TMI Blog2022 (7) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... ond proviso inserted by Finance Act 2007, extending the time for completion of assessment, when a reference has been made to TPO, during the course of assessment proceedings, have to be read in tandem and together. Our decision is also fortified by the fact that Section 153 was repealed and substituted with effect from 01.06.2016, where under Section 153 (1) it is clearly mentioned that the period of assessment is 21 months and under 153 (4), it is clearly mentioned that in case of reference under 92CA (1) during the course of assessment proceedings, the period of assessment would be extended by twelve months clarifying the mischief caused on account of the interpretation adopted by the officials. Therefore, when the extended time provided for the department is 12 months, the department cannot contend that it is only 9 months as because the reference was not made in time. Similarly, we also disagree with the findings of the Learned Judge, who has embarked much on the circular regarding the necessity for more time for TPO and the reason for the amendment losing sight of the time provided in the amendment and period within which the reference is to be made. Contention on estoppe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer under Section 143 (1) of The Income Tax Act (in short, the Act ) on 14.03.2008 and a refund of Rs.4,86,96,384/- was issued on 28.03.2008. 2.2. Subsequently, pursuant to the proceedings of the Commissioner of Income Tax, Chennai, dated 25.08.2008, the third respondent issued a fresh notice under Section 143 (2) on 04.09.2008 to the appellant. In response to the same, the representative of the appellant appeared before the third respondent and furnished the books of accounts, including Form 3CA and 3CD as per Section 44AB of the Act. 2.3. On scrutiny of the documents filed by the appellant, it was found that the appellant had entered into international transactions with its sister concerns and the total value of such transactions exceeds Rs.15 crores. Therefore, as per Sub-Section 1 of Section 92CA of the Act, the third respondent sent a communication dated 11.11.2008 to the Commissioner of Income Tax, Chennai seeking approval to refer the matter to the Transfer Pricing Officer (in short, the TPO ). The Commissioner of Income Tax, by a communication dated 18.11.2008 granted approval under Section 92 CA of the Act for computation of arm's length price of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the time limit of 33 months provided under Section 153 of the Act viz., extending the 21 months time limit by way of additional 12 months for completing the assessment proceedings in such case. Further, Section 153 of the Act requires the third respondent to refer the matter under sub-section (1) of section 92CA of the Act and the same has to be referred during the course of the proceedings in which the third respondent is entitled to pass an order of assessment within 21 months. 3.2. According to the appellant, the aforesaid mandatory procedures have not been followed in the present case. The appellant filed their return of income under section 139 of the Act on 30.11.2006 and the time limit under the first proviso to Section 153 expired on 31.12.2008. During the course of such proceedings, the third respondent should refer the transfer pricing issues under sub-section (1) of section 92CA of the Act to the second respondent and complete the entire assessment proceedings, including the matter of reference, within 31.12.2008. Whereas, in the present case, instead of referring the matter to the Transfer Pricing Officer during the course of assessment proceedings, the thir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f payment by the assessee, the said amount is to be assessed in the hands of the assessee u/s.41 (1) of the I.T. Act (ii) Disallowance u/s.40(a) (iii) :- An amount of Rs.39060.78 lacs under Software Development Expense and Rs.386.15 lacs under selling, Administrative and other expenses have been claimed as expenditure under salary and bonus including overseas staff expenses . Therefore, it is apparent that the assessee company has employees working overseas apart from employees working in India. Since the assessee has not given complete break up of the deduction of tax at source (TDS), the expenses towards salaries are disallowed u/s.40 (a) (iii). We direct the A.O.accordingly. (iii) Disallowance u/s. 40 (a) (i):- Amount of Rs.19,68,40,215/- The assessee has not submitted complete particulars in respect of TDS on the expenditure of Rs.19,68,40,215/- incurred under the head 'technical services outside India' in foreign currency towards travel and other project expenses, the entire amount is hit by the provisions of section 40 (a) (i) r.w.s. 195. We direct the A.O. Accordingly. 4.1. A counter affidavit was filed by the third respondent den ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act, 1961 by the 3rd respondent/Additional Commissioner of Income Tax to the Jurisdictional Commissioner of Income Tax started prior to expiry of normal period of limitation under the 1st proviso to Section 153(1) of the Income Tax Act, 1961 and during the course of assessment. 37. The permission was also granted by the Commissioner of Income Tax on 18.11.2008 to make a reference under Section 92CA(1) of the Income Tax Act, 1961 though the actual reference was made only on 17.02.2009. Since the case of the petitioner falls under Chapter X of the Income Tax Act, 1961, special period of limitation under the 2nd proviso to Section 153(1) of the Income Tax Act, 1961 was attracted for completing the assessment. 38. On perusing the records, it is noticed that the petitioner has wholeheartedly participated in the proceedings before the 2nd respondent/Transfer Pricing Officer pursuant to the reference made on 17.02.2009 by the 3rd respondent/Additional Commissioner of Income Tax. Before the 2nd respondent/Transfer Pricing Officer also no objection was raised by the petitioner regarding limitation. 39. After, the 2nd respondent/Transfer Pricing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment. As per Section 153, no order of assessment shall be passed under Section 143 or 144 at any time after expiry of two years from the end of the assessment year in which the income was first assessable. The first proviso to Section 153 of the Act provides that in case the assessment year in which the income was first assessable is the assessment year commencing on 1st day of April 2004 or any subsequent year, the provisions of clause (a) shall have the effect as if for the words two years the words twenty one had been substituted. The second proviso to Section 153 provides that in case the assessment year in which the income assessable is the assessment year commencing on the 1st day of April 2005, or any subsequent assessment year and during the course of the proceeding for the assessment of total income, a reference is made under sub-section (1) of section 92CA of the Act before 1st day of June 2007, but an order under sub-section (3) of that section has not been made before such date or if any order is made on or after the 1st day of June 2007, the provisions of clause (a) shall, notwithstanding anything contained in the first proviso, have effect as if for the words t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case, the limitation to finalise the assessment expired on 31.12.2008 and there is no question of extending the period by making reference on 17.02.2009. Thus, the reference made on 17.02.2009 after the expiration of the original limitation period of 21 months i.e., on 31.12.2008, is legally not sustainable. When the reference was not made during the course of assessment as required, jurisdictional pre-conditions under the second proviso necessary to extend limitation were not satisfied and the limitation period cannot be extended beyond 31.12.2008. 6.4. It is also submitted by the learned Senior counsel for the appellant that the applicability of extended time limit is contingent upon a valid reference made during the course of proceedings for assessment of total income of that year, as provided under Section 92CA of the Act. When a limitation is prescribed for completing the assessment expires without a valid reference having been made to the TPO, the Assessing Officer becomes functus officio and thereafter is not empowered to make a reference to the TPO. Thus, any reference received after the expiration of the time limit would be void-ab-initio. In such circumstances, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties. If the question now under consideration fell to be determined only on the application of general principles governing the matter, there can be no doubt that the District Court of Monghyr was coram non judice, and that its judgment and decree would be nullities. The question is what is the effect of Section 11 of the Suits Valuation Act on this position. 6.8. The learned Senior counsel for the appellant also placed reliance on the Judgment of the Hon'ble Supreme Court dated 07.10.2021 rendered in Civil Appeal No. 6204 of 2021 [The Commissioner of Income Tax, Chennai v. Mohammed Meeran Shahul Hameed] wherein, the issue involved was relating to limitation arising out of Section 263 in which the word made is employed; and the following ruling was made by the Hon'ble Supreme Court: 4.3 On a fair reading of subsection (2) of Section 263 it can be seen that as mandated by subsection (2) of Section 263 no or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of law framed is answered in favour of the revenue - appellant and against the assessee - respondent herein and it is held that the order passed by the learned Commissioner under Section 263 of the Income Tax Act was within the period of limitation prescribed under subsection (2) of Section 263 of the Act. The present appeal is allowed accordingly. No costs. 6.9. Thus, the learned senior counsel appearing for the appellant submitted that the entire assessment proceedings are barred by limitation. Once it is held that the reference to the TPO was invalid and the order passed by the TPO is void-ab-initio, the appellant would cease to be an eligible assessee as contemplated under Section 144C (15) of the Act. In such an event, no draft order at all is required to be passed against the appellant and therefore the draft assessment order passed by the third respondent required to be quashed. However, the learned Judge, overlooked the above aspects and dismissed the writ petition filed by the appellant. Therefore, the learned senior counsel sought to allow this appeal by quashing the order impugned herein. 7.1. On the other hand, the learned Standing Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin two years. If reference is not made within two years, then the question of time limit for completing assessment within 33 months, does not arise. This is the true intention of enacting Section 153 (1) read with Section 92 CA (1) and (2) of the Act and its proviso; and no other meaningful and purposeful interpretation can be given to it. 7.4. Thus, according to the learned Standing Counsel appearing for the respondents, it is futile on the part of the appellant to canvass the point of limitation in the writ petition and the same was rightly rejected by the learned Judge. It is also submitted that as against the order of the first respondent dated 24.09.2010, which was impugned in the writ petition, a remedy is available to the appellant to file an appeal before the Appellate Tribunal under Section 253 (1) (d) of the Act. However, without availing such remedy, the appellant filed the writ petition under Article 226 of The Constitution of India, which is not maintainable. In this context, the learned Standing counsel placed reliance on the decision of this Court in Hyundai Motor India Limited v. Deputy Commissioner of Income Tax [2020 (119) Taxmann.com 302 (Madras)] wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction. There is no dispute on facts about the date on which the reference was made or when the order was passed. What we are called upon to be adjudicated, is the interpretation of the provision, which is a pure question of law in the present case. Therefore, this court is of the view that the writ petitions were maintainable and that alternative remedy will not operate as a bar. 12. Before deciding the question of dispute, it is but necessary to refer to the relevant provisions of the Income Tax Act and the timelines under the Transfer Pricing. (A) Provisions of law Section 92CA Reference to the Transfer Pricing Officer Section 92CA. (1) Where any person, being the assessee, has entered into an international transaction or specified domestic transaction in any previous year, and the Assessing Officer considers it necessary or expedient so to do, he may, with the previous approval of the Principal Commissioner or Commissioner refer the computation of the arm's length price in relation to the said international transaction or specified domestic transaction under Section 92C to the Transfer Pricing Officer (2) Where a reference i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (3) has not been made by the Transfer Pricing Officer before the said date, or a reference under sub-section (1) is made on or after the 1st day of June, 2007, an order under sub-section (3) may be made at any time before sixty days prior to the date on which the period of limitation, referred to in section 153 or as the case may be, in section 153B for making the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires. Provided that in the circumstances referred to in clause (ii) or clause (x) of Explanation 1 to Section 153, if the period of limitation available to the Transfer Pricing Officer for making an order is less than sixty days, such remaining period shall be extended by sixty days and the aforesaid period of limitation shall be deemed to have been extended accordingly (4) On receipt of the order under sub-section (3), the Assessing Officer shall proceed to compute the total income of the assessee under subsection (4) of Section 92C in conformity with the arm's length price as so determined by the Transfer Pricing Officer (5) With a view to rectifying any mistake apparent from the record, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved; or (b) the period of filing of objections under sub-section (2) expires. (5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. (6) The Dispute Resolution Panel shall issue the directions referred to in sub-section (5), after considering the following, namely:- (a)draft order; (b)objections filed by the assessee; (c) evidence furnished by the assessee; (d) report, if any, of the Assessing Officer, Valuation Officer or Transfer Pricing Officer or any other authority; (e) records relating to the draft order; (f) evidence collected by, or caused to be collected by, it; and(g) result of any enquiry made by, or caused to be made by, it. (7) The Dispute Resolution Panel may, before issuing any directions referred to in sub-section (5),- (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-tax authority and report the result of the same to it. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) one year from the end of the financial year in which a return or a revised return relating to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, is filed under subsection (4) or sub-section (5) of section 139, whichever is later. Provided that in case the assessment year in which the income was first assessable is the assessment year commencing on or after the 1st day of April, 2004 but before the 1st day of April, 2010, the provisions of clause (a) shall have effect as if for the words two years , the words twentyone months had been substituted : Provided further that in case the assessment year in which the income was first assessable is the assessment year commencing on or after the 1st day of April, 2005 but before the 1st day of April, 2009 and during the course of the proceeding for the assessment of total income, a reference under sub-section (1) of section 92CA- 1. (i) Was made before the 1st day of June, 2007 but an order under sub-section (3) of that section has not been made before such date; or 2. (ii) Is made on or after the 1st day of June, 2007, The provisions of clause (a) shall, not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on shall, notwithstanding anything contained in the second proviso, have effect as if for the words one year , the words twenty one months had been substituted: Provided also that where the notice under section 148 was served on or after the 1st day of April, 2010 and during the course of the proceeding for the assessment or reassessment or recomputation of total income, a reference under sub-section (1) of section 92CA is made, the provisions of this sub-section shall, notwithstanding anything contained in the second proviso, have effect as if for the words one year , the words two years had been substituted (2A) Notwithstanding anything contained in sub-sections (1) , (1A), (1B) and (2), in relation to the assessment year commencing on the 1st day of April, 1971, and any subsequent assessment year, an order of fresh assessment in pursuance of an order under section 250 or section 254 or section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of one year from the end of the financial year in which the order under section 250 or section 254 is received by the [Principal Chief Commissioner orChief Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therwise than by making a fresh assessment or reassessment, such effect shall be given within a period of three months from the end of the month in which order under section 250 or section 254 or section 260 or section 262 is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, the order under section 263 or section 264 is passed by the Principal Commissioner or Commissioner: Provided that where it is not possible for the Assessing Officer to give effect to such order within the aforesaid period, for reasons beyond his control, the Principal Commissioner or Commissioner on receipt of such request in writing from the Assessing Officer, if satisfied, may allow an additional period of six months to give effect to the order. (6) Nothing contained in sub-sections (1) and (2) shall apply to the following classes of assessments, reassessments and recomputation which may, subject to the provisions of sub-sections (3) and (5), be completed- i. where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the assessment or file his objection to any such variation with the Dispute Resolution Panel and also the Assessing Officer under Section 144C(2). It goes without saying that if no objections are filed by the Assessee to the draft order, the assessing officer has to pass the final assessment order based on the draft order within one from the end of the month in which the period for filing the objection had expired as per Section 144C(4). Sub-Section (5) of Section 144C of the Act provides that if any objections are raised by the assessee before the Dispute Resolution Panel, the Panel consisting of top and expert functionaries of the department is empowered to issue such direction as it thinks fit for the guidance of the Assessing Officer after considering various details provided in Clauses (A) to (G) thereof. As per sub-section (12), the DRP has no authority to issue any directions under Sub-section (5) from the end of the month in which the draft order is forwarded to the eligible assessee and not from the date when the assessee submits the objections. Sub-Section (13) of Section 144C of the Act provides that upon receipt of directions issued under sub-Section (5) of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s useful to refer to the judgment relied upon by the learned senior counsel for the appellant in State of Punjab v. Shreyans Industries [2016 (4) Supreme Court Cases 769], in which, it was held as under: 8. A mere reading of the aforesaid provision would reflect that wherever return is filed by the assessee, assessment is to be made within a period of three years from the last date prescribed for furnishing the return in respect of such period. On the other hand, in those cases where return is not filed or any dealer, who is liable to pay the tax under the Act, does not get himself registered therein, the period of assessment prescribed is five years. We are not concerned with the alternate situation as in the instant appeals not only the assessees are registered dealers, they had also filed their returns regularly within the prescribed period and, therefore, assessments were to be completed within a period of three years from the last date prescribed for furnishing the returns, which is the normal period prescribed. At the same time, sub-section (10) of Section 11 gives power to the Commissioner to extend a period of three years. Interestingly, there is no upper limit pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid dicta, with which we entirely agree, the same shall apply in the instant cases as well. In the context of the Punjab Act, it can be said that extension of time for assessment has the effect of enlarging the period of limitation and, therefore, once the period of limitation expires, the immunity against being subject to assessment sets in and the right to make assessment gets extinguished. Therefore, there would be no question of extending the time for assessment when the assessment has already become time barred. A valuable right has also accrued in favour of the assessee when the period of limitation expires. If the Commissioner is permitted to grant the extension even after the expiry of original period of limitation prescribed under the Act, it will give him right to exercise such a power at any time even much after the last date of assessment. In the instant appeals itself, when the last dates of assessment were 30th April, 2004, 30th April, 2005, 30th April, 2006 and 30th April, 2007, order extending the time under Section 11 (10) of the Act were passed on August 17, 2007, August 17, 2007, August 17, 2007 and May 25, 2007 respectively. Thus, for the Assessment Year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner of Income Tax, Chennai vs. Mohammed MeeranShahul Hameed) (supra), relied upon by the learned senior counsel for the appellant becomes relevant. We therefore disagree with the findings of the learned Judge and set aside the same. 16. What can be inferred from an overall reading of Section 153 (1) and its first two provisos is that no order of assessment can be made after 21 months and the extended period of limitation to pass an assessment order within further period of 12 months or in other words within 33 months from the end of assessment year, is only when a reference under 92CA(1) is made during the course of assessment proceedings. Again, the language used in the provision is very clear. The word used is reference and not approval . Reference is used in the context of reference to TPO and approval is from the Commissioner. The extended period comes into operation only on a reference and not on concurrence. When it was not the intention of the parliament to attach any importance to concurrence from the Commissioner to reckon the period of limitation, it is not for the court to do so. At this juncture, it is relevant to refer to the judgment of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) and the first Proviso. 17. Further, it is to be noted that the different timelines to be adhered by the TPO, Assessing Officer to pass a draft order, assessee to file their objections, DRP to issue directions and the assessing officer to pass final order, would commence only on a reference to the TPO and not otherwise. At this juncture, it is not to be forgotten that the period of 33 months is to pass the final order of assessment after the directions from the DRP. In this case, we find from the undisputed dates and events that not only was the reference to the TPO made after the period of expiry of the period of limitation to pass assessment orders, but also that the assessing officer has failed to pass final assessment orders in time. The time to pass the original assessment would end on 31.12.2008 being 21 months from the end of the assessment year 2006-07 i.e 31.03.2007. Then the last date for the assessing officer to pass the final assessment order would end on 31.12.2009, even considering the extension by twelve months. In the present case, the order of the DRP itself is only 24.09.2010 much beyond the permissible period. 18. That apart, the revenue though on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... improper, since the primary source of the legislative intent is in the language of the statute. c. Lord Parker applied the rule in R.v. Oakes [(1959) 2 All ER 350] to construe and , as or in Section 7 of the Official Secrets Act, 1920 and stated : d. It seems to this Court that where the literal reading of a statute, and a penal statute, produces an intelligible result, clearly there is no ground for reading in words or changing words according to what may be the supposed intention of Parliament. But here we venture to think that the result is unintelligible. e. Lord Reid also with great clarity and precision which always characterise his judgment enunciated the rule as follows in Federal Steam Navigation Co. Ltd. v. Department of Trade and Industry [(1974) 2 All ER 97] : f. Cases where it has properly been held that a word can be struck out of a deed or statute and another substituted can as far as I am aware be grouped under three heads: where without such substitution the provision is unintelligible or absurd or totally unreasonable; where it is unworkable; and where it is totally irreconcilable with the plain intention shown by the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have no doubt that if the legislative intent was that re-sale should be within the territory of Delhi and not outside, the Legislature would have said so in plain unambiguous language which no layman could possibly misunderstand. It is a wellsettled rule of interpretation that where there are two expressions which might have been used to convey a certain intention, but one of those expressions will convey that intention more clearly than the other, it is proper to conclude that, if the legislature used that one of the two expressions which would convey the intention less clearly, it does not intend to convey that intention at all. We may repeat what Pollack C.B. said in Attorney General v. Sillem [(1864) 2 H C 431, 526] that: k. If this had been the object of our legislature, it might have been accomplished by the simplest possible piece of legislation; it might have been expressed in language so clear that no human being could entertain a doubt about it. l. We think that in a taxing statute like the present which is intended to tax the dealings of ordinary traders, if the intention of the legislature were that in order to qualify a sale of goods for ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is not such a consequence as would compel us to read the word resale as limited to resale inside Delhi. The argument of the Revenue was that the Legislature could never have intended that the Union Territory of Delhi should be altogether deprived of tax in cases of this kind. The legislative intent could only be to exempt the sale to the purchasing dealer in those cases where the Union Territory of Delhi would be able to recover tax on resale of the goods by the purchasing dealer. The goods must be taxed at least at one point and it could not have been intended that they should not be taxable at all at any point by the Union Territory of Delhi. The Revenue urged that it was for the purpose of taxing the goods at least at one point that the second proviso was enacted by the Legislature. We do not think this contention based on the presumed intention of the Legislature is-well founded. It is now wellsettled that when the court is construing a statutory enactment, the intention of the Legislature should be gathered from the language used by it and it is not permissible to the court to speculate about the legislative intent. Some eighty years ago, as far back as 1897, Lord Watson ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. We do not find evidence of such legislative intent in any provision of the Act. On the contrary, it is very clear that there are certain categories of resales by the purchasing dealer which are admittedly free from tax. If, for example, the purchasing dealer resells the goods within the territory of Delhi, but such resale is in the course of inter-State trade or commerce, or in the course of export out of the territory of India, it would be exempt from tax and yet, even on the construction suggested on behalf of the Revenue, the sale to the purchasing dealer would not be liable to tax. Both the sale as well as the resale would be free of tax even if the word resale were read as limited to resale inside the territory of Delhi. Then again, take a case where the resale by the purchasing dealer, though inside the territory of Delhi, falls within Section 5(2)(a)(ii). The resale in such a case would be exempt from tax and equally so would be the sale. So also the resale would not be taxable if it falls within Rule 29 and in that case too, the sale as well as the resale would both be exempt from tax. It will, therefore, be seen that it is not possible to discover any legislative inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods outside Delhi, then, on the construction contended for on behalf of the Revenue, he would be liable to include the price of the goods paid by him in his return of taxable turnover and pay tax on the basis of such return and if he fails to do so, he would expose himself to penalty, though he has complied literally with the declaration made by him. We find that in fact a penalty of Rs 2 lakhs has been imposed on the assessees in Civil Appeal No. 1085 of 1977 for not including the price of the goods purchased by them in their return of taxable turnover and paying tax on the basis of such return. It would be flying in the face of well-settled rules of construction of a taxing statute to read the words inside the Union Territory of Delhi in Section 5(2)(a)(ii) and the second proviso, when the plain and undoubted effect of the addition of such words would be to expose a purchasing dealer to penalty. s.16. The subsequent history of the Act also supports the construction which we are inclined to place on Section 5(2)(a)(ii) and the second proviso. Section 5(2)(a)(ii) was amended with effect from May 28, 1972 by Finance Act, 1972 and the words in the Union Territory of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing resale in the same manner by the addition of some such words as in the Union Territory of Delhi or inside Delhi . This clearly evinces parliamentary intent not to insist upon resale being restricted to the territory of Delhi. It is a circumstance which lends support to the view that resale in Section 5(2)(a)(ii) and the second proviso meant resale outside as well as inside Delhi. v. 21. She, however, urged that in her submission the second proviso was inconsistent with Section 4 and, therefore, no effect should be given to it. This contention is, in our opinion, wholly unsustainable. We fail to see how the second proviso can be said to be inconsistent with Section 4. It may be pointed out that even if there were some conflict, which we do not think there is, it would have to be reconciled by a harmonious reading of the two sections and it would not be right to adopt a construction which renders one of the two sections meaningless and ineffectual unless the conflict between the two is so utterly irreconcileable that the Court is driven to that conclusion. Here we find that Section 4 merely imposes liability on a dealer to pay tax if his gross turnover exceeds the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions unless the court, in spite of its efforts, finds it impossible to effect reconciliation between them. (3) It has to be borne in mind by all the courts all the time that when there are two conflicting provisions in an Act, which cannot be reconciled with each other, they should be so interpreted that, if possible, effect should be given to both. This is the essence of the rule of harmonious construction . (4) The courts have also to keep in mind that an interpretation which reduces one of the provisions as a dead letter or useless lumber is not harmonious construction. (5) To harmonise is not to destroy any statutory provision or to render it otiose. (c) CIT v. Hindustan Bulk Carriers, (2003) 3 SCC 57 : 2002 SCC OnLine SC 1226. 16. The courts will have to reject that construction which will defeat the plain intention of the legislature even though there may be some inexactitude in the language used. (See Salmon v. Duncombe [(1886) 11 AC 627 : 55 LJPC 69 : 55 LT 446 (PC)] AC at p. 634, Curtis v. Stovin [(1889) 22 QBD 513 : 58 LJQB 174 : 60 LT 772 (CA)] referred to in S. Teja Singh case [AIR 1959 SC 352 : (1959) 35 ITR 408 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstrue them according to plain, literal and grammatical meaning of the words. If that is contrary to, or inconsistent with, any express intention or declared purpose of the statute, or if it would involve any absurdity, repugnancy or inconsistency, the grammatical sense must then be modified, extended or abridged, so far as to avoid such an inconvenience, but no further. The onus of showing that the words do not mean what they say lies heavily on the party who alleges it. He must advance something which clearly shows that the grammatical construction would be repugnant to the intention of the Act or lead to some manifest absurdity. 19. The words of a statute should be first understood in their natural, ordinary or popular sense and phrases and sentences should be construed according to their grammatical meaning, unless that leads to some absurdity or unless there is something in the context, or in the object of the statute to suggest the contrary. Where a word has a secondary meaning, the assessment is whether the natural, ordinary or popular meaning flows from the context in which the word has been employed. In such cases, the distinction disappears and courts must adop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gic referred to herein is not formal or syllogistic logic, but acceptance that enacted law would not set a standard which is palpably unjust, unfair, unreasonable or does not make any sense. [Bennion on Statutory Interpretation, 5th Edn., p. 986.] When an interpretation is beset with practical difficulties, the courts have not shied from turning sides to accept an interpretation that offers a pragmatic solution that will serve the needs of society [Id, p. 971, quoting Griffiths, L.J.]. Therefore, when there is choice between two interpretations, we would avoid a construction which would reduce the legislation to futility, and should rather accept the construction based on the view that draftsmen would legislate only for the purpose of bringing about an effective result. We must strive as far as possible to give meaningful life to enactment or rule and avoid cadaveric consequences [ See Principles of Statutory Interpretation by Justice G.P. Singh, 14th Edn., p. 50.]. 19. Similarly, the contention of the learned counsel for the revenue that both the provisos to section 153 (1) are independent, have no connection in their operation and the reference to the TPO has to be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endment losing sight of the time provided in the amendment and period within which the reference is to be made. 20. Now, coming to the next contention on estoppel , we have already held that the question of limitation is a legal plea, which goes to the root of the jurisdiction of the authorities. A legal plea can be raised at any stage of the proceedings. It will be useful to refer to the following judgments in this regard. (a) National Textile Corpn. Ltd. v. NareshkumarBadrikumarJagad, (2011) 12 SCC 695 : (2012) 2 SCC (Civ) 791 : 2011 SCC OnLine SC 1212 at page 706: 19. There is no quarrel to the settled legal proposition that a new plea cannot be taken in respect of any factual controversy whatsoever, however, a new ground raising a pure legal issue for which no inquiry/proof is required can be permitted to be raised by the court at any stage of the proceedings. [See Sanghvi Reconditioners (P) Ltd. v. Union of India [(2010) 2 SCC 733 : AIR 2010 SC 1089] and Greater Mohali Area Development Authority v. Manju Jain [(2010) 9 SCC 157 : (2010) 3 SCC (Civ) 639 : AIR 2010 SC 3817] .] (b) Band Box (P) Ltd. v. Punjab Sind Bank, (2014) 16 SCC 321 : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch less advantageous position than the courts below. 13. In our view, the aforesaid succinctly sets forth the parameters of scrutiny, where the question of law is sought to be raised at the final court stage. There are no nice questions of fact required to be decided in the present case which would dissuade us from examining this plea at this stage. We have set forth the undisputed facts aforesaid. Thus, the only question is whether this is a question of law which deserves to be examined, and has ramifications in the present case. 21. Further, there cannot be any waiver of a statutory right as rightly contended by the learned senior counsel for the appellant. It is useful to refer to some judgments on this aspect. (a) Supdt. of Taxes v. OnkarmalNathmal Trust, (1976) 1 SCC 766 : 1976 SCC (Tax) 73 at page 779: 27. A distinction arises between the provisions which confer jurisdiction and provisions which regulate procedure. Jurisdiction can neither be waived nor created by consent. A procedural provision may be waived by conduct or agreement. In the case of Kammins Ballrooms Co. [(1971) AC 850] it was said that waiver arises in a situation wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the law, can be agitated in the further proceedings before the higher forum or not and this court in the said decision, observed thus (page 30 of 113 ITR): The legal position about waiver of such a mandatory provision created in the wider public interest to operate as fetter on the jurisdiction of the authority is well settled that there could never be waiver, for the simple reason that in such cases jurisdiction could not be conferred on the authority by mere consent, but only on conditions precedent for the exercise of jurisdiction being fulfilled. If the jurisdiction cannot be conferred by consent, there would be no question of waiver, acquiescence or estoppel or the bar of res judicata being attracted because the order in such cases would lack inherent jurisdiction unless the conditions precedent are fulfilled and it would be a void order or a nullity. The settled distinction between invalidity and nullity is now well brought out in the decision in Dhirendra Nath Gorai v. Sudhir Chandra Ghosh, AIR 1964 SC 1300, 1304, where their Lordships had gone into this material question as to whether the act in breach of the mandatory provision is per force a nullity. The pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the end of the return period. The procedure of best judgment assessment was laid down in section 9(4) and the question arose whether, in view of the injunction order obtained by the assessee, ignoring the two years limit laid down as a fetter for issuance of the notice under section 7(2), the best judgment assessment procedure was permissible. At page 2070, the learned Chief Justice first held that if a return under section 7(1) was not made, the service of a notice under section 7(2) of the Act was the only method for initiation of a valid assessment proceeding under the Act. The period of two years under section 7(2) was a fetter on the power of the authority and was not just a bar of time. It was the scheme of the Act that the service do notice within two years from the end of the return period was an imperative requirement for initiation of assessment proceeding as also reassessment proceeding under the Act. Further proceeding, at page 2071, their Lordships pointed out the settled legal distinction between the provisions which conferred jurisdiction and the provisions which regulated procedure, because the jurisdiction could neither to waived nor treated by consent, while a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion either before the Assessing Officer or before the Tribunal or consequently before the Assessing Officer can operate as a bar to the assessee to challenge the jurisdictional authority of the Assessing Officer under section 158BC of the Act. 22. From the above judgments, it is clear that a legal plea can be raised at any stage and there cannot be any waiver of a statutory right. In the present case, though the appellant/ petitioner has participated in the proceedings before TPO and the assessing officer, it is their specific stand that they have raised the issue before the DRP and also that, when they submitted their objections and documents to the TPO, the date of reference was not known to them. This stand is not factually objected by the department. Further, there is no acquiescence, waiver or estoppel in taxing laws. The law on this point is well settled. The Levy and collection of tax must be within the four corners of law in compliance with the substantial and procedural mandates of connected legislations. Therefore, we again disagree with the findings of the learned Judge. 23. If the reference is bad, then as a sequitur, all further proceedings, in further ..... X X X X Extracts X X X X X X X X Extracts X X X X
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