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Jagmohandas Gokaldas Vs. Commissioner of Wealth-tax, Bombay - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberMiscellaneous Application No. 114 of 1962
Judge
Reported in[1963]50ITR578(Bom)
ActsWealth Tax Act, 1957 - Sections 8, 9, 10, 11, 12, 23, 24, 24(6), 25, 25(1) and 25(I)
AppellantJagmohandas Gokaldas
RespondentCommissioner of Wealth-tax, Bombay
Appellant AdvocateS.P. Mehta, ;Y.S. Trivedi, ;U.T. Shah and ;S.J. Mehta, Advs.
Respondent AdvocateG.N. Joshi and ;R.J. Joshi, Advs.
Excerpt:
direct taxation - revision application - sections 8, 9, 10, 11, 12, 23, 24 and 25 of wealth tax act, 1957 - petitioner valued his assets adopting certain method - wealth-tax officer rejecting valuation put by petitioner and adopted different method to estimate value of assets - appeals failed and revision under section 25 (1) filed before respondent - revision was time barred - respondent had power to admit revision application filed beyond period of limitation on being satisfied that assessee was prevented by sufficient cause from making application within prescribed time - respondent directed to dispose of revision application filed by petitioner in accordance with law. - - and (ii) the application is made within one year from the date of the order sought to be revised or within.....tambe, j. 1. this is an application under article 226 of the constitution of india. the question that arises for consideration relates to the construction of proviso (b) to sub-section (1) of section 25 of the wealth-tax act, 1957 (27 of 1957) (hereinafter referred to as the act). the petitioner was assessed in the status of an individual under the act for the assessment years 1957-58 and 1958-59, the relevant valuation dates being 2nd november, 1956, and 23rd october, 1957, respectively. one of the assets belonging to the petitioner consisted of shares of messrs. lallubhai amichand private limited, messrs. metal rolling works (private) ltd. and messrs. rameshchandra private ltd. the petitioner in valuing the said assets in the shares of the aforesaid companies had adopted a certain.....
Judgment:

Tambe, J.

1. This is an application under article 226 of the Constitution of India. The question that arises for consideration relates to the construction of proviso (b) to sub-section (1) of section 25 of the Wealth-tax Act, 1957 (27 of 1957) (hereinafter referred to as the Act). The petitioner was assessed in the status of an individual under the Act for the assessment years 1957-58 and 1958-59, the relevant valuation dates being 2nd November, 1956, and 23rd October, 1957, respectively. One of the assets belonging to the petitioner consisted of shares of Messrs. Lallubhai Amichand Private Limited, Messrs. Metal Rolling Works (Private) Ltd. and Messrs. Rameshchandra Private Ltd. The petitioner in valuing the said assets in the shares of the aforesaid companies had adopted a certain method of valuation. That method, however, was not accepted by the Wealth-tax Officer and he rejected the valuation put by the petitioner on those assets. The Wealth-tax Officer adopted another method, estimated the value of those shares, and included that valuation in the value of net wealth estimated by the Wealth-tax Officer. Feeling aggrieved against the aforesaid orders of the Wealth-tax Officer the petitioner filed appeals against them before the Appellate Assistant Commissioner of Wealth-tax. The Appellate Assistant Commissioner rejected the appeals by his order dated May 1, 1959. Against the orders of the Appellate Assistant Commissioner the petitioner filed two appeals before the Appellate Tribunal on 16th July, 1959. One of the grounds raised related to the valuation of the assets on the aforesaid dates in which the petitioner had objected to the valuation placed on those shares by the Wealth-tax Officer. On 28th September, 1961, the Assistant Registrar of the Appellate Tribunal wrote a letter to the assessee, the material part of which is in the following terms :

'Sir,

One of the grounds taken by you in the above Wealth-tax appeal involves valuation of shares. Section 24(6) of the Wealth-tax Act enables you to require the Tribunal to refer the question of the disputed value to the arbitration of two valuers. If it is your intention to make the request to the Tribunal, you are requested to communicate the name and address of the valuer you nominate from the list of appropriate valuers approved under the Act, as also a schedule of the shares to be valued with sufficient description for the valuers to identify them on or before 23rd October, 1961...

If it is not your intention to avail yourself of the benefit of the above section, the case will be fixed for hearing in due course and disposed of according to law.

Yours faithfully.'

2. In reply to the aforesaid letter of the Assistant Registrar, the petitoner's chartered accountant, who had filed the appeal on behalf of the assessee, informed the Registrar of the Income-tax Appellate Tribunal that they have been instructed by the petitioner to request the members of the Tribunal to grant permission to them to withdraw the appeals. The chartered accountants, therefore, requested the Registrar by this letter to obtain permission of the Tribunal to withdraw the appeals. On 22nd November, 1961, the Bench of the Appellate Tribunal made the following order :

'By their letter dated 7th November, 1961, the assessee's representatives request for permission to withdraw these appeals. Request is granted and the appeals are dismissed for non-prosecution.'

3. This is a consolidated order, which has been made on both the appeals. On December 14, 1961, the petitioner preferred two revisions before the Commissioner of Wealth-tax under sub-section (1) of section 25 of the Act. By these two revision application the petitioner sought to get revised the order made in appeal by the Appellate Assistant Commissioner and prayed that the valuation of the shares adopted by the Wealth-tax Officer for the purpose of wealth-tax assessment was on a wrong basis altogether not warranted by law and as such the valuation made by the Wealth-tax Officer should be revised. Both the revision application appear to have been consolidated by the Tribunal and dismissed by his order dated 30th January, 1962, which is in the following terms :

'These two revision petitions relate to the assessment years 1957-58 and 1958-59. It, however, appears that second appeal was preferred by the petitioner to the Income-tax Appellate Tribunal in respect of both the assessments, but these appeals were later on withdrawn and dismissed as such by the Tribunal. Since the orders of the Wealth-tax Officer have been the subject of an appeal before the Appellate Tribunal under section 25(1), it is not possible for me to interfere at this stage. Both the petitions are rejected as incompetent.'

4. It is the aforesaid order of the Commissioner of Wealth-tax (respondent herein) which the petitioner seeks to get quashed by this petition under article 226 of the Constitution of India.

5. The petitioner also prays that a direction, order or writ including a writ in the nature of mandamus be issued under article 226 of the Constitution of India directing the respondent to give an opportunity of hearing to the petitioner and to decide the case on merits.

6. In order to appreciate the rival contentions raised on behalf of the petitioner and the respondent it would be convenient to produce the material part of section 25 of the Act :

'25(1) The Commissioner may, either of his own motion or on application made by an assessee in this behalf, call for the record of any proceeding under this Act in which an order has been passed by any authority subordinate to him, and may make such inquiry, or cause such inquiry to be made, and, subject to the provisions of this Act, pass such order thereon, not being an order prejudicial to the assessee, as the Commissioner thinks fit.

Provided that the Commissioner shall not revise any order under this sub-section in any case -

(a) where an appeal against the order lies to the Appellate Assistant Commissioner or to the Appellate Tribunal, the time within which such appeal can be made has not expired or in the case of an appeal to the Appellate Tribunal the assessee has not waived his right of appeal;

(b) where the order is the subject of an appeal before the Appellate Assistant Commissioner or the Appellate Tribunal;

(c) where the application is made by the assessee for such revision, unless -

(i) the application is accompanied by a fee of twenty-five rupees; and

(ii) the application is made within one year from the date of the order sought to be revised or within such further period as the Commissioner may think fit to allow on being satisfied that the assessee was prevented by sufficient cause from making the application within that period; and

(d) where the order is sought to be revised by the Commissioner of his own motion, if such order is made more than one year previously.

Explanation - For the purpose of this sub-section, -

(a) the Appellate Assistant Commissioner shall be deemed to be an authority subordinate to the Commissioner; and

(b) an order by the Commissioner declining to interfere shall be deemed not to be an order prejudicial to the assessee.'

Sub-section (2) is not material for the purpose of this case.

7. Mr. Palkhivala, appearing for the assessee, contends that the respondent was in error in holding that the orders of the Appellate Assistant Commissioner in appeal are subject of an appeal before the Tribunal within the meaning of the proviso to sub-section (1) of section 25 of the Act. According to Mr. Palkhivala, mere filing of an appeal before the Tribunal against an order of the Appellate Assistant Commissioner is not sufficient to hold that the order of the Appellate Assistant Commissioner is the subject of an appeal within the meaning of the proviso (b) to section 25(1), but, on the other hand, the order of the Appellate Assistant Commissioner is the subject of an appeal only when the Tribunal touches the order of the Appellate Assistant Commissioner, proceeds to go into the merits of the decision and pronounces its view on the correctness or otherwise of the order of the Appellate Assistant Commissioner. In other words, Mr. Palkhivala contends that unless the appeal has been decided on merits by the Tribunal, the order of the Appellate Assistant Commissioner is not the subject of an appeal within the meaning of the said proviso (b). Mr. Palkhivala has referred us to certain observations in A. V. Srinivasalu Naidu v. Commissioner of Income-tax.

8. Mr. Joshi, appearing for the revenue, on the other hand, contends that under the scheme of the Act, an option is given to the assessee to follow either of the two remedies. He may either file an appeal before the Tribunal against the order of the Appellate Assistant Commissioner or he may file a revision before the Commissioner. The substantial right conferred on the assessee is a right of appeal. In revision it is discretionary to the Commissioner either to interfere or not. The assessee at the threshold has to decide which of the remedies he would pursue. Section 25 of the Act would show that the assessee cannot pursue the remedy of revision unless time for filing the appeal has run out and the possibility of the filing of an appeal before the Tribunal is eliminated or when the assessee has waived the right to file an appeal before the Tribunal. It necessary follows that when an assessee files an appeal, which is competent and in which the assessee could get a decision of the Tribunal on merits from the Tribunal, it is not then open to the assessee to abandon that remedy and file a revision application. In short Mr. Joshi's contention is that the clause 'where the order is the subject of an appeal' means where a competent appeal against the order is filed in which the decision on merits could be given by the appellate authority. Mr. Joshi also contended that there is no power vested in the appellant to withdraw the appeal filed by him before the Tribunal and the order of the Tribunal dismissing the appeal for non-prosecution has to be construed to mean that the Tribunal has dismissed the appeal because in its opinion the assessee was satisfied with the assessment made by the Wealth-tax Officer and confirmed in appeal by the Appellate Assistant Commissioner. Mr. Joshi referred us to two decisions in Commissioner of Income-tax v. Nawab Shah Nawaz Khan and Rex v. Special Commissioner of Income-tax.

9. The Wealth-tax authorities are mentioned in Chapter III of the Act, Section 8 provides :

'Every Income-tax Officer having jurisdiction or exercising powers as such under the Income-tax Act in respect of any individual, Hindu undivided family or company shall perform the functions of a Wealth-tax Officer under this Act in respect of such individual, Hindu undivided family or company.'

10. Section 9 empowers the Central Board of Revenue constituted under the Central Board of Revenue Act, 1954, to empower as many persons as it thinks fit to exercise under this Act the functions of an Appellate Assistant Commissioner of Wealth-tax. Section 10 further empowers the said Board to empower as many persons as it thinks fit to exercise the functions of the Commissioner of Wealth-tax. Section 11 empowers the Commissioner of Wealth-tax to appoint as many persons as he thinks fit to exercise under this Act the functions of an Inspecting Assistant Commissioner of Wealth-tax. Section 12 provides that the Wealth-tax Officer shall be subordinate to the Commissioner of Wealth-tax and Inspecting Commissioner of Wealth-tax within the jurisdiction they perform thier functions. Chapter VI deals with the provisions relating to appeals, revisions and references. Section 23 confers a right on an assessee to file an appeal against certain orders of assessment of the Wealth-tax Officer enumerated in sub-section (1). Sub-section (2) provides the period of limitaion. Sub-section (3) and (4) provide the procedure to be followed by the Appellate Assistant Commissioner in the disposal of the appeal. Sub-section (5) provides that in disposing of the appeal, the Appellate Assistant Commissioner may issue such orders as he thinks fit, which may include an order enhancing the assessment or the penalty. Section 24 confers on an assessed aggrieved by the order of the Appellate Assistant Commissioner made under section 23, a right to file an appeal to the Tribunal within 60 days of the date on which he is served with such an order. Sub-section (2) provides that the Commissioner may, if he is not satisfied as to the correctness of any order passed by an Appellate Assistant Commissioner under section 23, direct the Wealth-tax Officer to appeal to the Appellate Tribunal against such order and such appeal may be made at any time before the expiry of 60 days of the date on which the order is communicated to the Commissioner. Sub-section (3) of section 24 confers power on the Tribunal to admit an appeal after the expiry of 60 days if it is satisfied that there was sufficient cause for not filing it within the period prescribed. Sub-section (4) provides that an appeal has to be filed in a particular form accompanied by a fee of Rs. 100. Sub-section (5) provides that the Appellate Tribunal, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit and any such order may include an order enhancing the assessment or the penalty provided that no order enhancing the assessment or penalty shall be made unless the person affected thereby has been given sufficient opportunity of showing cause against such enhancement. Sub-section (6) enables the Appellate Tribunal to refer the disputed question as to valuation to the arbitration of two valuers : one to be nominated by the appellant and the other by the respondent. The sub-section also provides that, if the appellant so requires, the Tribunal shall refer the disputed question as to valuation to arbitration. The proviso to sub-section (6) provides that in case of difference of opinion between the valuers as to the value, the matter shall be referred to a third valuer nominated by agreement or, failing agreement, nominated by the Tribunal. The provisions of sub-sections (7) to (11) of section 24 are not material. Section 25 relates to the the power of the Commissioner to revise orders of the subordinate authorities. We have already reproduced the material part of the said section.

11. Looking at the scheme of the Act, the authorities appointed under the Act are the Wealth-tax Officer, the Appellate Assistant Commissioner, the Inspecting Assistant Commissioner of Wealth-tax and the Commissioner of Wealth-tax. The highest authority under the Act is the Commissioner of Wealth-tax and the other authorities are subordinate to him. Certain assessment orders of the Wealth-tax Officer are subject to an appeal to the Appellate Assistant Commissioner and the orders of the Appellate Assistant Commissioner are subject to an appeal to the Tribunal. Orders of the Wealth-tax authorities subordinate to the Commissioner including the order of the Appellate Assistant Commissioner are made revisable by the Commissioner either on his own motion or at the instance of an assessee. It is, however, to be noticed that the right of appeal to the Appellate Assistant Commissioner against the order of the Wealth-tax Officer is conferred only on the assessee, but against the appellate order of the Appellate Assistant Commissioner, right to file an appeal is conferred both on an assessee as well as on the Commissioner, who can direct the Wealth-tax Officer to file an appeal to the Tribunal against the order of the Appellate Assistant Commissioner. Both the Appellate Assistant Commissioner as well as the Tribunal could enhance the penalty in exercise of their appellate powers. Having regard to the provisions of section 25, however, it is clear that an assessee feeling aggrieved by an order of the Appellate Assistant Commissioner has been given two alternative rights : he may either file an appeal against the order of the Appellate Assistant Commissioner to the Tribunal or instead he may file an application before the Commissioner to get the order of the Appellate Assistant Commissioner revised. The period of limitation for filing an appeal before the Tribunal is 60 days of the date on which the assessee is served with the notice of the appellate order of the Appellate Assistant Commissioner. The period of limitation for filing a revision, however, is one year. Both, the Tribunal as well as the Commissioner, have been empowered to condone the delay, on a sufficient cause being shown, in filing the appeal or revision. Now, the proviso to section 25(1), which relates to the revisional powers of the Commissioner, confers certain limitations on the exercise of the revisional powers. The first limitation, which is contained in clause (a), shows that those powers cannot be exercised unless the period of limitation for filing an appeal against the order sought to be revised has run out. But in the case where an appeal lies to the Appellate Tribunal, an assessee could invoke the revisional powers of the Commissioner before the period of limitation for filing an appeal has run out on his waiving the right of appeal to the Tribunal. He, however, cannot do so, if he is seeking to get revised the order of the Wealth-tax Officer, against which an appeal lies to the Appellate Assistant Commissioner. The second limitation is contained in clause (b) and that provides that the Commissioner is debarred from exercising his revisional powers, where the order sought to be revised is the subject of an appeal before the Appellate Assistant Commissioner or the Appellate Tribunal. The question that arises is when can an order be said to be the subject of an appeal According to Mr. Palkhivala, as already stated, the order becomes the subject of an appeal only when the merits of the order appealed against are dealt with by the appellate authority. While, on the other hand, according to Mr. Joshi, the order appealed against is the subject of an appeal when a competent appeal against that order is filed in which a decision could be given by the appellate authority.

12. We find it difficult to accept Mr. Joshi's contention. One of the shades of meaning of the word 'subject' given is 'that of which anything is said or of which the discourse treats'. Understanding clause (b) in this sense it can only be said that where anything is said in the appellate order of the order appealed against, relating to the merits of the order, it can be said to be subject of an appeal, and this appears to be the intention of the legislature in enacting clause (b). Looking to the scheme of the Act, in our opinion, the right conferred on an assessee is two-fold : he can get the validity of the order of the Appellate Assistant Commissioner or the Wealth-tax Officer tested either at the hands of the appellate authority, viz., the Tribunal or the Appellate Assistant Commissioner, or get the validity of either of the orders tested at the hands of the Commissioner and unless the question as to the validity of the order complained against is looked into or scrutinised by the authorities concerned, viz., the appellate authority or the revisional authority, it cannot be said that the right conferred by the Act is fully exercised or exhausted. The construction which we have put on clause (b), in our opinion, would be in consonance with the aforesaid intention of the legislature enabling the assessee to exercise the rights conferred on him by the Act. Had the legislature intended that mere filing of a competent appeal, in which a decision could be given by the Assistant Appellate Commissioner would take away the revisional powers of the Commissioner conferred on him under section 25, the legislature could have in plain words said so and clause (b) would have been differently worded in that case. The legislature has chosen not to do so but has in substance adopted the phraseology of clause (c) of the proviso to sub-section (2) of section 33A of the Indian Income-tax Act, which deals with the revisional powers of the Commissioner, which, prior to the date of the enactment of the Wealth-tax Act, has been judicially interpreted in A. V. Srinivasalu Naidu v. Commissioner of Income-tax. We may in brief state that the scheme of the Income-tax Act and the scheme of the Wealth-tax Act, so far as is relevant to the purpose of this case, is very similar. The initiating authority under the Income-tax Act is the Income-tax Officer and the same officers have been appointed Wealth-tax Officers under this Act. Under the Income-tax Act, appeal against the order of the Income-tax Officer lies to the Appellate Assistant Commissioner and under this Act appeal against the order of the Wealth-tax Officer lies to the Appellate Assistant Commissioner. The right of appeal to the Appellate Assistant Commissioner, Income-tax, is conferred only on the assessee and not on the Commissioner of Income-tax. Against the order of the Appellate Assistant Commissiner, an appeal could be field either by an assessee or by the Commissioner. The Appellate Tribunal under the Income-tax Act has been made the Appellate Tribunal under the Wealth-tax Act. Section 33A(1) of the Indian Income-tax Act deals with the powers of the Commissioner to revise the orders made by the authorities subordinate to him suo motu and the proviso to sub-section (1) enumerates the restrictions on the exercise of that power. It is not necessary to reproduce them because the proviso to sub-section (2) is substantially indentical. Sub-section (2) confers a right on an assessee to file an application before the Commissioner to get revised the order made by any of the authorities subordinate to the Commissioner. The proviso to sub-section (2) of section 33A is in the following terms :

'Provided that the Commissioner shall not revise any order under this sub-section if -

(a) where an appeal against the order lies to the Appellate Assistant Commissioner or to the Appellate Tribunal but has not been made, the time within which such appeal may be made has not expired, or, in the case of an appeal to the Appellate Tribunal, the assessee has not waived his right of apppeal, or

(b) where an appeal against the order has been made to the Appellate Assistant Commissioner, the appeal is pending before the Appellate Assistant Commissioner, or

(c) the order has been made the subject of an appeal to the Appellate Tribunal : Provided further that the order by the Commissioner declining to interfere shall be deemed not to be an order prejudicial to the assessee.'

13. It will be seen that clause (c) of the proviso to sub-section (2) of the section 33A corresponds to clause (b) of sub-section (1) of section 25 of the Act. There is, however, a slight difference in the language. In the Income-tax Act the words used are 'the order has been made the subject of an appeal', while instead of the words 'has been' the word 'is' is used in the Wealth-tax Act. Nothing, however, would turn on the slight difference in the phraseology. Clause (c) of the proviso to sub-section (2) of section 33A fell for consideration in A. V. Srinivasalu Naidu v. Commissioner of Income-tax. The facts of the case in brief were : An appeal to the Appellate Tribunal under section 33 against an order of the Appellate Assistant Commissioner was dismissed as barred by time. The assessee thereupon applied to the Commissioner under section 33A(2) to revise the order of the Appellate Assistant Commissioner, but the Commissioner declined to entertain the application on the ground that the order of the Appellate Assistant Commissioner had already been made the subject of an appeal to the Appellate Tribunal. The assessee then applied to the High Court (Madras) under section 45 of the Specific Relief Act for issue of directions to the Commissioner to hear and determine the revision filed by the assessee. It was held that the order of the Appellate Assistant Commissioner is made the subject of an appeal within the meaning of clause (c) of the first proviso to sub-section (2) of section 33A only when it is the subject-matter of an effective appeal. In this view of the matter, the application of the assessee was allowed and the Commissioner of Income-tax was ordered to dispose of the revision application in accordance with law. At page 345, it is observed :

'The object of the section is clear. The assessee can agitate the validity of the order of the subordinate authority either before the Tribunal or the Commissioner. That was the intention of the legislature, and, in my view, the provisions of the aforesaid two sections clearly bring out the intention.

The learned counsel for the Commissioner contended that the same consequences would follow even if an appeal was filed and dismissed as out of time. If this contention is accepted, it will defeat the purpose of the enactment and I cannot accept the same unless the words used in the section clearly support such contention. Mr. Ramarao Saheb contends that if an assessee exercises his option to prefer an appeal and files an appeal, whether it is admitted or not the order is 'subject of an appeal to the Appellate Tribunal' in clause (c) of the proviso. He argued that what matters is the intention of the aggrieved party. I cannot agree with this contention. The order is made the subject of an appeal only when it is the subject-matter of an effective appeal.'

14. Mr. Joshi contends that these observations can have no application to the facts of the present case as the case is distinguishable on facts. Here the appeal filed before the Tribunal was beyond the period of limitation. There was, therefore, no competent appeal before the Tribunal. The Tribunal had, therefore, dismissed the appeal as barred by time. There being thus no competent appeal filed by the assessee, the order of the Appellate Assistant Commissioner was not made subject of an appeal. Such, however, is not the case here. The appeal filed by the assessee before the Tribunal was not beyond the period of limitation prescribed for filing an appeal. It was a perfectly competent appeal. The petitioner could have obtained a decision on merits at the hands of the Tribunal. The order of the Appellate Assistant Commissioner, therefore, was the subject of an appeal within the meaning of proviso (b). It is indeed true that the facts of the present case and the facts with which the learned judges were concerned in A. V. Srinivasalu Naidu v. Commissioner of Income-tax are not identical, but the question which we have got to consider is similar to one that fell for consideration in A. V. Srinivasalu Naidu v. Commissioner of Income-tax, and that was the true meaning of the clause 'subject of an appeal to the Appellate Tribunal'. The decision of the learned judges has not turned on the fact that because the appeal was barred by time and because there was no competent appeal before the Tribunal, it was not the subject of an appeal. But, on the other hand, what is said is that the order of the Appellate Assistant Commissioner was not made the subject of an appeal because the order of the Appellate Assistant Commissioner was not the subject-matter of an effective appeal. Whatever doubt one may have about the meaning of the expression 'effective appeal', the position is still made clear at page 347, after examining the authorities which had been referred to during the course of the arguments in that case, in the following terms :

'When it was held that there was no appeal when the appeal filed was rejected on the ground it was barred by limitation, it would obviously be unsound to hold that where an appeal had been rejected as out of time, the order had been the subject of an appeal. Indeed, the words 'subject of an appeal' imply that the order appealed against has been decided on the merits.'

15. These observations make it clear that it is when the order appealed against is decided on merits by the appellate court that it can be said to be the subject of an appeal.

16. Mr. Joshi contends that these observations are obiter as the question did not arise for consideration in that case, the facts being the appeal filed by the assessed before the Tribunal was barred by time. Assuming it to be so, the observations relate to the construction placed on a section of the Income-tax Act, which is in substance pari materia with the clause in the Wealth-tax Act and the observations show that the expression 'the order is subject of an appeal' is capable of bearing the interpretation that the order appealed against is dealt with and decided on merits by the appellate authority. The construction being favourable to taxpayers is, therefore, preferable to be accepted than the construction sought to be put on the clause by Mr. Joshi. At any rate it can reasonably be assumed that the legislature knew that such an interpretation has been placed on clause (c) of the first proviso to sub-section (2) of section 33A of the Income-tax Act and, thereafter, the legislature having adopted a similar phraseology in the Wealth-tax Act, the intention of the legislature was the same as interpreted in A. V. Srinivasalu Naidu v. Commissioner of Income-tax, of the aforesaid clause (c). Further, the interpretation we consider preferable will effectively secure the rights conferred on an assessee by section 24 and 25 of the Act. As already stated the right conferred on an assessee is to get the validity of the order of the Appellate Assistant Commissioner tested in appeal at the hands of the Tribunal or tested at the hands of the Commissioner in revision. It is difficult to say that mere filing of a competent appeal without carrying the matter to a final decision would amount to a full exercise of that right. It would be seen that proviso (a) to sub-section (1) of section 25 enables the assessee to waive the right of appeal. It is true that that clause speaks of waiver of the right of appeal before the expiry of the period of limitation. But when the legislature permits an assessee to waive the right of appeal prior to the period of limitation, it can reasonably be assumed that the legislature did not intend to prohibit the assessee from waiving his right of appeal even when an appeal has been filed by the assessee unless it can definitely be said that in no event after the appeal has been filed, the assessee could withdraw the appeal. If that be the true legal position, then certainly it would necessarily follow that once a competent appeal has been filed, it is not open to an assessee to waive the right of appeal. In this connection Mr. Joshi has referred us to two decisions. Mr. Joshi contends that an appeal under the taxation Act cannot be equated with an appeal under the general law. The contention of Mr. Joshi is that an appeal under the taxation Act is different in nature from an appeal under the general law. Here the appellate authority is empowered to make an order even prejudicial to the assessee and enhance the assessment or the penalty. If the appellant-assessee is allowed to withdraw the appeal that would result in nullifying the powers of the Appellate Assistant Commissioner. It must, therefore, follow that the assessee has no power to withdraw an appeal after it has been filed.

17. It is indeed true that the appellate powers of the authorities constituted both under the Income-tax as well as the Wealth-tax Acts are different in nature than the appellate authorities under the general law. The Civil Procedure Code does not provide for any powers to make an order prejudicial to the appellant but here both the Appellate Assistant Commissioner and the Tribunal have been given powers not only to grant relief to the assessee but also, if on examination of the case they are satisfied, to enhance the assessment or penalty. But the question that has to be considered is whether it would necessarily follow from the aforesaid nature of the powers that the assessee in no event could be permitted to withdraw an appeal. In our opinion the decisions on which reliance is placed do not go to the extent to which Mr. Joshi wants us to go. On the other hand, the ratio that would follow from these two decisions is that the assessee cannot as of right to claim to withdraw the appeal. The question whether to permit withdrawal of the appeal or not would depend on the discretion of the appellate authority.

18. Facts in Commissioner of Income-tax v. Nawab Shah Nawaz Khan were : An assessment was made on the assessee for the year 1933-34. Thereafter an additional assessment was made under section 34 in respect of a sum of Rs. 8,675. The assessee appealed against this order to the Appellate Assistant Commissioner and during the pendency of the appeal, the Appellate Assistant Commissioner came to know that another item of Rs. 89,796 had also escaped assessment and issued a fresh notice in respect of the said sum to the assessee. It is thereafter that the assessee applied for withdrawing the appeal and the question arose whether in the circumstances the assessee could withdraw the appeal. The matter ultimately went to the High Court and, following a decision in Rex v. Special Commissions of Income-tax , it was held that it was not open to the assessee, who had preferred an appeal, to withdraw the appeal so as to prevent the Appellate Assistant Commissioner from enhancing the assessment. It would be seen that the assessee was seeking to withdraw the appeal after the Appellate Assistant Commissioner had issued a notice to him to show cause why the assessment should not be increased on account of the escapement of income amounting to Rs. 89,796 from taxation.

19. Facts in Rex v. Special Commissioners of Income Tax in brief were : Notice of appeal to the Special Commissioners was given against an additional assessment to Income Tax, Schedule D, made upon a taxpayer in an estimated amount for the year 1925-26. In November, 1933, a letter was written on the taxpayer's behalf withdrawing the appeal. The Commissioners of Inland Revenue not being satisfied that the amount of the assessment was adequate, the Special Commissioners were requested on their behalf to hear and determine the appeal, and the Special Commissioners listed the appeal for hearing. The taxpayer then applied for and obtained a rule nisi calling upon the Special Commissioners to show cause why a writ of prohibition should not be awarded to prohibit them from proceeding to hear the appeal. It was held that a notice of appeal having been given, machinery was set in motion under Part VII of the Income Tax Act, 1918, under which the Special Commissioners were entitled and bound to see that a true assessment of the amount of the taxpayer's liability was arrived at.

20. Mr. Joshi first referred us to the following passage from the judgment of the learned Chief Justice at page 384 of the report :

'The fact that the notice of appeal had been given not merely made it possible but made it obligatory upon the Commissioners that they should take certain steps, not merely or primarily in the interest of the individual appellant but in the performance of their duties imposed upon them in the interests of the general body of the taxpayers, to see what the true assessment ought to be, and that process, a public process directed to public ends, cannot be stopped at the option or the whim of the appellant who after giving notice begins to realise that if he pursues his appeal it may be the worse for him. The matter has passed out of his hands; he has given rise by his notice of appeal not merely to the opportunity but to the duty of performing a public task which may have an effect entirely opposite to that which he contemplated and desired.'

21. He next referred us to the following observations in Lord Wright's judgment at page 393 of the report :

'..... the conclusion I draw from the code is that the Commissioners, having set before them the duty of ascertaining and settling according to the best of their judgment the sum on which the taxpayer ought to be assessed, are required to make the assessment in accordance with that judgment, and in view of that I find it quite impossible to accept the argument that the giving of the notice of appeal is merely, as it were, a sort of offer, or is merely an act from which the taxpayer can at his discretion at any time resile, subject to his obeying the precepts and so forth, and that he can at any moment prevent the Commissioners from ascertaining and settling the sum to be assessed by the simple process of intimating by word or by deed that he withdraws from the appeal, or rather that he withdraws the notice of appeal, and that there is no appeal pending at all.'

22. Lastly, Mr. Joshi referred us to the following observations of Lord Justice Romer at page 395 :

'The question that we have to determine in this case is whether, when a taxpayer has served a notice of appeal and so brought into effect the machinery designed by section 133 for the purpose of completing the assessment, he can stop the further working of that machinery either by withdrawing the appeal or by refusing to be present at the hearing of the appeal. If that be right and he can in that way stop the working of the machinery, then, as it appears to me, he is in a position to prevent any final assessment being made upon him at all under the Act. That would be an extraordinary intention to impute to the Legislature. In my opinion that is not the effect of the Act. In my opinion the Income Tax payer has no more power, after he has served the notice of appeal and so brought into operation the machinery of procedure set up for it in Part VII of the Act, to stop the machinery of procedure than he is in the position to stop the machinery of procedure for the ascertainment of his liability to tax in any other part of the Act.'

23. It would be seen from the facts of this case that there had been an opposition on the part of the revenue to the withdrawal of the appeal on the ground that the tax levied was not adequate and the assessee was liable to pay tax higher than the one to which he had been assessed. The revenue, therefore, had made a request to the appellate authority to proceed to hear the appeal. It is in these circumstances that the question considered was whether the assessee can as of right claim the withdrawal of the appeal and it has been held that the taxpayer cannot at his option claim to withdraw the appeal and arrest the process, which is directed towards public end, set in motion by him by giving a notice of appeal. In our view, therefore, the ratio deducible from these two decisions is not that in no event the appeal filed by a taxpayer could be withdrawn but the ratio deducible is that after filing an appeal, the taxpayer cannot at his option or at his discretion withdraw the appeal to the prejudice of the revenue. We are not here concerned with an appeal which is sought to be withdrawn where a claim is put forward that the assessee has a right to withdraw the appeal. On the other hand, the facts of this case show that the chartered accountant on behalf of the assessee had written a letter to the Registrar of the Tribunal requesting him to obtain permission of the Tribunal to withdraw the appeal and the Tribunal, on a consideration of the application, has granted the assessee permission to withdraw the appeal.

24. The question, therefore, which we have to consider is whether the Tribunal having permitted the appeal to be withdrawn, it could be said that the order appealed against is the subject of an appeal before the Appellate Tribunal. For reasons stated above, in our opinion, in the circumstances of this case, it cannot be said that the order of the Appellate Assistant Commissioner is the subject of an appeal before the Appellate Tribunal. We may here state that the order of the Tribunal dismissing the appeal for non-prosecution on granting the permission for withdrawal of the appeal had at no stage been challenged by the Commissioner of Wealth-tax nor has it been stated in the affidavit in reply that the withdrawal was not bona fide or the withdrawal of the appeal was with the ulterior object of avoiding enhancement of the assessment.

25. The Commissioner of Wealth-tax, in our opinion, therefore, in the circumstances of the case, was not justified in dismissing the revision application filed by the petitioner in limine on the ground that it was incompetent since the orders of the Wealth-tax Officer and the Appellate Assistant Commissioner have been the subject of an appeal before the Appellate Tribunal under section 25(1) of the Act. The order is, therefore, liable to be quashed.

26. Mr. Joshi, however, contended that this court should not quash the order and direct the revision application to be heard by the Commissioner inasmuch as the writ granted by the court would be infructuous, the revision applications filed by the petitioner on December 14, 1961, being barred by time.

27. It is true that the period of limitation prescribed for a revision application filed on behalf of the assessee is a period of one year. The orders of the Appellate Assistant Commissioner, which the petitioner sought to get revised, were made on May 1, 1959. The revision filed, therefore, are clearly beyond the period of one year. But then, as would be seen from sub-clause (ii) of clause (c) of the proviso to sub-section (1) of section 25, the Commissioner has power to admit a revision application filed beyond the period of limitation on being satisfied that the assessee was prevented by sufficient cause from making the application within the prescribed period. It cannot, therefore, be said that a writ, if granted by this court, would necessarily be infructuous. Nor can we go into the question of sufficiency of the cause for not filing the revision applications within the prescribed time. Consideration of that question would fall within the jurisdiction of the Commissioner.

28. In the result, the order of the Commissioner of Wealth-tax (respondent herein) made on 30th January, 1962, is quashed and the respondent is directed to dispose of the revision applications filed by the petitioner in accordance with law. The respondent shall pay the costs of the petitioner.


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