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Lalji Haridas Vs. Commissioner of Income-tax, Gujarat - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtGujarat High Court
Decided On
Case NumberIncome-tax Reference No. 9 of 1966
Judge
Reported in[1968]67ITR213(Guj)
ActsIncome Tax Act, 1922 - Sections 31(2), 31(3), 33(1) and 33(2)
AppellantLalji Haridas
RespondentCommissioner of Income-tax, Gujarat
Appellant Advocate M.M. Thakore, Adv.
Respondent Advocate J.M. Thakore, Adv.
Cases ReferredJitan Ram Nirmal Ram v. Commissioner of Income
Excerpt:
.....whether order passed by appellate assistant commissioner calling for remand report from income-tax officer appealable - appeal under section 33 (1) is appeal against substantive order disposing appeal - such substantive order may be made under any of the different clauses of section 31 (3) - no appeal lies under section 33 (1) against order passed by appellate assistant commissioner directing income-tax officer to make further inquiry and report - tribunal not justified in entertaining appeal. - - 46. immediately after filing the return the assessee took certain proceedings for the purpose of challenging the jurisdiction of the income-tax officer, but ultimately he failed in preventing the income-tax officer from proceeding with the assessment, and the income-tax officer made an..........to be added in the assessable income of the assessee. the assessee preferred an appeal to the appellate assistant commissioner and his grievance against the assessment order was that the income-tax officer had acted contrary to the principles of natural justice and that no opportunity was given to him to examine witness in support of his case that the cash credit entries represented sale proceeds of gold and that certain relevant questions were also wrongly disallowed by the income-tax officer. the appellate assistant commissioner found that there was substance in this grievance of the assessee and he, accordingly, by an order dated 3rd september, 1959, directed the income-tax officer to make further inquiry into the case by giving an opportunity to the assessee to produce whatever.....
Judgment:

Bhagwati, J.

1. This reference arises out of a proceeding for assessment of the assessee for the assessment year 1949-50, the relevant account year being Samvat year 2004, for income shown in the account books and the financial year 1948-49, for income from undisclosed sources. The Income-tax Officer served a notice on the assessee on 21st December, 1957, under section 28 (2) read with section 46 (1) (a) of the Saurashtra Income-tax Ordinance, 1949, calling upon the assessee to file a return of his income for the assessment year 1949-50. In response to the notice, the assessee filed a return of his income under protest and in that return he disclosed an income of Rs. 46. Immediately after filing the return the assessee took certain proceedings for the purpose of challenging the jurisdiction of the Income-tax Officer, but ultimately he failed in preventing the Income-tax Officer from proceeding with the assessment, and the Income-tax Officer made an assessment order dated 17th December, 1958, holding that five cash credit entries appearing in the books of account of the assessee and aggregating to Rs. 4,74,000 represented undisclosed income of the assessee and was accordingly liable to be added in the assessable income of the assessee. The assessee preferred an appeal to the Appellate Assistant Commissioner and his grievance against the assessment order was that the Income-tax Officer had acted contrary to the principles of natural justice and that no opportunity was given to him to examine witness in support of his case that the cash credit entries represented sale proceeds of gold and that certain relevant questions were also wrongly disallowed by the Income-tax Officer. The Appellate Assistant Commissioner found that there was substance in this grievance of the assessee and he, accordingly, by an order dated 3rd September, 1959, directed the Income-tax Officer to make further inquiry into the case by giving an opportunity to the assessee to produce whatever evidence he wanted to adduce in support of his case, provided it was relevant and to make a report within three months. The assessee was of the view that the Appellate Assistant commissioner ought to have set aside the assessment Appellate remanded the case to the Income-tax Officer for making a fresh assessment and the Appellate Assistant Commissioner was wrong in keeping the appeal pending before him and directing the Income-tax Officer to make further inquiry and report. The assessee, therefore, preferred an appeal to the Tribunal complaining against the order of the Appellant Assistant Commissioner. At the hearing of the appeal before the Tribunal a Preliminary objection was raised on behalf of the Income-tax Officer against the maintainability of the appeal. The Income-tax Officer urged that since there was no substantive order passed by the Appellate Assistant Commissioner under section 31 (3) disposing of the appeal and the order passed by the Appellate Assistant Commissioner was merely an interim order causing further inquiry to be made by the Income-tax Officer under section 31 (2), no appeal lay to the Tribunal under section 33 (1) and the appeal was, therefore, not maintainable. The Income-tax Officer relied on a decision of the Bombay High Court in Girdher Javer and Co. v. Commissioner of Income-tax, in support of this preliminary objection. The Tribunal however rejected the preliminary objection holding that the decision of the Bombay High Court in Girdher Javer's case, was not a direct authority on the question raised by the preliminary objection but that there was a decision of the Patna High Court in Jitan Ram Nirmal Ram v. Commissioner of Income-tax, which was directly in point and according to that decision of the Patna High Court, an appeal lay against an order made by the Appellate Assistant Commissioner under section 31 (2). The Tribunal then proceeded to discuss the merits of the appeal and came to the conclusion that the order passed by the Appellate Assistant Commissioner under section 31 (2) causing further inquiry to be made by the Income-tax Officer was a proper and valid order. The tribunal in this view of the matter rejected the appeal of the assessee. The assessee then applied to the Tribunal for making a reference to the High Court on the question of law decided against him by the Tribunal. The Commissioner was also dissatisfied with the decision of the Tribunal as regards the preliminary objection but he could not make an application for a reference since the appeal was decided in favour of the revenue. But when the application for reference made by the assessee came to be heard, he submitted to the Tribunal that the question of law arising out of the preliminary objection should also be referred to the High Court. The Tribunal accordingly referred the following two questions for our determination :

'(1) Whether the order passed by the Appellate Assistant Commissioner calling for a remand report from the Income-tax Officer is appealable to the Appellate Tribunal ?'

'(2) Whether on the facts and in the circumstances of the case, was the order passed by the Appellate Assistant Commissioner calling for a remand report from the Income-tax Officer in accordance with law and justified in the circumstances ?'

2. It is apparent that the second question can arise for consideration only if the first question is answered in the affirmative and, therefore, we must first proceed to consider the first question. The first question raises the point whether an appeal lies to the Tribunal against an order passed by the Appellate Assistant Commissioner directing further inquiry to be made by the Income-tax Officer under section 31 (2). Section 33 (1) provides that any assessee objecting to an order passed by the Appellate Assistant any assessee objecting to an order passed by the Appellate Assistant Commissioner under section 31 may appeal to the Tribunal within sixty days of the date on which such order is communicated to him. The right which is conferred on the assessee to prefer an appeal to the Tribunal is therefore, limited to an order passed by the Appellate Assistant Commissioner under section 31. If, therefore, the order of the Appellate Assistant Commissioner objected to by the assessee in his appeal to the Tribunal was an order under section 31, the appeal would be maintainable under section 33 (1). Now when we turn to section 31 we find that the only orders contemplated in the section are those referred to in the various clauses of sub-section (3). Section 31 (2) does not contemplate an order to be passed on the appeal. What section 31 (2) provides is that the Appellate Assistant Commissioner may for the purpose of disposing of an appeal, make such further inquiry as he thinks fit or cause further enquiry to be made by the Income-tax Officer. The Appellate Assistant Commissioner may under section 31 (2) make further inquiry himself or cause such further inquiry to be made by the Income-tax Officer. It is no doubt true that when he decides to cause further inquiry to be made by the Income-tax Officer, he would pass an order directing the Income-tax Officer to make such further inquiry but that would be merely an interim order for the purpose of obtaining further material on the basis of which he can dispose of the appeal. Such an order would not stand on any different footing from a decision taken by him to make further inquiry himself. The appeal which is provided under section 33 (1) is an appeal against a substantive order disposing of the appeal and such a substantive order may be made under any of the different clauses of section 31 (3) but no appeal lies under section 33 (1) against decision of the Appellate Assistant Commissioner under section 31 (2) to make further enquiry himself or to cause further enquiry to be made by the Income-tax Officer.

3. This view appears to be clear on principle but quite apart from principle, there is clear authority in support of it and that is the decision of the Bombay High Court in Girdher Javer's case. This decision was brushed aside by the Tribunal by saying that it was not a direct authority on the point but we fail to see how the Tribunal could possibly disregard this decision as not being an authority on the point. This decision in terms lays down that the power conferred on the commissioner under section 33 (2) to prefer an appeal against an order passed by the Appellate Assistant Commissioner under section 31 is a power confined to prefer an appeal against the substantive orders made under section 31 and those substantive orders are made by the Appellate Assistant Commissioner under section 31 (3) and no appeal lies under section 33 (2) at the instance of the Commissioner against a direction given by the Appellate Assistant Commissioner under section 31 (2). It is no doubt true that this decision was concerned with the true interpretation of section 33 (2) but on the material point, the language employed in section 33 (2) is identical with that employed in section 33 (1) and if an order under section 31 referred to in section 33(2) means a substantive order under section 31(3) and not a direction under section 33 (2), equally reference section 33 (1) to an order under section 31 must be limited to a substantive order under section 31 and cannot include a direction under section 31 (2). The decision of the Bombay High Court in Girdher Javer's case is, therefore, a direct authority for the proposition that no appeal lies under section 33 (1) or 33 (2) against a direction given by the Appellate Assistant Commissioner under section 31 (2).

4. The Tribunal relied on the decision of the Patna High Court in Jitan Ram Nirmal Ram v. Commissioner of Income-tax and held that this decision was a direct authority for the proposition that an appeal lies to the Tribunal under section 33 (1) against a direction issued by the Appellate Assistant Commissioner under section 31 (2). But when we turn to this decision we find that it does not say anything of the sort. The order of the Appellate Assistant Commissioner, which was impugned in appeal before the Tribunal in that case, was not by way of direction for further inquiry by the Income-tax Officer under section 31 (2) but was an order setting aside in part the assessment made by the Income-tax Officer and directing the Income-tax Officer to make a fresh assessment as provided in section 31 (3) (b). It was a substantive order made under section 31 (3) (b) and was, therefore, clearly appealable even according to the view taken by the Bombay High Court in Girdher Javer's case. This decision of the Patna High Court does not, therefore, lay down that, where a direction is issued by the appellate Assistant Commissioner under section 31 (2), it can be challenged by way of an appeal under section 33 (1) or section 33 (2).

5. We are, therefore, of the view that no appeal lay to the Tribunal against the order passed by the Appellate Assistant Commissioner directing the Income-tax Officer to make further inquiry and report and that the Tribunal was in error in holding that the appeal was maintainable. Our answer to the first question referred to us must, therefore, be in the negative and in view of this answer to the first question, the second does not arise for consideration. The assessee will pay the costs of the reference to the Commissioner.


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