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Commissioner of Income-tax, Bombay Vs. Filmistan Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberI.T.R. No. 8 of 1957
Judge
Reported inAIR1958Bom345; (1958)60BOMLR32; ILR1958Bom419; [1958]33ITR334(Bom)
ActsIncome-tax Act, 1922 - Sections 29, 30, 30(1), 30(2), 46 and 46(1); Code of Civil Procedure (CPC), 1908 - Sections 96, 100, 101, 104 and 109; Income-tax Law
AppellantCommissioner of Income-tax, Bombay
RespondentFilmistan Ltd.
Appellant AdvocateM.P. Amin and ;G.N. Joshi, Advs.
Respondent AdvocateR.J. Kolah, Adv.
Excerpt:
.....of inc.-tax (1955) 28 i.t.r. 189 dissented from.;kamdar brothers of jharia v. commr. of inc.-tax (1954) 27 i.t.r. 176 agreed with. - - and, therefore, when the consequence of interpreting this proviso in a particular manner may well be to deny the right of appeal, wnich is an important right to the asses-see, altogether, if there is any alternative construction which can be put upon those words, it is our duty to try and put such a construction......right of appeal is taken away unless the tax is paid. in other words, his contention is that the words 'appeal shall lie' relate to the stage of entertaining the appeal or presenting the appeal and all subsequent stages, and not merely to the stage after presentation. now, we must confess that the words 'appeal shall lie' used in the context of a right of appeal in, for example, clause 15 of the letters patent or section 96, 100, 101, 104, or 109 of the c. p. c., do relate to the right of appeal; and, therefore, they are words which are capable of bearing the meaning that tne right of appeal is itself affected if tne tax is not paid. but we have got to construe these words in the context of income-tax law so as to prevent any injustice to the assessee. now, the requirement that no.....
Judgment:

Tendolkar, J.

1. The question that falls for determination on this reference is whether the first proviso toSub-section (1) of Section 30, which confers a right of appeal to the A. A. C. against certain orders, enacts a condition precedent to the presentation of the appeal or to the exercise of the right of appeal at all; or whether, in the alternative, it does not affect the right of appeal, but it affects merely the hearing and final disposal of the appeal.

2. The relevant facts are that for the assessment year 1949-50 a notice of demand under Section 29 was made for the payment of Rs. 1,80,646/. 14/- as income-tax and super-tax. The amount-was payable ,on 17-7-1954; but at the request of the assesses instalments were allowed and the last instalment of Rs. 30,646/14/- was made payable on or before 20-3-1955. There was default in payment of the last instalment and the Income-tax Officer, acting under Section 46(1), imposed a penalty of Rs. 3,000/- on 31-3-1955. The asses-see preferred an appeal to the Appellate Assistant Commissioner on 20-4-3955. The amount of the last instalment was paid on 16-5-1955. The appeal came up for hearing before ffie Appellate Assistant Commissioner on 19-8-1955, when the I. T. O. raised a preliminary objection that the appeal was not competent because prior to the presentation of the appeal the tax had not been paid. This objection was upheld by the A. A. C., but upon appeal the Tribunal held that upon a true construction of Section 30 Sub-section (1) and the first proviso thereto, the right of appeal was not taken away, but only the remedy was barred until tax was paid. It is this view of the Tribunal which has been challenged before us on this appeal.

3. Now, turning to the relevant section, Section 80 Sub-section (1) provides that any assessee may appeal to the Appellate Assistant Commissioner against the orders enumerated in that Sub-section. The first proviso to this Sub-section is:

'Provided that no appeal shall be against an order under Sub-section (1) of Section 46 unless the tax has been paid.'

and the question is: At what stage hss this tax-to be paid in order that the right of appeal should not be affected by reason of non-payment? The contention of Mr. Amin for the Department is that the payment of tax is a condition precedent to the presentation of the appeal; whilst the contention for the assessee, which found favour with the Tribunal, is that the payment ot tax is a condition precedent to the hearing and disposal of the appeal; and if by the time the date of hearing arrives the penalty has not been paid, the appeal will be liable to be dismissed.

4. Now, Mr. Amin has urged that the words 'no appeal shall lie' can mean nothing more or less than that the right of appeal is taken away unless the tax is paid. In other words, his contention is that the words 'appeal shall lie' relate to the stage of entertaining the appeal or presenting the appeal and all subsequent stages, and not merely to the stage after presentation. Now, we must confess that the words 'appeal shall lie' used in the context of a right of appeal in, for example, clause 15 of the Letters Patent or Section 96, 100, 101, 104, or 109 of the C. P. C., do relate to the right of appeal; and, therefore, they are words which are capable of bearing the meaning that tne right of appeal is itself affected if tne tax is not paid. But we have got to construe these words in the context of income-tax law so as to prevent any injustice to the assessee. Now, the requirement that no appe-1 shall lie is a requirement whica, in the case of inability on the part of the assessee to pay the penalty, may lead to an absolute denLl of the right of appeal; and, therefore, when the consequence of interpreting this proviso in a particular manner may well be to deny the right of appeal, wnich is an important right to the asses-see, altogether, if there is any alternative construction which can be put upon those words, it is our duty to try and put such a construction. Mr. Amin says that the words 'appeal shall lie' in this proviso should be read in the same sense as the word 'presented'' wiiich appears in Sub-section (2) of Section 30. That was the view which was accepted by the Andhra High Court in Raja of Venkatagi-i v. Commr. of Income Tax (1955) 28 ITR 189 : (AIR 1957 AP 276) (A). In that case, Subba Rao, C. J-, reading the provisions of Section 30(1) and 30(2) togetner, came to the conclusion: 'To read tne two subsections as dealing with a right of appeal at two different points of time is not only illogical but will lead to anomalies.' With respect to the learned Chief Justice, we are unable to agree with this view. On the other hand, it appears to us that when the Legislature had used the simple and unambiguous expression 'presented' in Sub-section (2), if they desired that no appeal sh.ll be presented without the tax being paid they would have used that same expression in the proviso and not some other expression. Then Mr. Arnin says that, looked at from another point of view, the question as to whether an appeal lies or does not lie is a question that is to be determined bsfore an appeal is presented and it is a stage anterior to the presentation of the appeal. In one sense, Mr. Amin is right because, unless there is a right of appeal, the presentation of an appeal is a futile formality; but looked at from another point of view, the question as to whether there is a right of appeal nd. therefore, an appeal lies can only be determined after an appeal is presented and on an objection taken by the respondent that no appeal lies. From that point of view, therefore, the question whether the appeal lies comes up only for determination at the hearing of the appeal, and not at any anterior stage. The Andhra High Court, in the case that we have referred to, also observed that if the words 'appeal shall He' in the proviso were to be interpreted as not equivalent to the word 'presented' in Sub-section (2), the maintainability of the appeal would depend upon the fortuitous circumstance of the posting of the appeal for hearing before or after the payment of the tax. With great respect again, we are unable to agree. In the first instance, although the posting of the appeal for hearing would become material in this context, the appellate authority will, if the view that we take is the correct view of the section, afford every reasonable opportunity to the appellant to paythe tax which stands in the way of the appellate authority disposing of the appeal, and there is nothing fortuitous about such a course, the requirement of the law being that the tax must be paid before the appeal can be heard and disposed of. If the unfortunate assessee is unable to pay before the appeal is heard and disposed of, that is the consequence brought about by law and not as a result of any ior-tuitous circumstance.

5. As against this decision of the Andhra High Court, there is a direct decision of the Patna High Court in Kamdar Brothers of Jharia v. Commr. of Income-tax, B. and O. : [1955]27ITR176(Patna) , where that High Court held that if the fax was paid before the date of hearing, the appeal was competent although filed before the tax was actually paid. Their Lordships, in their judgment, took the same view of the interpretation of the words 'appeal shall lie' in the proviso and the word 'presented' in Sub-section (2) as we are disposed to tike, namely, that if the Legislature intended to provide in the proviso that the appeal shall not be presented, nothing could have been similar for the Legislature than to use that expression. Their Lordships also considered the dictionary meaning of the word 'lie' which they state to be 'to be admissible or sustainable', which, unfortunately, does not necessarily help the one view or the other, but only shows that the expression 'lie' may be an expression of doubt-ful meaning. We have, in any event, here a case where two High Courts have taken two contrary views of the provisions of a statute, and it would be reasonable, in any event, to say that the true meaning of the words 'shall lie' in the proviso is not beyond doubt, and were it not beyond doubt, we ought to put on the proviso a construction which will favour the assessee and which would not deprive him of the right of appeal altogether, because such a construction would be in consonance with right and justice rather than the construction which would deprive him of that right altogether. We are, therefore, of the opinion that the view taken by the Tribunal as to the correct meaning of the proviso is the view which is preferable to the view taken by the Andhra High Court.

6. We, therefore, answer the queation referred to us in the affirmative.

I. T. C. to pay costs.

7. Answer affirmative.


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