B.R. Packaging Industries Vs. Income-tax Officer - Court Judgment

Excerpt:
1. by this miscellaneous application, the assessee urged that, the tribunal has not considered the decision of the patna high court in the case of jamshedpur motor accessories stores v. union of india [1991] 189 itr 70 holding that proviso to section 43b is retrospective in its operation and explanation 2 to section 43b is subject to the proviso.the law as amended is applicable for the assessment year 1984-85.pointing out the binding nature of such decision, it is prayed that in the absence of any contrary decision on this issue, the said judgment should be considered and the appeal filed by the assessee should be allowed by rectifying the order of the tribunal dated 12-3-1992. the learned counsel for the applicant has been heard with reference to the miscellaneous application filed. in short, the miscellaneous application seeks to recall the order of the tribunal dated 12-3-1992 and render decision in favour of the assessee. therefore, the petitioner seeks for review of the order of the tribunal. this is not permissible as per proviso to sub-rule (3) of rule 34a of the tribunal.the learned departmental representative has been duly heard and he has strongly resisted on the ground that review is not permissible.2. we have considered the submission of the parties. firstly, our log book does not reveal the citation of the patna high court referred to above. on the other hand, the case proceeded on the basis that the issue involved in this appeal stands covered by the consistent decisions of the tribunal on this issue. therefore, it is not correct on the part of the applicant, to state in the miscellaneous application that the judgment of the patna high court in the case of jamshedpur motor accessories stores (supra) was cited before the bench at the time of hearing of the appeal. secondly, the tribunal itself prefaced its order that in view of the conflicting judgments of the court the tribunal pune bench has been consistently taking the view that if the sales-tax relating to last quarter or last month is paid within the statutory time contained under the sales-tax act, no disallowance under section 43b is required to be made and if it is made beyond the time limit prescribed thereunder, disallowance could be made. it also observed that the tribunal was not going into the question of the proviso to section 43b which came into force from 1-4-1988 which is not applicable to the assessment year 1984-85. the tribunal being a creature of the income tax act cannot go to the literal or reasonable construction of the statute and when the finance act, 1987 inserted proviso to section 43b with effect from 1-4-1988, it is not open to the tribunal to hold otherwise. the tribunal, special bench, delhi in the case of rishi roop chemical co. (p.) ltd. v. ito [1991) 36 itd 35 considered the question whether the proviso to section 43b is prospective from 1-4-1988 or retrospective in operation from 1-4-1984.the special bench has duly noticed the judgment of the delhi high court in the case of sanghi motors v. union of india [1991] 187 itr 703 wherein their lordships of the delhi high court considered the challenge of arbitrariness and ultra vires of article 14 of the constitution and also the contention that the amendment to section 43b by the finance act 1987 with effect from 1-4-1988 by inserting proviso to section 43b was clarificatory in nature, but all these contentions were rejected by the delhi high court. on the other hand, the delhi high court held that the amendment clearly states that it is with effect from 1-4-1988 and this being so, it is not possible to give the amended provision retrospective effect with effect from 1-4-1984. thus the writ filed by sanghi motors was dismissed in limine. the special bench of the tribunal, inter alia, considered the aforesaid judgment of the delhi high court and contrary decisions of the benches of the tribunal in this regard and came to the conclusion that "the benefit of proviso inserted from 1-4-1988 would not be available to tax payers in respect of the assessment years 1984-85 to 1987- 88. it is a settled position in law that no statute shall be construed to have retrospective operation unless such a construction appears very clearly at the time of passing of the act or arises by necessary and distinct implication. there is nothing mentioned in the proviso that it would be retrospective. on the other hand, the legislature had taken care to see that it applies only from 1-4-1988. against the very specific mention of the date of its operation, it was very difficult to say that it was intended to apply retrospectively either by construction or by necessary implication. there was no material to say that the proviso is declaratory". therefore, it is abundantly clear that the delhi high court in the case of sanghi motors (supra) has given a contrary judgment regarding the retrospective operation of the proviso to section 43b with effect from 1-4-1988. therefore, it is not correct on the part of the applicant to urge that there was no contrary decision of court so as to apply the ruling of the bombay high court in the case of cit v. smt. godavaridevi saraf [1978] 113 itr 589. inasmuch as there is a contrary judgment of the delhi high court on the same issue, the ruling in the case of smt. godavaridevi saraf (supra) is not applicable. in any case, the tribunal cleared through the controversy existing between the high courts on this point and chosen to rest its decision based on consistent decisions of the tribunal on this issue.3. the learned counsel for the assessee made a valiant attempt by filing a copy of the order of the tribunal, pune bench, in the case of ito v. united engg. works [it appeal no. 574 (pune) of 1988, dated 17-12-1991]. in this case, the tribunal has duly noticed the conflicting decisions of the high courts both in favour of the assessee and against the assessee and chose to decide the issue in favour of the assessee by following the ruling of the supreme court in the case of cit v. vegetable products ltd. [1973] 88 itr 192. therefore, it is a case of balancing conflicting judgments and deciding in favour of the assessee. the tribunal has also noticed another decision of the delhi high court in the case of escorts ltd. v. union of india [1991] 189 itr 81 wherein their earlier decision in the case of sanghi motors (supra) was followed and the decision of the patna high court in the case of jamshedpur motor accessories stores (supra) was dissented from.therefore, reliance on the order of the tribunal in the case of united engg. works (supra) is not helpful because that was based on the benevolence and not on merits.4. in the facts and circumstances, therefore, it is abundantly clear that there were conflicting decisions between the delhi high court and patna high court regarding the nature of operation of proviso to section 43b. in this context, therefore, the applicant is not correct in seeking to apply the ratio of the bombay high court in the case of smt. godavaridevi saraf (supra) and cit v. jayantilal ramanlal & co.[1982] 137 itr 257 (bom.) which would apply only in the absence of any other conflicting decisions of any competent high court. in view of the conflicting decisions of the high courts, the tribunal cleared through the conflicting decisions of the courts and chose to rest on the consistent decisions of the tribunal. it is needless to say that the author of the order in the case of united engg. works (supra) is also a party to the impugned order of the tribunal and this impugned order being a later order to the order in the case of united engg. works (supra) it is more reasonable and consistent and, therefore, it is being followed.5. the tribunal has no power of review. the remedy lies elsewhere but not in miscellaneous application.

Judgment:
1. By this miscellaneous application, the assessee urged that, the Tribunal has not considered the decision of the Patna High Court in the case of Jamshedpur Motor Accessories Stores v. Union of India [1991] 189 ITR 70 holding that proviso to Section 43B is retrospective in its operation and Explanation 2 to Section 43B is subject to the proviso.

The law as amended is applicable for the assessment year 1984-85.

Pointing out the binding nature of such decision, it is prayed that in the absence of any contrary decision on this issue, the said judgment should be considered and the appeal filed by the assessee should be allowed by rectifying the order of the Tribunal dated 12-3-1992. The learned counsel for the applicant has been heard with reference to the miscellaneous application filed. In short, the miscellaneous application seeks to recall the order of the Tribunal dated 12-3-1992 and render decision in favour of the assessee. Therefore, the petitioner seeks for review of the order of the Tribunal. This is not permissible as per proviso to Sub-rule (3) of Rule 34A of the Tribunal.

The learned departmental representative has been duly heard and he has strongly resisted on the ground that review is not permissible.

2. We have considered the submission of the parties. Firstly, our Log Book does not reveal the citation of the Patna High Court referred to above. On the other hand, the case proceeded on the basis that the issue involved in this appeal stands covered by the consistent decisions of the Tribunal on this issue. Therefore, it is not correct on the part of the applicant, to state in the miscellaneous application that the judgment of the Patna High Court in the case of Jamshedpur Motor Accessories Stores (supra) was cited before the Bench at the time of hearing of the appeal. Secondly, the Tribunal itself prefaced its order that in view of the conflicting judgments of the Court the Tribunal Pune Bench has been consistently taking the view that if the sales-tax relating to last quarter or last month is paid within the statutory time contained under the Sales-tax Act, no disallowance under Section 43B is required to be made and if it is made beyond the time limit prescribed thereunder, disallowance could be made. It also observed that the Tribunal was not going into the question of the proviso to Section 43B which came into force from 1-4-1988 which is not applicable to the assessment year 1984-85. The Tribunal being a creature of the Income Tax Act cannot go to the literal or reasonable construction of the statute and when the Finance Act, 1987 inserted proviso to Section 43B with effect from 1-4-1988, it is not open to the Tribunal to hold otherwise. The Tribunal, Special Bench, Delhi in the case of Rishi Roop Chemical Co. (P.) Ltd. v. ITO [1991) 36 ITD 35 considered the question whether the proviso to Section 43B is prospective from 1-4-1988 or retrospective in operation from 1-4-1984.

The Special Bench has duly noticed the judgment of the Delhi High Court in the case of Sanghi Motors v. Union of India [1991] 187 ITR 703 wherein their Lordships of the Delhi High Court considered the challenge of arbitrariness and ultra vires of Article 14 of the Constitution and also the contention that the amendment to Section 43B by the Finance Act 1987 with effect from 1-4-1988 by inserting Proviso to Section 43B was clarificatory in nature, but all these contentions were rejected by the Delhi High Court. On the other hand, the Delhi High Court held that the amendment clearly states that it is with effect from 1-4-1988 and this being so, it is not possible to give the amended provision retrospective effect with effect from 1-4-1984. Thus the Writ filed by Sanghi Motors was dismissed in limine. The Special Bench of the Tribunal, inter alia, considered the aforesaid judgment of the Delhi High Court and contrary decisions of the Benches of the Tribunal in this regard and came to the conclusion that "the benefit of proviso inserted from 1-4-1988 would not be available to tax payers in respect of the assessment years 1984-85 to 1987- 88. It is a settled position in law that no statute shall be construed to have retrospective operation unless such a construction appears very clearly at the time of passing of the Act or arises by necessary and distinct implication. There is nothing mentioned in the proviso that it would be retrospective. On the other hand, the Legislature had taken care to see that it applies only from 1-4-1988. Against the very specific mention of the date of its operation, it was very difficult to say that it was intended to apply retrospectively either by construction or by necessary implication. There was no material to say that the proviso is declaratory". Therefore, it is abundantly clear that the Delhi High Court in the case of Sanghi Motors (supra) has given a contrary judgment regarding the retrospective operation of the proviso to Section 43B with effect from 1-4-1988. Therefore, it is not correct on the part of the applicant to urge that there was no contrary decision of Court so as to apply the ruling of the Bombay High Court in the case of CIT v. Smt. Godavaridevi Saraf [1978] 113 ITR 589. Inasmuch as there is a contrary judgment of the Delhi High Court on the same issue, the ruling in the case of Smt. Godavaridevi Saraf (supra) is not applicable. In any case, the Tribunal cleared through the controversy existing between the High Courts on this point and chosen to rest its decision based on consistent decisions of the Tribunal on this issue.

3. The learned counsel for the assessee made a valiant attempt by filing a copy of the order of the Tribunal, Pune Bench, in the case of ITO v. United Engg. Works [IT Appeal No. 574 (Pune) of 1988, dated 17-12-1991]. In this case, the Tribunal has duly noticed the conflicting decisions of the High Courts both in favour of the assessee and against the assessee and chose to decide the issue in favour of the assessee by following the ruling of the Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192. Therefore, it is a case of balancing conflicting judgments and deciding in favour of the assessee. The Tribunal has also noticed another decision of the Delhi High Court in the case of Escorts Ltd. v. Union of India [1991] 189 ITR 81 wherein their earlier decision in the case of Sanghi Motors (supra) was followed and the decision of the Patna High Court in the case of Jamshedpur Motor Accessories Stores (supra) was dissented from.

Therefore, reliance on the order of the Tribunal in the case of United Engg. Works (supra) is not helpful because that was based on the benevolence and not on merits.

4. In the facts and circumstances, therefore, it is abundantly clear that there were conflicting decisions between the Delhi High Court and Patna High Court regarding the nature of operation of proviso to Section 43B. In this context, therefore, the applicant is not correct in seeking to apply the ratio of the Bombay High Court in the case of Smt. Godavaridevi Saraf (supra) and CIT v. Jayantilal Ramanlal & Co.

[1982] 137 ITR 257 (Bom.) which would apply only in the absence of any other conflicting decisions of any competent High Court. In view of the conflicting decisions of the High Courts, the Tribunal cleared through the conflicting decisions of the Courts and chose to rest on the consistent decisions of the Tribunal. It is needless to say that the author of the order in the case of United Engg. Works (supra) is also a party to the impugned order of the Tribunal and this impugned order being a later order to the order in the case of United Engg. Works (supra) it is more reasonable and consistent and, therefore, it is being followed.

5. The Tribunal has no power of review. The remedy lies elsewhere but not in miscellaneous application.