(a) Income Tax Ordinance (XXXI of 1979)---

----S. 134(5)---"Shall" as used in S.134(5), Income Tax Ordinance, 1979 had not made the provisions mandatory in nature---Where the consequences of failure to comply with the provision were not stated, the provision was directory and where consequences were specifically mentioned, the provision was mandatory---Consequences of failure to comply with S.134(5) of the Income Tax Ordinance, 1979 having not been given, it could not be construed as a mandatory provision of law but was a directory provision.

(b) Interpretation of statutes--

----Mandatory or directory provision of law---Determination---Principles-- No universal rule or absolute test existed for determining whether a provision of law was mandatory or directory and it was to be determined according to the intention of the Legislature and the language which had been used in the provision---Ordinarily, where consequences of 'failure to comply with certain provisions were not stated those were to be deemed to be directory, and where the consequences were specifically mentioned, the provision was mandatory---Statute, as a general rule was understood to be directory when it contains matter merely of directions but it was construed as mandatory when those directions were followed up by an express provision that in default of following them, he had to face the consequences-- Provision was mandatory if its disobedience entitled a serious legal consequence.

1997 CLC 1724; 1'993 CLC 1666; 1996 SCMR 70; PLD 1984 SC 289; (1955) 27 ITR 587; (1942) 10 ITR 286; PLD 1982 SC (AJ&K) 112; 1996 PTD (Trib.) 334; (1950) 18 ITR 72 and PLD 1985 SC (AJ&K) 85 rel.

(c) Income Tax Ordinance (XXXI of 1979)---

----S. 134(5)---Object of S.134(5) of the Income Tax Ordinance, 1979 was to secure the revenue for the benefit of the State---Fiscal statutes were to be construed strictly in favour of subjects and basic object of all such statutes was to secure the revenue for the benefit of State and not to arm the litigant with a weapon of technicality.

PLD 1984 SC 289 rel.

(d) Interpretation of statutes-

---- Fiscal statute---Where a provision was open to two reasonably possible interpretations, then, the interpretation which favours the taxpayer has to be adopted.

1993 CLC 1666 rel.

(e) Income Tax Ordinance (XXXI of 1979)---

---S.134 (5)---Income Tax Appellate Tribunal Rules, 1981, Rr.l1, 15 & 7-- Assessee deposited appeal fee in Pakistan instead of Azad Jammu & Kashmir---Registrar of Appellate Tribunal of AJK did not give any notice to assessee/appellant for deposit of fee in Azad Jammu & Kashmir ---Appellate Tribunal, AJ&K dismissed the appeal on the ground that appeal fee was not paid in Azad Jammu'& Kashmir Treasury before the filing of appeal as it was a statutory requirement under S.134(5) of the Income Tax Ordinance, 1979--Assessee/appellant contended that no doubt, in S.134(5) of the Income Tax Ordinance, 1979, the word 'shall' has been used but no .penalty for the violation of the said provision was provided, therefore, merely on the basis of word 'shall', it could not be construed that it was a mandatory provision of law but it was a directory provision of law and the assessee/appellant could not be penalized for the default---Validity---Provision of S.134(5) of the Income Tax Ordinance, 1979 could -not be construed as mandatory provision of law but it was directory in nature---Rule 11 of Income Tax Appellate Tribunal Rules, 1981 nowhere contained that memo of appeal should accompany the appeal fee---Rule 15 of the Rules contained that where memo. of appeal was not filed in manner specified, then, the Registrar or Officer authorised under R.7 of Income Tax Appellate Tribunal Rules, 1981, may return it to appellant or his authorised representative to bring it in conformity with provision of the said Rules within such time as he may think fit---Rule 15, thus, also lends support to argument that S.134(5) of the Ordinance was directory provision of law and not mandatory because it suggested that if memo. of appeal was not accompanying necessary, documents then, Registrar of the Tribunal shall return the same and provide further time for its completion---Provision of S.134(5) of the Ordinance therefore, was not a mandatory provision of law---If memo. of appeal was not accompanying, the requisite fee, then, under R.15, it was the responsibility of the Registrar to provide further time to the appellant/assessee for depositing the appeal fee---Judgment of Income Tax Appellate Tribunal, Azad Jammu &" Kashmir was set aside with the direction to provide an opportunity .to appellant/assessee for depositing appeal fee and decide the case after hearing the parties on merits.

1997 CLC 1724; 1993 CLC 1666; 1996 SCMR 70; PLD 1984' SC 289; (1955) 27 ITR 587; (1942) 10 ITR 286; PLD 1982 SC (AJ&K) 112; 1996 PTD (Trib.) 334; (1950) 18 ITR 72; PLD 1985 SC (AJ&K) 85 and Crawford's Construction of Statutes, p.247 ref.

(f) Income Tax Ordinance (XXXI of 1979)---

----Ss.134 & 129---Appeal--Right of appeal---Announcement of judgment-- Question of appeal only arises after announcement of judgment---Right to appeal also accrues after the announcement of judgment but not from the date of recording the judgment---No right of appeal could be exercised before announcement of judgment.

Liaquat Afzal for Appellants (in all Appeals).

Haji Muhammad Afzal for Respondents,

ORDER

MUHAMMAD RIAZ AKHTAR CHAUDHARY, J.---All the above-captioned seven appeals have been filed against the one and the same judgment passed by the Income Tax Appellate Tribunal, Azad Jammu & Kashmir, dated 14-11-1998. The common questions of law and facts are involved in these seven appeals, therefore, all the aforesaid appeals shall be disposed of, through this single judgment.

The relevant and necessary facts for the disposal of the instant appeals are, that the assessment orders for the years 1979-80, 1980-81, 1988-89, 1989-90, 1990-91, 1991-92, and 1992-93, were passed by the Income-tax Officer, Mirpur. Feeling 'aggrieved from the orders of the assessment, the appellants preferred seven appeals for the aforesaid years before the Commissioner of Income-tax (Appeals) Muzaffarabad. All the aforesaid seven appeals were dismissed by the said Court. Feeling aggrieved from the decision of the said Court, the appellant filed the above-noted seven appeals before the Income Tax Appellate late Tribunal, Azad Jammu and Kashmir Council, Muzaffarabad. Both the Chairman and Member of the Tribunal, consolidated all the above-captioned seven appeals and dismissed the same through the impugned judgment. The instant appeals have been filed against this decision of the learned Income Tax Appellate Tribunal.

All the aforesaid appeals were dismissed by the Income Tax Appellate Tribunal, Azad Jammu and Kashmir on the ground, that the appeals fee was not paid in the Azad Jammu and Kashmir Treasury before the filing of the appeals as it was a statutory requirement under section 134(5) of the Income Tax Ordinance, 1979. All the appeals were dismissed on this legal ground, without considering the merit of the cases.

The learned counsel for the appellant argued that in Appeal No.2 pertaining to the Assessment year 1988-89, the requisite fee was paid in the National Bank of Pakistan before the filing of the same and the challan is on the file of the Tribunal. He further submitted that the Registrar also reported and endorsed that the requisite fee was deposited in the National Bank of Pakistan, Main Branch, Muzaffarabad. It was next submitted by the learned counsel that in Appeal No.3 of 1999 pertaining to the assessment year 1989-90, the fee was also deposited and the challan form regarding the deposit of the fee is also on the file. The Registrar also reported as such, but the learned Tribunal has wrongly held that the fee was not deposited.

It was further submitted by the learned counsel that in Appeal No. 1 of 1999 pertaining to the Assessment year 1979-80, a notice was given to the appellant to the effect that the requisite fee was required to be deposited in the Treasury of Azad Jammu and Kashmir, while, the fee was deposited in Pakistan, therefore, the fee should be deposited in, the Treasury of Azad Jammu and Kashmir. He further submitted that in Appeal No.6 pertaining to the Assessment year 1980-81, a notice, too was also given to the appellant that he has deposited the aforesaid fee in Pakistan, while it was required to be deposited in the Treasury of Azad Jammu and Kashmir. It was next submitted by the learned counsel that in response to the notices issued by the Registrar, the appellant deposited the requisite fee in the National Bank of Pakistan, Main Branch, Muzaffarabad. The Challan Forms have been submitted in the Court by the learned counsel alongwith the applications.

It was further submitted by the learned counsel that in all other cases, the fee was deposited; but that vas deposited in Pakistan and not, in Azad Jammu and Kashmir. The Registrar did not give any notice to the appellant for the deposit of the fee, while, it was enjoined upon him to issue a notice to the appellant.

It was next submitted by the learned counsel that no doubt, in section 134(5), the word 'shall' has been used but no penalty for the violation of the aforesaid provision its provided, therefore, merely on the basis of the word 'shall', it could not be construed that it is a mandatory provision of law but it is a directory provision of law. It was further submitted by the learned counsel- that the provision is directory and the appellant could not be penalized for the default. At the most, he could be ordered to deposit the fee. He referred the following authorities in support of his contentions:

(1) 1997 CLC 1724,

(2) 1993 CLC 1666,

(3) 1996 SCMR 70, and

(4) PLD 1984 SC 289

While controverting the arguments of the learned counsel for the appellant, the learned counsel for the respondents, contended that no doubt, in Appeal No.2 of 1999 regarding the Assessment year 1988-89 and Appeal No.3 of 1999 pertaining to the Assessment year 1989-90, the challan forms are on the files but this point was not taken in the memo. of appeal, therefore, the appellant cannot agitate it. It was further submitted by the learned counsel that the appeal lies only on the question of law. In the present case, no question of law was raised by the learned counsel for the appellant. All the questions raised by the appellant are the questions of facts, therefore, the appeals are not maintainable. It was also submitted by the learned counsel that section 134 (5) of the Income Tax Ordinance, is a mandatory provision of law. In this provision, the word 'shall' has been used. It was enjoined upon the appellant to file the requisite fee alongwith the memo. of the appeals. Subsequently, if the appeal fee was deposited after the period of limitation, then, the appeal is liable to be dismissed as being time-barred. He submitted that the mandatory provision of law has not been followed by the appellant, the Tribunal has rightly dismissed the appeals. The judgment of the Tribunal is based on sound, cogent and sagacious reasonings which warrants no interference.

It was further submitted by the learned counsel for the respondents that section 136 was amended and substituted in July, 1997. Prior to the said amendment, remedy by way of reference was available to the appellant. The judgment was written by the Members of the Tribunal in 1996, therefore, the remedy by way of reference was available to the appellant although the provision conferring the remedy by way of reference has been repealed but a right and remedy has accrued to the appellant under section 6 of the General Clauses Act and 56-C of Azad Jammu and Kashmir Interim Constitution Act, 1974, therefore, the remedy by way of reference was available to the appellant and all the aforementioned appeals entail dismissal on this sole ground. He referred the following authorities in support of his contentions:--

(1) Income Tax Reports 1955 Vol. 27, 587

(2) Income Tax Reports 1942 Vol. X, 286,

(3) PLD 1982 SC (AJ&.K) 112,

(4) 1996 PTD (Trib.) 334 and

(5) Income Tax Reports 1950 Vol, 18, 72.

We have heard the arguments of the learned counsel for the parties, perused the relevant record and given our utmost muse to the respective arguments advanced by the learned counsel for the parties.

The contemplate perusal of the record shows that in Appeal No.2 of 1999 pertaining to the Assessment Year 1988-89, -the requisite fee for filing the appeal was deposited in the Government Treasury. Both the learned Chairman and Member have not gone through the file and have not taken into consideration that. the requisite fee was paid. It is most unfortunate that both the Chairman and the Member of the said Tribunal have decided the case without looking into the file. The perusal of the file shows that page 1 of the file is a challan regarding the payment of the appeal fee in the National Bank of Pakistan, Main Branch, Muzaffarabad. This fee was deposited in the Bank on 9-9-1990. It was verified by the Registrar on 9-9-1990. The appeal was filed on 10-9-1990. Thus, it is crystal clear that when the appeal was filed, it was accompanied by the requisite fee. Both the learned Chairman and Member of a Tribunal have wrongly held that the appeal pertaining to the Assessment year 1988-89 was filed without the appeal fee and has wrongly dismissed it on this ground.

So far as Appeal No.3 of 1999 pertaining to the assessment year 1989-90 is concerned, in this case too, the appeal fee was deposited in the Government Treasury but both the Chairman and Member of the Tribunal have not taken the trouble to examine the original file. Page 4 of the Income Tax Appellate Tribunal's file is a challan through which Rs.100 was deposited in the National Bank of Pakistan, Main Branch, Muzaffarabad on 3-6-1991. Page 1 of the file contained the list of the documents accompanying the appeal. At item No.4, it was recorded as under:--

"Receipted Challan for Rs.100."

It was duly endorsed by the Registrar of the Tribunal. When the appeal was filed, it was accompanied by the requisite fee. Thus, the lower Court has wrongly held that the appeal fee was not deposited, and has wrongly dismissed the appeal, on this ground.

As the Appeals Nos.l and 4 of 1999 pertaining to the Assessment years 1979-80 and 1980-81. are concerned, in these appeals, the appeal fee was deposited, but it was deposited in Pakistan upon which on 24-2-1990, a notice was given by the Registrar of the Tribunal to the appellant in the following words:--

"You have remitted the fee in Pakistan, which is not acceptable here. The copies of the Challan are returned with the remarks that the appeal fee may please be remitted in Azad Jammu and Kashmir Treasury. For this purpose, challan forms are enclosed."

After the said notice, the appellant, deposited the appeal fee in the National Bank of Pakistan, Main Branch, Muzaffarabad on 8-3-1990. Both the challans were submitted by the learned counsel for the appellant, during the course of arguments. The perusal of both the challans shows that the requisite fee was deposited in response to the notice of the Registrar on 8th March, 1990, therefore, it could not be said that in both these cases, the requisite fee was not deposited but the same was deposited in the Treasury of Azad Jammu and Kashmir. The learned Income Tax Appellate Tribunal has wrongly and illegally dismissed both the aforesaid appeals.

As the remaining three appeals are concerned, in these appeals, the requisite fee was deposited in Pakistan and the same was not deposited in the Treasury of Azad Jammu and Kashmir, therefore, the Appellate Tribunal has dismissed the same on the ground that the requirement of section 134 (5) of the Income Tax Ordinance has not been fulfilled, as such, the appeals were dismissed.

Now the primary question requiring determination in the instant cases is whether in the present appeals, any question of law is involved or not?

Section 136 of the Income Tax Ordinance contained that an appeal shall lie to the High Court in respect of any question of law arising out of such order under section 135. In the present case, the question which was raised by the appellant is that section 134(5) is not a mandatory provision of law but it is a directory provision of law. Interpretation of sect ion 134(5) is required and this is a question of law, so, it could not be said that no question of law was involved in these cases. The entire questions raised in these appeals are the question of law, therefore, the contention raised by the learned counsel for the respondents that no question of law is involved, is without any substance.

Now, the next question emerges whether section 134(5) is a mandatory provision of law. For having proper perception, I would like to reproduce section 134 (S) which reads 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."

No doubt, that in section 134(5), the word 'shall' has been used but merely and simply on the basis of the word 'shall', it could not be construed that it is mandatory provision of law. There is no universal rule or absolute test for determining whether a provision of law is mandatory or directory. It is to be determined according to the intention of the Legislature and the language which has been used in the provision, but ordinarily, where consequences of failure to comply with the certain provisions are not stated in the provision, then, it is deemed to be directory, and where the consequences are specifically mentioned, the provision is mandatory. As a general rule, a statute is understood to be directory when it contains matter merely of directions but it is construed as mandatory when those directions are followed up by an express provision that in default of following them, he has to face the consequences. A provision is mandatory if its disobedience entails a serious legal. consequence. This view finds support from 1997 CLC page 1727 relevant page 1733 which reads as follows:

"Now, the question for determination is whether the provision of section 36(3) of the Act are mandatory or directory. There exists no universal rule or absolute test for determining whether a provision of law is mandatory or directory. The determination is made in view of the intention of the Legislature and the language in which the provision is couched but ordinarily where consequences of failure to comply with the provision are not stated, the provision is directory and where the consequences are specifically mentioned, the provision is mandatory."

This view further finds support from PLD 1985 SC (AJ&K) 85 relevant page 90 which reads as under:--

"It is evident from the above-stated survey of the case-law that there is consensus amongst the judicial authorities on the point that if a breach of rule, instruction or law prescribing the procedure for holding election is made and no penalty has been provided for such a breach in the relevant rules, instructions or law, as the case may be, such breach must be deemed to be a directory nature."

Both the aforesaid Reports clearly conveys that where the consequences of failure to comply with the provision are not stated, the provision is directory and where the consequences are specifically mentioned, the provision is mandatory. In the instant case, the consequences of failure to comply with section 134(5) has not been given, therefore, it could not be construed as a mandatory provision of law but it is a directory provision of law.

It is also pertinent to note that while interpreting the Statutes, the Court has to see that what was the intention of the Legislature and what was the object of the provision? Intention is the essence of the Statute and the intention of the Legislature as embodied in the statute, constitutes the law thereof. 'Naturally, the Legislature purpose is the reason that why the particular enactment was passed by the Legislature because the reason was to remedy some existing evil or to correct some defect in the existing law or to create a new right or a new remedy. This view finds support from Crawford's Construction of Statutes, page 247 which reads as under:---

"Naturally, the Legislature purpose is the reason why the particular enactment was passed by the Legislature. Perhaps, the reason was to remedy some existing evil, or to correct some defect in the existing law, or to create a new right or a new remedy."

Now, the question which perturbs our mind is that what was the object of section 134(5) of the Income Tax Ordinance?

The basic object of the aforesaid provision was to secure the revenue for the benefit of the State. The provisions of the Income Tax Ordinance, Court Fees Act and other fiscal Statutes were to be construed strictly in favour of the subjects and the basic object of all these Statutes is to secure the revenue for the benefit of the State and not to arm the litigant with a weapon of technicality. This view finds support from PLD 1984 Supreme Court page 289 relevant page 315 which reads as under:--

"It is also appropriate here to state the well-accepted rule about Court's attitude towards the collection of court-fee as agent of State. It is the effect that the Court Fees Act like the other fiscal statutes is to be construed strictly and in favour of the subject and that it was passed with the object of securing revenue for the benefit of the State and not to arm a litigant with a weapon of technicality to harass his opponent---See Rangchappa Subrao v. Shidappa Venkatrao AIR 1918' PC 188, Muhammad Sharif v. Mst. Natho PLD 1965 Lah. 686, M. Sharaf Faridi v. M. S. Shahan PLD 1975 Kar. 59. "

It is, thus, crystal clear that the basic object of section 134 (5) regarding the deposit of the court-fee was to secure the revenue for the welfare of the State and not to arm the litigant public with the weapon of technicality.

It is also well-settled principle of law that where a provision is open to two reasonably possible interpretations, then, the interpretation which favours the taxpayers has to be adopted. This view finds support from 1993 CLC 1993 page 1666 relevant page 1669 which reads as follows:--

"In any case, the Rule being a taxing provision, it has to be strictly construed that is to say, if it is open to two reasonably possible interpretations, then, that interpretation which favours the taxpayer has to be adopted. It must follow, therefore, that the Registering Officer acting under the Registration Act, cannot decline to register a deed other than a sale deed on the basis that the tax under the Ordinance and the Rules, has not been paid."

The case-law referred by the learned counsel for the respondents is mostly based on the analogy that where the appeal fee was not deposited alongwith the memo. of appeal but it was deposited subsequently, after the prescribed period of limitation, then, the appeal was dismissed being time-barred one. In the instant case, the point at issue was whether section 134 (5) regarding the deposit of the appeal fee is a mandatory provision of law or directory, therefore, the case-law referred by the learned counsel for the respondents has no bearing on the facts of the present cases, because in all these Reports, nowhere it was agitated or resolved that the provision regarding the deposit of the appeal fee is directory or mandatory.

It is also pertinent to note that the Income Tax Appellate Tribunal Rules, 1981 have also been enacted. Rule 11 pertains to the document accompanying the memo. of appeals. For having proper perception, I would like to reproduce the said Rule which is as follows:--

Documents to accompany memorandum of appeal.---(1) Every memorandum of appeal shall be in triplicate and shall be accompanied by two clear and legible copies (one of which shall be certified copy) of the order appealed against, order of the Income Tax Officer and of the grounds of first appeal, if any, alongwith certificate provided in Rule 12.

(2) In an appeal under subsection (2) of section 134, the Income Tax Officer shall append to the memorandum of appeal a certificate---

(i) showing the date of communication of the impugned order to the Commissioner; and

(ii) stating that the appeal has been preferred under the directions of the Commissioner.

(3) The Tribunal may, in its discretion, accept a memorandum of appeal which is not accompanied by all or any of the documents referred to in this rule."

The aforesaid. rules nowhere contained that the memo. of the appeal should also accompany the appeal fee. Rule 15 further contains that where the memo. of appeal is not filed in the manner specified, then, the Registrar or the Officer authorised under rule 7, may return it to the appellant or his authorised representative, if any, to bring it in conformity with the provisions of the said Rules within such time as he may think. The aforesaid Rule also lends support to the arguments that section 134(5) is directory provision of law and not mandatory because it. suggests that if any memo. of appeal is not accompanying the necessary document then, the Registrar shall return the same and provide further time for its completion. Thus, it clearly shows that in case, the appeal fee was not deposited within time then the Registrar should have directed the appellant to deposit the requisite appeal fee. He should have also provided time to the appellant for depositing the appeal fee, so, it could not be said that this provision is a mandatory provision of law, therefore, if, at all, the memo. of the appeals were not accompanying the requisite fee, then, under rule 15, it was the responsibility of the Registrar to provide further time to the appellant for depositing the appeal fee. Nothing like such was done in the instant cases.

It is to be noted that if it would have been a mandatory provision of law, then, in the rule 11, it should have been mentioned that the memo. on appeals should accompany the requisite court-fee and the consequences for failure of which would have also been provided in the aforesaid Rules.

As the next contention of the learned counsel for the respondents is concerned that at the time of the judgment, the remedy by way of reference was available to the appellant. The remedy by way of appeal has been subsequently introduced, therefore, the appeal is not maintainable, it has no substance for the simple reason that section 136 was substituted and amended in July,,4997 through Finance Act, 1997. In the instant cases, the judgment was released on 14-11-1998. The question of appeal only arises after the announcement of the judgment. A right to appeal also accrues after the announcement of the judgment but not from the date of the recording of the judgment. No right of appeal can be exercised, before the announcement of the judgment. In the instant cases, the judgment was announced on 14-11-1998. The remedy by way of appeal was available to the appellant on 14-11-1998. The remedy by way of reference was not available to the appellant on 14-11-1998. Thus, the contention raised by the learned counsel for the appellant, is without any substance.

Before patting with the case, we would also like to point out that in these cases, the learned Tribunal heard the arguments on 25-11-1995. The Chairman of the Tribunal wrote the judgment on 1-2-1996. while the other Member wrote the judgment on 14-2-1996. The order of the release of the judgment was passed on 18-2-1996 but the judgment was released on 14-11-1998 after two years and eight months of the order of the release of the judgment, which is most unfortunate.

The upshot of the above discussion is that all the aforesaid. seven appeals are accepted and the impugned judgment of the Income Tax Appellate Tribunal Azad Jammu and Kashmir, is hereby set aside and the cases are remanded to the learned Appellate Tribunal Income Azad Jammu and Kashmir with the direction to provide an opportunity to the appellant for depositing the appeal- fee in Appeals Nos.4, 5 and 7 pertaining to the Assessment Years 1990-91, 1991-92 and 1992-93, while, as stated above that in the remaining Appeals, the requisite fee had already been deposited. The learned Tribunal should decide the cases after hearing the parties on merits, in accordance with law.

C.M.A./M.A.K./7/AJ&K, Cases remanded.