At, High Court of Andhra Pradesh
By, THE HONOURABLE CHIEF JUSTICE MR. GOPAL RAO EKBOTE
By, THE HONOURABLE MR. JUSTICE P. CHENNAKESAV REDDI
For the Petitioner: P. Rama Rao, Standing Counsel. For the Respondent: T. Ananta Babu, J.V. Srinivasa Rao, Advocates.
1. Mr. P. Rama Rao, standing counsel for the Income Tax department, moved for a writ of certiorari to quash the order of the Income Tax Appellate Tribunal, Hyderabad, dated December 31, 1971.
2. The facts in outline are that the Additional Commissioner of Income Tax filed an application of reference before the Income Tax Appellate Tribunal on July 15, 1971. The Tribunal by its impugned order held that the Additional Commissioner of Income Tax is not competent to file such an application and as a result dismissed the same.
3. In order to find out whether the Additional Commissioner has locus standi to file an application for reference under Section 256 of the Act, we have to necessarily read a few sections of the Act.
4. Now, Section 256 empowers the assessee or the Commissioner to file an application requiring the Appellate Tribunal to refer to the High Court any question of law arising out of an order made under Section 254 of the Act.
5. The term "Commissioner" was amended by Act 19 of 1970, with effect from April 1, 1970. It reads :
"Commissioner means a person appointed to be a Commissioner of Income Tax under Sub-section (1) of Section 117, and includes a person appointed to be an Additional Commissioner of Income Tax under that subsection."
6. Section 116 describes the classes of Income Tax authorities for the purposes of the Act. Clause (c), as amended, declares Commissioners of Income Tax and Additional Commissioners of Income Tax to be one of such classes of authorities.
7. Section 117 empowers the Central Government to appoint Commissioners of Income Tax as well as Additional Commissioners of Income Tax apart from the authorities mentioned therein.
8. We then come to Section 121, the marginal note of which reads : " Jurisdiction of Commissioners ". Sub-section (1) of that section enjoins that " the Commissioners shall perform their functions in respect of such areas or of such persons or classes of persons or of such incomes or classes of income or of such cases or classes of cases as the Board may direct".
9. Sub-section (2), as amended, states that Where any directions issued under Sub-section (1) have assigned to two or more Commissioners, the same area or the same persons or classes of persons or the same incomes or classes of income or the same cases or classes of cases, they shall have concurrent jurisdiction and shall perform such functions in relation to the said area or persons or classes of persons or incomes or classes of income or cases or classes of cases as the Board may, by general or special order in writing, specify, for the distribution and allocation of the work to be performed."
10. The last section, which we must notice, is Section 130, the marginal note of which reads " Commissioners competent to perform any function or functions ". Sub-section (1) of that section enjoins that "In respect of any function to be performed by a Commissioner under
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any provision of this Act in relation to an assessee, the Commissioner referred to therein shall,-(a) in a case where only one Commissioner has jurisdiction over such assessee, be such Commissioner ;(b) in a case where two or more Commissioners have concurrent jurisdiction over such assessee, be the Commissioner empowered to perform such function by the Board."11. Sub-section (2) then states that :"Subject to the provisions of Sub-section (1), for the purposes of Sections 253, 254, 256, 263 and 264, the Commissioner referred to therein shall, in relation to an assessee, be the Commissioner having for the time being jurisdiction over the assessee."12. The Tribunal in its impugned order firstly held that it is not in every case that the expression " Commissioner " can be read as " Additional Commissioner for Commissioner ". The context in which the term is used is important and must be seen.13. The Tribunal then proceeded to consider the validity of the notification dated June 19, 1971, in the light of Sections 121 and 130 of the Act. The Tribunal observed :"The only possible way of resolving the difficulty is to regard Section 130(1) as dealing with all sections of the Act other than the five (sections) referred to in Sub-section (2), i.e., as far as action under Sections 253, 254, 256, 263 and 264 is concerned.The Board cannot have jurisdiction to transfer to or divide the functions between any two or more Commissioners. The Commissioner having jurisdiction over the assessee would be the only person who can be the Commissioner for the purpose of these sections."14. The Tribunal, therefore, found that " the Commissioner of Income Tax having jurisdiction over the assessee should, therefore, mean a Commissioner of Income Tax having complete territorial or other jurisdiction over the assessee and not one who can perform only some of the functions allotted to him ". The Tribunal, therefore, held that the notification dated June 19, 1971, as ultra vires of the mandatory provisions of Section 130 observing that the Board was not competent to empower the Additional Commissioner of Income Tax to act under Section 256 of the Act.15. In the alternative the Tribunal held that even if the said notification is valid, the annexure does not authorise the Additional Commissioner of Income Tax to file an application under Section 256 before the Appellate Tribunal. It further held that even if the notification authorised the Additional Commissioner to file such application, he should describe himself and sign in the capacity of Commissioner of Income Tax.16. The short question, therefore, is whether the Additional Commissioner is competent to file an application under Section 256 of the Act before the Tribunal. The answer to this question can be found only in the correct understanding of the definition of the term "Commissioner" given in Section 2(16).17. Now, it cannot be in doubt that it is a proper exercise of the legislative function to define the words contained in the statute and to prescribe rules for their interpretation. It is common for a statute to contain a provision that certain words and phrases shall bear a particular meaning when used in the statute. It must follow that when a legislature defines the terms which it uses, its definition is binding upon the court.18. It is equally well-established that in interpreting a statute a court looks to the subject of the Act or a provision and the object it intends to accomplish. When the subject-matter is clearly established and its general intent is determined, the words and terms used in the Act will be interpreted according to that intent. Thus, it is apparent that when the legislature, best knowing its own intent, has defined the meaning of a word, that definition will naturally be given great weight by the courts.19. It is true that in spite of a term being defined in the Act, there are instances where the meaning of the term or word in a statute has been enlarged or restricted. The words " unless the context otherwise requires" appearing at the threshold of Section 2 convey that meaning. But that is done when it is found necessary to carry out the intention of the legislature. It is proper only if sufficient reason can be assigned to construe a word in one part of an Act in a different sense from that which it bears in another part of the Act. There must be some uncertainty about the meaning of the term in the context in which it is used in a provision of the Act. In order to resolve the uncertainty in spite of the term being denned, if the intention of the legislature appears clearly, the term so defined can be given a restricted or extended meaning, as the case may be. See Pratap Singh v. Gulzari Lal AIR 1942 All 50. In such a case the enquiry always would be as to what the legislature intended and when that is ascertained, it would control the meaning of the word or the term.20. A definition is intended to serve as a device of shortening sections and to simplify legislative expression. Thus, if numerous obligations and duties are imposed on particular classes of persons, it is a useful legislative device to define the persons belonging to such classes, and, thereafter, refer to the classes alone. This device not only saves a great deal of space and eliminates the repetition of long cumbersome identifications, but of greater importance, it avoids the danger of minute discrepancies in descriptions which confuse or thwart the interpretation and administration of the Act.21. It is in this background that we have to see whether the word " Commissioner " used in Section 130(2) has a restricted meaning confined only to the Commissioner or has an extended meaning so as to take in Additional Commissioner also. Any answer to this question would depend, firstly, upon the correct appreciation of the definition of the term " Commissioner " given in Section 2(16) of the Act. And, secondly, on the object and purpose of Section 130(2) of the Act.22. Even on a cursory reading of Section 2(16), the definition, it would be clear that the words " means " and " includes " both are used. These are the two forms of interpretation clause usually employed. In the first, where the word defined is stated to " mean" so and so, the definition is explanatory and prima facie restrictive. In the second, where the word defined is declared to " include " so and so, the definition is extensive,23. Applying this principle to the definition of the term " Commissioner ", it will be plain that the first part when it states that the Commissioner means a person, etc., is explanatory and is prima facie restrictive. In other words, " Commissioner ", means a person appointed as such and no one else. The second part where it is declared that it " includes " a person, etc., it is extensive. In other words, the word "Commissioner" is extended to include Additional Commissioner also. What follows is that the term " Commissioner" must be construed as comprehending not only the Commissioner appointed as such but also includes the Additional Commissioner appointed as such.24. It is perhaps useful to refer here to Section 116, according to Clause (c) of which Commissioners of Income Tax and Additional Commissioners of Income Tax are one of the classes of Income Tax authorities for the purposes of the Act, And Section 117 empowers the Central Government to appoint Commissioners of Income Tax and Additional Commissioners of Income Tax. Though the two officers are different and can be appointed differently, the definition of the "Commissioner" for the purpose of brevity uses the single word " Commissioner " which means and includes Commissioner as well as Additional Commissioner.25. What then is the meaning of the word " Commissioner " used in Section 130(2) of the Act ? Ordinarily, the term would carry the same meaning as is given to it in the definition clause. But, if the intention of the legislature in enacting Section 130 and using the term "Commissioner" therein is found to be different, that is to say, that it intended to use the term confining its meaning only to the Commissioner appointed as such, then that intention obviously will control the meaning of the term " Commissioner " notwithstanding its definition in Section 2(16) of the Act.26. The first thing which immediately leaps to the eye on a reading of Section 130 is that the section applies only to a case " in relation to an assessee ". The first sub-section describes who shall be the Commissioner referred to in any provision of the Act in respect of any function to be performed by him " in relation to an assessee ". It states that in a case where only one Commissioner has jurisdiction over such assessee, the Commissioner would be that Commissioner who has such jurisdiction. In a case, however, where two or more Commissioners have concurrent jurisdiction over such assessee, then the Commissioner will be that person who is empowered to perform such function by the Board. What is clear is that wherever there is a single Commissioner, that is to say, there is no other Commissioner or Additional Commissioner, then the Commissioner would perform all the functions of a Commissioner in relation to an assessee. But, wherever there are two or more Commissioners having concurrent jurisdiction, then the Board will empower one of them, whether Commissioner or Additional Commissioner, to perform such function. So far as Sub-section (1) is concerned, it presents no difficulty in understanding its purpose.27. Sub-section (2) is expressly made subject to the provisions of subsection (1). Its purpose is restricted to five sections mentioned therein which includes Section 256 with which we are concerned. It states that the word " Commissioner" used in those sections shall be the Commissioner having for the time being jurisdiction over the assessee. Subsection (2) also is applicable to a case " in relation to an assessee ". What it means is that, subject to what is stated in Sub-section (1) for the purposes of Section 256, the Commissioner, who in relation to an assessee has a jurisdiction over him, shall exercise the function postulated by those sections including Section 256.28. Now, the sections referred to in Sub-section (2) relate to some of the most important powers of the Commissioner. Under Section 253(2) the Commissioner is empowered to direct the Income Tax Officer to appeal to the Appellate Tribunal from an order passed by the Appellate Assistant Commissioner. Section 254(3) requires the Appellate Tribunal to send a copy of any order passed under that section to the Commissioner.29. The Commissioner can ask under Section 256 on behalf of the revenue for a reference to the High Court from an order of an Appellate Tribunal. Under Section 263 he may revise any order passed by the Income Tax Officer which is prejudicial to the interests of the revenue and under Section 264 he can revise any order passed by any authority subordinate to him.30. If the scheme of Section 130 is borne in mind, it will not be difficult to postulate that even in reference to the sections mentioned in Sub-section (2) a situation may arise where two or more Commissioners are found to have concurrent jurisdiction over an assessee. It is to resolve such a situation that Sub-section (2) is made subject to Sub-section (1). The words "the Commissioner having for the time being jurisdiction over the assessee" may involve more than one Commissioner and, therefore, the Board will have to determine as to who the Commissioner would be to have the jurisdiction over such an assessee.31. If this understanding of the section is correct, then it would be clear that Section 130 applies to cases " in relation to an assessee ". The whole section, therefore, would be applicable only to cases in relation to an assessee over whom the Commissioner has jurisdiction and in case multiple authority is found to have jurisdiction over such assessee, the Board is empowered to designate a particular Commissioner to perform the duties in relation to the sections mentioned in Sub-section (2) and in all other cases determine the Commissioner who would discharge the duties under the relevant sections under Section 130(1)(b). It will be plain that the legislative problem with which Section 130 is concerned, is cases " in relation to an assessee ". Sub-section (1) applies to all other provisions under which the Commissioner is expected to perform his duties in relation to an assessee. Sub-section (2) applies to the duties of the Commissioner under the specified five sections. Since Sub-section (2) is made subject to Sub- section (1), the power of the Board under Sub-section (1) can be exercised in a case arising under Sub-section (2) also. There is, therefore, no difficulty in giving the same extended meaning to the word " Commissioner " appearing in both the sub-sections of Section 130. That word would not only mean Commissioner as such but also Additional Commissioners.32. The Tribunal has stated that such a construction would produce absurd results, but nowhere what those absurdities would be are mentioned. The learned advocate for the respondent could not point out as to what those absurdities would be. We can see nothing absurd in such a construction.33. We are fortified in this view by a decision of the Delhi High Court in National Agricultural Co-operative Marketing Federation Ltd. v. Central Board of Direct Taxes,  84 ITR 376 (Delhi).34. The only reason canvassed before us for giving a restricted meaning to the term " Commissioner " was in reference to Clause (a) of Sub-section (1). We do not, however, find any valid reason because of Clause (a) to ascribe a restricted meaning to that term. Both under Clause (a) of Sub-section (1) and Sub-section (2) a single Commissioner may have power over an assessee. Likewise, in relation to an assessee, more than one Commissioner may have power. These situations in relation to an assessee are met by Section 130. There are no words which would compel us to give a restricted meaning to the word " Commissioner" appearing in the section.35. It is, however, pertinent to note that the instant case is not " in relation to an assessee " so as to attract the provisions of Section 130. The distinction between Section 130 and Section 121 must be kept in view. Otherwise, one is likely to go wrong. While Section 130 is applicable to a case in relation to an assessee, Section 121 applies in respect of areas or persons or classes of persons or of incomes or classes of income or cases or classes of cases.36. Sub-section (1) of Section 121 empowers the Board to give directions as to how the Commissioners shall perform their functions in respect of such areas or of such persons or classes of persons or of such incomes or classes of income or of such cases or classes of cases. This sub-section, therefore, if the Board so directs, would determine the jurisdiction of the Commissioners in relation to the subjects mentioned therein. According to that provision, a Commissioner may be appointed to head the Income Tax administration of any specified area, usually a State, sometimes even a district, or he may be appointed as a Commissioner without any specific territorial jurisdiction, to deal with such persons, incomes or cases or classes of persons, incomes or cases, as the Board may direct under Sub-section (1).37. Sub-section (2) empowers the Board to specify who shall be the Commissioner by general or special order in writing where under the directions issued under Sub-section (1) two or more Commissioners have been assigned the same area or the same persons or classes of persons or the same incomes or classes of income or the same cases or classes of cases as they shall have according to that provision concurrent jurisdiction. Such specification would be made for the distribution and allocation of the work to be performed.38. What is clear is that Section 121 not only empowers the Board to appoint a Commissioner for an area, etc., as indicated above, but also has power to distribute and allocate the work to be performed where more than one Commissioner shall have concurrent jurisdiction over the same area or the same persons, etc., as mentioned above. Section 121, therefore, is wider in its amplitude and addresses itself altogether to a different legislative problem. Section 121 does not apply to a case " in relation to an assessee " because a specific provision almost on similar lines is made in Section 130. Thus, the two legislative problems, one under Section 121 and the other under Section 130, have been differently provided for. It would be useful to avoid confusion between these two provisions. They may be similar bat are designed to meet two different legislative problems. They neither overlap nor create any impediment to the interpretation of either of the sections. The word " Commissioner " used in Section 121 is clearly used keeping in view the extended definition and includes in its embrace an Additional Commissioner also. No reason could be pointed out in the course of arguments as to why the term " Commissioner " should be understood restrictively.39. That this interpretation of ours of the said two sections is correct gathers sufficient strength from the aims and objects mentioned at the time when the definition in Section 2(16) was amended along with other allied provisions. The objects are stated to be as follows :" 32. The field organisation of the Income Tax department is, at present, organised into territorial charges with one or more Commissioners of Income Tax at the head. Each Commissioner is assisted by several Inspecting Assistant Commissioners of Income Tax who supervise and control the work of the Income Tax Officers assigned to their charge. The jurisdiction of the Commissioners of Income Tax is laid down by the Board, and, within their respective jurisdictions, they also perform the functions of Commissioners of Wealth-tax and Gift-tax as also Controllers of Estate Duty. In recent years, the functions of the Commissioner of Income Tax have increased enormously both in the technical sphere, partly statutory and partly non-statutory, and on the administrative side, with the result that the present strength of Commissioners is found to be inadequate for the timely performance of all these functions.""33. With a view to ensuring greater attention to the functions of Commissioners of Income Tax, without fragmenting their charges into non-viable units, and enabling them to devote special attention to problem areas, such as accumulation of assessments and arrears of taxes, tax evasion, survey, and the proper and efficient management of their charges, Government have created a new cadre of Additional Commissioners on a lower scale of pay, to take over some of the statutory and non-statutory functions of Commissioners of Income Tax and thereby release senior officers for more important, administrative and managerial duties. It is accordingly proposed to include Additional Commissioners among the categories of Income Tax authorities. These Additional Commissioners will have the same status and functions under the statute as Commissioners of Income Tax. The Income Tax Act already allows distribution and allocation of work among Commissioners of Income Tax on the functional basis. It will be open to the Central Board of Direct Taxes to assign to more than one Commissioner, including Additional Commissioner, concurrent jurisdiction over the same area or persons or classes of persons or incomes or classes of incomes or cases or classes of cases, and to distribute and allocate the work among these Commissioners and Additional Commissioners on the functional basis. It is being specifically provided that where such concurrent jurisdiction over an assessee is assigned to two or more Commissioners (including Additional Commissioners), the Commissioners competent to perform any function in relation to such assessee will be the Commissioner (or Additional Commissioners) to whom such function has been assigned under the order of the Board."40. Notification No. S.O. 2162 Mated May 29, 1970, was issued in exercise of the powers conferred by Section 121(1) of the Act by the Central Board of Direct Taxes. According to that notification, Additional Commissioners of Income Tax specified in column (3) of annexure A will have concurrent jurisdiction along with the Commissioner of Income Tax specified in column (2) of annexure "A". And they will perform all or any of the functions performed by the respective Commissioners of Income Tax in respect of the jurisdiction vested in them under the Board's notification issued from time to time.41. Serial numbers 1 and 2 of annexure "A" relate to Hyderabad-34. There are two Commissioners for Andhra Pradesh 1 and 2 and there are two Additional Commissioners of Income Tax for A.P.-1 and A.P.-2.42. The other notification with which we are concerned is notification No. S.O. 3147 dated June 19, 1971. That notification took effect from June 21, 1971. In partial modification of Board's notification No. 87 dated May 29, 1970, the Central Board of Direct Taxes has issued the said notification under Section 121(1) of the Act. According to that notification " the Commissioners of Income Tax will not, and the Additional Commissioner of Income Tax will, perform the functions specified in the annexures ".43. Clause 3 of the annexure reads :44. "All work relating to second appeals before the Income Tax Appellate Tribunal, references and writ petitions before the High Court and Supreme Court and any other proceedings before these authorities except prosecution proceedings and tax recovery proceedings."45. What is evident is that with effect from June 21, 1971, it is the Additional Commissioners who are required to perform the functions mentioned in clause 3 of the annexure and Commissioners have been precluded from performing the same.46. The question then is whether this notification is ultra vires of Section 130 of the Act as is held by the Tribunal. With respect, we do not think that the notification in any manner is inconsistent with any part of Section 130. It is true that the notification is issued under Section 121. Nevertheless, if it contradicts with any other statutory provision of the Act including Section 130, it can be held as ultra vires of the Act. We do not, however, think that any of the two notifications mentioned above is in conflict with any part of Section 130. The Tribunal, therefore, was in error in holding that the notification dated June 19, 1971, is ultra vires of Section 130.47. It was then contended that even if it is held that the said notification is not bad, even then the annexure to the said notification does not authorise the Additional Commissioner of Income Tax to file an application under Section 256 before the Appellate Tribunal.48. We have already referred to the notification of June 19, 1971. Clause (3) of that notification should not leave anyone in doubt that the Additional Commissioner has been authorised to file an application under Section 256 of the Act. The language of the said clause denotes clearly its width and brings out the intention of the author in bold relief that the Additional Commissioners have been conferred with wide powers with a view to relieve the burden of the Commissioners. Even if it is held that " all work relating to second appeals " would not take in an application for reference against an order passed in a second appeal by the Tribunal, even then " all work relating to references " would undoubtedly take within its fold an application under Section 256. It could not be doubted that in order to have a reference before the High Court, it is necessary to file an application under Section 256 and get the matter referred to the High Court. That being an essential step for a reference before the High Court, it must be held that an application to refer is a work relating to the reference. That apart, the words " any other proceedings before these authorities " would certainly include a proceeding under Section 256 before the Income Tax Appellate Tribunal. No reason is shown as to why such an application cannot fall within Clause (3) of the notification in spite of the very wide language of that clause. We are satisfied that the notification confers powers on the Additional Commissioner to file an application under Section 256 of the Act. The Tribunal obviously went wrong in construing the notification and was in error in rejecting the application on the ground that the Additional Commissioner was not competent to file such an application.49. The next submission was that since the Additional Commissioner nomine was not a party to the appeal before the Tribunal, he could not file an application under Section 256. When once it is found that the term "Commissioner" includes Additional Commissioner and when it is clear that it is the Additional Commissioner who can file such application, the application cannot be rejected on the ground that he was not competent to file the application. The Commissioner admittedly was a party with the result that the Additional Commissioner performing the duties of Commissioner must be considered a party and is, therefore, competent to move the Tribunal for a reference.50. It was finally argued that the Additional Commissioner while performing the functions of a Commissioner should designate himself and sign as a Commissioner. As the application was not signed in that manner, it was not maintainable. We are unable to agree with this contention. The Additional Commissioner being quite competent to present such an application and since he in the eye of law is included in the definition of "Commissioner", the application signed in the manner in which it has been signed must be deemed to have been presented by a competent authority. In any case a defect in the description of a party could have been got amended as it was not detrimental to the proceedings under Section 256. We, however, hold that the application was properly signed and presented under Section 256.51. The Tribunal having misconstrued the position of law erroneously declined to entertain the application properly filed by a competent authority. The order of the Tribunal is plainly inconsistent with the law. In these circumstances, we would quash the impugned order of the Tribunal in R.A. 47/Hyd/1971-72 arising out of I.T.A. No. 6132 of 1968-69 by the issue of a writ of certiorari and direct the Appellate Tribunal to dispose of the application on its merits and in accordance with law. The petition is accordingly allowed with costs. Advocate's fee Rs. 250.Petition Allowed with costs.
"1973 (2) ALT 118" == "1975 (100) ITR 483,"