TMI Blog1959 (5) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... of opinion that the High Court was in error in not deciding the reference before it and answering the question on the facts disclosed in the statement of case. We are also of opinion that in the circumstances of this case the High Court had no jurisdiction under section 66(4) to direct the Tribunal to submit a supplementary statement of case on the points mentioned in its judgment. The result, therefore, is that the appeal will be allowed and the matter remanded to the High Court to arrive at its decision on the question of law referred to it in the statement of case already submitted to it by the Tribunal - - - - - Dated:- 12-5-1959 - Judge(s) : BHAGWATI., HIDAYATULLAH., S. R. DAS JUDGMENT The judgment of the court was delivered by BHAGWATI, J.--This appeal with special leave arises out of a judgment and order of the High Court of Judicature at Bombay dated September 23, 1955, delivered in Income-tax Reference No. 19 of 1955 made by the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal") to the High Court under section 66(1) of the Indian Income-tax Act (XI of 1922) (hereinafter referred to as "the Act") whereby the High Court directed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were drawn and that until such encashment of the cheques, the monies could not be said to have been received by the appellant. The appellant preferred appeals to the Appellate Assistant Commissioner Ahmedabad Range, against this order of the Income-tax Officer for the said two assessment years. The Appellate Assistant Commissioner by his two separate orders confirmed the orders of the Income-tax Officer and held that the cheques were not legal tender and were not monies or monies worth as such and that the receipt of cheques at Bhavnagar was not receipt of money. The receipt of money, according to the Appellate Assistant Commissioner, took place on actual payments by the drawee banks and he therefore held that the said amounts were taxable under section 4(1)(a) of the Act. A further appeal was taken by the appellant to the Tribunal against the said orders of the Appellate Assistant Commissioner and the Tribunal by its consolidated order for both the years, dated July 17, 1952, held that the cheques for the said amounts of Rs. 2,58,987 and Rs. 13,08,987 in respect of the assessment year 1943-44, were received at Bhavnagar and that the sale proceeds were also received in Bhav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Ltd., which decision had already been pronounced by then and where the said question had been debated and argued by the Revenue. The only ground urged by the Revenue at all material stages was that because the amounts which were received, from the merchants or the Government, were received by cheques drawn on banks in British India which were ultimately encashed in British India, the monies could not be said to have been received in Bhavnagar though the cheques were in fact received at Bhavnagar. Being aggrieved by the said decision of the Tribunal, the respondent (Commissioner of Income-tax) filed two applications under section 66(1) of the Act requesting the Tribunal to draw up a statement of the case and refer the question of law arising out of the order of the Tribunal to the High Court. In the said applications the facts which were admitted and/or found by the Tribunal and which were necessary for drawing up a statement of the case were stated as under : " Regarding items of Rs. 2,58,987 and Rs. 12,97,631 received from the Government of India in the accounting years relevant to the assessment for 1943-44 and 1944-45 respectively the amounts were received by cheques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese reference applications being reference applications Nos. 615 and 616 of 1952-53 were kept pending until the decision of this court in the case of Commissioner of Income-tax v. Kirloskar Brothers. This court decided that appeal and the companion appeal Commissioner of Income-tax v. Ogale Glass Works Ltd. on April 17, 1954, and the said reference applications were thereafter heard and decided by the Tribunal on November 3, 1954. It is worthy of note that the decision of this court in the said two cases proceeded on the basis that on the particular facts of those appeals the post office had acted as the agent of the assessee and that though the cheques were in fact received by post by the assessees outside British India, nevertheless, by reason of the fact that the assessees in the said two appeals had expressly requested the Government to remit the amounts by cheques, the assessees had constituted the post office their agent to receive, on their respective behalves, the said cheques which were posted by the Government at Delhi having addressed them to the assessees outside British India. In spite of the said decisions, the Revenue did not urge before the Tribunal that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the absence of materials as to whether the cheques which were received in Bhavnagar were posted by the Government at the request of the appellant and the High Court observed : " The question that has been submitted to us by the Tribunal is whether the receipt of the cheque in Bhavnagar amounted to receipt of sale proceeds in Bhavnagar. This question overlooks the important aspect which was dealt with both by us in Kirloskar's case and also by the Supreme Court. Assuming that the cheques were received in Bhavnagar, the question still remains as to whether if the cheques were received by post, the post office was constituted the agent of the assessee or not. The mere receipt of cheques by post in Bhavnagar is not conclusive of the question raised by the Tribunal. Unless we are in a position to say that the cheques were sent to Bhavnagar by post without there being a request, express or implied, by the assessee, the mere receipt of the cheques in Bhavnagar would not constitute receipt of sale proceeds in Bhavnagar. When we look at the statement of the case there is no reference at all to this aspect of the case." The High Court further observed that the burden would be upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... important question as to the nature, scope and extent of the jurisdiction vested in the High Court under section 66(4) of the Act and we shall now address ourselves to that question. The relevant provision of section 66 of the Act may now be referred to : " 66. (1) Within sixty days of the date upon which he is served with notice of an order under sub-section (4) of section 33 the assessee or the Commissioner may, by application in the prescribed form, accompanied where application is made by the assessee by a fee of one hundred rupees, require the Appellate Tribunal to refer to the High Court any question of law arising out of such order, and the Appellate Tribunal shall within ninety days of the receipt of such application draw up a statement of the case and refer it to the High Court : Provided that, if, in the exercise of its powers under sub-section (2), the Appellate Tribunal refuses to state a case which it has been required by the assessee to state, the assessee may, within thirty days from the date on which he receives notice of the refusal to state the case, withdraws his application and, if he does so, the fee paid shall be refunded. (2) If on any application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be raised and neither party would be entitled to require the Tribunal to refer to the High Court any question of law which could not thus arise out of the order of the Tribunal. Section 66(2) which gives the power to the High Court to require the Tribunal to state the case and refer the question of law to it also proceeds on the same basis and even where the High Court exercises the power under section 66(2) it can only require the Tribunal to state the case on any question of law arising out of such order. The scope and subject-matter of the reference under section 66(2) therefore is coextensive with that of the reference under section 66(1) of the Act and the High Court has no power or jurisdiction under section 66(2) to travel beyond the ambit of section 66(1). Section 66(2) comes into play only when the Tribunal refuses to state the case on the ground that no question of law arises and if the High Court is not satisfied of the correctness of the decision of the Tribunal, it has got the power and jurisdiction to require the Tribunal to state the case and refer the same to it. On the conditions of section 66(1) and section 66(2) being thus complied with the statement of case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case back to the Tribunal, so that the Tribunal within the four corners of section 66(1) and section 66(2) may make such additions to those statements or alterations therein as may be directed by the court. Even though the terms of section 66(4) are wide enough to comprise "such additions thereto or alterations therein as the court may direct in that behalf" the scope of such directions has got to be read in the context of and in conjunction with the provisions of section 66(1) and section 66(2) and under the guise of that direction the High Court cannot refer the case back to the Tribunal to find new facts or embark upon a new line of enquiry which would enable either the assessee or the Commissioner to make out a case which had never been made during the course of the proceedings before the Income-tax authorities or the Tribunal so far. Such additions thereto or alterations therein as the court may direct in that behalf are additions of facts to the statement of case or alterations therein which though they were part of the record before the Income-tax authorities or the Tribunal were not incorporated in the statement of case drawn up by the Tribunal either because such facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possible contentions to which the terms of the relevant section might give rise, but this court has always refused to treat matters arising out of questions so framed as entirely at large. It has adopted and acted on that view for the reason that this court is only an advisory body and the advice which it can be properly asked to give is only advice on matters which had been in contention before the Tribunal and which had been decided in one way or another such advice being sought in order that the parties interested might know whether the decision on those contentions had been in accordance with law. In hearing a reference under section 66(1), this court does not sit in appeal from the assessment and it is not called upon to give its advice on matters which the Tribunal was not asked to decide and which the Tribunal neither decided nor included in the statement of case for the opinion of this court." The Bombay High Court also expressed the same opinion in the case of Industrial Development and Investments Co. Ltd. v. Commissioner of Excess Profits Tax. Chagla, C.J., who delivered the judgment of the court, pointed out to the Tribunal what the correct procedure was with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by them, because they took a particular view of the law. We have merely the jurisdiction to answer the question of law referred to us, and we are not concerned with any questions which are pure questions of fact or its determination by the Tribunal." The other is the decision of this court in Commissioner of Income-tax v. Bhurangya Coal Co., where Venkatarama Aiyar, J., dealt with a similar argument which was addressed before this court, at page 805 : " The matter then came before the High Court of Patna on a reference under section 66(1) of the Income-tax Act, at the instance of the appellant. There the contention was raised that the differentiation between movables and immovables on which the judgment of the Tribunal rested had not been made at any time in the prior stages of the proceedings and that was a matter on which further evidence would have to be taken to ascertain the intention of the parties and that, therefore, the matter should be remanded for further enquiry to the Appellate Tribunal. The learned Judges refused to accede to this contention for the reason that no such application was made before the Tribunal and that it was a point which ought not to be all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt up a letter to the High Court stating that he had not heard the party in regard to the opinion of the Commissioner, and that in any event he should not consider that he had power within section 66(4) to vary an opinion given under section 66(2) if no new facts were admitted. The learned Judge pointed out that the Commissioner was in duty bound to carry out the order of the High Court and he should have reheard the parties, admitted such further evidence as he considered relevant on the point at issue and re-stated the case with his opinion thereon. It is not clear, however, from the record as to whether the re-hearing of the parties and the recording of such further finding as was considered relevant on the point at issue embraced a fresh line of enquiry which had not been entertained at any earlier stage of the proceedings or was merely by way of elucidation of the very same points at issue which had been canvassed earlier but had not been thrashed out completely and properly reflected in the finding of the Tribunal. These observations, in our opinion, do not make any difference to the position that we have adopted herein, viz., it is not open to the High Court in the exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e before us it is abundantly clear that the only question which was canvassed before the Income-tax authorities and the Tribunal before it made its order dated July 17, 1952, was whether the cheques which were received at Bhavnagar having been cashed in British India, the monies in respect of the same should be said to have been received in British India and the Tribunal had held following the case of Kirloskar Brothers that the cheques were received from the Government at Bhavnagar and the receipt of money in respect of cheques from banks in British India related back to the receipt of the cheque at Bhavnagar and, therefore, was also received in Bhavnagar. At no time was the question as regards the posting of the cheques in British India (Delhi) at the request, express or implied, of the appellant and the consequent receipt of the sale proceeds in British India ever mooted before the Income-tax authorities or the Tribunal, before the Tribunal made its order on July 17, 1952, or even in the reference applications filed on September 15, 1952, nor was the said question mooted before the Tribunal when it heard the reference and drew up the statement of case on November 5, 1954, eve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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