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The Commissioner of Income-tax Vs. Shahzadi Begum Alias Luthfunnisa Begum and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberCase Referred No. 7 of 1949
Judge
Reported inAIR1952Mad232; [1952]21ITR1(Mad); (1952)1MLJ51
ActsIncome-tax Act, 1922 - Sections 31
AppellantThe Commissioner of Income-tax
RespondentShahzadi Begum Alias Luthfunnisa Begum and ors.
Appellant AdvocateC.S. Rama Rao Sahib, Adv.
Respondent AdvocateG. Ramakrishna Aiyar and ;K. Srinivasan, Advs.
Cases ReferredBayya Reddi v. Gopalrao
Excerpt:
direct taxation - assessment - section 31 of income-tax act, 1922 - whether order of appellate assistant commissioner (aac) rejecting appeal on ground that it was time barred was not order under section 31 and against which no appeal lay to tribunal - order of aac rejecting appeal was under section 31 and appealable to appellate tribunal - question answered in affirmative. - - the appellate assistant commissioner was not satisfied with that explanation and therefore rejected the appeal on llth october 1948. an appeal was thereafter preferred to the appellate tribunal against the order of the ap-pellate assistant commissioner rejecting the appeal. the first sub-section to that section contained a proviso that no appeal shall lie in respect of an assessment made under sub-section (4).....satyanakayana rao j. 1. the question referred to us under section 66(1) of the indian income-tax act by the income-tax appellate tribunal is:'whether on the facts and in the circumstances of the case the order of the appellate assistant commissioner, rejecting the appeal on the ground that it was time barred was not an order under section 31 of the indian income-tax act and against which no appeal lay to the tribunal.'2. the following facts relevant for the consideration of the question are taken from the statement of the case by the appellate tribunal. the assessees are the joint receivers appointed by the high court for the management of the estate of the late md. umar sahib of madras. the receivers were, however, discharged after the application for reference under section 66(1) was.....
Judgment:

Satyanakayana Rao J.

1. The question referred to us under Section 66(1) of the Indian Income-tax Act by the Income-tax Appellate Tribunal is:

'Whether on the facts and in the circumstances of the case the order of the Appellate Assistant Commissioner, rejecting the appeal on the ground that it was time barred was not an order under Section 31 of the Indian Income-tax Act and against which no appeal lay to the Tribunal.'

2. The following facts relevant for the consideration of the question are taken from the statement of the case by the Appellate Tribunal. The assessees are the joint receivers appointed by the High Court for the management of the estate of the late Md. Umar Sahib of Madras. The receivers were, however, discharged after the application for reference under Section 66(1) was filed before the Tribunal and in their place, the heirs of the deceased were brought on record as respondents. For the accounting year 1943 a return of the income was made treating the estate as one single unit. The heirs, however, raised the contention that the assessment should be made upon them individually in proportion to the shares of the Income which they obtained from the estate to which they succeeded. While that assessment was pending enquiry before the Income-tax Officer, for the subsequent year 1944, a return was again submitted by the assessees for separate assessment. The claim of the assessees for separate assessment was rejected by the Income-tax Officer for the two years. Against the order of the Income-tax Officer, appeals were preferred to the Appellate Assistant Commissioner and they were pending. For the accounting year 1945 again a similar claim was made by the heirs in their return submitted to the Income-tax Officer, and following the previous decision, the Income-tax Officer again negatived the claim. Against this order also there was an appeal to the Appellate Assistant Commissioner, which was filed on the 28th September 1946. The appeal was however out of time by 64 days. In a covering letter which they submitted to the Appellate Assistant Commissioner along with the memorandum of appeal, the assessees prayed for the condo nation of the delay on the ground that the staff which received the order of the Income-tax Officer mislaid it and omitted to bring it to the notice of the assessees for the purpose of filing the appeal. The Appellate Assistant Commissioner was not satisfied with that explanation and therefore rejected the appeal on llth October 1948. An appeal was thereafter preferred to the Appellate Tribunal against the order of the Ap-pellate Assistant Commissioner rejecting the appeal. This appeal also was filed out of time but the Appellate Tribunal condoned the delay accepting the explanation offered by the assessees. When the appeal was taken up for hearing by the Tribunal, the departmental representative raised the preliminary objection that no appeal lay as the order of the Appellate Assistant Commissioner rejecting the appeal was an order under Section 30 of the Income-tax Act which was not appeasable and that therefore the Tribunal had no Jurisdiction to hear and dispose of the appeal. The Tribunal did not accept the contention, as in their opinion, the order of the Appellate Assistant Commissioner rejecting the appeal as time barred was a disposal of the appeal, and as the only section which empowered the Appellate Assistant Commissioner to dispose of an appeal was Section 31, the order of the Appellate Assistant Commissioner should be treated as one made under Section 31 of the Act. Therefore, the order, it was held by the Appellate Tribunal, was appealable. In the result the Tribunal allowed the appeal of the assessees and set aside the order of the Appellate Assistant Commissioner and remitted the case back for hearing. The question set out above was referred to this Court at the instance of the Income-tax Commissioner.

3. On behalf of the Commissioner it was contended by Mr. Rama Rao Sahib, the learned advocate, that the order of the Appellate Assistant Commissioner was not one coming within Section 31 of the Act, and that, therefore the appeal to the Appellate Tribunal was incompetent. This argument is founded on the assumption, that Section 31 of the Act applies only to such appeals which are presented within the prescribed period or dealt with by the Assistant Commissioner after admitting appeal by condoning the delay, and that the section has no application to any orders passed by the Appellate Assistant Commissioner at a stage anterior to It. In support of this contention, learned counsel relied on certain decisions of the Bombay and Allahabad High Courts. On behalf of he assessees, reliance was placed upon the view taken by the Patna High Court, which, it was claimed, was also supported by a decision of the Judicial Committee.

4. Before an examination of the decisions cited on either side it would be convenient to refer to the provisions of the Act relating to appeals and to examine the scheme underlying, these provisions. Under the Income-tax Act of 1922, before its amendment in 1939 and the introduction of the present Section 33, an appeal against the assessment order to the Assistant Commissioner was provided under Section 30 of the Act. The first sub-section to that section contained a proviso that no appeal shall lie in respect of an assessment made under Sub-section (4) of Section 23, or under that sub-section read with Section 27. Sub-section (2) of Section 30 provided that the appeal shall ordinarily be presented within thirty days of receipt of the notice of demand relating to the assessment and power was also conferred upon the Assistant Commissioner to admit an appeal after the expiration of the period, if he was satisfied that there was sufficient cause for not presenting the appeal within the prescribed period. Sub-section (3) required that the appeal should be in the prescribed form and should be verified in the prescribed manner. Section 31 laid down the procedure for disposing of the appeal and also the powers of the appellate authority in disposing of an appeal. A further appeal to the Commissioner was provided by Section 32 in a limited class of cases. There was then no further appeal to income-tax appellate tribunal as it was not constituted; and it was only under the present Section 33 that such a provision was made In respect of orders under Section 31, it was open under Section 65 to require the Commissioner to refer to the High Court a question of law arising out of such an order or decision, and if he refused to do so under Sub-clause 3 of Section 68, an application to the High Court could be made to requite the Commissioner 10 state a case, 'this was altered in 1939, to some extent. The right of appeal under Section 30, of the Act against the orders OF the Income-tax Officer relating to assessment to the Assistant Commissioner is continued by Section 30. The proviso to Sub-section 1 in the old Act barring appeals against assessment orders under Section 23(4) has now been omitted and other provisos have been added, Sub-clause (2) to Section 30, requiring that the appeal should ordinarily be presented within 30 days of the receipt of demand levying the assessment and the-power of the Appellate Assistant Commissioner ta admit an appeal after the expiration of the period of 30 days if there was sufficient cause for not presenting it within that period, remains unaltered. Sub-clause (3) was also retained. The procedure to-be followed and the powers to be exercised by the Assistant Commissioner acting as an appellate authority are retained under Section 31 though amplified to some extent. A second appeal is now provided to an Appellate Tribunal under Section 33 of the Act against orders passed by the Appellate Assistant Commissioner under Section 31. As we are now concerned only with an assessment order, we are not referring to the other provisions in Sections 30 and 31 of the Act. The power to be exercised and the procedure to be followed by the Appellate Tribunal is also stated in Section 33. Under the present scheme, therefore, a further appeal to the Appellate Tribunal lies only if an order falls under Section 31 of the-Act or under Section 28 and not otherwise. We are not in the present case concerned with Section 28. The appeal therefore to the Appellate Tribunal can be justified only if It is established that the order of the Appellate Assistant Commissioner rejecting the appeal is really one which was and could have-been passed under Section 31 of the Act.

5. The point for determination is whether the narrow construction put upon Section 31 by the Bombay and Allahabad High Courts should be preferred to the liberal construction placed upon that section-by the Patna High Court. A form is prescribed by Section 30 and rules were made under the rule making power for presenting an appeal. After an appeal is so presented, the appellate authority may have to consider certain questions of a preliminary nature, not touching the merits of the order appealed against. Such questions are, for example whether the appeal was presented in time, and' whether there was sufficient cause to condone the delay, whether an appeal conformed to the formalities prescribed by the rules or not, and whether art appeal was or was not barred by any of the provision of the Act and so on. These questions, though in a sense they may relate to the appeal, do not reality concern the merits of the appeal i.e., the question whether the order appealed against was correct or not. There is no definition of an appeal in the Income-tax Act. While construing the word 'appeal' in the third column in Article 182 of the Limitation Act, Sir Dinshaw Mulla observed in 'Nagendranath Dey v. Sureshchandra Dey', 59 I. A. 283 :

'There is no definition of appeal in the Civil P. C., but their Lordships have no doubt that any application by a party to an appellate Court, asking it to set aside or revise a decision of a subordinate Court, is an appeal within the ordinary acceptation of the term, and that it Is no less an appeal because it is irregular or incompetent.'

There is no particular reason for not accepting: and applying this definition of an appeal underthe Income-tax Act. The appeal may be an irregular appeal or an incompetent appeal or even may be an appeal which was presented out of time. But still the Appellate Court has to apply Its mind before it rejects the appeal on a preliminary ground that no case for condoning the delay was madeout or that the formalities required of law have not been compiled with or that the appeal was incompetent. In considering these questions the appellate Court is undoubtedly exercising an appellate power and not a power which is outside it. No doubt under Section 30(2) of the Act power is given to condone the delay if sufficient cause is madeout. But suppose a sufficient cause is not madeout, then what is the kind of order which the ap-pellate court is authorised to make and under which section of the Act. Which is the section of the Act that empowers the appellate Court to consider and weigh the reasons put forward in Justification of the filing of the appeal out of time and to come to a decision and reject the appeal? The Act does not specifically empower the Appellate authority to reject an appeal which is out of time or which did not comply with the formalities or even an appeal which was incompetent. Pushed to its logical conclusion, the argument on behalf of the Income-tax Commissioner would lead to the result that in such cases, the appellate Court would have no power at all to reject the appeal. This could not have been the result contemplated by the Legislature and that was for the reason that after the section conferring a right of appeal and empowering the appellate authority to excuse the delay if sufficient cause is made out and admit an appeal, there follows the section which defines the powers of the appellate . Court and prescribes the procedure to be adopted in disposing of the appeal. Even in respect of the preliminary questions it cannot bedoubted and indeed it was not disputed, that the appellate Court is bound to hear the appellant after fixing a date for hearing which section confers such a power except it be Section 31? The Legislature, in our opinion, thought that all suck matters are covered by Section 31 which defines the procedure to be adopted and the power to be exercised by the Appellate Tribunal and therefore no other specific provision was made in the Act in thatbehalf.

6. This view is to a large extent supported by the observations of the Judicial Committee in 'Commr. of Income-tax, Bombay Presidency and Aden v. Khemchand Bamdas', 65 Ind App 236. The view taken before the decision of the Privy Council in some of the High Courts was that under the proviso to Section 30, which is now omitted, anorder by the Appellate Assistant commissioner, that an appeal against an order of assessment underSection 23(4) was incompetent as such an appeal was barred by the proviso, and that a reference under Section 6 in such a case was precluded as the order was not one under Section 31. In the case before the Judicial Committee above referred to, the Income-tax Officer made an assessment first under Section 23 (4) and revised it later in view of a later order of the Commissioner declaring that the registrationof a firm was invalid and passed a fresh order ofassessment under Section 23(4) and made the asses-sees liable to super-tax under Section 55 of the Act. One of the questions considered was whether the later order was one against which an appeal to the Assistant Commissioner was competent. In dealing with this contention, their Lordships observed at page 251:

'If it was made, as the Commissioner has found, in purported exercise of the powers given by Section 23, Sub-section 4, the assessee nevertheless had a right of appeal to the Assistant Commissionerunder Section 30 and the Commissioner was in errorwhen he quashed the proceedings on that appeal.'

For as was truly said by Sir Shadi Lal in 'DuniChand v. Commissioner of Income-tax', 10 Lah 696:

'The mere fact that the assessment purports to have been made under that sub-section does not shut out the appeal; it must be shown that tbe circumstances of the case bring it within the scope of that sub-section.'

As a preliminary to the application of the old proviso to Section 30 barring a right of appeal, it was always necessary when the assessee complained to see whether the circumstances of the case were such as would have Justified action on the part of the Income-tax Officer of making an assessment under the best judgment rule in Section 23(4). If the circumstances did not warrant it, the assessment would be unsustainable. If on the contrary, the circumstances assumed to have existed by the Income-tax Officer, did in fact exist, the order would be correct and the appeal would be incompetent. It cannot be said therefore that because an appeal was incompetent, an order disposing of the appeal as being incompetent is not appealable. These are all no doubt Questions of a preliminary nature to be determined by the appellate authority in the exercise of its appellate powers. The decision of Sir Shadi Lal which had the approval of the Judicial Committee was the foundation of the view taken by the Patna, High Court, In the earliest of the cases in 'Ananda v. Commissioner of Income-tax, B & O', 11 Pat 187. In the light of the decision of the Judicial Committee the earlier decision of the Allahabad High Court in 'Jotram Sher Singh v. Commissioner of Income-tax, U. P. : [1934]2ITR129(All) which was based upon the Pull Bench decision of the Rangoon High Court in 'In Adbul Bari v. Commissioner of Income-tax', Burma 9 Hang 281 seems to us erroneous. The Rangoon Full Bench disagreed to a considerable extent from the view taken in 'Duni Chand v. Commissioner of Income-tax', 10 Lah 596. To accept the limited and narrow construction for which the counsel for the Commissioner of Income-tax contends that the 'appeal' in Section 31 must be understood as meaning only an appeal which was competent and was presented in time or which was admitted after the delay was condoned and which also complied with all the formalities, is to leave the appellate Court powerless to decide the preliminary points for there is no specific enumeration of the power in the scheme of the Act. It would also deprive the aggrieved party of a remedy and make him helpless even in cases where the order of the Appellate Assistant Commissioner was obviously wrong and unjust. There is no reason to restrict the meaning of the word 'appeal' in Section 31 to an appeal which complied with all the requirements of the law and was ripe for consideration on the merits of order appealed against. The expression 'hearing of the appeal' and 'disposing of the appeal' In Sub-els. 1 and 2 of Section 31 and the power to make further inquiry may all equally apply to the preliminary stages as well as the subsequent stages of the hearing of an appeal.

7. The argument however most strongly pressed was that in enumerating the powers in Sub-section 3 to Section 31 power to reject an appeal was not expressly mentioned, which, it was claimed, was an indication that the preliminary stages of an appeal and the disposal and hearing of it were not within the purview of Section 31. We are unable to agree with this view. If the appeal is dismissed as incompetent or is rejected as it was filed out of time and no sufficient cause was established, it results in an affirmation of the order appealed against. When pressed, learned counsel however was forced toconcede that if an appeal, though out of time, was admitted by mistake and at the hearing an objection was taken by the respondent which was upheld, the order rejecting the appeal at that stage would fall under Section 31. One of the decisions of the Allahabad High Court even held that once the delay was condoned and the appeal was admitted, but later, on the objection of the respondent, it was found that the condonation of the delay at the earlier stage proceeded on a mistake, an order rejecting the appeal at that stage would be one under Section 31. It is also stated that if a date for the hearing of the appeal was axed and the appeal was heard, the order might possibly fall under Section 31. If the argument in support of the Allahabad view were correct, where is the power under Section 31 to reject an appeal even under those circumstances? It must be conceded that the order of rejection under such circumstances would amount to confirmation of the order of the Income-tax Officer. The difficulty arises according to the argument advanced on behalf of the Income-tax Commissioner only in cases where the delay was not condoned by the Appellate Assistant Commissioner and when he deals with the matter ex parte. In such a case, it is said that the order would be outside the purview of Section 31. It is difficult to make a distinction in the manner suggested. It only shows and reinforces the argument that all the powers exercised and exercisable by the appellate authority are derived under Section 31 and that the language of Section 31 is wide enough to cover the two stages of the hearing of the appeal whether It related to questions of a preliminary nature or whether it related to the merits of the appeal. The decision of the Allahabad High Court in 'Jot Ram v. Commissioner of Income-tax, U. P. : [1934]2ITR129(All) , already referred to was followed by the same Court in 'Shivnath Prasad v. Commissioner of Income-tax', Central and United Provinces : [1935]3ITR200(All) in which the question was whether an order rejecting an appeal by the Assistant Commissioner as time barred was within the purview of Ss. 31, 32 or 33 of the Income-tax Act as ifc stood before 1939 and the High Court could direct the Commissioner to state a case under Section 66 of the Act. It was held that the order was not within Section 31 or any other section. It was an appeal filed out of time and the delay in presenting was not condoned and the appeal was non-existent; the question of the power to reject an appeal under any particular section of the Act was not considered by the learned Judges. An order rejecting an appeal on the ground of limitation was not considered to be an order confirming an assessment within the meaning of Section 31. According to the learned Judges an order confirming an assessment is an order which has reference to the assessment and which affirms it; in other words an express affirmation of the order of assessment should be made. All that the section says is that in disposing of an appeal, the Appellate Assistant Commissioner may in the case of an order of assessment confirm the order; if the appeal is rejected or if the appeal is dismissed it tantamounts 'to a confirmation of the order. It is not the form in which the judgment is pronounced that matters, but the substance and the consequence of the dismissal or rejection of the appeal. In a recent decision of the same Court in 'Special Manager, Court of Wards v. Commissioner of Income-tax, U. P. : [1950]18ITR204(All) , there are observations doubting the correctness of the decision in 'Shivnath Prasad v. Commissioner of income-tax, C. P. and U. P. : [1935]3ITR200(All) though obiter, for it was found even by the Appellate Tribunal that the case was not one in which the delay should be excused on the merits, as they were not satisfied with the sufficiency of the grounds for condoning the delay. After referring to a decision of the Patna High Court to the contrary, this is what the learned Judges state at page 212: 'The other view at the same time may be possible that even though the period of limitation is prescribed under Section 30 and the power to grant extension is also given in that section the power is really exercised under Section 31 as the' appellate Assistant Commissioner when he decides not to extend the period of limitation may be said in a sense to have confirmed the assessment. This question may assume some importance to a case where the appeal was within time but the Appellate Assistant Commissioner made a mistake and refused to admit it on the ground that the appeal was barred by limitation or the question might well have to be seriously considered in a case where there was sufficient cause for condonation of the delay and the exercise of the discretion by the Appellate Assistant Com- missioner was considered to be perverse. In the case before us, however, both the Appellate Assistant Commissioner as well as the Appellate Tribunal considered the case on the merits and both were of the opinion that there were no sufficient grounds for the condonation of the delay..... in the circmstances of the case, there is no point in having the question further considered by a larger Bench.'

There are two decisions of the same Court in 1951. In 'Mohd. Nairn Md. Alam v. Commissioner of Income-tax, u. P. : [1951]19ITR58(All) , the first of the cases, the Appellate Assistant Commissioner admitted an appeal but subsequently dismissed It on the ground that the appeal was time-barred. This order was passed after issue of notice to the assessee fixing a date and place of hearing of the appeal and the order was treated as one falling under Section 31 which was appealable. The reason given by the learned Judges was that after the admission of the appeal the only section that would apply at the time of the hearing was Section 31. They however expressly 'refrained from expressing any opinion on the larger question for they observed at page 62:

'We do not want to go into the larger question whether an order refusing to condone the delay under Section 30(2) and thereafter rejecting the memorandum of appeal is an order under Section 30 (2) of the Indian Income-tax Act or, is an order under Section 31 of the Act.'

The second decision is reported at page 63 as the 'Municipal Board, Agra v. Commissioner of Income-tax, U. P. : [1951]19ITR63(All) . The distinction was drawn in that case between an appeal which was dismissed 'in limine' on the ground of limitation in which case the order would be under Section 30 (2) and an appeal which was admitted and after fixing a date and place of hearing was dismissed as time-barred in which case it would be an order under Section 31 (1). On the facts it was a case where the appeal was dismissed 'in limine'. Therefore It was held that there was no appeal. The distinction if we may say so with respect, between the two cases seems to be very thin.

8. The Bombay High Court in 'Commissioner of Income-tax v. Mysore Iron and Steel Works : [1949]17ITR478(Bom) , followed the Allahabad view. It was also a case where the Appellate Assistant Commissioner refused to condone the delay. The learned Judges refused to follow the Patna view and preferred the view taken by the Allahabad Court. With great respect we are unable to agree with the view taken by the learned Judges of the Bombay High Court. At page 480the learned Chief Justice) after examining the scheme of the Act, observes:

'Now, the scheme under Sections 30 and 31 of the Act is fairly clear. An assesses has a statutory right to present an appeal within thirty days without any order being required from the Appellate Assistant Commissioner for admission of that appeal. But if the time prescribed expires, then that statutory right to present an appeal goes; end an appeal can only be entertained provided it is admitted by the Appellate Assistant Commissioner after condoning the delay. Therefore before an appeal could be admitted in this case, an order from the Appellate Assistant Commissioner, was requisite that the delay had been condoned, and it was only on such an order being made that the appeal could be entertained by the Appellate Assistant Commissioner. Now B. 31 deals only with such appeals which are presented within the prescribed period or admitted after the delay had been condoned, and the procedure laid down in Section 31 with regard to the hearing of appeals only applies to such appeals. Therefore, in my opinion, when the Appellate Assistant Commissioner refused to condone the delay, there was no appeal before him which he could hear and dispose of as provided under Section 31 of the Act.'

This in substance is also the argument advanced en behalf of the Income-tax Commissioner by Mr. Ramarao Sahib.

9. Considerable light 13 thrown on the question which we are considering in this reference by the decision of the Full Bench in 'K. Ananda v. Commissioner of Income-tax, B & O', 11 Pat 187. It was a case which arose under the old proviso to Section 30 barring a right of appeal in respect of en assessment order under Section 23(4). The observations of the learned Judges are in consonance with the principles laid down by the Privy Council In 'Income-tax Commissioner v. Khemchand Ramdas', 65 I. A. 236, already referred to. Courtney-Terrell C. J. observed at page 202:

'It is undoubtedly the duty of the Assistant Commissioner when the order Of the Income-tax Officer comes before him on appeal to decide whether or not he is precluded by the Act from going into the amount or rate of the assessment or the liability of the assessee, and, if he is so precluded, he must reject the appeal. In so rejecting the appeal he is, in my opinion, under Section 31 'disposing of an appeal' and such disposal is a proceeding In connection with an assessment under this Act.'

The observations of Fazl All J. (as he then was) are more pertinent. At page 215 the learned Judge states:

'The Assistant Commissioner did not summarily dismiss the appeal but fixed a date and place for hearing the assessee and after dealing with the point as to whether the assessee was liable to be taxed under the Act or not, confirmed the assessment on the ground that the assessment had been rightly made under Section 33 (4). The question is whether this order or decision was or was not one under Section 31. The learned Assistant Government Advocate contends that once It is found that no appeal lay to the Assistant Commissioner, the order passed by that Officer cannot be regarded as one passed under Section 31. Now Section 31 provides that the Assistant Commissioner may in disposing of the appeal confirm, reduce, enchance or annul the assessment or may set It aside and direct the Income-tax Officer to make ft fresh assessment after making such further inquiry as the Income-tax Officer thinks fit. In this case the Assistant Commissioner passed anorder which Is at least in form an order under Section 31. In passing the order the Assistant Commissioner also purported to act as the ordinary appellate authority and as far as I am aware there is no section in the Income-tax Act except Section 31 under which the order could have been passed. It appears to me, therefore, that the moment such an order is produced before the Commissioner of Income-tax, the assessee is entitled to ask him, If he so wishes, to refer such questions of law as arise out of it to the High Court under Section 66 (2) ...... UnderSection 31, the Assistant Commissioner has the power to allow the appeal as well as to reject it and the mere fact that he rejects it on the grouud that in his opinion no appeal lies will be no ground for treating the order as one not passed under Section 31.'

Again at page 219 after referring to a decision of the Calcutta High Court under Article 119 of the Limitation Act of 1877 which had to construe whether there has been an appeal as in 'Nagendranath De v. Sureshchandra Dey', 59 I. A. 283 the learned Judge adopts the reasoning in 'Wazir Mahton v. Lulit Singh', 9 Cal 100' and states:

'That case, it is true, was decided with reference to a wholly different Statute but the reasoning which was adopted there is, in my opinion, also applicable to this case and I think that where an appeal has been actually preferred to the appellate authority and where it has been disposed of by such authority, the order passed in such a proceeding may, without straining the actual words of the section, be regarded as an order under Section 31 or Section 32 as the case may be.'

The observations of Sir Shadi Lal in 'Duni Chand v. Commissioner of Income-tax', 10 Lah 595' which had the approval of the Privy Council were reliad on. In a later case of the same Court in 'Gyan Manjari Kuari v. The Commissioner of Income-tax, B & O : [1944]12ITR59(Patna) , an appeal was rejected by the Appellate Assistant Commissioner on the ground that it was not in the prescribed form. It was hold that the order of the Appellate Assistant Commissioner was within Section 31 of the Act and that the appeal was competent. Manohar-lal, J., who delivered the judgment'of the Court quoted 'in extenso' from the decision of the Pull Bench in 'Kunwarji Ananda v. Commissioner of Income-tax, B & O.' 11 Pat 187, in support of his view. At page 65 occurs the following extract from Dhavle, J's. judgment which gives the basis of the decision:

'Where, however, the Assistant Commissioner holds that an appeal is barred by the proviso, (referring to the old proviso to Section 30), it has been urged by the learned Counsel for the income-tax Department that there is no order passed under Section 31 and that consequently the assessee is not entitled to resort to the provisions of Sub-sections (2) and (3) of Section 66 for coming up to the High Court on questions of law. It appears to me that this contention is unsound. If the order be not an order under Section 31, there Is no other section in the Act under which it can come. It is true that Section 31 deals with the hearing of the appeals; but does this necessarily mean a hearing of the appeal on the merits.'

10. The view taken by the Patna High Court In our opinion, for the reasons already mentioned is correct. Under the Civil Procedure Code, it was held that if an appeal was rejected either on the ground of limitation or for a similar reason that the order of rejection was appealable as a decree --See 'Ayyama v. Nagabhooshanam', 16 Mad 285, 'Zamindar of Tuni v. Bennayya', 22 Mad 155,'Samintha lyer v. Venkatasubba Aiyar', 27 Mad 21 in which 'Gulab Rai v. Mangilal', 7 All 42 was followed -- See also 'Kantaimathi Animal v. Ganesa lyer; 59 Mad 805. But a Full Bench of our Court in 'Re: Kayambu Pillai', ILR (1941) Mad 904, held that an order dismissing an appeal for non-compliance of the order requiring security for coats and an order dismissing an appeal for -non-payment of court-fee are hot decrees and are not appealable as such. The decisions in 'Ayyanna v. Nagabhooshanam', 16 Mad 285, and 'Zamindar of Tuni v. Bunnayya', 22 Mad 155 were distinguished. There is a recent decision of Subba Rao, J., in 'Srinivasalu Naidu v. Commissioner of Income-tax : [1948]16ITR341(Mad) , which at first sight seems to be against the view which we have taken. The question which the learned Judge had to deal related to the construction of Section 33-A (2) of the Income-tax Act. The Commissioner is authorised by that section to exercise the power of revision but subject to certain restrictions provided in the section itself. The Commissioner has no power under that proviso to revise the order:

'(a) Where an appeal against the order lies to the Appellate Assistant Commissioner or to the Appellate Tribunal but has not been made, the time within which such appeal may be made has not expired, or, in the case of an appeal to the Appellate Tribunal, the assessee has not waived his right of appeal, or

(b) where an appeal against the order has been made to the Appellate Assistant Commissioner, the appeal is pending before the Appellate Assistant Commissioner, or

(c) the order has been made the subject of an appeal to the Appellate Tribunal.'

11. In that case an appeal to the Appellate Tribunal under Section 33 against an order of the Appellate Assistant Commissioner was dismissed as time-barred. Thereafter the assessee applied to the Commissioner under Section 33-A (2) to revise the order of the Appellate Assistant Commissioner. He declined to entertain the application on the ground that the order of the Appellate Assistant Commissioner had already been made the subject of an appeal to the Appellate Tribunal. The assessee then applied to the High Court under Section 45. of the Specific Relief Act for directing the Commissioner to hear and determine the question. The objection raised was that the order of the Appellate Assistant Commissioner was made the subject of an appeal to the Appellate Tribunal though it was dismissed as being out of time and therefore the Commissioner could not be compelled to exercise the power of revision under Section 33-A (2). In the context in which the expression occurs it Is clear that the bar to the exercise of the revisional Jurisdiction was the actual pendency of an appeal before the Appellate Assistant Commissioner, or that there was a disposal on merits by the Appellate Tribunal and therefore it should not be again made the subject of revisional jurisdiction of the Commissioner. It was therefore rightly held by the learned Judge, if we may say so with respect, that a mere dismissal of an appeal 'in timine on the ground of limitation did not attract the bar to the exercise of the revisional jurisdiction and therefore a mandamus was issued. Reference was made in that Judgment to the decision of Madhavan Nair, J., in 'Bayya Reddi v. Gopalarao', 57 Mad 741 and of the Judicial Committee, In 'Nagendranath De v. Sureshchandra De', 59 I. A. 283. The- decision, in our opinion, does not support to any extent the contention of Mr. Rama Rao Sahib, in 'Bayya Reddi v. Gopalrao', 57 Mad 741. no doubt the appeal memorandum was rejected as being out of time and the view that there was no appeal within' the meaning of Article 183of the Limitation Act was based on the fact at under the Madras Amendment which introduced new Sub-section 3 to Rule 1 of Order XLJ Civil Procedure Code, it was necessary to decide the application under Section 5 of the Limitation Act to excuse the delay before the appeal is admitted. The view therefore taken by the learned Judge in that case car; be justified on the ground. But that does not help the contention of Mr. Kama Rao Sahib.

12. We are therefore of opinion that the order of the Appellate Assistant Commissioner lejecting the appeal was one under Section 31 of the Income-taxi Act and was appealable to the Appellacc Tribunal. The question referred to us must therefore be answered in the affirmative and in favour of the assessee. As the assessee has succeeded in this reference, he is entitled to his costs which we fix at Rs. 250. (To be shared by the respondents between them.)


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