I.TAS NOS. 9712/LB, 9713/LB OF 1991-92; 5762/LB, 5745/LB TO 5761/LB, 2531/LB OF 1986-87; VS I.TAS NOS. 9712/LB, 9713/LB OF 1991-92; 5762/LB, 5745/LB TO 5761/LB, 2531/LB OF 1986-87;
1995 P T D (Trib.) 774
[Income tax Appellate Tribunal Pakistan]
Before Inam Ellahi Sheikh Iftikhar Ahmad Bajwa,
Accountant Member and Nasim Sikandar, Judicial Member
I.TAS Nos. 9712/LB, 9713/LB of 1991-92; 5762/LB, 5745/LB to 5761/LB, 2531/LB of 1986-87; 2184/LB, 2183/LB of 1987-88 and 9486/LB to 9490/LB of 1992-93 decided on /01/.
th
December,1994. Per Nasim Sikandar, Judicial Member, Iftikhar Ahmad Bajwa and Inam Ellahi Shaikh, Accountant Members, agreeing---
(a) Income-tax Act (XI of 1922)---
----S. 31---Appeal---Time-barred appeal ---Condonation of delay---Orders of Appellate Assistant Commissioner, holding that there was no sufficient reasons for excusing the delay and rejecting the appeals as time-barred would be orders passed under S.31 of the Act and would be open to appeal---Whether order of dismissal of such an appeal on ground of limitation is made before or after the appeal is admitted would make no difference.---[1994 PTD (Trib.) 83 dissented from.].
1994 P T D (Trib.) 83 dissented from.
Mela Ram and Sons v. CIT Punjab (1956) 29 ITR 607 rel.
(b) Income Tax Ordinance (XXXI of 1979)---
----S. 132---Appeal and application for condonation of delay 'in filing appeal-- Two separate and distinct, though related or at times interdependent, proceedings---Decision in appeal---When an appeal is filed accompanied by an application for condonation of delay, it is not decided or disposed of only by recording of an order of rejection on the condonation application but there will have to be recorded an order deciding the fate of appeal besides rejecting the request for condonation ---Order with regard to fate of appeal will be a part of the order recorded on application for condonation of delay---Once there is an order on appeal of its rejection as time-barred, be it on the application for condonation of delay or even suo motu by the Authority, the order will be one under S.132, Income Tax Ordinance, 1979 and appeal before Income Tax Appellate Tribunal against such order will be competent.---[ 1994 PTD (Trib.) 83 dissented from].
Filing of an appeal and a condonation `application are two different proceedings and, therefore, two separate orders will be recorded in them. Although the one in appeal may entirely be dependent upon result in the condonation application when it is refused. At the same time, however, an application for condonation is an application "in" an appeal and not a "lis" totally independent of the appeal. At best it can be described as a prayer for an interim or early relief different from the final or total prayed for in the appeal. The practice and procedure being followed in the Tribunal as well as superior Courts in the country also supports the view in this respect where an application for condonation is invariably treated as a miscellaneous application "in" an appeal.
An application for condonation and an appeal are two separate and distinct, though related or at times interdependent proceedings. Therefore, an order recorded in one cannot be treated to have been made in other although one may cast a shadow upon the other. In other words, when an appeal is filed accompanied by an application for condonation, it is not decided or disposed of only by recording of an order of rejection on the condonation application. There will have to be recorded an order deciding the fate of the appeal besides rejecting the request for condonation. This may well be a part of the order recorded on application. Once there is an order on appeal of its rejection as time-barred, be it on the application for condonation or even suo motu by the Court or Authority, the order will be one under section 132 of the Ordinance.
Rejection of an application and the provision under which it happens is not that material. Because, mere rejection of condonation application does not ipso facto result in rejection of appeal. To dispose of an appeal the authority/Court must go one step ahead to record that finding. The difficulty faced before the amendment in the late Act of 1922 was that this disposal of appeal could not be made relatable to any of the situations or sections enumerated in section 31 of the late Act, 1922. Because, just like the provisions of subsection (1) of section 132, section 31 in the late Act referred to disposal of appeals with reference to specific provisions of the Act and the particular orders made thereunder. There was no general or omnifarious provision available in the late Act of 1922 parallel to sub-clause (c) of section 132(1) of the Ordinance. This is where the Courts got stuck up and, therefore, had to consider the disposal/dismissal of appeal as time-barred to be one under section 31 by looking at the resultant confirmation of assessment, vesting nature of right of appeal, thread-bearing the stage at which the order was made and to call in for aid various principles of interpretation of statutes. None of these is needed any more with the introduction of the said sub-clause (c), in subsection (1) of section 132 in the Ordinance.
Confining an all embracing provision as contained in subsection (1)(c) of section 132 to only certain orders detailed under section 129 of the Ordinance would be squeezing it unnecessarily to suit a preconceived interpretation. Subsection (1)(c) in section 132 has been provided for to cover various kinds of orders passed by the A.A.Cs. including dismissal of appeal as time-barred. For example, no provision in section 130 provides for rejection of an appeal if it is not in prescribed form or is not properly verified. In such a case rejection can happen only under the provisions of section 132(1)(c) and none other.
Nothing was more easy for the legislature to bar in express words a further appeal against dismissal of first appeal as time-barred if it so desired. Since no manifestation of such intention is available, the logical conclusion would be that such order is fully covered by these contemplated under section 132(1)(c).
To say that in case a time-barred appeal is filed with an application for condonation of delay it is the application for condonation, which is rejected and not the appeal does not appear correct. There would be a number of cases where an application for condonation is not made at all for a number of reasons still the suit, appeal or application will be dismissed as time-barred. A dismissal of an appeal on suo motu consideration of limitation, or on objection by the respondent, will ultimately result in dismissal of "appeal" as provided for in section 3 of the Limitation Act. An application for condonation wherever moved cannot be termed something like a leave to appeal in which case, appeal is filed only after a leave is obtained. All proceedings on condonation application are ancillary to the main proceedings in the sense that in case of acceptance main order shall be rendered on appeal after hearing the parties. And, in case of refusal, the appeal is dismissed/rejected being a necessary corollary. From whatever angle one looks at the appeal provisions in the Ordinance, legislative intent to make the dismissal of appeal order based upon limitation as final does not emerge at all.
No other provision was available in the late Act to which such power could be related to and the discrepancy has been made up in the form of sub clause (c) of section 132(1) of the Ordinance. The danger in adopting a literal approach in the interpretation of statutory provisions is evident from this situation. If there is no authority for passing an order for dismissal of an appeal as time-barred under section 132 "decision in appeal", then there is no power in section 130(3) either. This is only an enabling provision without prescribing for the other eventuality i.e. dismissal of appeal as time-barred. The placing of this power in this section with the title "Form of an appeal and limitation" also indicates that other eventuality of dismissal of appeal does not belong to the domain of section 130(3). For, a dismissal of appeal on the ground of limitation is a dismissal "of appeal" and, therefore, belongs to the gene to be found in section 132 "decision in appeal". The headings of these sections in their sequence provide for the steps involved from the right of first appeal against certain orders till their final disposal in appeal. Accordingly, the contention that relevant sections in the Ordinance, 129, 130, 131 and 132 have an intrinsic oneness and should be read as an interlinking thesis appears cogent.
Mela Ram & Sons v. CIT, Punjab (1956) 29 ITR 607 rel.
1994 PTD (Trib.) 83 dissented from.
1994 PTD (Trib.) 83; CIT v. Mysore Iron and Steel Works (1949) 17 ITR 478; Municipal Board Agra v. CIT, UP (1951) 19 ITR 63; CIT v. Shahzadi Begum (1952) 21 ITR 1; Grour Mohan Mullick v. CIT, Agricultural Income Tax (1952) 22 ITR 131; Mela Ram and Sons v. CIT Punjab (1956) 29 ITR 607; CIT, Central Karachi v. International Building Industries Limited 1993 PTD 58; CIT v. Ashoka Engineering Company and others 194 ITR 645 = 1992 PTD 1254; Faiz Ali Shah v. Chief Administrator Auqaf PLD 1974 SC 17; Subhan Khan v. Nawal Khan PLD 1990 Lah. 302; State of Bihar and others v. Rai Chandani Nath Sahay and others AIR 1983 Pat. 189; K.K. Porbunderwala v. Bombay City (1952) 21 ITR 63; Maxwell on Interpretation of Statutes, 3rd Edn., p.319; Sarfraz Khan v. Crown PLD 1950, Lah. 384 and LIT v. Khuda Bakhsh Meraj Din PLD 1956 Lah. 252 ref.
(c) Income Tax Ordinance (XXXI of 1979)---
----Ss.130, 131, 132, 133 & 134---Appeal---Limitation---Application for condonation of delay in filing appeal--Practice and procedure.
As for the delay and its condonation, there could be only three situations in which an appellate authority can possibly exercise its discretion. First where an appeal is on the face of it time-barred but no application is made for condonation, second where appeal is admitted to be time-barred as-it is accompanied with an application for excusing the delay and thirdly where the Court/authority on an objection by the office or the respondent or even suo motu raises the objection of limitation. In all the three situations, the authority or the Court ordinarily, will consider the possibility of hearing the appellant on merits only after condoning the delay. Both in the first and third situation the authority or the Court will put the appellant on guard before making an order of dismissal of appeal as time-barred. Because, the appellant may insist his appeal to be within time on factual and legal submissions. For example it may be contended that service on a particular person was not valid and that time started running against him only when recovery proceedings came to his knowledge. In such case the effect of service on that person and when it is found in favour of the assessee then the actual time of knowledge of the recovery proceedings shall have to be ruled upon.
Court has to allow an opportunity to the appellant to file an application for condonation before dismissing his appeal. The second situation is obvious. The argument that in the first case even the ministerial staff of the Court can refuse to receive the appeal papers is misconceived. From whatever papers and in whatever form a complaint against an appealable order of a lower forum is made to a higher forum its receipt cannot be refused by the authority or Court or its official functionaries. These papers filed as an appeal may face rejection in limine for a number of reasons e.g. their non-submission in the language of the Court, deficiency or insufficiency of court-fee or appeal fee, intemperate language, lack of documents required under the law to be annexed with like certified copies etc. etc. However, every such order of rejection will have to be made by the authority or the Court itself unless the Rules or charter of the forum, authority or the Court provide otherwise. Where the rules do provide for such return, rejection or refusal by supporting staff that is also done on behalf of the Court or authority and has that effect accordingly.
Therefore, in all three situations visualized, the Court or authority will hear the appellant and any order passed thereafter, even on mere prayer for condonation will be one under section 132 and thus appealable to the Tribunal under section 134(1).
(d) Interpretation of statutes---
---- Enactment conferring right of appeal---Liberal and beneficial interpretation favoured.
Per Inam Ellahi Sheikh, Accountant Member, agreeing with Nasim Sikandar, Judicial Member---
(e) Income Tax Ordinance (XXXI of 1979)---
----Ss. 132, 131, 130 & 129---Decision in appeal---Order passed by Appellate Assistant- Commissioner, whereby the appeal is rejected as time-barred has to be treated as an order under S.132 of the Income Tax Ordinance, 1979.
Order passed in any other case as laid down in clause (c) of subsection (1) of section 132 of the Ordinance meant an order passed by the Assessing Officer, and not by the AAC, under any other section, as aid down in section 129 of the Ordinance.
Subsection (2) of section 130 of the Ordinance which prescribes the time limit of 30 days for the presentation of the appeal, specially, by reference to clause (b) of that subsection which refers to the start of the limitation from the date on which intimation of the order is served in any other case, whereas clause (a) of the same subsection deals with the start of the limitation from the service of the notice of demand in the case of appeals relating to assessment or penalty. However, from reading of sections 129 to 132 altogether, it would appear that section 129 is a substantive provision prescribing the right of appeal given to the assessee against certain orders of the Assessing Officer and the only restriction in that section is laid down in subsection (2) which says that no appeal under subsection (1) would lie against any order of the assessment unless the tax payable under section 54 etc. (admitted liability) has been paid. Even in such cases where the admitted liability of tax had not been paid before the riling of the appeal, the discharge of such liability before the hearing of the appeal would validate such appeal as competent. Section 130 of the Ordinance
(f) Income Tax Ordinance (XXXI of 1979)-- -
---S. 130(2)(3)---Appeal---Limitation---Provision of S 130(2)(3), Income-Tax Ordinance, 1979 cannot be taken lightly and the question of limitation must be resolved before the appeal could be heard and decided on merits.
Dr. Ilyas Zafar for Appellant.
Shahbaz Butt, Legal Adviser and Siddique Butt, D.R. for Respondent.
Date of hearing: 25th October, 1994.
ORDER
NASIM SIKANDAR (JUDICIAL MEMBER).---This is to consider a preliminary objection by the Revenue against maintainability of these appeals which were earlier dismissed by the first appellate authority on account of their being barred by time. The issue precisely is whether an appeal against an order of AAC/CIT declining to condone delay and dismissing appeal as barred by time lies to the Tribunal. The exact provision of the Income Tax Ordinance under which such orders are recorded by the first appellate authorities, AACs/CITs is another way to describe the objection.
2. The appeals of the first appellant an A.O.P. manufacturing electric cables for the years 1982-83 and 1983-84 were dismissed by the CIT (Appeals-V), Lahore on 12-2-1994. The reason being their late filing by more than 1-1/2 months. The factual and legal submissions qua availability of the assessee at the given address and infirmities in the procedure adopted for substituted service were also rejected. In case of the other assessee, also an A.O.P. deriving income from manufacture and sale of shot, guns all appeals for the years1962-63 to 1979-80 were found barred by time and, therefore dismissed by AAC, Sialkot Range, Sialkot on 5-a-1987. In this case too the objections against service of demand notices were repelled. Both of the assessees are in further appeal before this Tribunal.
3. The objection against these appeals is necessarily based upon the ratio and the reasons recorded by a Division Bench of this Tribunal on 31-5-1992 in ITA No. 1096/LB of 1990-91 (assessment year 1989-90) now reported as 1994 PTD (Trib.) 83. The first appeal filed by the assessee in that case was also dismissed as time-barred. The learned Bench itself raised the question as to the maintainability of the appeal. And, after confronting the appellant and hearing it the appeal was held incompetent. According to the learned Division Bench, an order by AAC/CIT dismissing an appeal as time-barred is an order under section 130 of the Income-tax Ordinance read with sections 3 and, 29 of the Limitation Act and that since section 134 of the Ordinance providing for appeals to the Tribunal does not contain a reference to an order under section 130 of the Ordinance, no such appeal was entertainable. Further, that a collective reading of the provisions contained in sections 130 and 132 indicate that unless all the requirements of section 130 are fulfilled, an assessee's appeal is not admitted for hearing and, therefore, there is no occasion for following the procedure as provided under section 131 and for taking up the appeal for decision under section 132 of the Ordinance; that unless an appeal is drawn and filed in the prescribed form and within the prescribed limitation or where unless time is not extended by the AAC, it cannot be said to be a legally filed appeal. To the learned Bench it appeared that unless the appellate authority AAC/CIT exercised a discretion to condone the delay, the documents presented did not become "appeal" as such warranting adjudication under section 132 of the Ordinance.
4. For the assessees it is inter alia, contended that sections 129 to 132 should be read together as these pertain to only one aspect i.e. first appeal under the Ordinance; that headings (titles) of sections though do not control the provisions, yet can be looked into to know the real nature of the provisions contained in the section and the legislative intent; that section 132(c) clearly visualizes and includes the kind of orders now in question before us; that at any rate an AAC/CIT decides an appeal under section 132 of the Ordinance and decision on limitation suo motu or an application by the assessee is a decision in appeal as it has the effect of confirming the assessment and that ever since the promulgation of the Income Tax Ordinance in 1979 this Tribunal is entertaining and adjudicating upon appeals against orders whereby first appeals were dismissed as time-barred. Learned counsel for the assessee further contends that in matters of interpretation of provisions regarding right of appeal, a liberal and objective approach should be adopted to advance the course of justice rather than its denial by a narrow and pedantic approach.
5. Learned Legal Adviser speaking for the Revenue besides adopting the aforementioned reasons which found favour with the learned Division Bench contends that an appeal being a substantive right must be expressly provided for in a statute, it cannot be inferred from a provision or allowed by bringing in extraneous consideration to stretch the scope of an otherwise clear provision. According, to the Revenue the intention of legislature is absolutely clear that only orders recorded under section 132 shall be appealable before the Tribunal and that an order rejecting an appeal as time-barred is without any doubt an order passed under section 130(3) of the Ordinance and is, therefore, not appealable. Accordingly the learned Legal Adviser prays for rejection of these appeals on account of their being incompetent.
6. The issue it may be stated at the outset has been a subject of deliberations by the superior Courts in post -and pre-partition India when similar provisions contained in the late Income Tax Act of 1922 (the late Act) were interpreted in divergent manners. Section 30 of the late Act provided for appeals to AAC against assessments under various sections and was couched in the language similar to section 129 of the Income Tax Ordinance, 1979. Subsection (2) of section 30 of the Act provided for a time limit, its terminus quo and also the discretion with the first appellate authority to admit an appeal after expiration of the prescribed period. The comparable provision in the Ordinance is section 130(3). Then section 31(1) of the Act provided for hearing of appeal and its subsection (6) enumerated the kinds of orders an AAC could pass in appeal. The provisions of section 31 were similar to those enacted as section 131 in the Ordinance though now titled "procedure in appeal" and those in subsection (6) of section 31 are now provided under an independent section 132 titled "decision in appeal". It may be mentioned that section 33 of the late Act as amended from time to time contained almost all the comparable provisions now provided under sections 134 and 135 of the Ordinance. It pay also be noticed that in Pakistan, orders under section 30 of the late Act were also made appealable through an amendment introduced by section 12 of the Finance Act (I of 1953).
7. The difference of opinion among various High Courts of India was that while some of them held the order of an AAC rejecting an appeal as time barred to be not appealable to the Tribunal was provided for the first time in 1939 by substituting section 33 in the late Act. According to this new section appeals laid to the Tribunal against the orders of the AAC passed under various sections of the Act. The reasons for difference in the judgments being that no appeal lay to the Tribunal against an order under section 30(2) as it found no mention in the appellate orders listed in section 33 of the late Act. This view was represented by the findings recorded by Bombay High Court in CIT v. My sore Iron and Steel Works (1949) 17 ITR 478 and the Allahabad High Court in Municipal Board, Agra v. CIT, UP (1951) 19 ITR 63. The other view being that an order under section 30(2) refusing condonation of delay was necessarily an order under section '31 whether it was made before the appeal was admitted or after because it lad the effect of confirming an assessment order and that an appeal filed out of time was nonetheless an appeal for the purposes of section 31. Therefore, 'an order dismissing it would be appealable under section 33. This view earlier taken by Madras High Court in CIT v. Shahzadi Begum (1952) 21 ITR L and by the Calcutta High Court in Gour Mohan Mullick v. CIT, Agricultural Income Tax (1952) 22 ITR 131 was favoured and approved by Supreme Court of India in Mela Ram & Sons v. CIT, Punjab (1956) 29 ITR 607. In this case the Supreme Court reviewed the conflicting views of various High Courts in India to conclude, "that the orders of the AAC holding that there was no sufficient reasons for excusing the delay and rejecting the appeals as time-barred would be orders passed under section 31 and would be open to appeal, and it would make no difference in position whether the order of dismissal is made before or after the appeal is admitted." The reasoning of Calcutta and Madras High Courts and the Supreme Court of India were ably epitomized by Mr. Abrar Hussain Naqvi, learned Judicial Member, in the following lines of pages 23/24 of the report:
"(1) An appeal whether competent or incompetent is an appeal and therefore has to be disposed of as such,
(2) An appeal is a substantive right and such a right having been conferred by the Statute and the period of limitation only bars the remedy but does not extinguish the right.
(3) An appeal presented out of time is an appeal and an order rejecting such an appeal as time-barred is one passed `in appeal'.
(4) There is no power with the AAC for passing an order under section 30 of the repealed Act in the case the appeal is held to be time-barred. The only power for disposing of the appeal was provided by section 31 of the repealed Act and, therefore, such an order would be deemed to have been passed under section 31.
(5) An order rejecting an appeal as time-barred in fact confirms the assessment and, therefore, should be considered as having been passed under section 31 of the repealed Act."
8. These findings did not impress the learned Bench for various reasons including what was described as wrong assumption that an order refusing condonation of delay was an order "in appeal" or that a right of appeal does not extinguish by the law of limitation. Accordingly it was stressed that "conscious omission of section 130 from section 134 leads to the inescapable conclusion that against an order by AAC/CIT(A) refusing to exercise discretion under section 130(3) no appeal lies to the Tribunal but if this discretion is exercised to admit the appeal and, therefore, adjudication made the same would be appealable in its character as an order under section 132".
9. In support of maintainability of these appeals the appellants rely heavily on two decisions of the High Courts in Pakistan. In R.P. Saha v. CIT, East Bengal decided on 21-7-1953 a Division Bench of the Dacca High Court, with some distinction, held an order passed after hearing the appellant on the question of limitation to be one under section 31 of the Act and, therefore, appealable to the Tribunal. The other case re: CIT Central Karachi v. M/s. International Building Industries Limited 1993 PTD 58) is quite recent and stands on all fours to the facts before us. In that case the assessee, a Private Limited Company engaged in construction business returned a loss for the year 1981-82. The assessing officer rejected the declared version and made an addition under section 12(7) of the Ordinance towards total income. The first appellate authority confirmed the addition but ordered the same to be calculated in respect of a lesser amount. Being dissatisfied the Revenue took up the matter in appeal before the Tribunal which was dismissed on the ground of its being out of time. The reference application praying for a statement of the case to the High Court also failed as the Tribunal refused to oblige the Revenue. The Revenue thereupon approached the Karachi High Court under section 136(2) of the Ordinance. While considering the similar objection that dismissal of appeal by the Tribunal as time-barred was on order passed under section 134 of the Ordinance and not under section 135 against which a reference is competent to the High Court, it was observed:
"If an appeal is not presented within the time, does that cease to be an appeal as provided under section 134(1)? It is well-established that rules of limitation pertain to the domain of adjective law and that they operate only to bar the remedy but not to extinguish the right. An appeal preferred in accordance with section 134(1) must, therefore, be an appeal in the eye of law, though having been presented beyond the period mentioned in section 134(3), it is liable to be dismissed in limine. There must be a provision in the statute that at the end of the period of limitation prescribed, the right would be extinguished, as for example, section 28 of the Limitation Act but there is none such here."
As to the exact provision (section) of the Ordinance under which the order of dismissal was made His Lordship remarked:
"The next question is whether it is an order passed under section 135 of the Ordinance. That section is the only provision relating to hearing and disposal of appeals, and if an order dismissing an appeal as barred by limitation is one passed in appeal, it must fall within- section 135. And section 136 provides for filing a reference requiring the Appellate Tribunal to refer to the High Court any question arising out of such order."
10. It will be seen that both the High Courts in Pakistan adopted the same view as held by the Supreme Court of India in Mela Ram's case (supra). The proposition is further supported by a recent decision, of Supreme Court of India in Re: CIT v. Ashoka Engineering Company and others 194 ITR 645 = 1992 PTD 1254 wherein an appeal was held maintainable from an order rejecting an application (for registration or declaration of continuance) filed beyond time without there being any sufficient cause. The moot point in that case is constituted of these facts. Section 184 of the Indian Income Tax Act provides for registration of firms or filing of declaration for continuation of registration. Subsection (4) of section 184 requires the applications to be made by the end of the previous year. A proviso to this subsection, however, empowers the ITO to entertain the application if he is satisfied that the applicant firm was prevented by Buff client cause from making an application before the end of the pi envious year. Subsection (7) of that section provides for a time limit for filing of declaration of continuation and also a discretion vesting in the assessing officer entertain such applications after the prescribed period. In several cases which finally reached the Court the assessing officer refused to entertain applications on finding absence of sufficient cause in preventing the assessees from making these applications. The assessees preferred appeals to AAC. The short question before the Supreme Court was if these appeals were maintainable. The case of the Revenue was that section 246 which dealt with the subject-matter of appeals to AAC did not provide for, an appeal from an order under the aforementioned section 184(4) or under section 184(71. The Revenue cited a number of cash in support of their contention. It was, however, repelled for the reason that:
"It will be appreciated that, even if an application is filed" the income Tax Officer whichtacit appears to be out of time, the Income Tax Officer cannot straightaway reject it or refuse to entertain it. He will have to give an opportunity to the assessee to show cause as to how it can be entertained. Sometimes, even his impression that there is delay may itself be shown to be wrong. If the assessee satisfies the income Tax Officer that there was sufficient cause, then the application has to be entertained by the Income Tax Officer. In other words, the defect that the application was beyond time stands remedied and the application is in order.
On the other hand, if delay is not condoned, the officer rejects the application as not `in order'. The defect need not be something in the application. It can also be one in the procedure prescribed for making the application. In our opinion, there is nothing artificial or strained in the interpretation placed by the High Courts that cases where registration is refused for the reasons set out in section 184(4) or (7) are really cases where there is an order refusing registration to the firm by rejecting its application within the meaning of section 185(2) or (3)."
11. Having heard the parties and considered the statements of law made in the above reported cases, I find myself naturally inclined towards the ratio in Mela Ram's case and therefore the maintainability of these appeals. For the moment I need not examine the law and significance characterising `filing' of an appeal. However, I am absolutely clear in my concept that an application for condonation and an appeal are two separate and distinct, though related or at' times interdependent proceedings. Therefore, an order recorded in one cannot be treated to have been made in other although, as said above, one may have a shadow cast upon the other. In other words, when an appeal is filed accompanied by an application for condonation, it is not decided or disposed of only by recording of an order of rejection on the condonation application. There will have to be recorded an order deciding the fate of the appeal besides rejecting the request for condonation. This may well be a part of the order recorded on application. Once there is an order on appeal, of its rejection as time-barred, be it on the application for condonation or even suo motu by the Court or Authority, the order will be one under section 132 of the Ordinance.
12. As far the delay and its condonation, it is explained that there could be only ~three situations in which an appellate authority can possibly exercise its discretion. First where an appeal is on the face of it time-barred but no application is made for condonation, second where appeal is admitted to be time-barred as it is accompanied with an application for excusing the delay and thirdly where the Court/authority on an objection by the office or the respondent or even suo motu raises the objection of limitation. In all the three situations, the authority or the Court ordinarily, will consider the possibility of hearing the appellant on merits only after condoning the delay. Both in the first and third situation the authority or the Court will put the appellant on guard before making an order of dismissal of appeal as time-barred. Because, the appellant may insist his appeal to be within time on factual and legal submissions. For example it may be contended that service on a particular person was not valid and that time started running against him only when recovery proceedings came to his knowledge. In such case the effect of service on that person and when it is found in favour of the assessee then the actual; time of knowledge of the assessee of the recovery proceedings shall have to be. ruled upon. In PLD 1974 SC 17 Re: Faiz Ali Shah v. Chief Administrator Auqaf, where a letters patent appeal was rejected as time-barred the Supreme Court desired that the learned Division Bench of the High Court ought to have allowed an opportunity to the appellant to file an application for condonation before dismissing his appeal. The second situation is obvious. The argument advanced by the Revenue that in the first case even the ministerial staff of the Court can refuse to receive the appeal papers is misconceived. From whatever papers and in whatever form a complaint against an appealable order of a lower forum is made to a higher forum its receipt cannot be refused by the authority or Court or its official functionaries. These papers filed as an appeal may face rejection in limine for a number of reasons e.g. their non-submission in the language of the Court, deficiency or insufficiency of court-fee or appeal fee, intemperate language, lack of documents required under the law to be annexed with like certified copies etc. etc. However, every such order of rejection will have to be made by the authority or the Court itself unless the Rules or charter of the forum, authority or the Court provide otherwise. Where the rules do provide for such return, rejection or refusal by supporting staff that is also done on behalf of the Court or authority and has that effect accordingly.
13. Also, a formal application is not always necessary to be filed alongwith appeal for consideration of condonation. It has been so found by a Single Bench of the Lahore High Court in PLD 1990 Lah. 302 Re: Subhan Khan v. Nawal Khan. The learned Judge quoted with favour a decision of the Patna High Court in AIR 1983 Patna 189 Re: State of Bihar and others v. Rai Chandani Nath Sahay and others. In that case despite the provision of Rule 3-A in Order 41 Indian Civil Procedure Code enacting expressly that if any appeal is filed beyond the period of limitation it shall be accompanied by an application explaining the circumstances that the appellant had sufficient cause for not preferring the appeal within time, the Court observed:---
"We regret we cannot accept this effect of non-compliance of Rule 3-A of the Code. The filing of limitation petition is entirely different from the filing of an appeal. For proper presentation of appeal all that is needed is that the memorandum of appeal is accompanied by a copy of the judgment and the decree as provided in R.1 of 0.41 of the Code. The ambit of R.1 cannot be enlarged and has not been enlarged by R.3-A of the Code. We regret, we find it difficult to accept the interpretation placed by Mr. Prasad upon the provisions of R.3-A and the consequence of non-compliance thereof. This view of ours appears to be supported by that of the Supreme Court in Mrs. Sandhya Rani Sarkar v. Sint. Sundha Rani Debi AIR 1978 SC 53'7, in paragraph 7."
The ratio of this case also supports my submission that filing of an appeal and a condonation application are two different proceedings and, therefore, two separate orders will be recorded in them. Although the one in appeal may entirely be dependent upon result in the condonation application when it is refused. At the same time, however an application for condonation is an application "in" an appeal and not a "lis" totally independent of the appeal. At best it can be described as a prayer for an interim or early relief different from the final or total prayed for in the appeal. The practice and procedure being followed in this Tribunal as well as Superior Courts in the country also supports my view in this respect where an application for condonation is invariably treated as a miscellaneous application "in" an appeal.
14. What I wish to say, precisely, is that rejection of an application and the provision under which it happens is not that material as has been thought by the learned Division Bench. Because, mere rejection of condonation application does not ipso facto result in rejection of appeal. To dispose of an appeal the authority/Court must go one step ahead to record that finding. The difficulty faced before the amendment in the late Act of 1922 was that this disposal of appeal could not be made relatable to any of the situations or sections enumerated in section 31 of the late Act, 1922. Because, just like the provisions of subsection (1) of section 132, section 31 in the late Act referred to disposal of appeals with reference to specific provisions of the Act and the particular orders made there under. There was no general or omnifarious provision available in the late Act of 1922 parallel to sub-clause (c) of section 132(1) of the Ordinance. This is where the Courts got stuck up and, therefore, had to consider the disposal/dismissal of appeal as time-barred to be one under section 31 by looking at the resultant confirmation of assessment, vesting nature of right of appeal, thread-bearing the stage at which the order was made and to call in for aid various principles of interpretation of statutes. None of these is needed any more with the introduction of the said sub-clause (c) in subsection (1).of section 132 in the Ordinance.
15. The word "admit" as used in section 130(3) has been interpreted by the Revenue to mean "admission of appeal" for regular disposal after condoning delay. In other words, where delay is not condoned, no appeal is admitted for hearing and therefore in such case there could be no decision in appeal under section 132 to make it eligible for further appeal to this Tribunal under section 134(1). The parallel provision in the Act of 1922 also contained this word exactly at the same place in the comparable provision viz. section 30 (before amendment). In R.P. Saha v. CIT East Bengal (supra) Their Lordships of the Dacca High Court reached a different conclusion by observing:" The Income Tax Act does not provide for any preliminary hearing of the appeal for the purpose of admission but the memorandum of appeal which is in form and apparently in order will be taken to have been admitted and will be heard in due course". In that case z reference was made to the case of K.K. Porbunderwala v. Bombay City reported in (1952) 21 ITR 63 in which it was held that the portion of the AAC's order dismissing the appeal was appealable under section 31 but the portion of the order refusing to condone delay fell under section 30(2) and was not appealable. As said earlier in this order, the Supreme Court of Pakistan in Re: Faiz Ali Shah (supra) has desired allowing of an opportunity to an appellant to file an application for condonation before dismissing the appeal as time-barred. Therefore, in all three situations visualized above, the Court or authority will hear the appellant and as per ratio of R.P. Saha (supra) any order passed thereafter, even on mere prayer for condonation will be one under section 132 and thus appealable to this Tribunal under section 134(1).
16. Next objection by the Revenue also concerns similar provisions in the later Act. According to the learned Legal Adviser, the later Act was amended through section 12 of the Finance Act (I of 1953) making all orders under section 30 of the Act appealable in the same way as orders under section 31. It is submitted that while promulgating the Ordinance the Legislature omitted the comparable section 130(3) from the list of appealable orders to the Tribunal and thereby indicated a conscious denial of right of appeal in respect of orders passed there under. These contentions are not difficult to meet. In the first instance, if the Legislature was interested in not allowing a right of appeal in the situation before us, nothing could refrain it from providing the same in express words. Secondly, the Revenue is overlooking the aforesaid change that has occurred in the provisions of section 132 of the Ordinance, which is partly, comparable to section 31 of the late Act. The exact change so far as relevant reads:---
"132. Decision in appeal.---(1) In disposing of an appeal, the Appellate (Additional Commissioner) may,---
(a) In the case of an order of assessment,---
(i) Set aside the assessment and direct the assessment to be made afresh after making such further inquiry as the Appellate (Additional Commissioner) may direct or the (Deputy Commissioner) thinks fit;
(ii) Confirm, reduce, enhance or annul the assessment;
(b) In the case of an order imposing a penalty, confirm, set aside or cancel such order or enhance or reduce the penalty; and
(c) In any other case pass such order as he thinks fit;
(2) To (6)------------------------------------------------------------
As reproduced above subsection (c) in section 132(1) is a clear addition when compared with its predecessor provisions in section 31 of the late Act. I am conscious of the interpretation placed upon this subsection in the aforesaid reported case of the Division Bench. With, respect I will submit that confining an all embracing provision as contained in subsection (1)(c) of section 132 to only certain orders detailed under section 129 of the Ordinance would be sequeezing it unnecessarily to suit a preconceived interpretation. My considered view is that subsection (1)(c) in section 132 has been provided for to cover various kinds of orders passed by the AA.Cs. including dismissal of appeal as time-barred. For example, no provision in section 130 provides for rejection of an appeal if it is not in prescribed form or is not properly verified. In such a case rejection can happen only under the provisions of section 132(1)(c) and none other. This way of interpretation is in line with the proposed "Interpretation of Statutes" by Maxwell in 3rd Edition at page 319 and ninth edition at page 85 and approved by Their Lordships of the Lahore High Court in PLD 1950 Lahore 384 re: Sarfraz Khan v. Crown and PLD 1956 Lahore 252 re: LIT v. Khuda Bakhsh Meraj Din. We cannot assume that the legislature was not aware of the controversy mused at by Superior Courts in India and Pakistan. As said earlier, nothing was more, easy for the legislature to bar in express words a further appeal against dismissal of first appeal as time barred if it so desired. Since no manifestation of such intention is available, the logical conclusion would be that an order of the kind in question is fully covered by these contemplated under section 132(1)(c).
17. The stress by Revenue on section 3 of the Limitation Act is also impertinent because after all section 3 of the Limitation Act provides for dismissal of "an appeal, application or suit" and not that of application for condonation. Therefore, to say that in case a time-barred appeal is filed with an application for condonation of delay it is the application for condonation, which is rejected and not the appeal does not appear correct. There would be a number of cases where an application for condonation is not made at all for a number of reasons still the suit, appeal or application will be dismissed as timebarred. A dismissal of an appeal on suo motu consideration of limitation, or on objection by the respondent, will ultimately result in dismissal of "appeal" as provided for in section 3 of the Limitation Act. An application for condonation wherever moved cannot be termed something like a leave to appeal in which case appeal is filed only after a leave is obtained. All proceedings on condonation application are ancillary to the main proceedings in the sense that in case of acceptance main order shall be rendered on appeal after hearing the parties. And, in case of refusal, the appeal is dismissed/rejected being a necessary corollary.
18. As said above, from whatever angle one looks at the appeal provisions in the Ordinance, legislative intent to make the dismissal of appeal order based upon limitation as final does not emerge at all. In Mela Ram's case learned counsel for the appellant, amongst others, also contended that order excusing delay only fell properly under section 30(2) of the Act and that an order refusing to condone the delay clearly fell outside that provision. Also that an order refusing to condone delay could only be made under section 31 of the Ordinance. The Court rejected the contention on the ground that when a power is granted to an authority to be exercised at discretion it is necessarily implicit in that grant that the power may be exercised in such a manner as the circumstances might warrant. It was, therefore, held that refusal to exercise delay was an order under section 30(2). It is in this regard submitted that the order of the Court as a general statement of law is perfectly correct. However, what was actually broached upon was that express mention of one is implied exclusion of the other and, therefore, the order of refusal to condone could only be made under section 31 of the Act comparable to section 12 which deals with "decision in appeal". It is submitted and I am in agreement that no other provision was available at that time in the Late Act to which such power could be related to and that the discrepancy has been made up in the form of sub-clause (c) of section 132(1) of the Ordinance. The danger in adopting a literal approach in the interpretation of statutory provisions is evident from this situation. If we do not find any authority for passing an order for dismissal of an appeal as time-barred under section 132 "decision in appeal", then we do not find that power in section 130(3) either. This is only an enabling provision without prescribing for the other eventuality i.e. dismissal of appeal as time barred. The placing of this power in this section with the title "Form of an appeal and limitation" also indicates that other eventuality of dismissal of appeal does not belong to the domain of section 130(3). For, as rightly found in some of the above-referred cases, a dismissal of appeal on the ground of limitation is a dismissal "of appeal" and, therefore, belongs to the genre to be found in section 132 "decision in appeal". The headings of these sections in their sequence provide for the steps involved from the right of first appeal against certain orders till their final disposal in appeal. Accordingly, the contention that relevant sections in the Ordinance, 129, 130, 131 and 132 have an intrinsic oneness and should be read as an interlinking thesis appears cogent.
19. Mr. Ilyas Zafar, learned counsel for one of the appellants relies upon on a number of Indian cases wherein dismissal of an appeal as time-barred by the appellate authority, generally a District Judge, was held to be a "decree" and, therefore, appealable as such before the next forum. These cases have no direct relevance to the case before us. However, the findings in the case cited as 7 All. 42 Re: Ghulab Rai v. Mangli Lal decided on 29-7-1884 are interesting in that these herald the approach adopted by the Supreme Court of India in Mela Ram's case (supra). Mr. Justice Mahmood speaking for the Bench said:
"In the Civil Procedure Code there is no separate provision which allows the Appellate Courts to `reject' a memorandum of appeal on the ground of its being barred by limitation. Section 543 is limited to cases in which the memorandum of appeal is not drawn up in the manner prescribed by the Code, and it is only by applying section 54(c), mutatis mutandis (as provided by the last part of section 582), to appeals that the Code can be understood to make provision for rejection of appeals as barred by limitation. However, section 4 of the Limitation Act clearly lays down that every `appeal presented after the period of limitation prescribed therefore shall be dismissed'. It is therefore clear that the order of the District Judge in this case must be taken to be one which falls under the (44) definition of `decree' within the meaning of section 2 of the Code, as the order, so far as the Judge was concerned, disposed of the appeal. We do not think any other view can give effect to the provision of the Code, for we cannot hold that the Legislature intended such orders to be final."
20. A number of cases have also been cited to support contentions in favour of liberal and beneficial interpretation of statutes when a right of appeal is in question. Being in total agreement with them in the perspective of the facts before us and since there is no dispute about the adoption of such an approach, no detailed mentioning of these cases is required. A long list of cases has also been counted before us in which the Courts entertained and answered references or decided further appeals arising out of the appeals which were dismissed by the Tribunal as time-barred. Since these do not directly address the question before us their mentioning would only burden the order. Some reported decisions have also been relied upon to contend that concept of considering an order passed under one section to have been made under another section is not new. Particularly where it comes to a right of appeal. These cases are 1974 PTD 235 Re: Kara Bhai v. CIT; 1993 PTD Note 336 Re; CIT v. BL Agrawala; (1968) PTD 257 Re: Inland Navigation Company Limited, Chittagong v. ITO and 1985 PTD 324 Re: CIT v. Seth Dhanrajmal. As the precedents wherein the matter in issue has directly been decided are available, discussion on these judgments will again be of no use as these touch the controversy in an indirect manner.
21. From what has been discussed above, I find that the issue having been resolved by the Superior Courts both in India and Pakistan and that law having been suitably changed to cater the kind of situation before us no useful purpose will be served by fanning the dust that stands settled both by the authoritative as well as the Legislature. Accordingly, I will respectfully differ, with the view expressed in the aforesaid reported decision of this Tribunal and reject the objection made by the Revenue so that these appeals are listed for hearing on merits.
(NASIM SIKANDAR),
JUDICIAL MEMBER.
(IFTIKHAR AHMAD BAJWA)
ACCOUNTANT MEMBER.
22. INAM ELAHI SHEIKH (ACCOUNTANT MEMBER).---I have perused the above order, proposed by my learned brother the Judicial Member Mr. Nasim Sikandar, as agreed by my learned brother Mr. Iftikhar Ahmed Bajwa, Accountant Member. I have also perused the order, dated 31-5-1992 recorded in ITA No. 1096/LB of 1990-91 (hereinafter referred to `the earlier order) recorded by a Division Bench comprising of two very able and learned Members who have since retired from the Tribunal. I have found both the orders to be equally interesting and well reasoned. In the earlier order it was held by the Division Bench that no appeal would lie before the Tribunal under section 134 of the Ordinance where the assessee's appeal has been dismissed in limine as time-bared by the first appellate authority, after holding that such an order was not an order under section 132 of the Ordinance. It may be mentioned here that out of such earlier order a reference bearing RA. No.87/LB of ' 1992-93 has already been made under section 136 of the Ordinance referring the following question of law for the consideration of the learned Judges of the Lahore High Court:---
QUESTION
"Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the order by the first appellate authority rejecting the appeal in limine on the ground that it was barred by time was an order under section 130(3) of the Ordinance and not the order under section 132 of which appeal could be filed before the Tribunal."
23. The main reason given by that Division Bench for arriving at such conclusion was that, as per the learned Members of that Bench, unless the appeal filed by the assessee fulfilled the requirements of section 130 of the Ordinance, it could not be treated as an appeal at all and thus no order could be passed under section 132 of the Ordinance which empowers the first appellate authority to dispose of an appeal.
24. The Division Bench elaborated that the AAC had the power to admit an appeal after the due date if he was satisfied with the explanation etc. of the assessee and that implicitly the AAC also had the power under that provision to pass an order refusing to admit the appeal which is held to be time-barred. That Bench examined the provisions of. subsection (1) of section 132 and held that order passed in any other case as laid down in clause (c) of subsection (1) of section 132 of the Ordinance meant an order passed by the Assessing Officer, and not by the AAC, under any other section, as laid down in section 129 of the Ordinance. Such other cases have already been elaborated in the earlier order of the Division Bench and I need not repeat the same. This reasoning of the Division Bench in the earlier order appears to be technically correct in the light of the provisions of subsection (2) of section 130 of the Ordinance which prescribes the time limit of 30 days for the presentation of I the appeal, specially, by reference to clause (b) of that subsection which refers to the start of the limitation from the date on which intimation of the order is served in any other case, whereas clause (a) of the same subsection deals with the start of the limitation from the service of the notice of demand in the case of appeals relating to assessment or penalty. However, from reading of sections 129 to 132 all together, it would appear that section 129 is a substantive provision prescribing the right of appeal given to the assessee against certain orders of the Assessing Officer and the only restriction in that section is laid down in subsection (2) which says that no appeal under subsection (1) would lie against any order of the assessment unless the tax payable under section 54 etc. (admitted liability) has been paid. It may be mentioned that even in such cases where the admitted liability of tax had notbeen paid before the filing of the appeal, the Courts have held that the discharge of such liability before the hearing of the appeal would validate such appeal as competent. Section 130 of the Ordinance lays down the form of appeal and the limitation for the presentation of the same and also prescribes the fee to be payable at the time of filing of the appeal. In my considered view the provisions of section 130 are procedural provisions and any shortcomings or irregularity in the appeal against the provisions of section 130 would not render the appeal to be incompetent altogether. Thus, in my view an appeal filed within the ambit of section 129 of the Ordinance would be an appeal even though it may be a defective appeal and that will require disposal by the AAC. Section 131 of the Ordinance lays down the procedure that the AAC has to follow before disposing of the appeals. Section 132 after Ordinance lays down the types of orders the AAC may pass and also lays down certain conditions for passing such orders e.g. the assessment or penalty may not be enhanced without giving a show-cause notice, requirement to pass the order within certain time limit etc. However, the important thing is that section 132 empowers the AAC to dispose of an appeal presumably, which is pending adjudication with him. Thus it could be said that an order passed by the AA.C. where by the appeal is rejected as time-barred has to be treated as an order under section 132 of the Ordinance, as subsection (3) of section 130 of the Ordinance does not cater for the disposal of an appeal which is not otherwise invalid under the provisions of section 129 of the Ordinance.
25. As I have already mentioned above a reference has already been made to the High Court under the provisions of section 136(1) of the Ordinance referring a question arising out of such earlier order of the Division Bench. Section 136(1) of the Ordinance empowers the Tribunal to dispose of the appeals and the provisions are not much different from those of the provisions of section 132 of the Ordinance which empowers the AAC to dispose of an appeal. This means that the earlier order of the Tribunal has been treated as an order under section 135 of the Ordinance which means that the appeal filed by the assessee was implicitly held to be competent although the Division Bench had itself, in that earlier order, held that the order of the AAC was under section 130(3) of the Ordinance and not section 132 of the Ordinance. This goes in favour of the assessee and even if there is any doubt, the same should be resolved in favour of the assessee.
26. However, the provisions of subsection (2) and subsection (3) of section 13Q cannot be taken lightly and the question of limitation must be resolved before the appeals could be heard and decided on merits.
27. The appeals may be listed for regular hearing.
M.BA./85/TOrder accordingly.