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Income Tax Ordinance

Justifying 'question of hardship' in departing from plain provision

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26th-Oct-2019       
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High Court Division :
(Special Statutory Jurisdiction)
Borhanuddin J
Sardar Md Rashed Jahangir J
 Equity Valuation
Research & Distribution Ltd…….Applicant
vs
 Commissioner of Taxes,
 Taxes Zone-7, Dhaka………..Respondent
Judgment
April 18th, 2019
Income Tax Ordinance (XXXVI of 1984)
Section 160
The only jurisdiction of the High Court Division in a reference application is to answer the questions of law that are placed before him. Question of hardship cannot justify the court in departing from plain provision of the statute …… (16)
Osman Gani Mondal vs Mainuddin Ahmed, 27 DLR (AD) 61 ref.
MA Hannan, Advocate-For the Applicant.
Nurun Nahar, AAG-For  the respondent.
Judgment
Borhanuddin J : The applicant preferred instant reference application under Section 160 of the Income Tax Ordinance (hereinafter stated "the Ordinance") referring following questions of law:
a)    Whether in the facts and circumstances of the case, the Taxes Appellate Tribunal, Division Bench-2, Dhaka is justified to reject the appeal which shall be deemed to have been allowed under fourth proviso to Section 159(6) of the Income Tax Ordinance as the said appeal had not been disposed of within the period of one year from the end of the year in which the said appeal was filed.
b)    Whether in the facts and circumstances of the case, the Taxes Appellate Tribunal, Division Bench-2, Dhaka was justified to reject the appeal on the ground of non deposit of taxes under Section 153(3) without applying the provision of Section 158(2) independently in a situation when the Appellant paid the tax on the basis of return under Section 74 before preferring of the appeal before the Tribunal. (sic)
2.    Brief facts are that the applicant company as assessee submitted it's return for the assessment year 1998-1999 showing total income at Taka 83,071. After hearing representative of the assessee and perusing submitted papers/documents, the Deputy Commissioner of Taxes (hereinafter called as "the DCT") computed total income of the assessee at Taka 26,90,284.
3. Against order of the OCT, the assessee filed appeal before the Commissioner of Taxes (Appeal) [hereinafter called "the CT (A)"]. Upon hearing representative of the assessee and perusing relevant papers/documents, the CT(A) rejected the appeal along-with appeal filed by the assessee against tax determining order passed by the DCT for assessment year 1997-98 by a consolidated order dated 31-12-2000 holding that:
 ÒAvcxjvaxb 1997-98 Ges 1998-99 Ki erm‡i AvcxjKvix †Kv¤úvbxi wiUvb© Avq Uvt 6,32,284 Ges Uvt 80,071 cÖ`k©b Kwiqv†Q hvnv‡`i Dci cwi‡kva‡hvM¨ ¯^xK…Z `vq `uvovq h_vµ‡g Uvt 2,52,914 Ges Uvt 32,080 | AvqKi Aa¨v‡`‡ki 153 (3) avivi kZ© Abyhvqx  ¯^xK…Z `vq cwi‡kva c~e©K Avcxj `v‡qi Kwi‡Z nq | wKš' GB †ÿ‡Î AvcxjKvix ¯^xK…Z `vq cwi‡kvac~e©K Avcxj `v‡qi K‡ib bvB | AvcxjKvix KZ…©K Avcxj †g‡gv‡iÛv‡gI Ki cwi‡kva Kiv nq bvB ewjqv D‡jøL Kiv nBqv‡Q | GgbwK Acxj ïbvbx†Z Dcw¯'Z cÖwZwbwaI   ¯^xK…Z `vq cwi‡kv‡ai †Kvb cÖgvY †ck/Dc¯'vcb Kwi‡Z cv‡ib bvB | Bnv nB‡Z my¯úófv‡e cÖZxqgvb nq †h, Avcxj gvgjv 2wUi †ÿ‡Î AvqKi Aa¨v‡`‡ki 153(3) avivi kZ© c~iY nq bvB weavq Avcxj gvgjv 2wU cÖZ¨vL¨vb Kiv nBj|Ó
4. Being aggrieved, the assessee preferred appeal in the Taxes Appellate Tribunal. After hearing representative of both the appellant and respondent, Tribunal dismissed the appeal vide order dated 5-11-2002 and thereby affirmed findings of the CT (A),
5. Having aggrieved by and dissatisfied with the order, the assessee appellant as applicant moved before this court under Section 160 of the Ordinance referring questions of law as stated above.
6. Mr MA Hannan, learned advocate appearing for the applicant submits that though the CT (A) rejected appeal of the applicant for non-compliance of legal requirement under Section 153(3) of the Ordinance but the applicant filed appeal in the Tribunal complying legal requirement under Section 158(2) of the Ordinance as such the Tribunal was under obligation to decide the matter on merit and thus committed illegality in passing the impugned order. He also submits that under Sections 158 and 159 of the Ordinance Tribunal is an independent authority and, as such, dismissing the appeal without deciding the issue on merit is violative of the provisions of the Ordinance. He further submits that during pendency of the appeal before Tribunal, a new proviso inserted with Section 159(6) of the Ordinance providing that sub-Section (6) of Section 159 of the ordinance shall be applicable for the appeal filed by an assessee before the last day of July, 2002 and if Tribunal fails to make an order within one year from the end of the year in which appeal was filed as such, order passed by the Tribunal on 5-11-2003 after expiry of one year from the date of filing the appeal is violative of Section 159(6) of the Ordinance. Learned Advocate prays to answer questions of law in affirmative i.e. in favour of the assessee.
7. On the other hand, Ms. Nurun Nahar learned Assistant Attorney General by filing an affidavit-in-reply submits that CT (A) rejected appeal of the assessee-applicant for not complying statutory requirement and Tribunal affirmed order of the CT (A) in accordance with law as such questions of law referred by the assessee are required to be answered in negative, in favour of the respondent.
8. Heard learned advocate for the applicant and learned Assistant Attorney General for the respondent.
9. Admittedly, the assessee filed appeal before the CT (A) against order of the OCT without complying statutory requirement under the Ordinance.
10. Section 153(3) of the Ordinance provides statutory requirement for filing appeal against order of the OCT and inspecting Joint Commissioner in the following manner:
"153 (3).  No appeal under this Section against any order of assessment shall lie, unless [five per cent] of the lax payable on the basis of such assessment or the tax payable on the basis of return under Section 74, whichever is higher, has been paid before filing the appeal".
11. It is evident that the applicant did not pay admitted liability before filing of the appeal which is also admitted by assesse's representative present before the CT (A) at the time of hearing. Tribunal upon hearing representative of the assessee and perusing record affirmed order passed by the CT (A).
12. Section 153(3) start with the words "No appeal under this Section against any order of assessment shall lie" i.e. the statute mandates that if anyone aggrieved by the order passed by DCT desires to file appeal to the next higher forum prescribed by the ordinance has to comply legal requirement provides under sub-Section (3) of Section 153 before filing of the appeal. No doubt that the language of sub-Section (3) of Section 153 is mandatory one. Mandatory statues are those that require, as opposed to permit, a particular cause of action. Their language is characterized by such directive terms as "shall" as opposed to "may". A mandatory provision is one that must be observed, whereas a directory is optional. Mandatory is' absolutely demanded or required.
13. In the case of Osman Gani Mondal vs Mainuddin Ahmed, reported in 27 DLR (AD) 61, our Apex Court held:
"It is the cardinal rule of construction that when statutory restriction is couched in negative terms they are almost universally held to be mandatory."
14. In view of the provision of sub-Section (3) of Section 153 of the Ordinance, the CT (A) had no other alternative but to reject the appeal for non compliance of statutory requirement. Against said order of the CT (A), assessee moved before the Taxes Appellate Tribunal under Section 158 of the Ordinance.
15. Section 158 of the Ordinance prevailing at the relevant period is reproduced herein-under:
(1) An assessee may appeal to Appellate Tribunal if he is aggrieve/an order of-
a)    an Appellate Joint Commissioner [or the Commissioner (Appeals) the case may be] under Section 128 or 156.
(2) No appeal under sub-Section (1) shall against an order of the Appellate Joint Commissioner or the Commissioner (Appeals) as the case may be, unless
(a) the assessee has paid [ten per cent] of the amount representing the difference between the tax as determined on the basis of the order of the Appellate Joint Commissioner or the Commissioner (Appeals), as the case may be, and the tax payable under Section 74.
16. Learned advocate for the applicant tried to impress us that though the assessee failed to comply legal requirement in filing appeal before the CT (A) due to hardship but paid the tax payable under Section 74 in the Tribunal as such Tribunal was under obligation to decide the issue on merit. Admittedly assessee preferred appeal in the Tribunal against order of the CT (A) which was rejected for non compliance of legal requirement as such argument of the learned advocate is nothing but a fallacious one inasmuch as Tribunal on perusal of the record and hearing representative of the assessee found that the CT (A) rightly rejected the appeal for non compliance of legal requirement under Section 153(3) of the ordinance.  Argument advanced by the learned advocate that Tribunal could sent back the appeal to the CT (A) for disposal on merit does not hold water since there was no appeal pending before the CT(A) in view of the prohibition of sub-Section (3) of Section 153 of the Ordinance. In fact, question of law (b) referred by the applicant is not a question of law rather is a question of fact because of admittedly the assessee did not pay admitted liability under the provision of law and the Tribunal being the last fact finding forum on perusal of record found that the assessee presented appeal before the CT (A) without complying legal requirement under Section 153(3) of the Ordinance. Tribunal is the fact findings authority. A decision on fact of the Tribunal can be gone into by the High Court Division only if a question has been referred to it which says that finding of the Tribunal on fact  is perverse, in the sense that it is such as could not reasonably have been arrived at on the material placed before the Tribunal. In this case, there is no such question before this Division. Unless and until a finding of fact reached by the Tribunal is canvassed before the High Court Division in the manner set out above, the High Court is obliged to proceed upon the findings of fact reached by the Tribunal and to give an answer in law to the question of law that is before him. The only jurisdiction of the High Court Division in a reference application is to answer the questions of law that are placed before him. Moreover, question of hardship cannot justify the court in departing from plain provision of the statute.
17. The other question referred by the applicant relating to fourth provison of Section 156(6) is not relevant at all in this reference inasmuch as the proviso came into force from 1st July, 2002 through Finance Act, 2002 during pendency of the appeal filed by the applicant on in this case then also the period of disposal would be 14-5-2002 when the fourth proviso was not in exist. Though fourth proviso of Section 156(6) inserted on 1st July, 2002 through Finance Act, 2002 during pendency of the appeal but taking that advantage the applicant tried to mislead the Tribunal as well as this Division inasmuch as the appeal pending before the Tribunal against the order of rejection by the CT (A) for not complying legal requirement provided by law. By taking recourse of mere technicality, the assessee applicant successfully refrained from payment of income tax to the tune of Taka 12,37,513 for more than 20 years. Though under Section 160 of the Ordinance, function of this Division is advisory one but still to check this sort of tactics the taxing authority should vigilant in realizing the tax due to the assessee with fine or penalty as applicable under the Ordinance.
18. In the premises above, our answer to the referred questions of law are negative i.e. against the applicant and in favour of the respondent.
19. Since this reference application filed in the year 2004 relating to the assessment year 1998-99 taking recourse of mere technicality, we are inclined to dispose of the reference application with a cost of Taka 50,000 (Fifty thousands) which will be paid by the applicant to the Kidney Foundation Hospital and Research Institute Bangladesh, Plot No. 5/2, Road No.1, Section 2, Mirpur, Dhaka-1216, within 60 days from the date of receipt of this order and learned advocate for the applicant is directed to file affidavit in compliance after payment of the cost.
Registrar of the Bangladesh Supreme Court, High Court Division, is hereby directed to take necessary steps under Section 161(2) of the Income Tax Ordinance, 1984.

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