AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1965 (2) TMI 8
X X X X Extracts X X X X
X X X X Extracts X X X X
....ceded that if the said two decisions were to be followed, the appeal would have to be allowed and sent back as suggested by the appellant. The learned judges constituting the Division Bench took the view that an opportunity should be given to the learned Attorney-General to press his contention, and so, they directed that the appeal be placed before a Bench of five judges. Thereafter, this appeal came on for hearing before the Constitution Bench on November 5, 1964. On this occasion again, the same contentions were raised on behalf of the appellant and the respondent respectively. Mr. Palkhivala for the appellant urged that it would be inappropriate to reconsider the recent decisions on which he relied, and he argued that, on the merits, the view taken by this court in the said two decisions was sound and correct. On the other hand, the learned Attorney-General contended that he wanted this court to reconsider the said two decisions, and he pointed out that the matter was of importance, and so, the appeal should be referred to a larger Bench in view of the fact that the decision in the case of the Petlad Co. was a unanimous decision of a Bench consisting of five judges of this cour....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the appellant before the Income-tax Appellate Tribunal--hereafter called the Tribunal. The Tribunal dismissed the appellant's appeal in respect of Rs. 4,40,878 and allowed the Income-tax Officer's appeal in part and held that the item of Rs. 12,68,460 had been wrongly excluded by the appellate authority. In respect of item (iii) relating to Rs. 6,71,735, the Tribunal held that in the circumstances of the case the sale proceeds represented by the said item were not received in British India but in the State itself. This decision of the Tribunal led to two cross-applications by the appellant and the Income-tax Officer for raising the questions of law before it in relation to the items in respect of which they had respectively failed. As a result of these proceedings, the Tribunal drew up the statement of the case on November 5, 1948, and raised the following question to the Bombay High Court : " Whether, on the facts and in the circumstances of the case, the sums of Rs. 12,68,460, Rs. 4,40,878 and Rs. 6,71,735, or any them, which represents receipts by the assessee-company of its sale proceeds in British India, include any portion of its income in British India ? " In other wo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or decision was whether the post office which takes the cheque from the sender to the addressee is the agent of the sender or the addressee ; and on this point, the court held that as between the sender and the addressee, it is the request of the addressee that makes the post office the agent of the addressee and after such request, the addressee cannot be heard to say that the post office was not his agent. On the other hand, if there is no such request by the addressee, express or implied, then on delivery of the letter or the cheque to the post office by the sender, the post office acts as the agent of the sender. This decision had a significant impact on the further progress of the present dispute. After receiving the supplementary statement of case from the Tribunal, the matter was argued before the High Court on the 15th February, 1955. On this occasion, the High Court referred the matter back again to the Tribunal with the direction : " that the Tribunal will determine on the evidence led by both parties whether the sum in question was paid by various merchants by sending drafts, hundis or cheques by post and that if the Tribunal found that in some cases the amount was not....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the problem as to whether the view taken by this court in the said two decisions needs to be reconsidered and revised, it is necessary that we should refer to the said two decisions as well as other decisions on which both the parties have relied before us in the course of their arguments. The first decision on which Mr. Palkhivala relies is the New Jehangir Mills case. In that case, the question which was referred by the Tribunal to the High Court was whether the receipt of the cheques in Bhavnagar amounted to receipt of the sale proceeds in Bhavnagar. Before rendering its answer to this question, the High Court had directed the Tribunal to furnish a supplementary statement of the case on the following points : " On the finding of the Tribunal that all the cheques were received in Bhavnagar, the Tribunal should find what portion of these cheques were received by post, whether there was any request by the assessee, express or implied, that the amounts which are the subject-matter of these cheques should be remitted to Bhavnagar by post. " It would be noticed that as a result of this direction, the question which would really have to be considered by the High Court would be w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ribunal to include in such supplemental statement material and evidence which may already be on the record, but which had not been included in the statement of the case initially made under section 66(1). The result of this decision is that section 66(4) does not confer on the High Court power to require the Tribunal to take additional evidence before it renders its answers on the questions formulated under section 66(1) or section 66(2). In accordance with the view thus taken by this court, the direction issued by the High Court to submit a supplemental statement of the case after taking additional evidence was reversed ; and following the precedent in the New Jehangir Mills case, an order was passed that the appeals should be allowed and the matter remitted to the High Court to give its decision on the question of law referred to it as required under section 66(5) of the Act. Before the decision of this court in the Petlad Co. Ltd. was pronounced, a similar point had been raised in the case of Zoraster and Co. v. Commissioner of Income-tax. In this latter case, the question referred to the High Court for its decision was whether, on the facts and circumstances of the case, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and record further evidence. There is one more decision to which reference may incidentally be made before we part with the series of decisions on which Mr. Palkhivala relies. In Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. this court had occasion to consider the scope and denotation of the expression " any question of law arising out of such order " occurring in section 66(1) of the Act. The majority decision has summed up the result of the discussion as to the scope and effect of the provisions of section 66 in these words : " (1) When a question is raised before the Tribunal and is dealt with by it, it is clearly one arising out of its order. (2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order. (3) When a question is not raised before the Tribunal but the Tribunal deals with it, that will also be a question arising out of its order. (4) When a question of law is neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent the Privy Council has indicated the nature of these facts. " It is necessary to know ", says the judgment, " as regards (a) the business, machinery, plant and other movables ; (b) the factory buildings and land whether they were before 1931 the self-acquired property of the father or his ancestral property or joint family property or whether they fall into some other and what category according to the customary law. " The judgment also points out that the rights of the members of the family in respect of the said property would have to be ascertained and the conduct of the parties considered. Then, in regard to the agreement in question, the Privy Council pointed out that it would be necessary to enquire what agreement, if any, was made prior to February 12, 1933, and when as to a partnership being constituted to carry on the sugar factory and as to the assets which it was to have as a firm. " None of these essential facts ", says the judgment, " have been found and stated by the Commissioner, with the result that the question referred cannot be answered until the High Court has exercised its powers under sub-section (4) of section 66 of the Act ". Having made these observation....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or, Sardar Dayal Singh, as may bear upon the proper interpretation of the expression " keeping up the liberal policy of the said newspaper " in clause XXI of the will of the said testator dated the 15th day of June, 1895, and, secondly, for the addition of such facts as to a compromise dated the 1st day of December, 1906, as may show whether the said compromise is binding on all parties interested in the estate of the said testator. Thereafter, a supplementary statement made by the Commissioner was filed and it appears that before he made the said statement, the Commissioner " carefully assembled considerable material explanatory of the direction given by the testator in the phrase 'keeping up the liberal policy of the said newspaper', and showing as their Lordships think, very fairly, the nature and purpose of the trust ". After considering the said material, the Privy Council allowed the appeal preferred by the trustees, because in its opinion the second question framed for the decision of the High Court had to be answered in favour of the assessee. It is urged that this decision also shows that the Privy Council called for additional material and evidence by requiring the High C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ternative view which appears to this court to be more reasonable ; and in accepting its own view in preference to that of the High Court, this court would be discharging its duty as a court of appeal. But different considerations must inevitably arise where a previous decision of this court has taken a particular view as to the construction of a statutory provision as, for instance, section 66(4) of the Act. When it is urged that the view already taken by this court should be reviewed and revised, it may not necessarily be an adequate reason for such review and revision to hold that though the earlier view is a reasonably possible view, the alternative view which is pressed on the subsequent occasion is more reasonable. In reviewing and revising its earlier decision, this court should ask itself whether in the interests of the public good or for any other valid and compulsive reasons, it is necessary that the earlier decision should be revised. When this court decides questions of law, its decisions are, under article 141, binding on all courts within the territory of India, and so, it must be the constant endeavour and concern of this court to introduce and maintain an element of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecause they were persuaded to take the view that there were several circumstances which made it necessary to adopt that course. On the other hand, dealing with a similar problem in the case of Sajjan Singh v. State of Rajasthan, this court unanimously rejected the request made on behalf of the petitioners that its earlier decision in Sri Sankari Prasad Singh Deo v. Union of India and State of Bihar should be reviewed and revised. Hidayatullah and Mudholkar JJ., who were somewhat impressed by some of the pleas made in support of the contention that the earlier decision should be revised, in substance agreed with the ultimate decision of the court that no case had been made out for a review or revision of the said earlier decision. The principle of stare decisis no doubt, cannot be pressed into service in cases where the jurisdiction of this court to reconsider and revise its earlier decisions is invoked ; but nevertheless, the normal principle that judgments pronounced by this court would be final, cannot be ignored, and unless considerations of a substantial and compelling character make it necessary to do so, this court should and would be reluctant to review and revise its earl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... pass such orders as are necessary to dispose of the case conformably to such judgment. It is clear that when the Tribunal draws up a statement of the case and refers a question of law to the High Court under section 66(1), the said question must arise out of its order, and the statement of the case would necessarily be limited to the statement of facts already brought on the record either before the Income-tax Officer or before the Appellate Assistant Commissioner, or before the Tribunal. There is no doubt and indeed no dispute before us that the question of law must arise from the Tribunal's order and the statement of the case must be confined to the facts already brought on the record. The same would be the position where the High Court requires the Tribunal to state the case and refer to it under section 66(2). The position, therefore, is that when the High Court is exercising its advisory jurisdiction under section 66(4), it is dealing with a question of law arising from the order of the Tribunal and has to answer the said question in the light of the statement of the case submitted to it by the Tribunal. In the normal course, the statement of the case would refer to facts s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s that at the appellate stage additional evidence may be taken and further enquiry may be made in the discretion of the Appellate Assistant Commissioner. When the matter goes before the Appellate Tribunal under section 33, the question about the admission of additional evidence is governed by rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963. This rule provides that the parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any documents to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or if the Income-tax Officer has decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by him or not specified by him, the Tribunal may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced. After the Tribunal has passed orders on the appeal before it, the stage is reached to take the matter by way of reference proceedings before the High Court under section 66. This scheme....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... conferring such power on the High Court in section 66(4) if the legislature had intended that the High Court would be competent to call for additional evidence ; but there are no terms of limitation in section 66(4), and it would be reasonably possible to construe section 66(4) as enabling the High Court to call for additional evidence if it is satisfied that the material in the statement of the case is not sufficient to answer satisfactorily the question raised by the statement of the case. When the High Court is dealing with the statement of the case under section 66(4), it is its duty to answer the question submitted to it. As has been held by this court in Rajkumar Mills Ltd. v. Commissioner of Income-tax where the question involved is one of law and the High Court finds it difficult to answer the question owing to the unsatisfactory nature of the statement of the case submitted by the Tribunal, the proper procedure is to call for a further statement of the case and then decide the question itself. The High Court would be adjuring its advisory function if it merely gives some directions and orders the Tribunal to dispose of the matter according to law and in the light of the d....