JUDGMENT This is a writ petition under article 226 of the Constitution. The relief claimed is for the issue of a writ in the nature of mandamus requiring the Income-tax Tribunal to consider the ground of computation of standard èprofits as was raised in the excess profit tax appeals but which inadvertently remained undisposed of. The facts leading up to this petition are thes :
The petitioner was assessed to excess profits tax for the chargeable accounting periods ending on March 31, 1945, and March 31, 1946, by two assessment orders dated August 26, 1949. According to the said assessment the petitioner was assessed to excess profits tax to the tune of Rs. 1,06,181.5 and Rs. 48,978 for the above chargeable accounting periods respectively. In the excess profits tax assessment order, according to the petitioner, the Excess Profits Tax Officer had failed to make adjustments for capital variation in the standard period and the chargeable accounting periods as required by section 6 of the Excess Profits Tax Officer, 1940, read with rule 5, Schedule II to the Act. Being aggrieved by the order, the petitioner filed appeals before the Appellate Assistant Commissioner of Income-tax in respect of each of the relevant chargeable accounting periods and those appeals were disposed of by the Appellate Assistant Commissioner. Before the said appeals were heard, the petitioner filed a specific ground in respect of adjustment of standard profits due to the increase or decrease of the capital in the chargeable accounting periods. This ground was considered but rejected by the Appellate Assistant Commissioner.
Thereafter, an appeal was preferred before the Income-tax Appellate Tribunal, Allahabad Bench, at Allahabad, and the following specific grounds of appeal was take :
"Because the learned Excess Profits Tax Officer and the Appellate Assistant Commissioner have erred in not allowing to the assessee proper standard profits in accordance with the standard period subject to the adjustment on account of the increase and decrease of capital in the relevant chargeable accounting period, the view of the Income-tax Officer is wrong and untenable. The appellant was always prepared to file his computation of average capital. The lower court is not justified in refusing to give the benefit to the assessee on this account."
The petitioner states on affidavit that the aforesaid ground was argued in his presence by his counsel before the Tribunal. These excess profits tax appeals were heard along with the income-tax appeals and the Tribunal, as is clear from the opening paragraph of the consolidated judgment, treated the excess profits tax appeals as merely consequential. The Income-tax Appellate Tribunal again observe :
"The excess profits tax appeals being consequential and the grounds in both these appeals being common, they are disposed of by this common order."
That is the usual opening paragraph in most of the orders passed in the excess profits tax appeals which are heard along with the income-tax appeals and it would appear that the Tribunal lost sight of the specific ground raised in the excess profits tax appeals which was not common to the income-tax appeals. Such was the position deducible from the fact that the petitioner has stated on oath that this specific ground was argued in his presence before the Tribunal. Against that statement there is, for obvious reasons, no contradiction and in these circumstances there èis no reason to disbelieve the affidavit of the petitioner.
An application was filed on April 2, 1956, before the Income-tax Appellate Tribunal requesting it to re-hear the excess profits tax appeals as this ground was not disposed of by it. The Tribunal did not, very fairly, say that the point was not pressed, but disposed of that application merely on the ground that the application was made after the expiry of the period of limitation under section 35 of the Income-tax Act, 1922. According to the Tribunal, the period of limitation under section 35 of the Act was four years and that having expired, the application was held to be barred by time. The Tribunal, therefore, by an order dated 9th June, 1956, rejected the application. It is this order which the petitioner, by means of this writ petition filed on 4th November, 1961, seeks to challenge as being one patently erroneous in law, or one where the Tribunal failed to exercise the jurisdiction vested in it.
Two questions, therefore, fall to be considere : One, whether there was, in fact, any period of limitation for making an application for rectification under the Excess Profits Tax Act and, if there was no period of limitation, its effec ? Secondly, whether in a case, such as the present, where the Tribunal inadvertently failed to deal with the ground raised and the petitioner had followed other remedies before invoking the writ jurisdiction in this court, can it be said that there were laches in filing the writ petition and, therefore, this court should not exercise its extraordinary writ jurisdictio ?
On the first question there seems to be a clear lacuna in the Excess Profits Tax Act. The Tribunal came into the picture as an appellate authority in place of the Commissioner after the Excess Profits Tax Officer had already come into force. Section 19 deals with the powers of the Commissioner. Sub-section (2) read :
"On the coming into operation of Part II of the Indian Income-tax (Amendment) Act, 1939, sub-section (1) shall cease to have effect, but thereafter any Excess Profits Tax Officer or any person in respect of whose business an order under section 14 has been passed who objects to an order passed by an Appellate Assistant Commissioner under section 16 or section 17 may, within the prescribed time, and the prescribed manner, appeal against such order to the Appellate Tribunal constituted under the Income-tax Act, 1922, and that Tribunal shall have all such powers in disposing of the appeal as it has in respect of appeals preferred to it under the Indian Income-tax Act, 1922."
Unfortunately, section 20 of the Excess Profits Tax Act was contained in the Act originally and when section 19(2) was brought into force at a subsequent date the necessity of making a suitable amendment in section 20 was lost sight of an not made. In section 20, which provides for rectification of mistakes, there should have been a provision which would have come into operation on the coming into operation of Part II of the Income-tax Act, 1939, but unfortunately the legislature lost sight of that provision when enacting section 20. Section 20 of the Excess Profits Tax Act provides for rectification of mistakes, which read :
"20. The Commissioner may, at any time, within four years from the date of any order passed whether by himself or by èany Appellate Assistant Commissioner or Excess Profits Tax Officer under this Act, rectify any mistake in any evidence recorded during assessment or appellate proceedings, or any mistake apparent from the record and shall within the like period rectify any mistake apparent from the record which has been brought to his notice by a person to whose business this Act applies."
It will be noticed that there is no reference to the rectification of any mistake by the Income-tax Appellate Tribunal but that is understandable, for, at the time when section 20 was enacted, the Income-tax Appellate Tribunal had not come into existence. Even this omission under section 20 may not have been there if the legislature had taken in precaution of including section 35 of the Income-tax Act as one of the sections in section 21 of the Excess Profits Tax Act by which various sections of the Income-tax Act were made applicable to the Excess Profits Tax Act. Unfortunately, even in section 21 of the Act, section 35 of the Income-tax Act, 1922, is conspicuously absent.
The provision which the petitioner contends comes to his rescue in section 19 of the Excess Profits Tax Act. Mr. Gulati, the learned standing counsel, on the other hand, basing himself on the following words, "and the Tribunal shall have all such powers in disposing of the appeal as it has in respect of appeals preferred to it under the Indian Income-tax Act, 1922," contends that the power of the Tribunal conferred under sub-section (2) of section 19 of the Excess Profits Tax Act no doubt is the same as given to the Appellate Assistant Commissioner but only up to the stage of disposing of the appeal under section 33 of the Income-tax Act, 1922, and not beyond. For everything beyond that stage, the Excess Profits Tax Act has made specific provision under section 20 and section 21 of the Act. The application of the Income-tax Act having been specifically restricted when dealing with the provision for appeals under the Excess Profits Tax Act, it is not possible, so the argument proceeds, to give the impugned section a wider meaning. It is, however, unnecessary to resolve these conflicting contentions in these proceedings as I have come to the conclusion that even if section 19(2) does not come to the rescue of the petitioner, the inherent powers of the Tribunal will be available to rectify a mistake committed by itself.
As already observed, there was a clear lacuna inasmuch as the legislature had inadvertently failed to make a specific provision for rectification of any mistakes by the Tribunal in respect of any matter arising out of an appeal disposed of by it. The logical result, therefore, which could flow from such omission by the legislature, albeit inadvertently, would be that neither the period of four years under section 20 of the Excess Profits Tax Act nor the period of four years provided under section 35 of the Income-tax Act, 1922, will as such apply to the entertainment of an application by the Tribunal for rectification of a mistake which has inadvertently been committed by itself.
The Supreme Court in Shivdeo Singh v. State of Punjab has held that "the power of review which inheres in every ècourt of plenary jurisdiction to prevent miscarriage of justice or to correct grave and palpable errors committed by it." The power of the Tribunal in dealing with the orders of the Appellate Assistant Commissioner is sufficiently wide and has been so expressed under section 33(4) of the Indian Income-tax Act, 1922. It has been held by this court in Sri Bhagwan Radha Kishen v. Commissioner of Income-tax that the Tribunal has inherent powers to set aside an order deciding an appeal on wrong grounds; even if rule 24 may not give that power, the inherent jurisdiction for setting right the injustice is there. In Oriental Building and Furnishing Company v. Commissioner of Income-tax it has been held that the Tribunal has plenary jurisdiction. Thus, according to the decision of the Supreme Court, all courts of plenary jurisdiction have an inherent jurisdiction to rectify manifest and palpable mistakes. A fortiori the Tribunal has an inherent jurisdiction to rectify its mistakes. Therefore, the Tribunals order rejecting the application of the petitioner on the ground that it was barred by limitation is manifestly unsustainable in law.
The only other question which remains to be considered is whether the petitioner can be said to have been guilty of laches so as to make it difficult, if not impossible, for this court in the exercise of its extraordinary writ jurisdiction to remedy the manifest mistake in not disposing of a ground of appeal, which was taken and argued before it. A perusal of the affidavit filed shows that the petitioner was all along diligently pursuing some remedy or other, though the petitioner may not have followed the correct remedy. The excess profits tax appeals were disposed of by the Tribunal on 24th April, 1951. Substantial relief in the income-tax appeals and, consequently, in the excess profit tax appeals was granted. Reference applications under section 66(1) were filed, though no question regarding the standard profits and necessary adjustment was raised. These applications were rejected. Applications under section 66(2) were thereafter filed and these were allowed by an order dated April 19, 1956. While these applications under section 66(2) were pending and before the period of four years had expired, the petitioner had applied on 11th March, 1954, to the Central Board of Revenue that in giving effect to the Appellate Tribunals order the necessary capital adjustment be made and standard profits be recomputed. By a letter dated 25th May, 1956, the Commissioner of Income-tax wrote to the petitioner that his petition dated 11th March, 1954, addressed to the Central Board of Revenue and the subsequent petition dated the 24th May, 1954, addressed to the Income-tax Officer stood rejected and that the Commissioner did not see any justification for re-opening the assessment which had been closed and had become final. In order to glean a clear picture as to whether the petitioner was active or only sleeping the facts may conveniently be recapitulate :
The petitioner had filed reference applications under section 66(1) of the Income-tax Act in all the four cases èbut the said applications were dismissed by the Tribunal by their order dated the 28th August, 1961. Thereafter, the petitioner preferred applications under section 66(2) of the Income-tax Act in each of the above four cases; these applications were allowed by this court by an order dated 19th April, 1956. When the statement of the case under section 66(2) of the Act was being prepared by the Tribunal, the petitioner asked for questions regarding the standard profits also to be referred. The petitioner had already moved an application on April 2, 1956, before the Income-tax Appellate Tribunal under section 19 of the Excess Profits Tax Act read with section 35 of the Income-tax Act, 1922, to re-hear the ground of appeal which the Income-tax Appellate Tribunal had failed to dispose of. That application was rejected on 9th June, 1956, by the Tribunal. Therefore, when the hearing of the statement of the case under section 66(2) was pending in this court, an application under section 66(4) was moved requiring the Tribunal to refer the questions regarding standard profits. This application was considered when the reference under section 66(2) was heard. But again, unfortunately, this court did not pass an order on the application under section 66(4). When the attention of the court was drawn to the application under section 66(4), on the 10th March, 1961, this application was rejected on the basis of the decision of the Supreme Court in New Jehangir Vakil Mills Ltd. v. Commissioner of Income-tax, where it has laid dow :
"The facts which are not found in the order of the Tribunal or in the record before it cannot be the foundation for the raising of any question of law either in the abstract or otherwise and that 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 to be read in the context of and in conjunction with the provisions of section 66(1) and (2), and under the guise of a direction under section 66(4) the High Court cannot refer the case back to the Tribunal to find new facts or embark upon a new line of enquiry........."
Till this decision of the Supreme Court, the law as to the scope of section 66(4) was not well settled. This court had taken the view that the provisions of section 66(4) were very wide and even in cases where the Tribunal had refused to refer some questions under section 66(1), an order could be made under section 66(4) calling upon the Tribunal to refer such questions. The Supreme Court in Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. has, however, after reviewing the conflict which prevailed, laid down the scope and limitation of the words "question of law arising out of the order of the Tribunal," which appear in section 66(1) of the Act, 1922, and one ground on which such reference would lie was held to be "when a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is, therefore, one arising out of its order." Therefore, it is ènot possible to say that the petitioner was negligent in not including that question in his application under section 66(1) when that question had not been disposed of by the Tribunal. If the petitioner considered rightly or wrongly that the remedy lay somewhere else and diligently pursued that remedy, it is not possible to hold him guilty of such laches as would prevent this court from giving him an opportunity of obtaining a decision of the Tribunal on the ground which was urged and pressed but not decided by it.
It was also contended by the learned counsel for the department that the matter having been before the High Court under section 66(2) and section 66(4) and again under section 66A of the Act, it would not be proper for this court to grant the prayer of the petitioner. There is no force in this contention. At no stage did the High Court record any finding on the question as to whether the application filed by the petitioner before the Tribunal was one which could be said to be barred by time.
For reasons given above, I would set aside the order of the Tribunal dated 9th June, 1956, and direct the Tribunal to dispose of that application afresh in accordance with law. In the circumstances of the case, there will be no order as to costs.