivolous appeals are filed on that account, such appeals deserve rejection.
?
Cropper v. Smith reported as (1884) Ch. D 700, 710; 1991 PTD (Trib) 583; Montreal Street Railway & Co. v. Normandine (1917) AC 170 (PC); State of Gujrat v. Ram Prakash Puri (1970) 2 SCR 375 (SC); C.I.T. v. Calcutta Discount Co. reported as L973 91 ITR (SC), Mela Ram & Sons v. C.I.T. (1956) 29 ITR 607 (SC), C.I.T. v. Chenanippa Mudaliar reported as (1969) 74 ITR 41 (SC), C.I.T. v. Nelliappan reported as (1967) 66 ITR (SC), Sheonath Singh v. C.I.T., West Bengal reported as (1958) 33 ITR 591 (Calcutta High Court), Dhanpat Mal Diwanchand v. C.I.T. reported as (1954) 36 ITR 357 (Lahore High Court). Gouri Kumari Devi v. C.I.T. Bihar & Orissa, reported as (1959) 37 ITR 220 (Patna High Court), Chhotay Lal Kishn Lal v. C.I.T. reported as (1962) 45 ITR 490 (Allahabad High Court), Laxminarayan Behari Lal v. C.I.T. Sitapur reported as (1960) 39 ITR 649, Tariq Transport Co. v. Sargodha Bherra Transport Co. PLD 1958 SC 467, Niaz Muhammad v. Ghulam Ali reported as PLD 1963 SC 382, Zain Noorani v. Secretary of National Assembly reported as PLD 1957 SC 46, 1990 PTD (Trib) 1042, 1987 PTD (Trib) 71, 1990 PTD (Trib) 1042, 1991 PTD (Trib) 583, W.TA. Nos. 78 to 86 (IB) of 1989-90 and RA. No.17(IB) of 1989-90 ref.
Abdul Hamid, D.R. for Appellants.
Mir Ahmad Ali, G. Abbas Chatha, M. Aslam Anwar, Hafiz Muhammad Idrees and Amir Alam Khan for Respondents.
Date of hearing: 20th July, 1991.
ORDER
The issue as to whether an appeal not filed in the prescribed form either under the Income-tax Ordinance or the Wealth Tax Act, is sustainable in law has been considered by various Benches of this Tribunal. Since there were divergent views, it was considered necessary to form a Full Bench and examine the issue in depth and come out with a well-considered finding. The Full Bench, therefore, held a sitting at Islamabad on 20-7-1991 and heard the arguments for and against the issue from the learned Authorised Representatives of various assessees involved in these appeals, as also the learned Departmental Representative to project the viewpoint of the Department.
Messrs Mir Ahmad Ali, GA. Abbas Chatha, Hafiz Muhammad 1drees, Advocates, advanced arguments holding that such an appeal would not be sustainable in law.
They were supported by the learned D.R. as well, while Mr. Amir Alam Khan, FCA argued his case in favour of the question raised.
It would be only pertinent to give a gist of the arguments put forth by each counsel alongwith the case law cited by him in support.
Mir Ahmad Ali, Advocate invited our attention to subsection (5) of section 134 of the Income-tax Ordinance, 1979 (hereinafter called the Ordinance) and pointed out that the legislature has used the word "shall" in connection with the filing of an appeal before the Tribunal. It says that the appeal shall be in the prescribed form and shall be filed in the prescribed manner. Since the word "shall" has been used in the main statute itself and not in the Rules, it is mandatory in character and any appellant not complying with the requirement of the law, must suffer dismissal of his appeal. In this regard, he further referred to Rule 195 of the Income-tax Rules, 1982, Rule 7 of the Income-tax Appellate Tribunal Rules, 1981 and Rule 6 of the Wealth Tax Rules, 1963, which all lay emphasis on the filing of an appeal in the prescribed form. In support of his arguments the learned counsel quoted at length from the following decisions--
(1) Commissioner of Income-tax v. Fakir Cotton Ginning and Pressing Industries PLD 199.1 SC 280.
(2) Collector of Customs v. M/s. Abdul Majid Khan 1977 SCMR 371.
(3) Niaz Muhammad Khan v. Mian Fazal Raqib PLD 1974 SC 134.
(4)??????? Mrs. Hirgina & Co., (Pakistan) Ltd. v. Commissioner of Sales Tax 1971 SCMR 128.
(5) Atta Muhammad Qureshi v. Settlement Commissioner, Lahore PLD 1971 SC 61.
(6) A.S.N. Shamsuzaman v. Abdul Tahir PLD 1956 Dacca 46.
(7) Ali Ahmad Khan Talpur v. Government of Sindh & others PLD 1976 Kar. 316.
(8) Muhammad Mateen v. Mrs. Dino Manekji PLD 1983 Karachi 387.
(9) Commissioner of Income-tax, Rawalpindi v. Mian Javed A. Sheikh 1989 PTD 525.
(10) Mehmood Ali and others v. Mst. Karam Elahi & others PLD 1961 Lhr. 912.
(11) Commissioner of Income-tax v. Nagina Talkeez PLD 1974 Kar. 6.
(12) WTA's 78 to 86(IB) of 1989-90 Dated 13-8-1990.
(13) Interpretation of Statutes by Vepa P. Sarathi.
The arguments of Mr. G. Abbas Chatha, Advocate were on the same lines, and he cited the following case law to press his arguments:--
(i) Commissioner of Income-tax v. B.W.M. Abdul Rehman 1973 SCMR 445.
(ii) AJ.K. Government v. Muhammad Akram 1989 CLC 905.
(iii) 1987 PTD 71 (Trib).
(iv) Khokhar Engineering Co. v. Habib Bank Limited 1986 MLD 2941.
(v) Commissioner of Sales Tax v. Crescent Pak Soap and Oil Mills 1986 PTD 238 Karachi.
(vi) Wahid Bakhsh Gadani v. The State PLD 1988 Karachi 78.
(vii) Mirza Qamar Raza v. Mst. Tahira Begum PLD 1988 Karachi 169.
Mr. Abdul Hamid, the learned D.R. has relied upon the following decisions:--
(1)??????? Damodarprasad and others v. Commissioner of Income-tax 1929 3 ITC 405 Patna High Court.
(2) Dhanpat Mal Devan Chand v. Commissioner of Income-tax 1954 26 ITR 357 Lahore High Court.
Mr. Amir Alam Khan, F.CA., however, was of the view that the right of appeal was a substantive right which could not be sacrificed at the altar of procedural niceties. He contended that it is the duty of the Courts to administer justice, properly and squarely. A mere fetish of a technicality should not deprive an appellant of his substantive right of appeal. After all the form and the manner in which appeals have to be filed are a part and parcel of the procedure to be followed for seeking justice from the Courts. If for any earthly reason, a defect, or a flaw crops up unwittingly or inadvertently, it should not snatch away the right of an appeal. Quoting the background of his client's appeals, he stated that his client has recently returned from the U.K. and had gone to the office of the C.I.T. (Appeals) to fetch an appeal form for filing wealth-tax appeals. The staff of the C.I.T. (Appeal)'s office gave him the form meant for an income tax appeal rather than a wealth-tax appeal. The gentleman filed his wealth-tax appeal in the form meant for an income-tax appeal. The learned C.W.T. (Appeals), dismissed the appeals on the ground that they were not in the prescribed form. Now this was a genuine case of hardship where a man not fully conversant with the legal technicalities attempted to pursue his legal rights in his personal capacity without the assistance of any legal mind and if he encountered any difficulties or committed an error, the lapse should have been condoned. Mr. Amir Alam Khan, then relied upon the following decisions:-
(a) Muhammad Mateen v. Mrs. Dino Manekje PLD 1983 Karachi 387.
(b) Mrs. Dino Manekje Chinoy v. Muhammad Mateen PLD 1983 SC 693.
(c) 1991 PTD 583 (Tribunal)
(d) 1990 PTD 1042 (Tribunal).
The question raised before us is no doubt a contentious one, but it has been dealt with substantially in a larger Bench decision of this Tribunal reported as 1991 PTD (Trib.) 583. However at the cost of repetition, we would like to refer to the relevant provisions of law and the rules on the subject Section 134(5) of the Ordinance runs as under:--
134(5) An appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner, and shall, except in the case of an appeal under subsection (2), be accompanied by a fee of one hundred rupees.
And the prescribed form has been given under Rule 195 of the Income?-tax Rules which are reproduced hereunder:-
FORM OFAPPEAL TO THE TRIBUNAL UNDER SECTION 134 OF THE INCOME TAX ORDINANCE, 1979.
IN THE INCOME TAX APPELLATE TRIBUNAL
No. of 19
Appellant????????????????????? v.??????????????????? Respondent.
Income-tax Circle in which assessment was made and one in which it is located.
Assessment year to which the appeal relates.
Section of the Income-tax Ordinance, 1979 under which Income-tax Officer/ Inspecting Assistant Commissioner passed the order.
Appellate Assistant Commissioner/Commissioner of Income-tax (Appeals) passing the appellate order.
Date of communication of the order appealed against.
Address to which notices may be sent to the appellant.
Address to which notices may be sent to the respondent.
Claim in appeal.
GROUNDS OF APPEAL
Signed ???????????? (Appellant)
Signed
(Authorised Representative, if any)
VERIFICATION
??????????? I, the appellant, do hereby declare that what is stated above is true to the best of my information and belief.
Verified today, the ?????????????????? ?day of ???????????????????????? 19,????
Signed
?(Appellant)
N.B:(1) The memorandum of appeal (including the Grounds of appeal when filed on a separate paper) must be in triplicate and should be accompanied by two copies (at least one of which should be a certified copy) of the order appealed against and two copies of the order of the Income-tax Officer.
(2) The memorandum of appeal in the case of an appeal by the assessee must be accompanied by a fee of one hundred rupees. The appeal fees must be credited in the Treasury or a Branch of the National Bank of Pakistan or the State Bank of Pakistan after obtaining a challan from the Income-tax Officer and the triplicate portion of the challan sent to the Tribunal with the memorandum of appeal. The Appellate Tribunal will not accept cheques, hundies or other negotiable instruments.
(3) The memorandum of appeal should be set forth, concisely and under distinct heads, the grounds of appeal without any argument or narrative and such grounds should be numbered consecutively."
Rule 7(1) of the Income-tax Appellate Tribunal Rules lays down that the memo of appeal to the Appellate Tribunal shall be in the prescribed form and presented to the Registrar or an officer authorised by him in this behalf or sent by registered post addressed to the Registrar or to such officer. Similarly, when we look at the Wealth Tax Act, 1963, we find that sections 24 and 26 of that Act provide that appeals to the Appellate Tribunal shall be in Form I under rule 6 of the Wealth Tax Rules which is also reproduced below:-
"Rule, 6: -Form of appeal to the Appellate Tribunal :-
An appeal under section 24 and section 26 of the Act to the Appellate Tribunal shall be in Form I annexed to this rule and be verified in the manner provided therein.
FORM I
Appeal to the Appellate Tribunal under subsection (1) or (2) or subsection (26) of the Wealth Tax Act, 1963.
In the Income Tax Appellate Tribunal
No. ???????????????? W.T. of?..19????????????????????????????????????? 19????????????
(To be filled in by office)
Versus
(Appellant) ???????????????????????????????????????????????????????????????????????????? (Respondent)
Wealth Tax assessment year, and in the case of an assessment under section 17 of the Wealth Tax Act the assessment year in which the wealth should have been assessed.
Wealth-tax Officer passing the assessment order.
Section of the Wealth Tax Act under which the Wealth Tax Officer passed the order.
Appellate Assistant Commissioner of Wealth Tax determining the appeal under section 23 or the Commissioner of Wealth Tax passing the order under section 25.
?Date of communication of the order of the Appellate Assistant Commissioner or the Commissioner as the case may be.
Address to which notices may be sent to the appellant.
Address to which notices may be sent to the respondent.
Relief claimed in appeal.
1,2,3.??
GROUNDS OF APPEAL
Signature of appellant.
Signature of authorised representative, if any.
VERIFICATION
??????????? I???the appellant do hereby declare that what is stated above, is true to the best of my information and belief.
Verified today, the??????????????????? day of????????????? 19
Signed
(Appellant)
N.B;--(1) The Memorandum of Appeal must be in triplicate and be accompanied by two copies (at least one of which should be a certified copy) of the order appealed against and two copies of the order of the Wealth Tax Officer relating thereto.
(2) The Memorandum of Appeal, in the case of an appeal by the assessee, must be accompanied by a fee of one hundred rupees. It is suggested that the fee should be credited in the Treasury or a Branch of National Bank of Pakistan or a Branch of State Bank of Pakistan or after obtaining a challan from the Wealth Tax officer, and the triplicate challan sent to the Appellate Tribunal with the Memorandum of Appeal. The Tribunal will not accept cheques, drafts or other negotiable instruments.
(3) The Memorandum of Appeal should be written in English and should set forth concisely and under distinct heads, the grounds should be numbered consecutively.
Perusal of the relevant provisions of law shows that the word "shall" has been used both in the Income-tax Ordinance as well as the Wealth Tax Act. It is the word "shall" which has really swayed the learned counsel opposing the question posed before us.
We have, therefore, to see whether the word "shall" is mandatory or directory in nature. Law on the interpretation of statutes has laid down the following tests in this regard:
(1) The intent of legislature cannot be gathered from the use of the words "shall" or "may" as this is not conclusive and the words are interchangeable;
(2) It has to be seen whether permissive interpretation is possible;
(3) Whether any consequence of the non-compliance has been provided;
(4) Whether any injury or prejudice has been caused to the opposite party because of the non-compliance of the provision;
(5) The importance of the subject-matter of the provision and the effect of the non-compliance on the subject-matter is also to be seen;
(6) What is the real intent of the legislature;
(7) Whether the provision and its compliance is of substance or merely of form and convenience; and
(8) Whether there is any absolute prohibition?
Considering the above yardsticks, it is not difficult to conclude that the word "shall" used in section 134(5) of the Ordinance and sections 24 and 26 of the Wealth Tax Act is directory in nature as intent of the Legislature cannot be gathered from the use of the words "shall" and "may" which are used interchangeably. Further, no consequence for non-compliance with the provisions has been laid down. And no injury or prejudice to the opposite party is caused if the appeal is not filed in the proscribed form, as long as due intimation is sent to it in the manner laic: down under the Income-tax Tribunal Rules. Besides, compliance with these provisions is a matter of form and convenience for the appellate authorities rather than prejudicially affecting the respondents. And lastly, there is no absolute prohibition for non-compliance with these provisions.
After all, the object as observed by His Lordship Bowen L.J. in the case of Cropper v. Smith reported as (1884) Ch. D.700, 710, is "to decide the rights of the parties and not to penalise them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights. I know of no kind of error or mistake which is not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. the Courts do not exist for the sake of discipline but for the sake of deciding the matter of favour or of grace."
It would further be appropriate to quote from our larger Bench decision reported as 1991 P T D (Trib.) 583 dealing with the sanctity of the right of appeal and the case-law in support. It reads as under:--
"The sanctity of the right of appeal has been enshrined in the decision of the Lord Buckmaster in Montreal Street Railway & Co. v. Normandine (1917) AC 170 (PC) wherein he has pointed out that all Rules of this type are nothing but provisions intended to secure proper administration of justice. It is, therefore, essential that they should be made to serve and be subordinate to that purpose.
It would be worthwhile to refer to some decisions from the Indian jurisdiction. In the case of State of Gujrat v. Ram Prakash Puri (1970) 2 SCR 375 (SC), the Supreme Court pointed out that a procedure is a handmaid and not a mistress of law intended to sub-serve and facilitate the course of justice and not to govern or obstruct it. The Supreme Court of India in the famous case of C.I.T. v. Calcutta Discount Co., reported as L973 91 I T R (SC) has held that no specific form is necessary for seeking relief at the hands of any Court or Tribunal if the I necessary grounds are taken in the appeal memo. It was further held that the Tribunal instead of dealing with the substance of the matter, appeared to have been unduly influenced by procedural technicalities. Its conclusion that the appeal memo was not in accordance with law was also questionable.
A reference can also be made to yet another famous decision of the Supreme Court of India in re: Mela Ram & Sons v. C.I.T. reported as (1956) 29I T R 607 (SC), where referring to the right of appeal, it was held, "a construction should not be adopted which deprives the parties of valuable rights. Contentions relating to preliminary issues are open to consideration at the time of hearing of appeal."
In another case, namely, C.I.T. v. Chenanippa Mudaliar reported as (1969) 74I T R 41 (SC), while examining vines of rule 24 of the Income-tax Appellate Tribunal Rules, 1946, as amended in 1948. It was observed that it came into conflict with section 33(4) of the Income Tax Act, 1922, and hence in so far as it enabled the Tribunal to dismiss the appeal for default of appearance, was held to be ultra vires.
In fact, in hearing an appeal, the Tribunal is empowered to permit an appellant to urge grounds not set forth in the memo of appeal and in contesting the appeal. the Tribunal is not restricted to the grounds set forth in memo of appeal, or taken with the leave of the Tribunal. Views to this effect have been expressed by the Supreme Court of India in the case of C.I.T. v. Nelliappan reported as (1967) 66I T R (SC).
It would be worthwhile to refer to some cases in support of the view that any defect or failure to comply with the requirement of the Rules falls within the category of an irregularity rather than an illegality which could be fatal to the fate of an appeal. Such defects or irregularities are curable and rectifiable by an amendment taking effect H from the date documents were originally filed and that the Tribunal can exercise its discretionary jurisdiction to condone such defects:--
(i) Sheonath Singh v. C.I.T. West Bengal reported as (1958) 33 I T R 591 (Calcutta High Court).
(ii) Dhanpat Mal Diwanchand v. C.I.T. reported as (1954) 36 I T R 357 (Lahore High Court). .
(iii) Gouri Kumari Devi v. CXT. Bihar & Orissa, reported as (1959) 37 I T R 220 (Patna High Court).
(iv) Chhotay Lal Kishan Lal v. C.I.T. reported as (1962) 45 I T R 490 (Allahabad High Court).
(v) Laxminarayan Behari Lal v. C.I.T. Sitapur reported as (1960) 39I T R 649. '
The upshot of the whole discussion is that the right of appeal granted to the appellant under S.134 of the Ordinance has been expressedly granted by the legislature and it cannot be snatched away or sacrificed at the altar of procedural niceties dictated by the Income-tax Appellate Tribunal Rules. This however, does not mean that Rules have to be observed by default rather than by compliance. Each case has to be examined on its merits. No premium can be placed on any irregularity committed by an appellant, But at the same time, valuable right of appeal can also not be extinguished by an irregularity or an omission or??????????? defect which was either unintentional or error committed unwittingly or inadvertently. Surely, the Income-tax Appellate Tribunal is vested with discretionary jurisdiction which could be exercised in appropriate cases where sufficiency of cause preventing timely compliance with rules is shown to the satisfaction of the Tribunal."
Our own Courts have also upheld the same principle as is evident from a decision of the Supreme Court of Pakistan in the case of Tariq Transport Co. v. Sargodha Bherra Transport Co., cited as P L D 1958 SC 467, wherein, it has been laid down by their Lordships that the violation of procedural rules regulating the hearing if results in a minor, error and does not amount to denial of justice, should not be a ground for quashing the proceedings. In another case of Niaz Muhammad v. Ghulam Ali reported as P L D 1963 SC 382, Justice B.Z. Kaikaus speaking for the Supreme Court observed at page 358 that the proper procedure for any system of justice is to uphold and not to thwart the grant to the people of their rights. Again, their Lordships of the Supreme Court in the case of Zain Noorani v. Secretary of National Assembly reported as P L D 1957 SC 46 held that non-performance of statutory duty within the prescribed time does not affect the ability of the duty performed. They went to the extent of declaring even an L Article of Constitution as directory. In yet another decision reported as P L D 1983 SC 693, in the case of Dino Manekje v. Muhammad Mateen, their Lordships of Supreme Court have held that the provisions of law have to be complied with in substance and right of appeal should not be defeated. The plethora of case-law on the subject clearly supports the proposition laid down in the question posed before us.
Since the learned counsel have cited a number of rulings for and against their submissions, we would now turn to them before coming to some conclusion.
The first case cited at the Bar is that of M/s. Faqir Cotton Ginning Company (supra). In this case, their Lordships of the Supreme Court have laid down that in taxing statutes, the Court must look to what is in the statute and interpret it in the light of what is clearly expressed: In this case, their Lordships held that the ITO has added Rs.4,02,604 and Rs.2,72,879 for the charge years 1957-58 and 1958-59 on account of difference between the sale price of machinery and plant and their written down value under section 10(2) of the Repealed Income Tax Act.
In the case of Abdul Majid Khan, their Lordships of the Supreme Court while considering the interpretation of expression "tube and pipe" vis-a-vis the import policy issued under the Import & Export (Control) Act, again observed that in penal or taxing statutes, the Courts have to look to what is in the statute and interpret it in the light of what is clearly expressed and not any import to support assumed deficiency.
In the case of Niaz Muhammad Khan, the question which came on the anvil of their Lordships of the Supreme Court was as to whether a plaint filed under the N: W.F.P. Pre-emption Act should be rejected if the security money was not deposited within a certain period. In this case, their Lordships have considered in detail the directory or mandatory nature of statutory provisions and we shall revert to it subsequently.
In the case of M/s. Hirjina & Co. (supra), their Lordships of Supreme Court were called upon to interpret the expression "sale price" as used under sections 2(16) and 3(3) of the Sales Tax Act and while interpreting it they held that in interpreting the taxing statutes, the Courts must see what is in the statute and interpret it in the light of what is clearly expressed. It cannot imply anything which is not expressed. It cannot import provision in the statute so as to support the assumed deficiency. On the other hand in the case of Atta Muhammad Qureshi (supra) a shop was allotted to him under the Displaced Persons (Compensation and Rehabilitation Act) by the Deputy Settlement Commissioner as' a house but subsequently in view of a press note of 3rd May, 1960, the Additional Settlement Commissioner cancelled his allotment which was confirmed by the High Court, Lahore. Allowing the appeal it was observed by their Lordships that if plain requirement of absolute statutory enactment prescribed, how something is to be done, thing being done in some other manner would be invalid. Their Lordships have made the distinction between the mandatory and directory provisions.
In the case of Mian Javed Sheikh (supra), a reference application was rejected by their Lordships of the Lahore High Court under section 66(2) of the Repealed Income Tax Act, which was not accompanied by certified copies of the order of the Tribunal. We have discussed this case at length in a decision of this Tribunal reported as 1990 P T D (Trib.) 1042 and for the sake of brevity we rely on our aforesaid decision.
In the case of Mahmood Ali (Supra), the question before their Lordships of Lahore High Court was as to whether Pakistan Administration of Evacuee Property Ordinance, 1958, was revived after the expiry of Pakistan Administration of Evacuee Property Ordinance, 1959, which repealed it and in this context, their Lordships held that if the intention of legislature was unambiguously expressed, the Courts will not be entitled to impute any intention other than so expressed.
Several decisions have been cited from the Karachi High Court also. The first is the case of Wahid Bukhsh (Supra). In this case, Mr. Justice Muhammad Mazhar Ali, a former Chairman of the Income-tax Tribunal, while interpreting section 497 of the Criminal Procedure Code has observed that a provision of law should be construed in such a way that no other part of it is thereby rendered redundant, In the case of Qamar Raza (Supra) the question before his Lordship was as to-in what period, Talaq became effective if the woman menstruates and at what period if she does not. It was in this context that Justice Tanzeel-ur-Rehman has made observation that when the legislature fixes certain period for a certain thing or the manner in which certain act is to be performed, the Courts must see that the same is strictly followed.
The case of M/s. Khokhar Engineering (Supra) is also from the Karachi High Court. In this case, it was held that the procedure laid down by a statute should be done the same manner. In this case, the issue before the learned Division Bench was as to whether an appeal lay against interlocutory order recorded under the provisions of the Banking Companies (Recovery of Lands) Ordinance.
In the case of Crescent Pak. Soap (Supra), the question before their Lordships of the Division Bench was as to whether sales tax was payable on the sale of empty drums and it was observed by their Lordships that fiscal statutes were to be strictly construed so that no liability against a citizen is created unless it was clearly spelt out.
In the case of Muhammad Mateen (supra) the Division Bench of the Karachi High Court while interpreting the provisions of Order 43 rule 3 have observed that what shall and may very often connotes unchangeable concepts.
In the case of Ali Ahmad Talpur, the question before their Lordships of Karachi High Court was as to whether an entry in the record of rights could be cancelled without affording an opportunity of hearing and it was held by their Lordships that the procedure laid down in the statute should be strictly followed even if it was directory.
In the case of Nagina Talkies, the learned Division Bench of Karachi High Court was called upon to interpret the true meaning and import of the word "allowance" as used in section 11(3)(4) of the Repealed Income Tax Act. In this context, it was observed by their Lordships that in fiscal statutes, meaning was to be ascertained from the plain language of a statute, and it was for this reason that their Lordships held that the word "allowance" could. not be interpreted to mean and imply any liability.
A case has also been cited from the Supreme Court of Azad Jammu & Kashmir in the case of Muhammad Akram Shah. In this case sub-rule (3) of rule 2 of Azad Jammu & Kashmir Efficiency & Discipline Rules laid down that the authorised officer or authority should not be personally interested in the result of the proceedings and it was in this context that it was held that any act which was performed in violation of mandatory provisions vitiates the whole proceedings. Thus the respondent was reinstated and his order of dismissal was recorded in violation of aforesaid rule.
The authority from Dacca High Court has also been cited which has been recorded in the case of Shams-uz-Zaman. In this case, East Bengal Premises Rent Control Ordinance came for consideration of a learned Single Judge. Section 13 thereof laid down that before an order for attachment of the judgment property of the debtor could be issued, the decree holder alongwith the petition must file a copy of the decree and an affidavit to the effect that the amount of the ex parte decree is recoverable. It was in this context that it was observed that where the words of the statute were plain and unambiguous, the Courts cannot refuse to give them their natural meaning to avoid the possibility of injustice or hardship.
A few decisions have also been cited from this Tribunal. The first is reported as 1987 P T D (Trib.) 71. In this case it has been held that even if the rule 12 of the Income-tax Tribunal Rules was not complied with the appeal was not liable to be rejected. The other two decisions are reported as 1990 P T D (Trib.) 1042 and 1991 P T D (Trib.) 583, The latter decision is a larger bench decision consisting of five members and the two decisions mentioned above have been rather confirmed by five members of the larger Bench. The fourth decision is unreported decision, recorded in W.T.A. Nos. 78 to 86 (IB)/1989-90 relating to assessment years 1979-80 to 1987-88 on 13-8-1990. This wealth tax decision lays down that if an appeal under Wealth Tax Act has not been filed in the prescribed form, it was not Sustainable in law. The reliance has been placed on a full bench decision recorded in RA. No. 17(IB)/1989-90 decided on 13th March, 1990. However, let us mention that aforesaid Full Bench decision has been considered and not approved by the larger Bench:
Before turning to the merits of the issue involved, let us advert to the two cases that were also relied upon by the first appellate authority. The first is the case of Dhanpat Mal (Supra). In this case the Appellate Assistant Commissioner decided certain issues by his order dated 28-6-1946 whereas he sent certain issues to be investigated by the ITO. The assessee went up in appeal to the Tribunal against those issues which were decided by the learned AA.C. Subsequently, the AA.C. also decided the other issues after receiving report from his ITO by his order dated 31-3-1947. The assessee instead of filing separate appeal before the Tribunal decided to move an application containing additional grounds whereby the order of learned A.A.C. recorded on 31-3-1947, was challenged. This application was neither in the prescribed form nor was accompanied by fee of one hundred rupees. Consequently the Tribunal refused to deal with these additional grounds for the reason that they did not arise out of the order dated 28-6-1946 and on a reference, a Division bench of Lahore High Court has confirmed the order of this Tribunal. This decision has been relied upon by the first appellate authority for the proposition that if an appeal is not filed in the prescribed form. it is liable to be rejected. However, with due respect, we feel that the learned Division Bench of the Lahore High Court has not confirmed the order of this Tribunal because the appeal was not in prescribed form or was not accompanied by prescribed fee. From perusal of this authority it appears that under rule 13 of Income Tax Tribunal Rules of 1946 the Tribunal had the jurisdiction to reject a memorandum of appeal, if it was not in the prescribed form or return it for being amended within such time as may be allowed. The learned Bench upheld the order of the Tribunal with the following observations:--
"The Appellate Tribunal, therefore, had the discretion to reject the application even if it could be treated as a memorandum of appeal in the circumstances of the case and nothing has been urged before us to show that the discretion has been even improperly, much less illegally, exercised."
It is, therefore, clear that this decision is not an authority for the proposition for which it has been relied upon. Similarly, the case of Damodar Parasad (Supra) is also not an authority on the issue before us. In that case, an unsigned and unverified appeal was rejected by the AA.C. in limine as he had no power to call upon the appellant to rectify the mistake in appeal. However, this Tribunal has such powers which have been discussed in very elaborate manner by the larger Bench in a case reported as 1991 P T D (Trib.) 583.
From perusal of the case-law cited at the Bar it appears that even in those cases where a dispute is between a citizen and a citizen, the procedural laws are not to be strictly interpreted even if the word "shall" has been used. It further appears that only those fiscal provisions are to be interpreted strictly which create some sort of liability on a citizen. However, the issue before us pertains to a right of appeal which is surely a statutory right. It is true that a particular procedure and form has been prescribed by the relevant laws yet we do not think that such a right could be defeated by a mere omission of some technicality though the provision is complied with in substance. In our larger Bench decision reported as 1991 P T D 583, we have cited instances of various rules where the words `shall' and `may' as pointed out by their Lordships of the Karachi High Court in the case of Muhammad Mateen have been used interchangeably. Thus if we follow the yardstick as provided by our own Supreme Court in the case of Niaz Muhammad Khan (Supra), we may observe the word "shall" as used under subsection (5) of S. 134 of the Ordinance and the Rules framed thereunder, in sections 24 and 26 of the Wealth Tax Act, Rule 6 of the Wealth Tax Rules as also in the Tribunal Rules, the directory nature of the word "shall" is self evident inasmuch as there is neither any consequence given under these provisions for their violation nor is there any absolute prohibition for non-compliance nor is any injury or prejudice caused to the opposite party if the appeal is not filed in the prescribed form as long as due intimation is sent to it in the manner laid down under the Tribunal Rules. Anyhow, compliance with the provisions is a matter of form and convenience for the Appellate authorities rather than prejudicially affecting the respondents. Comparing the provisions of Rule 13 of the Income-tax Appellate Tribunal Rules, 1948 with Rule 12 of this Tribunal Rules, 1981, it has been observed in a case reported as 1990 P.T D (Trib.) 1042, as under:--
"But there is no provision made either in the Rules or in the Ordinance that the Registrar would be entitled to reject the memorandum of appeal, if any of the rules have not been complied with. It is pertinent to note that Rule 13 of ITAT Rules, 1948, specifically vested the Tribunal with the discretion of rejecting the memorandum of appeal, if it was not in the prescribed form. But such provision is conspicuous by its absence in the rules."??????
Considering the powers of the Tribunal, it has been further observed:--
"Sub-rule (3) of Rule 15 read with sub-rule (3) of Rule 11 vests in the Tribunal both powers of accepting the memorandum of appeal or rejecting it in its discretion on the facts and circumstances of each case, if it has not complied with the rules."
It is true that aforesaid observations have been made in a case requiring interpretation of Rule 12 of the Income-tax Appellate Tribunal Rules, but we think that reasons advanced by all the five Members of this Tribunal in the decision reported as 1991 P T D (Trib.) 583 apply with full force in the interpretation of the relevant provisions of the Income Tax Ordinance and the aforesaid rules. Nevertheless, we would like to add that the cardinal principle of the law of pleading is to bring the parties to the issue so as to avoid an element of surprise. It would depend on the good judicious sense of the Bench to decide as to whether a particular appeal under its own facts and circumstances should be rejected or not. The best illustration comes from the case presented by Mr. Amir Alain Khan, where although no prejudice had been caused to the department yet his appeal was rejected by the C.W.T. (Appeals). It is pertinent to note that the department itself had supplied wrong forms to the person concerned but he was without any legal assistance at that time. Thus it is clear that there might be other cases of this nature where the provisions of law may have to be relaxed in order to meet the demands of justice and equity. However, let us hastily adhere that there might be cases where appeals may not have been filed in the prescribed form for lack of proper interest without exercising due care or caution or just because the other party had filed an appeal for improper motives. As no doubt, many frivolous appeals are filed on that account, such appeals deserve rejection.
In view of the above, the question stands answered accordingly.
M.BA./1200/T ??????????????????????????????????????????????????????????? ??????????????????????? Reference answered.