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Commissioner of Wealth-tax Vs. S. Baliah - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAndhra Pradesh High Court
Decided On
Case NumberCase Referred No. 33 of 1976
Judge
Reported in[1978]114ITR858(AP)
ActsWealth-tax Act, 1957 - Sections 24 and 24(11); Income Tax Act, 1961 - Sections 255, 255(1), 255(2), 255(3), 255(4), 255(5) and 255(6); Income Tax Appellate Tribunal Rules - Rule 2
AppellantCommissioner of Wealth-tax
RespondentS. Baliah
Appellant AdvocateP. Rama Rao, Adv.
Respondent AdvocateNone
Excerpt:
direct taxation - single member of appellate tribunal - sections 24 and 24 (11) of wealth-tax act, 1957, sections 255, 255 (1), 255 (2), 255 (3), 255 (5) and 255 (6) of income tax act, 1961 and rule 2 of income tax appellate tribunal rules - whether single member of appellate tribunal can hear matter when income of assessee within maximum prescribed in section 255 (3) - bench implies minimum two persons one member of tribunal and other accountant within meaning of section 255 (2) - under section 255 (3) single member can hear and dispose matter - section 255 (3) is exception to section 255 (2) - scope of section 255 (3) cannot be enlarged so as to entitle single member to dispose of appeal preferred under section 24. - .....section 195 and chapter xxxv of the code of criminal procedure, 1898 (5 of 1898).'5. this single member bench of the appellate tribunal in holding that a single member bench can hear an appeal under the wealth-tax act, where the total income of the assessee is less than the maximum prescribed in section 255(3) of the income-tax act, relied upon sub-sections (2) and (3) thereof. the application of sub-sections (2) and (3) of section 255 of the income-tax act is excluded by sub-section (11) of section 24 of the act. therefore, the provisions that apply in so far as the powers and functions of the appellate tribunal are concerned, where a case is referred under the wealth-tax act are sub-sections (1), (4) and (5) of section 255 of the income-tax act. the object of constituting an.....
Judgment:

Obul Reddi, C.J.

1. This is a reference under Section 27(1) of the Wealth-tax Act. The question involved in this reference is whether an appeal preferred under the Wealth-tax Act to the Tribunal can be heard by a single member of the Appellate Tribunal where the total income of the assessee is within the maximum prescribed in Section 255(3) of the Income-tax Act,

2. The assessee is an individual. He was treated as a defaulter as he had not filed his return of net wealth in time, and after issuing a notice to him under Section 18(1)(a) of the Wealth-tax Act (hereinafter referred to as 'the Act'), the Wealth-tax Officer levied a penalty of Rs. 2,380. On appeal, the Appellate Assistant Commissioner, while upholding the penalty, reduced the quantum to Rs. 475 only. That lead to the department's appeal to the Tribunal. The income of the assessee during the relevant assessment year 1966-67 was less than Rs. 40,000 for income-tax purposes. The appeal on that ground was taken up for hearing by a single member of the Tribunal constituting a Bench. A preliminary objection was taken by the representative of the department that a single member of the Tribunal cannot hear the appeal taking the income of the assessee as the basis. That objection was overruled by the Tribunal and hence this reference at the instance of the Commissioner of Wealth-tax, Hyderabad.

3. To determine the question arising in this reference it is necessary to notice the relevant provisions of the Wealth-tax Act, 1957, and the Income-tax Act, 1961.

'Appellate Tribunal', as defined in Section 2(b) of the Act, means the Appellate Tribunal constituted under Section 252 of the Income-tax Act. 'Assessee', as defined in Section 2(c), means 'a person by whom wealth-tax or any other sum of money is payable under this Act, and includes--

(i) every person in respect of whom any proceeding under this Act has been taken for the determination of wealth-tax payable by him or by any other person or the amount of refund due to him or such other person ;

(ii) every person who is deemed to be an assessee under this Act;

(iii) every person who is deemed to be an assessee in default underthis Act.'

Section 24(11) provides:

'The provisions of Sub-sections (1), (4) and (5) of Section 255 of the Income-tax Act shall apply to the Appellate Tribunal in the discharge of its functions under this Act as they apply to it in the discharge of its functions under the Income-tax Act.'

4. We may now refer to the provisions of the Income-tax Act which have a bearing on the question. Section 252(1) empowers the Central Government to constitute an Appellate Tribunal consisting of as many judicial and accountant members as it thinks fit to exercise the powers and discharge the functions conferred on the Appellate Tribunal by this Act. Sub-Section (2) prescribes the qualifications of a judicial and accountant member. Sub-section (3) thereof further says that the Central Government shall ordinarily appoint a judicial member of the Appellate Tribunal to be the President thereof. Powers and functions exercisable by the Appellate Tribunal are detailed in Section 255. This sectionmay be quoted in extenso.

'255. (1) The powers and functions of the Appellate Tribunal may be exercised and discharged by Benches constituted by the President of the Appellate Tribunal from among the members thereof.

(2) Subject to the provisions contained in Sub-section (3), a Bench shall consist of one judicial member and one accountant member.

(3) The President or any other member of the Appellate Tribunal authorised in this behalf by the Central Government may, sitting singly, dispose of any case which has been allotted to the Bench of which he is a member and which pertains to an assessee whose total income as computed by the Income-tax Officer in the case does not exceed forty thousand rupees, and the President may, for the disposal of any particular case, constitute a special Bench consisting of three or more members, one of whom shall necessarily be a judicial member and one an accountant member.

(4) If the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority, but if the members are equally divided, they shall state the point or points on which they differ, and the case shall be referred by the President of the Appellate Tribunal for hearing on such point or points by one or more of the other members of the Appellate Tribunal, and such point or points shall be decided according to the opinion of the majority of the members of the Appellate Tribunal who have heard the case, including those who first heard it.

(5) Subject to the provisions of this Act, the Appellate Tribunal shall have powers to regulate its own procedure and the procedure of Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings.

(6) The Appellate Tribunal shall, for the purpose of discharging its functions, have all the powers which are vested in the income-tax authorities referred to in Section 131, and any proceeding before the Appellate Tribunal shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 and for the purpose of Section 196 of the Indian Penal Code (45 of 1860), and the Appellate Tribunal shall be deemed to be a civil court for all the purposes of Section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898 (5 of 1898).'

5. This single member Bench of the Appellate Tribunal in holding that a single member Bench can hear an appeal under the Wealth-tax Act, where the total income of the assessee is less than the maximum prescribed in Section 255(3) of the Income-tax Act, relied upon Sub-sections (2) and (3) thereof. The application of Sub-sections (2) and (3) of Section 255 of the Income-tax Act is excluded by Sub-section (11) of Section 24 of the Act. Therefore, the provisions that apply in so far as the powers and functions of the Appellate Tribunal are concerned, where a case is referred under the Wealth-tax Act are Sub-sections (1), (4) and (5) of Section 255 of the Income-tax Act. The object of constituting an Appellate Tribunal is to have in it a judicial member and an accountant member. The constitution of the Benches is left to the discretion of the President of the Appellate Tribunal from among the members thereof. Sub-section (3) relied upon by the Tribunal empowers the President or any other member of the Appellate Tribunal who sits singly to dispose of any case which has been allotted to the Bench of which he is a member and which pertains to an assessee whose total income as computed by the Income-tax Officer in that case does not exceed Rs. 40,000. It is a legislative injunction that a Bench of the Appellate Tribunal shall consist of one judicial member and one accountant member and Sub-section (3) is an exception to Sub-section (2). It is not open to the President or any member of a Bench of an Appellate Tribunal to sit singly and dispose of a case under the Income-tax Act where the income of the assessee exceeds Rs. 40,000. Sub-section (3) is not applicable to appeals before the Appellate Tribunal filed under Section 24 of the Act. The question of the income of the assessee under the Income-tax Act is irrelevant in so far as hearing of an appeal preferred under Section 24 of the Act is concerned. ' Assessee' as defined in Clause (7) of Section 2 of the Income-tax Act means ' a person by whom any tax or any other sum of money is payable under this Act, and includes--

(a) every person in respect of whom any proceeding under this Act has been taken for the assessment of his income or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person ;

(b) every person who is deemed to be an assessee under any provision of this Act;

(c) every person who is deemed to be an assessee in default under any provision of this Act.'

6. The assessee referred to in Sub-section (3) of Section 255 is the assessee defined in Clause (7) of Section 2 of the Income-tax Act and not the assessee denned in Clause 2(c) of the Act. The Tribunal placed reliance on the Income-tax (Appellate Tribunal) Rules in coming to the conclusion that a single member Bench could hear an appeal filed under Section 24 of the Act. These rules do not throw any light on the question involved. 'Bench', as defined in Rule 2(iii), means 'a Bench of the Tribunal constituted under Sub-section (1) of Section 255, and includes the President or any other member sitting singly under the provisions of Sub-section (3) of the said section and a special Bench constituted under the same provision'. 'Tribunal' as defined in Rule 2(ix) means 'the Appellate Tribunal constituted by the Central Government under Section 252, and includes, where the context so requires, a Bench exercising and discharging the powers and functions of the Tribunal'. These rules do not provide for a single member Bench hearing appeals preferred under Section 24 of the Act. The definition of 'Bench' in the Rules makes it manifest that it is a Bench constituted under Sub-section (1) of Section 255 from among the members thereof. Though there is no reference to Sub-section (2) of Section 255 in Section 24(11) of the Act, yet, the Bench to comply with the requirement of Section 255(2), must consist of one judicial member and one accountant member. 'Bench', when read in the light of the definition in the rules and Sub-section (2) of Section 255, can only mean, a Bench of two members, i.e., one judicial member and one accountant member. Sub-section (3) of Section 255 which has been relied upon by the Tribunal has absolutely no relevance in the matter of disposal of appeals preferred under Section 24 of the Act. The scope of Sub-section (3) of Section 255 cannot be enlarged so as to bring in an 'assessee' as defined in Section 2(c) of the Act and entitle a member sitting singly to dispose of an appeal preferred to the Appellate Tribunal under Section 24 of the Act.

7. The question, therefore, is answered in the negative and in favour of the revenue. The matter is remitted to the Appellate Tribunal for disposal afresh. No costs. Advocate's fee Rs. 250.


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