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Shrimant Govindrao Narayanrao Ghorpade Vs. Commissioner of Income-tax, Bombay South - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberIncome-tax Reference No. 33 of 1960
Judge
Reported in[1963]48ITR54(Bom)
ActsIncome Tax Act, 1922 - Sections 2(2), 30, 30(2), 40, 41(1) and 41(2); Limitation Act, 1908 - Sections 6
AppellantShrimant Govindrao Narayanrao Ghorpade
RespondentCommissioner of Income-tax, Bombay South
Appellant AdvocateN.A. Palkhivala, Adv.
Respondent AdvocateG.N. Joshi, Adv.
Excerpt:
.....wards - validity of present application challenged by department on ground that applicant was not assessee and assessment was made in name of court of wards - also that there was delay in filing application which cannot be condoned - as per section 30 applicant was assessee - service of notice of assessment to court of wards does not lead to conclusion that applicant was not assessee - delay in filing application condoned as applicant had no knowledge of notice of demand - reference accordingly answered. - - i never knew anything about these assessments or failure to appeal against the same, on the part of my guardian, the collector and court of wards, kolhapur, prior to the aforesaid date, viz. it has also to be observed that the appellant admittedly attained majority on june 23,..........(1) of section 66 of the indian income-tax act (herein after referred to as the act). the applicant-assessee is the present jagirdar of ichalkaranji of the former kolhapur state. he attained majority on 23rd june, 1956. during his minority his estate was under the management and superintendence of the court of wards, the collector of kolhapur being the court of wards. we are here concerned with five assessment years 1950-51 to 1954-55 which fell during the minority of the applicant. the assessment orders in respect of these years were under section 23(3) of the act some time in the year 1954-55. on 4th april, 1957, the applicant's estate was released from the management of the court of wards. on 23rd april, 1957, the applicant filed five appeals before the appellate assistant.....
Judgment:

Tambe, J.

1. This is a reference at the instance of the applicant-assessee under sub-section (1) of section 66 of the Indian Income-tax Act (herein after referred to as the Act). The applicant-assessee is the present jagirdar of Ichalkaranji of the former Kolhapur State. He attained majority on 23rd June, 1956. During his minority his estate was under the management and superintendence of the court of wards, the Collector of Kolhapur being the court of wards. We are here concerned with five assessment years 1950-51 to 1954-55 which fell during the minority of the applicant. The assessment orders in respect of these years were under section 23(3) of the Act some time in the year 1954-55. On 4th April, 1957, the applicant's estate was released from the management of the court of wards. On 23rd April, 1957, the applicant filed five appeals before the Appellate Assistant Commissioner against the assessment orders for the aforesaid five years. Along with the memo of appeals the applicant filed an affidavit explaining the delay in the matter of filing the appeals. After stating that he attained majority on 23rd June, 1956, and that his estate was restored to him on 4th April, 1957, under the orders of the Government, he further stated :

'That was for the first time on April 4, 1957, I came to know that certain assessments were made on me by the Income-tax Officer, Kolhapur, for the assessment years 1950-51 to 1954-55 (both inclusive) and that the Collector and court of wards, Kolhapur, my guardian, had filed to file appeals against those assessments within the prescribed time. I never knew anything about these assessments or failure to appeal against the same, on the part of my guardian, the Collector and court of wards, Kolhapur, prior to the aforesaid date, viz., the 4th day of April, 1957.

That immediately after 4th April, 1957, I have taken all the necessary and adequate steps to protect my rights by preferring appeals against all the aforesaid assessments before then ?'

2. No counter-affidavit was filed by the department challenging the truth of the statements continued in the aforesaid affidavit of the applicant. At the hearing of the appeals on behalf of the department two contentions were raised : firstly, that the applicant was not the assessee but the assessee was the court of wards; the appeals filed by the applicant, therefore, were incompetent, not having been filed by an assessee and, secondly, that the delay should not be condoned. The Appellate Assistant Commissioner accepted the first contention of the department and held that the applicant was not the person, who was entitled to file an appeal. In upholding the second contention of the department, the Appellate Assistant Commissioner has only observed the following sentence in his order :

'Thus so far as the appeal petitions are concerned, they are very much out of time and as there is no sufficient cause the late (delay) cannot be condoned.'

3. The applicant took a second appeal before the Tribunal challenging the aforesaid findings of the Appellate Assistant Commissioner. A further contention appears to have been raised on behalf of the department that no appeal lay to the Tribunal against the Appellate Assistant Commissioner's refusal to admit the appeal on grounds of limitation. The Tribunal held that an appeal lay to the Tribunal against the Appellate Assistant Commissioner's refusal to admit an appeal on grounds of limitation. It held that the property of the applicant had vested in the court of wards, that the tax liability was on the court of wards under sub-section (1) of section 40 of the Act, and that the assessee was the court of wards and not the applicant. The applicant therefore was incompetent to file the appeals.

4. On the question of contention of delay, the Tribunal observed :

'Even otherwise, section 6(1) of the Limitation Act has no relevance because it is not applicable to 'appeals'. Therefore, the appellant had no right to file an appeal after the cessation of the disability. It has also to be observed that the appellant admittedly attained majority on June 23, 1956; therefore, it is difficult to believe his words in the affidavit that he came to know of the assessments on the 4th April, 1957, for the first time and that he never knew anything about these assessment or the guardian's failure to appeal against them prior to 4th April, 1957.'

5. In this view of the matter the appeals were dismissed by the Tribunal.

6. On an application made by the applicant, the Tribunal, after drawing up a statement of case, has referred the following six questions of law to this court :

'(1) Whether in the facts and circumstances of the case the applicant was the assessee and entitled to prefer appeals before the Appellate Assistant Commissioner in respect of the assessment years 1950-51 to 1954-55

(2) Whether in the facts and circumstances of the case the assessments were made under section 40(1) of the Act

(3) Whether in the facts and circumstances of the case, assuming the assessments were made on the court of wards, the applicant is barred from preferring the appeals

(4) Whether in the facts and circumstances of the case the appeals were filed in time

(5) Whether in the facts and circumstances of the case there is any material for the Tribunal to reject the applicant's statement in the affidavit that he came to know about the assessments on April 4, 1957, when the superintendence and control over his estate was removed ?'

(6) Whether in the facts and circumstances of the case the Tribunal exercised its discretion judicially in not condoning the delay ?'

7. Even though six questions have been referred to this court, the question that fall for consideration are only two-fold : in the first instance, whether applicant is factually an assessee in the sense that the person against whom an assessment order has been made or in the alternative whether, at any rate, on the facts and in the circumstances of the case, the applicant is an assessee within the meaning of section 30 of the Act having a right of file appeals; and, secondly, whether the Tribunal had any material before it to reject the applicant's statement in the affidavit that he (the applicant) came to know about the assessment on April 4, 1957, when the superintendence and control over his estate was removed.

8. Mr. Palkhivala appearing for the applicant contends that, on the material on record, the applicant is a person whom assessment orders had been made, he is factually the assessee and, therefore, in that capacity he has a right to file appeals. It is also his contention that, even assuming that the position is not so, the assessment proceedings taken were in respect of his income and, therefore, he was an assessee within the meaning of section 30 of the Act entitled to file an appeal.

9. Mr. Joshi, appearing for the revenue, on the other lands, urged that the court of wards is the assessee as the tax was payable by the court of wards. Notice of assessment proceedings were served on it, returns were filed by it and even the notice of demand was served on it and, therefore, it is the court of wards alone that could have filed the appeals and not the applicant. Referring us to section 4, 5, 23 and 37 of the Court Wards Act, Mr. Joshi further argued that the applicant was a disqualified person and, therefore, the only person, who was liable to pay tax, was the court of wards. Consequently, on this ground alone the court of wards is the assessee.

10. It may be stated in fairness to Mr. Joshi that he frankly conceded that the assessment proceedings taken against the court of wards were not under section 40(1) of the Act as is assumed by the Tribunal. According to him the proceedings against the court of wards were taken under section 41 of the Act and the finding of the Tribunal that the property of the applicant vested in the court of wards was not the true legal position.

11. The Tribunal has included the assessment order of all the five years as part of the statement of case and a perusal of these five orders of sufficient to show that the person against whom assessment orders were made was the applicant and not the court of wards. It is not necessary to reproduce the material parts of all the five assessment orders. They are more or less identical in terms. It would be sufficient, therefore, to refer to the assessment order of only one year and we will refer to the assessment order of 1950-51. Now, in this assessment order, the name of the assessee given is 'Shri Govindrao alias Abasaheb Ghorpade minor jagirdar of Ichalkaranji, Guardian Court of Wards, Kolhapur.' The status of the assessee is shown as 'individual'. The section under which the assessment is made is shown to be section 23(3). The opening sentence of the assessment order is : 'The assessee is the present jagirdar of Ichalkaranji.' That being the position on record, there cannot be doubt that the contention of Mr. Palkhivala that the applicant is really the assessee in the sense that he is the person against whom the assessment orders were made is well founded.

12. The argument of Mr. Joshi, however, was that the Income-tax Officer may have shown the applicant as a person against whom the assessment order was made but that was not the correct legal position. In law, it was only the court of wards that was liable to pay the tax and, therefore, it must be held that it was the court of wards against whom the assessment orders have been made.

13. Turning to section 41 of the Act, it does not appear that the position contended for by Mr. Joshi is the correct legal position. Sub-section (1) enables the Income-tax Officer to levy upon and recover the tax from the court of wards in the same manner and to the same amount as would be leviable and recoverable from the person on whose behalf such income, profits or gains are receivable. It shows that sub-section (1) of section 41 only enables the revenue to levy and recover the tax from the court of wards. That does not, however, mean that it is the court of wards and the court of wards alone which can be proceeded against and not the ward. Sub-section (2) of section 41 does not leave any doubt in the matter. It provided :

'Nothing contained in sub-section (1) shall prevent either the direct assessment of the person on whose behalf income, profits or gains therein referred to are receivable, or the recovery from such person of the tax payable in respect of such income, profits or gains.'

14. It is clear from the provisions sub-section (2) of section 41 that it is perfectly competent to the Income-tax Officer to proceed against, levy and recover the tax from the ward of the court of wards if the Income-tax Officer chooses to do so. The other circumstances in support of his contention to which Mr. Joshi referred us were that a notice under section 22 was served on the court of wards; the return was filed by the court of wards and the notice of demand was also served on the court of wards. In our opinion, these circumstances are not decisive and are hardly of any assistance to the revenue in the face of a clear statement made by Income-tax Officer in his order that the assessee was the applicant and view of the fact that in the assessment order the applicant has been shown to be the assessee and not the court of wards. The court of wards in shown only as a guardian of the applicant. As already stated, at the material time the applicant was a minor. It is not in dispute that the court of wards was his guardian. Naturally, therefore, notice under section 22 of the Act would be served on the guardian of the minor assessee. The court of wards, who is the guardian of the minor assessee, would file the return and similarly notice of demand would also be served on the court of wards. It would be seen from the provisions of section 27 that it empowers the Income-tax Officer to serve notices of demand not only on the assessee but also on any other person, who is liable to pay tax. The estate of the applicant was under the management of the court of wards. Naturally, therefore, the court of wards was under a liability to meet lawful demands on the estate of the minor. The facts, therefore, that the notice of demand was served by the Income-tax Officer on the court of wards cannot be taken as a decisive factor leading to the conclusion that the assessee was the court of wards.

15. Turning to the provisions of the Court of Wards Act, section 4 thereof empowers the court of wards to assume superintendence of property of disqualified land-holders and pension-holders after following a certain procedure mentioned therein. Section 5 enumerates the disqualified land-holders and pension-holders and minor land-holder is one of them. Section 23 enumerated the general powers of the court of wards and it empowers the court of wards either by itself or through a manager to do all such things requisite for the proper care and management of the property of which he assumes superintendence under the Act to the same extent as the owner would have done. Section 24 relates to the steps the court of wards has to take, etc. Section 25 relates to the payment of allowance for Government ward, his family and dependents. Section 26 provided the duties of the court of wards and enjoins a duty on him to manage the property diligently and faithfully for the benefit of the ward. Section 27 enumerates the disabilities of a Government ward and it provides :

'Except with the approval of the court of wards, a Government ward shall be incompetent to transfer or create any charge on, or interest in, his property or any part thereof (except such interest as may be created by a will made in accordance with section 38), or to enter into any contract which may involve him in pecuniary liability; and no suit shall be brought in any civil court whereby to charge any person upon any promise made after he has ceased to be a Government ward to pay any debt contracted during the period when he was a Government ward, or upon any ratification made after he has ceased to be a Government ward of any promise or contract made during the period aforesaid, whether there is or is not any new consideration for such promise or ratification.'

16. Sub-section (2) is not material. These are the sections to which our attention was drawn by Mr. Joshi. In none of these sections we find any prohibition restraining the Income-tax Officer from proceeding against the ward and assessee him to income-tax.

17. For reasons stated above, in our judgment, the applicant was the assessee against whom assessment orders had in fact been made by the Income-tax Officer and, therefore, the applicant had a right to file an appeal under section 30 of the Act.

18. We would, however, for the sake of argument, assume that the applicant was not the assessee against whom assessment orders had been made, but the court of wards was the person against whom assessment orders had been passed. Even then, in our opinion, on a true construction of section 30 of the Act, the applicant would have a right to file appeals against the aforesaid assessment orders. Section 30 confers a right on any assessee objecting to the income assessed, etc. Now, 'assessee' has been defined in sub-section (2) of section 2 of the Act in the following terms :

''assessee' means a person by whom income-tax or any other sum of money is payable under this Act, and included every person in respect of whom any proceeding under this Act has been taken for the assessment of his income or of the loss sustained by him or of the amount of refund due to him.'

19. It would be seen that the aforesaid definition of 'assessee' is wider in terms and is not confined to the person against whom an assessment order been made or who has been called upon by the department to pay the tax. It included every person in respect of whom any proceeding under this Act has been taken for the assessment of his income and also a person liable to pay tax. Section 41(2), to which we have already referred, fastens liability to pay tax on the applicant. The assessments relate to the income of the applicant. The fact that the court of wards has assumed superintendence and management of the estate cannot and does not have the effect of making the income of his estate that of the court of wards. We do not see anything repugnant in the subject or context of section 30 to understand the expression 'assessee' in section 30 in any other sense than defined in sub-section (2) of section 2 of the Act. On the other hand, it would be reasonable to hold that the person in respect of whose income an assessment order is made or under the Act held liable to pay the tax should have a right to appeal if he has any grievance about the assessment. Therefore, even if it is assumed that the assessment orders had been made against the court of wards, the applicant would be an assessee within the meaning of section 30 of the Act having a right to file the appeals.

20. For reasons stated above our answer to the first question would be that the applicant was the assessee and entitled to prefer appeals before the appellate Assistant Commissioner in respect of the assessment orders passed for the years 1950-51 to 1954-55.

21. Our answer to the second question would be that the assessments made were not under section 40(1) of the Act.

22. Our answer to the third question would be that, even assuming that the assessments were made on the court of wards, the applicant would be competent to prefer appeals.

23. Coming to the other question relating to limitation, it can at once be stated that the appeals are clearly barred by time. It is not in dispute that the period of limitation is 30 days and the appeals have been filed nearly after a lapse of two years. The contention which has been raised on behalf of the applicant that section 6 of the Limitation Act arrested the commencement of the period of limitation till the date of his attaining majority cannot be sustained on the terms of section 6 of the Limitation Act. That section has application to suits and applications for execution and has no application to appeals. Indeed Mr. Palkhivala had not reiterated that stand before us.

24. Our answer to the fourth question would be that the appeals were not filed in time.

25. It is next to be considered whether the delay in filing the appeals should have been condoned. Sub-section (2) of section 30 provides that the appeals shall ordinarily be presented within 30 days of the receipt of notice of demand but gives a discretion to the appellate authority to accept an appeal after the expiration of the said period if the appellate authority is satisfied that the appellant had sufficient cause for not presenting it within that period. It, therefore, follows that if an appellant contends before the appellate authority that the delay on his part in the matter of filing the appeal should be condoned and the appeal be accepted after expiration of the said period, it is the statutory obligation cast on the appellate authority to consider whether sufficient cause for not presenting an appeal within time has been shown by the appellant to entitle him to condonation of a delay.

26. In the present case the appellant had stated certain grounds for condonation of the delay and those grounds were that during the minority of the applicant his estate was under the management and superintendence of the court of wards; he had no knowledge of the assessment proceedings or the assessment orders or the service of notice o demand and he, for the first time, on 4th April 1957, when the management was handed over to him, knew the assessment orders had been issued for the five years and no appeals had been filed by the court of wards. On averment of these facts he claimed that delay in the filing of the appeals be condoned. It appears that at the argument stage reliance on the provisions of section 6 was also placed on behalf of the assessee and a contention raised that the period of limitation had not commenced to run till the appellant and attained majority. We have already dealt with the contention of the appellant relating to section 6 of the Limitation Act an due have also stated that there was no counter-affidavit filed by the department challenging the truth of the aforesaid statements averred by the applicant in his affidavit. However, in its order the Tribunal has observed :

'It has also to observed that the appellant admittedly attained majority on June 23, 1956; therefore, it is difficult to believe his words in the affidavit that he came to know of the assessments on the 4th April, 1957, for the first time and that he never knew anything about these assessments or the guardian's failure to appeal against them prior to 4th April, 1957.'

27. The order of the Tribunal in this respect appears to be found merely on surmises. The applicant has stated certain facts on oath. Those facts have not been controverted by any counter-affidavit by the department. In these circumstances it can hardly be said that the aforesaid conclusion reached by the Tribunal is founded on any material on the record. In our opinion, therefore, the answer to the fifth question would be that these was no material before the Tribunal to reject the applicant's statements in the affidavit that the came to know about the assessments on 4th April, 1957, when the superintendence and control over his estate was removed.

28. Turning to the sixth question, in our opinion, it does not appear to have been happily worded. The Tribunal had not to condone any delay in respect of the appeals filed before it. The appeals filed before it were undisputedly in time. The question that fell for consideration before the Tribunal was whether the Appellate Assistant Commissioner should have condoned the delay or not or, in other words, the question that fell for consideration before the Tribunal was whether the Appellate Assistant Commissioner was justified in refusing to condone the delay. We would, therefore, reframe the sixth question as under :

'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the Appellate Assistant Commissioner's order refusing to condone the delay in the appeals filed by the applicant before him (Appellate Assistant Commissioner).'

29. As already stated, the ground on which the decision of the Appellate Assistant Commissioner in this respect has been sustained by the Tribunal, for reasons stated above, cannot be sustained. We have also stated that it is the duty of the Appellate Tribunal to consider whether sufficient ground for getting the delay condoned had been made out or not and that aspect of the case does not appear to have been considered either by the Appellate Assistant Commissioner or by the Tribunal.

30. Mr. Joshi, however, contends that at the material time the assessee was minor, the court of wards was his guardian; and a notice to the court of wards was a notice to the applicant. Consequently, the knowledge of the court wards would be the knowledge of the applicant and it must be held that, right from the date the notice of demand were served on the court of wards, the applicant had knowledge of the fact that notices of demand had been served and in this view of the matter it must be held the there was no sufficient cause for condoning the delay in filing these appeals.

31. We do not propose to express ourselves on this contention raised by Mr. Joshi. Suffice it to say that the contention has not been raised in this from either before the Appellate Assistant Commissioner or the Tribunal. We would, therefore, not be justified in proceeding to decide this contention in this reference. The department, if so advised, can raise this contention when the matter goes to the tribunal or the Appellate Assistant Commissioner. All that we say at this stage is that proper attention had not been given to the decision of the question, which fell for consideration before the Tribunal, viz., whether sufficient ground had been made out by the applicant entitling him to condonation of delay. It will not be possible for us, therefore, to answer question No. 6 either way.

32. Our answers to the questions referred to us would be as indicated above. The department shall pay the costs of this reference to the applicant.

33. Question answered accordingly.


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