Income-tax reference proceedings for pre-1962 returns remained governed by the repealed law; delay could not be condoned.
Reference proceedings for a return filed before 1 April 1962 were treated as part of the assessment process preserved by section 297(2)(a) of the Income-tax Act, 1961 and clause 4 of the Income-tax (Removal of Difficulties) Order, 1962, so the repealed 1922 Act continued to govern those proceedings. The Tribunal had no statutory power to condone delay in a reference application under section 66(1) of the 1922 Act because section 5 of the Indian Limitation Act, 1908 was not applicable. Where the Tribunal dismissed the reference request as time-barred without refusing to state a case on a question of law, relief under section 66(3) of the 1922 Act or section 256(2) of the 1961 Act was unavailable.
Issues: (i) whether an application under section 66(3) of the Income-tax Act, 1922, or under section 66(2) of the 1922 Act and section 256(2) of the Income-tax Act, 1961, lay where the Tribunal had dismissed the reference application as time-barred without deciding it on merits; (ii) whether the Tribunal had jurisdiction to condone delay in an application under section 66(1) of the 1922 Act and whether section 5 of the Indian Limitation Act, 1908, applied to such proceedings; and (iii) whether, after the repeal of the 1922 Act, an application for reference in relation to a pre-1 April 1962 return had to be governed by the 1922 Act or the 1961 Act, having regard to section 297(2)(a) of the Income-tax Act, 1961 and clause 4 of the Income-tax (Removal of Difficulties) Order, 1962.
Issue (i): whether an application under section 66(3) of the Income-tax Act, 1922, or under section 66(2) of the 1922 Act and section 256(2) of the Income-tax Act, 1961, lay where the Tribunal had dismissed the reference application as time-barred without deciding it on merits.
Analysis: Section 66(3) was confined to a challenge that the Tribunal had wrongly treated an application as out of time, and it did not authorise the High Court to grant relief where the application was admittedly time-barred. Section 66(2) and section 256(2) applied only where the Tribunal refused to state a case on the ground that no question of law arose. Here the Tribunal had not refused reference on that ground, but had declined to deal with the merits because it treated the application as barred by limitation. In such a situation, the statutory remedy under those provisions was unavailable.
Conclusion: The application did not lie under section 66(3) of the 1922 Act or under section 66(2) of the 1922 Act and section 256(2) of the 1961 Act.
Issue (ii): whether the Tribunal had jurisdiction to condone delay in an application under section 66(1) of the 1922 Act and whether section 5 of the Indian Limitation Act, 1908, applied to such proceedings.
Analysis: The application for reference had been filed when the Indian Limitation Act, 1908 was in force, and section 5 had not been extended to proceedings under section 66(1) of the 1922 Act by the relevant scheme of limitation law then applicable. The Tribunal therefore had no statutory power to extend time for such an application. Unless a provision expressly made section 5 applicable, the Tribunal was bound to dismiss a reference application filed beyond the prescribed period.
Conclusion: The Tribunal had no jurisdiction to condone delay under section 66(1) of the 1922 Act, and section 5 of the Indian Limitation Act, 1908, was inapplicable.
Issue (iii): whether, after the repeal of the 1922 Act, an application for reference in relation to a pre-1 April 1962 return had to be governed by the 1922 Act or the 1961 Act, having regard to section 297(2)(a) of the Income-tax Act, 1961 and clause 4 of the Income-tax (Removal of Difficulties) Order, 1962.
Analysis: The expression "proceedings for the assessment" in section 297(2)(a) was construed in its widest sense so as to include all steps in the assessment machinery, including appeals, references, and revisions, where the return had been filed before the commencement of the 1961 Act. The savings provision in clause 4 of the 1962 Order made explicit that such proceedings were to be instituted and disposed of as if the repealing Act had not been passed. The court rejected the contention that a reference application formed a separate proceeding outside the assessment chain or that clause 4 was inconsistent with section 297(2)(a) or section 298.
Conclusion: The reference proceedings relating to a return filed before 1 April 1962 were governed by the 1922 Act, and the 1961 Act did not confer a fresh right to invoke the Tribunal's power to condone delay.
Final Conclusion: The application failed because the Tribunal rightly treated the reference request as time-barred under the governing repealed law, and the broader saving provisions of the 1961 Act did not assist the assessee.
Ratio Decidendi: For returns filed before 1 April 1962, reference proceedings form part of the assessment process preserved by section 297(2)(a) of the Income-tax Act, 1961 and clause 4 of the Income-tax (Removal of Difficulties) Order, 1962, but neither section 66(3) of the 1922 Act nor section 66(2) or section 256(2) can be used to compel a reference where the Tribunal has dismissed the application solely as time-barred.