This judgment will dispose of two cases which arise from orders made under Section 43 of the Indian Income-tax Act declaring the petitioners in each case agents in British India of certain firms doing business in State territory. In both cases appeals were lodged against these orders and were dismissed by the appellate authorities concerned as being premature, as no assessment of income-tax at that stage had been made. Applications were then made in each instance for a case to be stated in Court. In the case of Messrs. Narang Brothers, the application was refused and this Court is now being asked to order that such a statement of the case should be made. In the second case, that of Messrs. Sehgal Brothers, the Income-tax Tribunal has stated the case to this Court and we are asked to adjudicate upon the following questions :
'Does an appeal lie under Section 30, Income-tax Act, 1922, against the order of an Income-tax Officer appointing a person an agent of a non-resident Company under Section 43 of the Income-tax Act, where neither the non-resident Company nor the person appointed agent has been assessed in respect of profits accruing to the company in British India from its connection with the person appointed as agent ?'
On behalf of the petitioner it has been argued by Mr. Mehr Chand Mahajan that Section 30 of the Act gives a right of appeal to anyone denying his liability to be assessed under the Act. He points out that an order under Section 43 of the Act can, in accordance with the proviso, only be made after an opportunity has been given to the person affected thereby of being hard : therefore, an order Under Section 43 declaring such person to be an agent is an order passed after the parties concerned have been heard and the question has been adjudicated upon. He further points out that the effect of an order under Section 43 is automatically to make such an agent liable to assessment under Section 42 which provides that he shall be deemed to be for the purposes of this Act 'the assessee'. He relies on a judgment of the Nagpur High Court, Gokul Das Chunilal v. Commissioner of Income-tax, in which it was held that the scope of the words 'denying his liability to be assessed' in Section 30, sub-section (1), is wide enough to cover the case of an assessee who denies his liability to be declared an agent under Section 43; therefore an appeal against the order of an Income-tax Officer under that section is not barred, though the appeal is not against the assessment itself.
It should, however, be noticed that the distinction between that case and the one now before us is that in the former, proceedings had advanced to the stage of assessment before the appeal was lodged, whereas in the present case there has not yet been any assessment at all. The Nagpur judgment is, therefore, only an authority providing that once an assessment has been made the assessee can appeal against the order under Section 43 appointing him as agent, even though he does not actually appeal against the assessment. In the present case we are asked to go further and decide that an agent appointed under Section 43 can at once lodge an appeal against his appointment as such, before anything else is done to render him liable to payment of any income-tax. In our view it has been rightly decided that an appeal at this stage is premature.
The grounds given by the Income-tax Appellate Tribunal in support of its conclusion that no appeal lies at this stage are that none of the provisions of sub-section (2) of the section 30 which deal with the starting point of the period of limitation for different kinds of appeals is applicable in the present case. Further, Section 31 which provides the manner in which the Appellate Assistant Commissioner can exercise his powers in appeal, is not applicable to such an appeal as is now contemplated. We are of the view that the decision of the Income-tax Appellate Tribunal is correct.
In spite of the use of the word 'assessee' in Section 42 we think it clear from a perusal of Section 30 and 31 that the Legislature never contemplated such an appeal at this stage. The provisions contained in sub-section (2) of Section 30 of the old Act, which prescribe periods of limitation for appeals under various sections of that Act. But still, no provision is made for any appeal against an order passed only under Section 43. Further, we do not see how the appellate authority could exercise any of its functions within the scope of sub-section (3) of Section 31 in deciding such an appeal. This seems to us to indicate clearly that the Legislature did not consider it necessary to provide an appeal against an order under Section 43 before any assessment had been attempted. The reason seems obvious. It does not necessarily follow that an agent nominated under Section 43 will ever actually be assessed. As already pointed out, if an assessment is made, the agent immediately has a right of appeal not only against the actual assessment but also, as found in the Nagpur case, against the order nominating him as agent.
Our answer to the question put in this reference is, therefore, in the negative. It follows that both these petitioners must be dismissed with costs.
Reference answered in the negative.