COMMISSIONER OF INCOME TAX Vs. RATHNAM NADAR K

JUDGEMENT

(1.) THREE questions have been referred for decision under section 66 (1) of the Indian Income-tax Act, 1922, two of them at the instance of the revenue, and one at the instance of the assessee. The question referred at the instance of the revenue are :

(2.) WHETHER, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee was entitled to the benefit of the substitution of the fair market price of the goodwill as on January 1, 1954 ?"

(3.) WE shall now deal with the question whether the preliminary objection on behalf of the revenue to the reference directed by this court at the instance of the assessee can be upheld. WE are of opinion that it ought to be. Under section 66 of the Act, either the assessee or the Commissioner may, by application in the prescribed form, require the Tribunal to refer any question of law arising out of an order under section 33(4) and the Appellate Tribunal shall draw up a statement of the case and refer it to the High Court. But, if on any application being made under sub-section (1) of section 66, the Appellate Tribunal refuses to state the case on the ground that no question of law arises, the assessee or the Commissioner, as the case may be, may apply to the High Court, and the High Court may, if it is not satisfied with the correctness of the decision of the Tribunal, require it to state a case refer it and, on such requisition, the Appellate Tribunal shall state the case and refer it and, on such requisition, the Appellate Tribunal shall state the case and refer it accordingly. It is under this provision that the assessee had applied to this court in T.C.P. No. 56 of 1965. The right of the assessee - we are not concerned in this case with the right of the Commissioner - under this sub-section arises only when he is served with a notice of refusal under sub-section, and such a notice of refusal can arise only on an application being made under sub-section (1) of that section. Under sub-section (1), as already noticed, the assessee in this case should have applied in the prescribed form, accompanied by a fee of Rs. 100 and required the Appellate Tribunal to refer to the High Court any question of law. The assessee in this case did not apply under section 66(1) to the Tribunal. The application was not in the prescribed form, nor was it accompanied by the fee of Rs. 100. The assessee required a question of law to be referred only in his counter statement to the application made by the Commissioner. The requirement of an application under section 66(1) by him before the assessee can apply under section 66(2) is not a mere technical formality. The importance of an application in the prescribed form within the prescribed period accompanied by the prescribed fee is to ensure that no party should be given an opportunity to raise any question as and when it pleases and on any occasion as it pleases but that a question can be raised only when certain condition are satisfied. Apparently, when the order under section 33(4) was served on the assessee, the assessee did not consider that any question of law, which had to be referred to the High Court, arose.