Ramachandra Iyer, J.
(1) The following two questions have been referred to us under S. 66(2) of the Indian Income-tax Act:
'(1) Whether on the facts and in the circumstances of this case, the Appellate Tribunal having dismissed the appeal by the department had jurisdiction to set aside the assessment on the petitioner as an individual and direct a fresh assessment; and
(2) Whether on the facts and in the circumstances of this case, the Appellate Tribunal was right in deciding the appeal on the basis of an irregularity in the assessment while the said irregularity was not specifically taken in the grounds of appeal.'
(2) The following facts are necessary to be mentioned in answering the questions aforesaid. The assessee is a Nattukottai Chettiar. He and his nephew, Ramaswami Chettiar, formed members of a Hindu Undivided family. Ramaswami Chettiar was congenitally blind. He executed a release deed in favour of the assessee in the year 1935, admitting his disqualification.
The family owned (1) properties, (2) a money-lending business at Karaikudi, with a branch in Penang the Vilasam being M. R. M. M. (3) a share in a partnership firm at Talukanson and (4) certain shares in companies. Besides his interest in the family properties, the assessee owned, in his own individual right, (1) a business in stocks and shares, (2) an interest as a partner in a Hundial shop M. R. M. S., which had its head office at Karaikudi and a branch at Penang, and (3) some shares in certain companies. The assessee had been assessed to income-tax in two capacities: (1) as the karta of a Hindu undivided family with respect to the income from family properties and (2) as an individual in respect of the income from his separate property.
Ramaswami Chettiar died on 12-3-1948. For the assessment year, 1948-49 (the account year being 18-4-1947 to 12-4-1948) the assessee submitted tow returns, one on behalf of the family and the other for himself. He, however, claimed that after 12-3-1948, he should be assessed only as an individual on all the sources of income. The Income-tax Officer accepted the assessee's claim, and proceeded to club the two returns and assessed him as an individual for the year 1948-49. The Officer computed the income for the year at Rupees 4,31,840.
In so doing, he included a sum of Rs 3,19,162 as a constructive remittance of foreign profits, as having been received in India on 5-2-1948. the reason why that sum was treated as a constructive remittance requires an explanation. The assessee required large sums of money for his business in stocks and shares. The Penang branch of M. R. M. S. Hundial shop, of which he was a partner, raised monies from certain individuals in Penang and remitted the same to its head office in India, from whence the assessee took them over. The Penang business of M. R. M. S. Hundial shop had a liability to its creditors and a credit with its head office.
In 1942, the branch of the Hundial shop at Penang was closed, and there was then a credit in its favour in the accounts of the head office at Karaikudi to the extent of nearly $4,00,000. The assets and liabilities of that branch were taken over by the joint family firm of the assessee M. R. M. M at Penang. The net liabilities taken over were $ 401041, which stood debited in the assessee's books at Penang as against M. R. M. S. at Penang.
As stated already, there was a credit in favour of the Penang branch in the books of the head office at Karaikudi for nearly that sum. On 5-3-1948 the assessee family firm M. R. M. wrote off the debit balance of $ 401041 which stood against M. R. M. S. Penang, for no valid reason, according to the department, as there was an asset of very nearly that amount in the head office of M. R. M. S. The amount thus written off was, therefore, treated as a remittance in India, and was held to have been constructively received by the assessee.
The amount of remittance was ascertained at the then prevailing exchange rate to be Rs. 7,06,750. Out of this sum, a sum of Rs. 3,19,152 was allocated as the receipt during the year of account forming the unassessed and unremitted profits of previous years. The Income-tax officer, therefore, held that this would represent a constructive receipt by the assessee. According to the Officer, the remittance was on the date when the amount of $ 401041 was written off in the Penang accounts, and thus would be during the year of account, and was therefore liable to be included in the assessment for that year.
(3) The assessee filed an appeal to the Appellate Assistant Commissioner. In that appeal he took up, curiously enough, a position contrary to what he did before the Income-tax Officer, namely, a plea that the assessment should have been made separately on the two capacities he possessed during the year of account and that the assessment of income made on him in his individual capacity could not include the receipt of the foreign profits by the family. But the more substantial objection in the appeal was the question, whether there was a constructive remittance of foreign profits during the year of account. The Appellate Assistant Commissioner rejected the first contention in regard to the legality of the inclusion of the income of the family in the assessment of the individual. But he held that the remittances of foreign profits should be held to have been made only during 1941-42, corresponding to the assessment year 1942-43, when the monies were actually remitted and not when they were written off in the account books of the family business at Penang, and he, therefore, deleted the sum of Rs. 3,19,162 from assessment relating to the year 1948-49.
(4) The department contested the order of the Appellate Assistant Commissioner by an appeal to the Tribunal: The only point taken by the department in its memorandum of appeal related to the question of remittance of foreign profits. According to the department, the writing off a sum of $ 401041 in the Penang books of 5-2-1948 amounted to a constructive remittance of the profits to India on that date, and not on the earlier dates on which the borrowed monies of the Penang branch of the M. R. M. S. Hundial shops were remitted to its head office. There was no objection on the part of the department, that the assessment should be made separately in regard to the two distinct capacities in which the assessee was receiving income during 1947-48. Unfortunately, the Tribunal did not decide the only question that was raised in the appeal, viz., the year of receipt of the monies in India. Instead, it proceeded to consider the propriety of the income-tax officer clubbing together the assessment on the Hindu undivided family with the assessment of the individual. The Tribunal held that the Income-tax Officer committed a fundamental mistake, in that he failed to note that, there having been two distinct and separate assessees, namely, the assessee as the karta of a Hindu undivided family and the assessee as an individual, the assessment should have been separately made and observed:
'The remittances presently in dispute before us are admitted to relate to only sources that belong to the Hindu undivided family and consequently deserve to be considered only in the assessment of the family. The fact that Periannan (assessee) is ultimately going to receive both the assessment orders of the family and of himself for the same assessment year can make no difference to the case.'
For that reason, the Tribunal set aside the assessment proceedings and directed the Income-tax Officer 'to make a fresh assessment according to law, starting from the stage of returns.' The effect of the order was that both the appellate and the assessment orders were set aside, and the assessment proceedings were directed to start de novo. But strangely enough, the Tribunal stated in conclusion 'the appeal is dismissed'
(5) Notwithstanding the inconsistency between the order of remand and the final dismissal of the appeal, the department took the order of the Tribunal as one authorising the recommencement of the assessment proceedings and, accordingly, the Income-tax Officer, by his letter dated 20-8-1955, requested the assessee to inform him as to whether the return already filed could be taken as relating to the family, and that, if that were not so, requiring him to file a return of the income of the family to enable the Income-tax Officer to carry out the directions contained in the Tribunal's order. Shortly thereafter, the officer issued also a notice under S. 34 of the Indian Income-tax Act. The notice was dated 23-9-1955. The assessee, feeling aggrieved by the initiation of proceedings under S. 34, filed a petition under Art. 226, W. P. No. 950 of 1955, in this court, for calling for records relating to the notice aforesaid, and quashing the same. Various objections were taken by the department as to the maintainability of the writ petition. This Court, by its order dated 21-3-1957, dismissing the petition, observed:
'It is common ground that the assessment, the validity of which was challenged was only what the department called 'protective.' Therefore, no question of collection would arise. The rule is discharged and the petition is dismissed. There will be no order as to costs.'
No objection therefore, could be taken to the assessee, who has been assessed only as an individual, to contest the validity of the order of the Tribunal on the ground that the person affected, namely, the joint family of which the assessee was the karta, is not before us. There is no doubt, that the assessment o the family would affect the assessee. That apart, it was implicit in the pleas taken by the department in W. P. No. 950 of 1956, that the validity of the order directing the assessment of the family could be challenged in this reference.
(6) Mr. R. Venkataram, the learned counsel for the assessee, contended that it was not open to the Tribunal to give a finding, that the receipt of foreign profits was by the Hindu undivided family during the year of account, as the family was not represented before the Tribunal. We cannot, however, agree with that contention. The assessee was a party to the appeal before the Tribunal albeit only in his individual capacity. For the purpose of ascertaining as to whether the assessee received the foreign profits, it was necessary for the Tribunal to find as to who received the profits. It cannot be disputed that, in a case where an assessee disputed the receipt of income on the ground that that was really received by some other person, it would be open to the Tribunal to give a finding as to whether the assessee received the income.
One way of finding that the assessee did not receive the profits during the year of account, was to find that somebody else did. It was, therefore, competent for the Tribunal to find that some person other than the assessee did receive the foreign profits. Such a finding would be necessary for the purpose of giving a finding on the actual matter in controversy before the Tribunal, or at least it should be considered as one incidental to an adjudication that the assessee did not, in fact, receive such profits, We are, therefore, of opinion that it was open to the Tribunal to give a finding, namely, that it was the Hindu undivided family, and not the assessee that received the profits.
(7) Mr. Venkataraman next contended that the Tribunal had no jurisdiction to give a finding that the foreign profits were received by a person, not a party before it, and to give directions for the initiation of fresh proceedings that would enable the Department to commence proceedings under S. 34 against such party and render futile the plea of limitation available to him. The learned counsel referred us to the second proviso to S. 34(3) by which the period of limitation laid down under sub-secs. (1) and (3) would not apply, if it were to give effect to any finding or direction contained in an order in appeal, reference or revision.
It was argued that, if the department were to initiate proceedings under S. 34 for the first time against the family in 1955, it would be barred by limitation. The finding of the Tribunal, that it was the joint family that received the foreign remittance, though given in proceedings is which the family was not represented, would attract the proviso to S. 34(3), and prejudice the family by depriving it the plea of limitation. For that reason alone, it was contended that the Tribunal would have no jurisdiction to direct a fresh assessment.
(8) It was further contended that the second proviso to S. 34(3) was ultra vires, and the Tribunal would have no jurisdiction to give a finding, so as to enable the department to commence proceedings which had become barred by limitation. In this connection, the learned counsel referred to the decision in S.C. Prashar v. Vasantsen Dwarkadas, : AIR1956Bom530 , where the Bombay High Court held that the proviso, in so far as it deprived any person other than the assessee of the valuable rights acquired by operation of limitation as a result of proceedings, to which he was not a party and in which he had no right or opportunity of being heard, was void, as offending Art. 14 of the Constitution.
We consider that, for the disposal of the reference before us, it is unnecessary to express our opinion as to whether the decision of the Bombay High Court should be followed, and even if it were so, whether the principle stated therein would apply to the present case, where the assessee on the date of the order of the Tribunal combined in himself both capacities, namely, that of the karta of the erstwhile joint family and also that of an individual though he was impleaded only in the latter capacity.
(9) It was then contended that the Tribunal had no jurisdiction to consider the question, whether the joint family, or the assessee in his individual capacity received the profits, when the only ground of appeal before the Tribunal was whether there was a remittance of profits during the year of account, or outside that period. We have already referred to the fact, that the memorandum of appeal filed by the department before the Tribunal comprised only one matter, namely, about the year of remittance. It becomes, therefore, relevant to consider whether the Tribunal was competent to decide any other question.
(10) Section 33(3) states that an appeal to the Appellate Tribunal shall be in the prescribed form. Rule 9 of the Appellate Tribunal Rules, 1946, made under S. 5-A(8) of the Income-tax Act, states,
'Every memorandum of appeal shall be written in English, and shall set forth, concisely and under distinct heads, the grounds of appeal without any argument or narrative; and such grounds shall be numbered consecutively.'
'The appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth, in the memorandum of appeal but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule;
Provided that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground.'
Rule 27: 'The respondent, though he may not have appealed, may support the order of the Appellate Assistant Commissioner on any of the grounds decided against him.'
Section 33(4) of the Act states:
'The appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and the Commissioner.'
Rule 12 prescribes that an appellant shall not urge any ground in support of the appeal but that it would be open to the Tribunal to decide on a ground not so taken provided the party who might be affected had sufficient opportunity of being heard on that ground. Rule 27, which enables a respondent to support the order of the Appellate Assistant Commissioner on a ground decided against him by that authority by showing that it was wrong, would, obviously, cover a case where the grounds would not be in the memorandum of appeal.
The learned advocate for the assessee referred us to a number of decisions to show that the Appellate Tribunal could not travel beyond the grounds urged in the memorandum of appeal. On the other hand, Mr. Rama Rao Sahib, for the department, contended that it was competent for an appellant to raise, at the hearing of the appeal before the Tribunal, additional grounds even without a formal amendment of the grounds set forth in the appeal, and so long as the party affected had sufficient opportunity of being heard on that ground, there was no lack of jurisdiction in the Tribunal to consider any ground of appeal.
It is, however, unnecessary to decide that question, as the question in the present case is not whether the Tribunal can rest its decision on a new ground of appeal in regard to a subject-matter of controversy raised before it but one whether the Tribunal can do so on the basis which was not the subject of any controversy. It was the case of the assessee before the Income-tax officer that he should be assessed with respect to all the sources of income as an individual.
The Income-tax Officer accepted his contention, and assessed him as an individual. The assessee, no doubt, made a half-hearted attempt to go behind the attitude he took up before the Income-tax Officer in the appeal before the Appellate Assistant Commissioner. That attempt failed. As the Tribunal has stated 'the assessee was satisfied with this position and did not pursue the matter further.' So far as the department was concerned, both the Income-tax Officer and Appellate Assistant Commissioner proceeded on the footing, that the assessee should be assessed only as an individual.
The only question for determination was whether the remittance from Penang should be held to have been received during the year of account 1941-42 or 1947-48. Therefore, the question of who received the remittance did not arise for determination before the Appellate Tribunal, and could not properly form the subject-matter of the appeal. The question then is not whether in regard to the subject-matter of an appeal a ground not taken in the memorandum of appeal could be urged or not, but whether the existence of an appeal which related only to a distinct matter in controversy would entitle the Tribunal to take up and decide the appeal in favour of the appellant on the basis of a ground not in controversy. We have no hesitation in answering that the Tribunal would have no such power. The provisions of S. 33(4) and Rule 12, which contemplate an opportunity being given to both sides for being heard, imply that there should have been a dispute on that question. Rule 27 recognises the principle that the appellate tribunal would have authority only to decide the question, decided by the Appellate Assistant Commissioner against the appellant, and makes a special provision enabling the respondent alone to support the order on a ground decided against him. Section 33(1) and (2) give a right of appeal only on matters, on which there could be an objection to the orders of the Appellate Assistant Commissioner by the Assessee, or the Commissioner, and not on a matter which could not properly from the subject of an objection. The question in the instant case, as to whether the assessee was to be separately assessed in his two capacities, did not arise before the Tribunal on the appeal, and it was not competent for it to adjudicate on it; nor would it have a power to give a finding that the income was received by the family. We are of opinion that that question of separate assessment for the family and the individual did not arise before the Tribunal for adjudication.
(11) It becomes then relevant to consider whether there has been a disposal of the appeal in accordance with law, viz., the scope f its jurisdiction to remand the appeal for commencing the assessment proceedings afresh.
(12) The finding of the Appellate Assistant Commissioner was that there was no remittance of foreign profits during the year of account. Although that was the only question in the appeal before the Tribunal, there has been no adjudication on it. It was the duty of the Tribunal to have decided that question. In the exercise of its jurisdiction, the Tribunal has, no doubt, the powers granted to it under Rr. 28 and 29 to remand the case back to the Appellate Assistant Commissioner, or direct him or the Income-tax Officer, to take fresh evidence.
Those powers could not be exercised even before deciding the appeal, for that would amount to a refusal, or evasion of jurisdiction. A remand would imply a setting aside of the order of the Appellate Assistant Commissioner, and therefore, it could be made only when the Tribunal has decided that it is necessary to set aside the order, and that could be done only, if there is material, and after considering that material, decided that the Appellate Assistant Commissioner was wrong, e.g., that the order was erroneous, or was based on insufficient materials, or that some fresh evidence had to be considered.
Rule 28 is no doubt couched in general terms; but the power granted thereby would be analogous to that given to a civil appellate court under O. 41 R. 23 C.P.C. and should not be exercised without the Tribunal coming to the conclusion that the order of the Appellate Assistant Commissioner was wrong, illegal & had to be set aside as unsustainable either for some reason appearing on the order itself or outside it. In a case where it was open to the Tribunal, to direct a revised assessment in the manner directed by it, there would undoubtedly be a power to remand.
But we have held that the Tribunal had no jurisdiction to direct a fresh assessment in this case on the ground, that it was the family and not the individual that had to be assessed. It would follow that the order of remand could not be made, unless the Tribunal set aside the order of the Appellate Assistant Commissioner as wrong, or unsustainable. This, the Tribunal has not done, as it did not consider the only question raised in the appeal.
(13) There is yet another objection to the order of the Tribunal. The Appellate Tribunal, after setting aside the assessment, and directing a fresh assessment, has concluded its order with the words 'The appeal is dismissed.' It is different to follow how the appeal could be held to be dismissed, while, in substance, it was allowed, by setting aside the assessment. In the statement of the case, the Tribunal sought to explain the inconsistency between its order of remand and ultimate dismissal of the appeal thus ;
'It is hereby submitted and with respect that this narration is only a direction for purposes of the tribunals;' own statistics and which cannot by any means affect the rights or liabilities of the parties before the Tribunal which are only governed by the directions in the body of the order.'
We fail to understand as to how any statistics maintained by the Tribunal could require that an appeal, which was virtually allowed, should be treated as one dismissed. We have come across cases in execution proceedings governed by the Civil Procedure Code, where it has been held that the use of the words 'dismissed' 'struck off,' 'recorded' etc., do not, by themselves indicate a termination of the proceedings, so far as that court is concerned, and that those words should be understood in the light of the context to see whether there has been a final disposal of the execution petition. We cannot see how that principle can apply to appeals before the Tribunal. For one thing, a remand implies a termination of the proceedings, so far as the appellate authority is concerned, and no question would arise about continuation of the appeal thereafter. For another, the term 'dismissed' has a definite legal connotation, implying a final disposal by the Tribunal, rejecting the case of the suitor.
(14) The result is that there had been no proper disposal of the appeal. For the assessee, it was contended that it is the final words of the order that would govern, even what preceded before, and that, therefore, the order directing re-assessment was wrong. On the other hand, Mr. Rama Rao Sahib, for the department, contended that the substance of the order should be taken, and that it was the order of remand that should be considered as the real order of the Tribunal, and that no meaning should be attached to the concluding words, dismissing the appeal.
An order of a judicial authority, like that of the Tribunal, is a solemn one, and the Tribunal should devote great care in expressing it. On the terms of the order, as they stand, it would be open to either of the constructions contended for. Mr. Rama Rao Sahib contends that there was been no valid disposal of the appeal by the tribunal, in that (1) the question to be decided has not been decided, (2) it is not clear whether the Tribunal intended to dismiss the appeal or set aside the order of the Appellate Assistant Commissioner and remand it and what we should direct it to rehear the same. We cannot see how we can give any such direction, as the matter has not been brought to us on a proper reference.
As we indicated, it is difficult to accept the extreme contention urged on behalf of the assessee that the appeal had been dismissed. Question 1, cannot therefore, arise. As regards the second question, we are of opinion that, as the question as to who received the foreign profits during the year of account was not properly the subject of appeal the Tribunal was not competent to decide that question by giving a finding that the joint family received the foreign remittance and remand the proceedings for fresh assessment. The assessee will be entitled to his costs. Counsel's fee Rs. 250/-
(15) Answer for assessee.