Delhi High Court
The Commissioner Of Income Tax vs Sh. Anil Minda on 14 September, 2010
Author: A.K.Sikri
Reportable
* IN THE HIGH COURT OF DELHI AT NEW DELHI
ITA No.582 of 2009
with
ITA No.527 of 2009,ITA No.593 of 2009
ITA No.605 of 2009,ITA No.618 of 2009
ITA No.772 of 2009
Reserved On: August 19,2010
% Date of Decision: September 14, 2010
(1) ITA No.582 of 2009
The Commissioner of Income Tax . . . Appellant
Through : Mr. Sanjeev Sabharwal, Sr.
Standing Counsel with Mr.
Utpal Saha, Advocate.
VERSUS
Sh. Anil Minda . . .Respondent
Through: Dr. Rakesh Gupta, Advocate
with Mr. Ashwani Taneja and
Ms. Rani Kiyala, Advocates.
(2) ITA No.527 of 2009
The Commissioner of Income Tax . . . Appellant
Through : Mr. Sanjeev Sabharwal, Sr.
Standing Counsel with Mr.
Utpal Saha, Advocate.
VERSUS
Sh. Anil Minda . . .Respondent
Through: Dr. Rakesh Gupta, Advocate
with Mr. Ashwani Taneja and
Ms. Rani Kiyala, Advocates.
(3) ITA No.593 of 2009
The Commissioner of Income Tax . . . Appellant
ITA No.582 of 2009 with ITA No.527 of 2009,ITA No.593 of 2009, Page 1 of 20
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
Through : Mr. Sanjeev Sabharwal, Sr.
Standing Counsel with Mr.
Utpal Saha, Advocate.
VERSUS
Sh. Vandana Minda . . .Respondent
Through: Dr. Rakesh Gupta, Advocate
with Mr. Ashwani Taneja and
Ms. Rani Kiyala, Advocates.
(4) ITA No.605 of 2009
The Commissioner of Income Tax . . . Appellant
Through : Mr. Sanjeev Sabharwal, Sr.
Standing Counsel with Mr.
Utpal Saha, Advocate.
VERSUS
Sh. J.P. Minda . . .Respondent
Through: Dr. Rakesh Gupta, Advocate
with Mr. Ashwani Taneja and
Ms. Rani Kiyala, Advocates.
(5) ITA No.618 of 2009
The Commissioner of Income Tax . . . Appellant
Through : Mr. Sanjeev Sabharwal, Sr.
Standing Counsel with Mr.
Utpal Saha, Advocate.
VERSUS
Sh.J.P. Minda . . .Respondent
Through: Dr. Rakesh Gupta, Advocate
with Mr. Ashwani Taneja and
Ms. Rani Kiyala, Advocates.
(6) ITA No.772 of 2009
The Commissioner of Income Tax . . . Appellant
Through : Mr. Sanjeev Sabharwal, Sr.
Standing Counsel with Mr.
Utpal Saha, Advocate.
VERSUS
ITA No.582 of 2009 with ITA No.527 of 2009,ITA No.593 of 2009, Page 2 of 20
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
Ms. Gayatri Minda . . .Respondent
Through: Dr. Rakesh Gupta, Advocate
with Mr. Ashwani Taneja and
Ms. Rani Kiyala, Advocates.
CORAM :-
HON‟BLE MR. JUSTICE A.K. SIKRI
HON‟BLE MS. JUSTICE REVA KHETRAPAL
1. Whether Reporters of Local newspapers may be allowed
to see the Judgment?
2. To be referred to the Reporter or not?
3. Whether the Judgment should be reported in the Digest?
A.K. SIKRI, J.
1. In all these appeals, an interesting question of law arises
relating to the interpretation that needs to be given to the provisions
of Section 132(1) of the Income Tax Act (hereinafter referred to as
‗the Act') touching upon the limitation aspect contained therein.
Following common question of law, in this behalf, is raised by the
Revenue in all these appeals:
―Whether the learned Income Tax Appellate
Tribunal erred in holding that the assessment
framed by the Assessing Officer is barred by
limitation?‖
2. The Income Tax Appellate Tribunal (hereinafter referred to as
‗the Tribunal') has held that the assessment orders passed in the
case of all these assessees were time barred, as the assessments
were not completed within two years from the end of month in which
the last authorization for search under Section 132 of the Act was
issued. To appreciate this controversy, we have taken note of the
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
dates as they appear in ITA No.582 of 2009. The assessee is the son
of J.P. Minda, who is in the Minda Group of business, engaged in
manufacturing of various automobiles components. The two warrants
of authorization under Section 132(1) of the Act for carrying out the
search at bank locker with Canara Bank, Kamla Nagar, were issued
on 13.03.2001 and 26.03.2001. Warrants which were executed on
13.03.2001 were executed on various dates, which are as under:
1. 13.03.2001 1st Authorization/search warrant
issued
2. 19.03.2001, Panchnama drawn/executed and
20.03.2001, search completed in regard to 1st
26.03.2001, search warrant
27.03.2001,
28.03.2001
&
11.04.2001
3. During the execution of the search warrants dated 13.03.2001,
the Income Tax authorities got the information about a locker
belonging to the assessee in a bank. Further, on 26.03.2001, second
authorization was issued for searching this locker and this was
executed on 26.03.2001 itself. It is, thus, clear from the aforesaid
that in respect of first authorization given on 13.03.2001, which was
for search at the office and residence of the assessee, it continued
for some time and culminated only on 11.04.2001. However, as far
as second search authorization is concerned, which was given on
26.03.2001, that was executed on the same day and Panchnama
drawn on 26.03.2001.
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
4. Thereafter the notice under Section 158BC for filing block
return was issued. The assessee had filed his return and the
assessment was completed by passing assessment orders in April
2003. The position was similar with all other assessees. The
assessees filed appeal challenging the assessment, inter alia, on the
ground that the assessment was time barred. According to the
assessees, limitation was of two years as prescribed under Section
158BE of the Act, which was to be computed when Panchnama in
respect of second authorization, i.e., on 26.03.2001 was executed.
Since that Panchnama was drawn on 26.03.2001, two years period as
provided under Section 158BE (b) come to an end by March 2003 and
the assessment order in April 2003 was thus time barred. On the
other hand, the plea of the Department was that since the last
Panchnama, though related to search authorization dated 13.03.2001
was executed on 11.04.2001, limitation of two years was to be
computed from this date and therefore, the assessment order passed
was well within the limitation prescribed. In order to appreciate the
controversy, we may reproduce the provisions of Section 158BE of
the Act, which reads as under:
―Section 158BE
TIME LIMIT FOR COMPLETION OF BLOCK
ASSESSMENT.
(1) The order under section 158BC shall be passed
- (a) Within one year from the end of the month in
which the last of the authorisations for search
under section 132 or for requisition under section
132A, as the case may be, was executed in cases
where a search is initiated or books of account or
other documents or any assets are requisitioned
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
after the 30th day of June, 1995 but before the 1st
day of January, 1997;
(b) Within two years from the end of the
month in which the last of the authorisations
for search under section 132 or for
requisition under section 132A, as the case
may be, was executed in cases where a search
is initiated or books of account or other documents
or any assets are requisitioned on or after the 1st
day of January, 1997.
(2) The period of limitation for completion of block
assessment in the case of the other person
referred to in section 158BD shall be - (a) One
year from the end of the month in which the notice
under this Chapter was served on such other
person in respect of search initiated or books of
account or other documents or any assets
requisitioned after the 30th day of June, 1995 but
before the 1st day of January, 1997; and
(b) Two years from the end of the month in which
notice under this Chapter was served on such
other person in respect of search initiated or books
of account or other documents or any assets are
requisitioned on or after the 1st day of January,
1997.
Explanation : In computing the period of limitation
for the purposes of this section, the period - (i)
During which the assessment proceeding is stayed
by an order or injunction of any court, or
(ii) Commencing from the day on which the
Assessing Officer directs the assessee to get his
accounts audited under sub-section (2A) of section
142 and ending on the day on which the assessee
is required to furnish a report of such audit under
that sub-section, shall be excluded.
Explanation 2 : For the removal of doubts, it is
hereby declared that the authorisation referred to
in sub-section (1) shall be deemed to have been
executed, - (a) In the case of search, on the
conclusion of search as recorded in the last
panchnama drawn in relation to any person in
whose case the warrant of authorisation has been
issued;
(b) In the case of requisition under section 132A,
on the actual receipts of the books of account or
other documents or assets by the Authorised
Officer.‖
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
5. The case of the assessee is predicated on the expression ―last
of authorization‖ and it is the date on which warrants in respect of
this ―last of authorization‖ would be the starting point of limitation.
On this basis, it was argued that even if the first authorization dated
13.03.2001 was executed on a later date, i.e., 11.04.2001 that would
be of no consequence and for the purpose of reckoning the limitation
period, the first authorization is irrelevant and it is the ―last of
authorization‖, which has to be kept in mind. Last authorization in
this case is dated 26.03.2001, which was executed on the same date
and, therefore, the period of two years is to be counted from that
date.
6. Learned counsel for the assessee had submitted that it is
settled law that while construing taxation laws, more particularly
relating to limitation; a strict and literal interpretation has to be
made. This was so held in the case of K.M. Sharma vs. Income
Tax Officer [254 ITR 772 (SC) in the following words:-
―The provisions of a fiscal statute, more
particularly one regulating the period of limitation,
must receive a strict construction. The law of
limitation is intended to give certainty and finality
to legal proceedings and to avoid exposure to risk
of litigation of litigants for an indefinite period on
future unforeseen events. Proceedings which had
attained finality under existing law due to bar of
limitation cannot be held to be open for revival
unless the amended provision is clearly given
retrospective operation so as to allow upsetting of
proceedings which had already concluded and
attained finality.‖
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
7. He has also referred to another judgment of the Supreme Court
in the case of Nasiruddin and Ors. Vs. Sita Ram Agarwal [AIR
2003 SC 1543]. It was also submitted that when the period of
limitation is statutorily prescribed, it has to be strictly adhered to and
cannot be relaxed or departed from for equitable considerations. In
support of this submission, the learned counsel relied upon the cases
of Apex Court in India House vs. Kishan N. Lalwani [AIR 2003 SC
2084] and Municipal Board vs. State Transport Authority,
Rajasthan [AIR 1965 SC 458]. In the latter case, the following
passage was specifically read out:
―In interpreting the provisions of limitation
equitable considerations are out of place and the
strict grammatical meaning of the words is the
only safe guide. The words should not be read as
‗from the date of the knowledge of the order' in
the absence of clear indication to that effect. If the
legislature had intended that an application may
be made within 30 days from the date of intimation
or knowledge of the order, it would have said so as
it did in Sections 13, 15, 16 and 35. In the absence
of any such thing the Court is bound to hold that
the application will be barred unless made within
30 days from the date of the order by which the
person is aggrieved.‖
8. It was also argued that when there is a conflict between law
and equity, it is the law which has to prevail, in accordance with the
Latin maxim "dura lex sed lex", which means "the law is hard,
but it is the law". Equity can only supplement the law, but it
cannot supplant or override it. [Raghunath Rai Bareja vs. Punjab
National Bank, 2007 (2) SCC 230.]
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
9. The thrust of the submission made by the learned counsel for
the Revenue was altogether different. He submitted that the
aforesaid provision contained in clause (b) of Section 158BE of the
Act was not to be read in isolation, but along with the Explanation 2
thereto, which had been inserted by Finance (No.2) Act, 1998 with
effect from 01.07.1995 and which reads as under:
―Explanation - 2 for the removal of doubts, it is
hereby declared that the authorization referred to
in sub-Section (I) shall be deemed to have been
executed -
(a) In the case of search on the conclusion of
search as recorded in the last Panchnama
drawn, in relation to any person in whose case
the warrant of authorization has been issued;
(b)In the case of requisition under Section 132A, on
the actual receipt of the books of accounts or
other documents or assets by the Authorized
officer.‖
10. The submission of Mr. Sabharwal based on the aforesaid
Explanation was that it was specifically inserted with a view to give
last of the Panchnama as the starting point of limitation. He argued
that the aforesaid Explanation makes it clear that the time for
completion of Block Assessment under Section 158BC/158BE, is the
conclusion of search/drawing of last Panchnama, which will be
relevant and not the dates of issuance of various authorizations. The
linkage is withdrawing of last of Panchnama and not to issuance of
authorizations. The aforesaid was also made clear by the
Memorandum explaining the Amendment in 231 ITR 202 (St.)
which reads as under:-
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
―Clause-48 seeks to amend Section 158BE of the
Income Tax Act relating to limit for completion of
Block Assessment.
The proposed amendment seeks to renumber the
existing Explanation of sub-Section (2) of Section
158BE and to insert a new Explanation--2
thereafter to provide that the execution of an
authorization for search under Section 132 or for
requisition under Section 132A will mean the
date of conclusion of the search in respect of
the authorization as recorded in the last
Panchnama in the case of a person in whose case
the warrant has been issued. In the case of
requisition under Section 132A, the execution of an
authorization will mean the date when the
authorized officer receives books, document or
assets.
The amendment proposed is of a clarificatory in
nature.
The proposed amendment will take effect form 1st
July, 1995.‖
11. According to Mr. Sabharwal, if the contention of the assessee is
accepted, the very purpose of introducing the Explanation would
become redundant. His argument was that the linkage of
time/limitation of the completion of search in the context of Block
Assessment is logical and rational. It is rational for the reason that
unless Assessing Officer has completed search, obtained all the
material, has custody of relevant material and has overall picture, he
cannot frame Block Assessment. Therefore, it is only when all
material is made available to the Assessing Officer (on completion of
last search) that the limitation would run against the Assessing
Officer and it surely cannot run from a date interior to the same as he
is under disability to initiate Assessment. The issuance of
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
authorization, execution of said authorization by drawing last
Panchnama and making available complete search material to the
AO for Block Assessment cannot be completed as Chapter XIVA
beginning with authorization under Section 132(1) and framing of
Block Assessment is sequential and unless the first stage of
collecting material is completed the next stage of framing block
assessment cannot begin or time to frame assessment begin to run.
Since the Block Assessment is a single continuous and homogenous
process [State of Maharashtra vs. NC Bajaj, 201 ITR 315
(Bombay)] what is to be looked at is not a particular authorization
(which will not lead to obtaining complete material for Block
Assessment) but all authorization(s) together as common and
determining the limitation from the conclusion of search by drawing
of last of Panchnama on any of the authorizations.
12. The logic of the above in the context of Block Assessment is
obvious as before the said time neither search is concluded nor all
material can be made available to the Assessing Officer.
13. We have given our utmost consideration to the submissions
made by the counsel for the parties. No doubt, the provisions of Sub
Section (1) of Section 158 BE if read in isolation, it gives an
indication that the period of two years is to be counted from the end
of the month in which ―last of the authorization‖ for search under
Section 123 was executed. Here the world ‗last' is relatable to
authorization and not to the execution. Therefore, if we have to
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
interpret clause (b) of sub Section (1) of Section 158 BE of the Act,
one may be inclined to conclude that two years period is to be
counted from the date when last authorization was executed. The
question, however is, whether explanation which was inserted by
Finance Act, 1998 effective from 1st July, 1995 makes any difference?
To put it otherwise, whether such an explanation clarifies the position
contained in clause (b) of sub Section (1) of Section 158 B?
14. By means of this Explanation-2, a deeming provision is added.
Therefore, it creates a fiction in so far as the authorization referred to
in sub section (1) is to be treated as executed.
15. The Supreme Court in the case of G. Viswanathan Vs. The
Hon'ble Speaker, Tamil Nadu Legislative Assembly, Madras
and another, AIR 1996 SC 1060 held as under:-
―The scope of the legal fiction enacted in the
explanation (a) to paragraph 2(1) of the Tenth
Schedule assumes importance in this context. By
the decision of this Court it is fairly well settled
that a deeming provision is an admission of the
non-existence of the fact deemed. The Legislature
is competent to enact a deeming provision for the
purpose of assuming the existence of a fact which
does not even exist. It means that the Courts must
assume that such a state of affairs exists as real,
and should imagine as real the consequences and
incidents which inevitably flow there from, and
give effect to the same.
The deeming provision may be intended to
enlarge the meaning of a particular word or to
include matters which otherwise may or may not
fall within the main provision. The law laid down in
this regard in East End Dwellings Co. Ltd. case
(1952) AC 109 : (1951) 2 All. E.R. 587 has been
followed by this Court in a number of cases,
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
beginning from State of Bombay v. 1953CriLJ1049
and ending with a recent decision of a three Judge
Bench in M. Venugopal v. (1994)ILLJ597SC . N.P.
singh, J., speaking for the Bench stated the law
thus at page 329 :
The effect of a deeming clause is well-known.
Legislature can introduce a statutory fiction and
courts have to proceed on the assumption that
such state of affairs exists on the relevant date. In
this connection, one is often reminded of what
was said by Lord Asquith in the case of East End
Dwellings Co. Ltd. v. Finsbury Borough Council
that when one is bidden to treat an imaginary
state of affairs as real, he must surely, unless,
prohibited from doing so, also imagine as real the
consequences and incidents which inevitably have
flowed from it one must not permit his
"imagination to boggle" when it comes to the
inevitably corollaries of that state of affairs.‖
16. The Apex Court in the case of Ashok Leyland Ltd. v. State of
T.N. (2004) 3 SCC 1) held that legal fiction must be given its full
effect when the conditions precedent therefore are satisfied and not
otherwise. In the case of Mancheri Puthusseri Ahmed v.
Kuthiravattam Estate Receiver (1996) 6SCC 185, it was held as
under:-
―Rule of construction of provisions creating legal
fictions is well settled. In interpreting a provision
creating a legal fiction the court is to ascertain for
what purpose the fiction is created, and after
ascertaining this, the court is to assume all those
facts and consequences which are incidental or
inevitable corollaries to the giving effect to the
fiction. But in so construing the fiction it is not to
be extended beyond the purpose for which it is
created, or beyond the language of the section by
which it is created. It cannot also be extended by
importing another fiction. In this connection we
may profitably refer to two decisions of this Court.
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
In the case of CIT v. Shakuntala [1961] 43ITR
352(SC) a three-Judge Bench of this Court
speaking through S.K. Das, J., made the following
pertinent observation in paragraph 8 of the
Report:
The question here is one of interpretation only and
that interpretation must be based on the terms of
the section. The fiction enacted by the legislature
must be restricted by the plain terms of the
statute.‖
17. Thus, when we look into the matter in that context and find that
there was a definite purpose of inserting the said Explanation-2, we
have to give an interpretation which sub-serves the purpose and
shall not defeat the same. No doubt, in taxing statutes, literal
interpretation is to be preferred more particularly when the language
is clear and capable of one meaning and while giving effect to literal
interpretation, one has not to see the consequences it would lead to.
However, in the present case, application of this very rule is
conditioned by the explanation contained in the same provision, and,
therefore, sub Section (1) is to be read in accordance with the
intention expressed in Explanation-2. Moreover, the Explanation-2
categorically states that authorization referred to in sub Section (1)
shall be deemed to have been executed, in the case of search, on the
conclusion such as recorded in the last panchnama drawn in relation
to any person in whose case, warrants of authorization was issued.
By this deeming provision, authorization referred to in sub Section (1)
would be that authorization which is executed on the conclusion of
search as recorded in the last panchnama. Therefore, by this
deeming provision, even an authorization which may not be
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
otherwise the last authorization would become last authorization, if
that is executed and if the panchnama in respect thereto is drawn
last. Therefore, the purport of this explanation is to count the period
of limitation of two years from the date when the last panchnama
was drawn in respect of any warrant of authorisation, if there were
more than one warrants of authorization. This interpretation would be
in consonance with the intent and purpose of the legislature on
behalf of the said explanation.
18. We are agree with Mr. Sabharwal, learned counsel appearing
for the revenue that the very purpose of introducing the Explanation
would become redundant if the contention of the assessee is
accepted.
19. Block Assessment and timely Block Assessment are in
furtherance of search warrants issued under Section 132(1) of the
Act. The authorizations themselves are issued by the Director
General on the prima facie satisfaction of undisclosed income for
which admittedly as many warrants to achieve the above objective
are issued depending upon where all material which would provide
evidence of undisclosed income is located. Hence, at the time of
issuance of warrants concern is of obtaining all the material
necessary for preventing tax evasion, and hence depending on the
material found during the search by various search parties one or the
other search warrants may be issued prior or subsequent in time
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
which will not make any difference to the objective of bringing to tax,
undisclosed income.
20. Thus keeping in view the objective of the search of unearthing
of the undisclosed income and preventing tax evasion for which
admittedly as many search warrants can be issued than any other
provisions which does not effectuate aforesaid objective being the
primary objective has to be read down and interpreted keeping in
view the purposive interpretation. Explanation-2 clearly lays
emphasis on the ―conclusion of search‖. The purpose is to collect all
relevant material, during search, in order to enable the Assessing
Officer to undertake the exercise of block assessment.
21. It is but logical that any point of execution of warrants on the
last panchnama drawn would be starting point of time of limitation
because at that point of time the search party has in its custody the
complete material and is in a position to evaluate disclosed and
undisclosed material/income and not before and only then issue
notice for Block Assessment under Section 158 BD (C) and/or carry
forward Block Assessment is to be issued. The courts, have
construed ‗conclusion of the search' to mean when there is scrutiny
of all the material collected which may be searched or otherwise and
when has resulted in drawing of last panchnama as the conclusion of
the search. (See 319 (AT) 197 (SB), 238 ITR 501 at 504 (Kerala) and
279 ITR 298 (Del).
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
22. The primary function of the Court is to find out the intention of
the legislature. According to us, the legislature has manifested its
intention eloquently, in the manner stated by us above, by inserting
Explanation-2.
23. In State of Tamil Nadu Vs. Kodaikanl Motor Union (P) Ltd.
2 SCR 927, the Supreme Court referring to K.P. Varghese Vs. I.T.O.
131 ITR 597 (SC) and Luke Vs. Inland Revenue Commissioners
(1964) 54 ITR 692 observed:-
"The courts must always seek to find out
the intention of the legislature. Though
the courts must find out the intention of
the statute from the language used, but
language more often than not is an
imperfect instrument of expression of
human thought. As Lord Denning said it
would be idle to expect every statutory
provision to be drafted with divine
prescience and perfect clarity. As Judge
Learned Hand said, we must not make a
fortress out of dictionary but remember
that statutes must have some purpose
or object, whose imaginative discovery is
judicial craftsmanship. We need not
always cling to literalness and should
seek to endeavour to avoid an unjust or
absurd result. We should not make a
mockery of legislation. To make sense
out of an unhappily worded provision,
where the urpose is apparent to the
judicial eye „some‟ violence to language
is permissible."
24. The Apex Court has opined, time and again, that in a taxation
statute where literal interpretation leads to a result not intended to
sub-serve the object of the legislation another construction in
consonance with the object should be adopted. { Keshvji Ravji and
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
Co. and others Vs. Commissioner of Income Tax 183 ITR 1
(SC)}.
25. In the present case what we find is that the legislature noticed
that literal interpretation given to clause (b) of sub Section (1) of
Section 158 BE of the Act may lead to the result not intended to sub-
serve the object and, therefore, introduced Explanation 2. This
purpose sought to be achieved by the legislature cannot be defeated
and has to be given effect to. In Oxford University Press Vs.
Commission of Income Tax, 165 CTR (SC) 629, the position in this
behalf was explained in the following manner:-
―Giving a purposeful interpretation of the
provision it will be reasonable to hold that in
order to be eligible to claim exemption from
tax under section 10(22) of the Act the
assessee has to establish that it is engaged
in some educational activity in India and its
existence in this country is not for profit
only. This interpretation of section 10(22)
neither causes violence to the language of
the provision nor does it amount to re-
writing the same. On the other hand it only
gives a harmonious construction of the
provision which subserves the object and
purpose for which the provision is intended
to serve. This Court noticed the basic principle of
interpretation of statutory provisions. Noticing the
words of Judge Learned Hand, it was said that the
task of interpretation of a statutory enactment is
not a mechanical task. It is more than a ???
???carding of mathematical formulae because few
words possess the precision of mathematical
symbols. We must not adopt a strictly literal
interpretation of Section 52(2) but construe its
language having regard to the object and the
purpose which the legislature had in view in
enacting the provision and in the context of the
setting in which it occurs. The literal construction
would lead to manifestly unreasonable and absurd
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
consequences. It is well recognised rule of
construction that a statutory provision must be so
construed if possible that absurdity and mischief
may be avoided. It was held that construction
suggested on behalf of the revenue would lead to a
wholly unreasonable result which could never have
been intended by the legislature. It was said that
the literalness in the interpretation of Section 52(2)
must be eschewed and the court should try to
arrive at an interpretation which avoids the
absurdity and the mischief and makes the
provision rational, sensible, unless of course, the
hands of the court are tied and it cannot find any
escape from the tyranny of literal interpretation. It
is said that it is now well-settled rule of
construction that where the plain literal
interpretation of a statutory provision
produces a manifestly absurd and unjust
result which could never have been intended
by the legislature, the court may modify the
language used by the legislature or even `do
some violence' to it, so as to achieve the
obvious intention of the legislature and
produce a rational construction. In such a case
the court may read into the statutory provision a
condition which though not expressed, is implicit in
construing the basic assumption underlying the
statutory provision. Bearing in view these
principles the court held that on a fair and
reasonable construction of Section 52(2) the court
would read into it a condition that it would apply
only where the consideration for the transfer is
understated or in other words, the assessee has
actually received a larger consideration for the
transfer than what is declared in the instrument of
transfer and it would have no application in case of
a bona fide transaction where the full value of the
consideration of transaction is correctly declared
by the assessee. Thus, a condition though not
expressed, was read into Section 52(2) constituting
the basic assumption underlying the said sub-
section.‖
26. We are unable to accept the submission of the learned counsel
for the assessee that the purpose of inserting Explanation-2 was
limited to setting at rest the controversy regarding the meaning of
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
―execution‖. That may be an additional factor. When we find that
the contention advanced by the learned counsel for the assessee in
interpreting the aforesaid provision would defeat the very purpose,
we have to eschew such a course of action.
27. The aforesaid discussion leads us to conclude that the Tribunal
erred in holding that the assessment order framed by the AO was
barred by limitation. We thus answer the question in favour of the
revenue and against the assessee. As a result, we hold that the
assessment orders passed by the Assessing Officer were within the
period of limitation. We, therefore, set aside the impugned order of
the Tribunal in all these cases and remit the cases back to the
Tribunal to decide the appeal of the assessee on merits.
(A.K. SIKRI)
JUDGE
(REVA KHETRAPAL)
JUDGE
SEPTEMBER 14, 2010.
pmc/skb
ITA No.605 of 2009,ITA No.618 of 2009 & ITA No.772 of 2009
