The judgment of the court was delivered by
DESAI, C.J. - The following question has been referred to this court by the Income-tax Appellate Tribunal, Allahabad Bench, at the assessees instance under section 66(1) of the Income-tax Ac :
'Whether, in the circumstances of the case, an appeal lay to the Tribunal against the order of the Appellate Assistant Commissioner dismissing the appeal as incompeten ?'
The facts, as stated in the statement of the case, are these. During an assessment proceeding the assessee claimed relief under section 25(3) but the claim was not considered by the Income-tax Officer. The assessee filed an appeal from the assessment order passed against him under section 23 and the Appellate Assistant Commissioner set aside the assessment order and directed the Income-tax Officer to give a finding on the question whether the provision of section 25(3) was attracted by the facts of the case. It is to be noted that Appellate Assistant Commissioner who set aside the order did not direct the Income-tax Officer to make a fresh assessment after further inquiry and simply called for a finding on the question about the applicability of section 25(3). The Income-tax Officer recorded the finding that there was no discontinuation of business within the meaning of section 25(3). The Appellate Assistant Commissioner when the matter went back to him disagreed with the Income-tax Officers finding, held that the assessee was entitled to relief under section 25(3) or section 25(4) and directed him to modify the assessment accordingly. Before doing so he himself decided other points raised by the assessee before him in the appeal, giving relief on some of them. He reduced the amount of the assessment by a certain amount 'subject to the relief under section 25(3) or section 25(4) as above'. The case went back before the Income-tax Officer and he held that the assessee was entitled to the relief of Rs. 5,15,000 and odd under section 25(3) or section 25(4) as against the relief of Rs. 5,72,000 and odd claimed by the assessee. Against his order an appeal was preferred by the assessee to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner held that no appeal lay from the order of the Income-tax Officer under section 30 and dismissed it. The assessee preferred an appeal from his order to the Tribunal contending that he had jurisdiction to decide the question of relief to which it was entitled under section 25(3) or section 25(4). The Tribunal dismissed the appeal saying that the order passed by the Appellate Assistant Commissioner was not an order under section 31 and that consequently no appeal lay from it.
It is not in dispute that the Tribunal could hear the appeal if the order passed by the Appellate Assistant Commissioner dismissing the assessees appeal as incompetent could be said to be an order under section 28 or under section 31. Section 28 has no applicability and it is not the assessees case also that the order passed by the Appellate Assistant Commissioner could be said to be one under section 28.
Section 31 deals with orders that an Appellate Assistant Commissioner can pass on hearing an appeal which lies to him under section 30. An appeal lies to him under section 30 at the instance of an assessee objecting to the amount of income assessed under section 23 (an appeal lies to him from certain other orders also but it is not the assessees case that the last order of the Income-tax Officer was any of them). Section 30(2) lays down that the appeal would ordinarily be presented within 30 days of the receipt of the notice of demand and that the Appellate Assistant Commissioner may admit an appeal after the expiration of the period if he is satisfied that the appellant had sufficient cause for not presenting it within it. Sub-section (3) lays down that the appeal shall be in the prescribed form and shall be verified in the prescribed manner. Sub- (1) of section 31 days down that the Appellate Assistant Commissioner shall fix a day and place for the hearing of the appeal and sub-section (3) says that, in disposing of an appeal, he
'may, in the case of an order of assessment, -
(a) confirm, reduce, enhance or annul the assessment, or
(b) set aside the assessment and direct the Income-tax Officer to make a fresh assessment after making such further inquiry as the Income-tax Officer thinks fit or the Appellate Assistant Commissioner may direct, and the Income-tax Officer shall thereupon proceed to make such fresh assessment......'
What section 30 provides is a right of appeal against an order mentioned therein, and if such an appeal is filed then section 31 indicates how it shall be disposed of by the Appellate Assistant Commissioner.
In Commissioner of Income-tax v. Arunachalam Chettiar the Supreme Court held that an order can be passed under section 31 by an Appellate Assistant Commissioner only when there is before him an appeal contemplated by section 30(1). In that case an appeal was preferred by the assessee under section 30(1) against an order of an Income-tax Officer, and that was dismissed by an Appellate Assistant Commissioner as incompetent. No appeal was filed against that order, but a miscellaneous application was filed by the assessee before the Appellate Tribunal and the Tribunal acting on that application set aside the finding of the Income-tax Officer and directed him to make a fresh computation. The Commissioner applied to the Tribunal for referring to the High Court the question of law about the validity of the order passed by it. The Tribunal referred the question, but the High Court declined to answer it on the ground that the order of the Tribunal out of which the question arose was not passed an appeal under section 33(1) and that, therefore, the reference was incompetent. The Commissioner carried the matter to the Supreme Court but without success. The Supreme Court held that there was no provision in the Act permitting the making of such a miscellaneous application before the Tribunal and it could not be said to be an appeal under section 33(1) and the order thereon, therefore, could not be regarded as one under section 33(4) and, therefore, no reference lay under section 66(1) or (2). In the instant case the Appellate Assistant Commissioner after deciding a number of points raised by the assessee in the appeal and giving relief thereon reduced the amount of the assessment 'Subject to the relief under section 25(3) or section 25(4)'. Against the order for computation the assessee preferred what he styled as an appeal to the Appellate Assistant Commissioner. Now clearly the order passed by the Income-tax Officer was not an order against which an appeal was provided by section 30(1), and, therefore, it could not be said that any appeal was before the Appellate Assistant Commissioner on which he could pass any of the orders contemplated by section 31(3). The order of the Appellate Assistant Commissioner dismissing the appeal as incompetent was not an order under section 31, there being no appeal before it as contemplated by the statute. Accordingly the view taken by the Tribunal was, in our opinion, plainly right in that no appeal lay to it from the order of the Appellate Assistant Commissioner because the order passed by the latter was not an order under section 31. The appeal that had been filed before the Appellate Assistant Commissioner was not an appeal from an order mentioned in section 30(1), and, therefore, as the Supreme Court said in Arunachalam Chettiars case '...... there was no proper appeal before the Appellate Assistant Commissioner such as is contemplated by section 30(1) and, therefore, the order made by the Appellate Assistant Commissioner cannot be regarded as an order made by him under section 31(3), for an order section 31(3) can only be made in disposing of an appeal properly filed under section 30......'
Even if the Appellate Assistant Commissioner had wrongly said that no appeal lay to him it might 'conceivably be corrected by appropriate proceedings but it cannot certainly be regarded as such an order as is contemplated by any of the sub-sections of section 31.'
Sri Jagdish Swarup relied upon Mela Ram and Sons v. Commissioner of Income-tax. In that case the assessee preferred respective appeals against two assessment orders made against it. Those appeals were registered and notice was issued for their hearing under section 31. At the hearing the department raised the objection that the appeals were barred by time and must, therefore, be dismissed. The assessee prayed for condonation of the delay in filing the appeals. The Appellate Assistant Commissioner passed an order refusing to condone the delay and rejected the appeals in limine. He purported to pass the orders under section 31 read with section 30(2). Against those orders the assessee appealed to the Tribunal, which dismissed the appeal on the ground that the orders of the Appellate Assistant Commissioner were in substance passed under section 30(2) and not under section 31 and, therefore, were not appealable under section 33.
The High Court, upon reference made at the instance the assessee, upheld by the view taken by the Tribunal. The Supreme Court held that the orders of the Appellate Assistant Commissioner holding that there were no sufficient reasons for excusing the delay and rejecting the appeals as time-barred were orders passed under section 31 and, therefore, open to appeal. The Supreme Court observed that an appeal though not presented within time was nevertheless an appeal and the order dismissing it as time-barred was an order passed in appeal.
In the instant case the question is not whether the appeal before the Appellate Assistant Commissioner was an appeal barred by time. The question is whether the challenge before the Appellate Assistant Commissioner directed against an order which is not an order mentioned in section 30(1) can be said to constitute an appeal at all. That being so, the instant case is governed by the law laid down in Arunachalam Chettiars case rather than by the law stated in Mela Rams case. An appeal that is time-barred is an appeal within the jurisdiction of the Appellate Assistant Commissioner; it is distinct from an appeal which does not lie at all and an order refusing to entertain the latter cannot be said to be an order under section 31. It was made clear in Arunachalam Chettiars case that an order refusing to entertain an appeal that does not lie is not an order under section 31. In Mela Rams case, the Supreme Court said that the order was one under section 31(1)(a) because its effect is to confirm the assessment. It was recognized that an order dismissing an appeal as barred by time does not expressly confirm the assessment but reliance was placed upon the fact that the effect is that of confirming the assessment. It seems that the Supreme Court was of the view that the various expressions used in section 31(1)(a) indicate of the character of the orders which may be passed by an Appellate Assistant Commissioner on an appeal before him, the character being derived from the effect of those orders. If an appeal was dismissed, the effect of the order of dismissal was to confirm the assessment order. If the appeal was allowed in part, the effect of that order was to reduce the assessment. If upon the appeal the Appellate Assistant Commissioner enhanced the assessment, the order passed by him on the appeal was one of that character. If the appeal was allowed without a direction for a fresh assessment, the order was one which had the effect of annulling the assessment. All these are orders which can be passed only upon an appeal contemplated by section 30(1). An appeal which is not filed against the orders mentioned as open to appeal in section 30(1) is not an appeal upon which an order can be passed under section 31(3). In the instant case the order against which an appeal was filed before the Appellate Assistant Commissioner not being one of the orders mentioned in section 30(1) there was no appeal at all. This is quite different from saying that an appeal has been filed before the Appellate Assistant Commissioner but is barred by time. For these reasons we do not think that Sri Jagdish Swarup can derive any support for his contention from the decision in Mela Rams case.
Sri Jagdish Swarup contended that the interpretation we placed would leave an assessee without remedy against a wrong order by an Appellate Assistant Commissioner that the appeal is incompetent or does not lie. If this is the result it is not because of the interpretation being wrong but because that was the policy of the legislature. The legislature was not bound to provide a remedy against that wrong order. If it intended to give a remedy in such a case it should have laid down in section 33 that an appeal would lie to the Tribunal from any order passed by the Appellate Assistant Commissioner.
In the result we answer the question in the negative. The assessee will pay to the Commissioner of Income-tax his costs, which we assess at Rs. 200. Counsels fee is assessed at Rs. 200.
We direct that a copy of this judgment shall be sent under the seal of the court and the signature of the Register to the Income-tax Appellate Tribunal as required by section 66(5) of the Act.
Question answered in the negative.