RAJAGOPALAN, J. - The assessee, who was assessed to income-tax both in Indian and in Ceylon, applied for relief from double taxation under the rules framed with reference to Ceylon under section 49A of the Income-tax Act. The claim was with reference to the assessment years 1943-44 and 1945-46. The assessee claimed with reference to 1943-44 that he had been assessed to a tax of Rs. 3,000 in Ceylon for the same period and that he had paid that tax in two instalments of Rs. 1,000 and Rs. 2,000. The assessment order and the receipts for the payment of the assessed tax were produced in evidence. With reference to 1945-46, the tax assessed in Ceylon was Rs. 1,785.21 and the assessee produced a copy of the assessment order as well as the receipts for the payment of the assessed tax.
What rule 3 required was that the assessee should prove to the satisfaction of the Income-tax Officer that the assessee had paid by deduction or otherwise the Ceylon tax for the corresponding year in Ceylon on the same part of his income.
The assessees claim that he had closed his business in Colombo towards the close of 1957, was never challenged.
What the Income-tax Officer required of the assessee was the production of 'finality certificates' from the income-tax authorities in Ceylon to show that the assessments with reference to the assessment year in question had become final. The assessee pleaded inability to produce such certificates, because he had closed his business in Ceylon in 1947. Thereupon, the Income-tax Officer himself addressed the Ceylon authorities for information whether the assessment had become final. The reply of the Commissioner of Income-tax, Colombo, was that it was not yet possible to issue such finality certificates.
The Income-tax Officer rejected the relief by way of refund asked for by the assessee. Rule 6 provided for an appeal. The assessee availed himself of that right, but the appeal he filed was dismissed by the Assistant Commissioner. Against the order of the Assistant Commissioner the assessee preferred an appeal to the Tribunal. The Tribunal observed in paragraph 4 of its judgment :
'We have a shade of doubt in our minds as to whether the refusal of the Income-tax Officer to grant relief for non-compliance with the requirements of the rule is justifiable at all. Nevertheless as we have found above that the document presently insisted upon by the Income-tax Officer is basic and vital in nature, this question can make no difference to the case.'
What the Tribunal apparently referred to was the finality certificates on the production of which the Income-tax Officer insisted and for failure to produce which he rejected the claim of the assessee. In paragraph 5 the Tribunal recorded :
'In our opinion the Income-tax Officer is fully justified to refuse the relief without the assessee satisfying him about the finality of the assessment in Ceylon. If, however, at any subsequent date, the finality certificate is available, the refund shall be granted, and till such time, the Income-tax Officer will keep the application pending.'
The appeal itself was formally dismissed by the Tribunal.
When the assessee sought a reference under section 66(1) of the Act, the Department took objection that the appeal to the Tribunal itself was not competent, though such an objection does not appear to have been taken when the appeal was heard and disposed of by the Tribunal.
The Tribunal referred the following questions under section 66(1) of the Act :
'(1) Whether the order of the Appellate Assistant Commissioner, annexure D, can be said to be an order under section 31 appealable to the Tribunal under section 33
(2) If the answer to the above question is in the affirmative, whether the Income-tax Officer could be said to have had all the materials necessary to satisfy himself that the assessee had suffered tax in Ceylon to the extent claimed in the manner required of him under rule 3 of the Income-tax (Double Taxation Relief) Ceylon Rules, 1942 ?'
Section 49 A provides for relief from double taxation on the basis of agreements entered into by the Government of India, with the Governments of other countries. As we have already pointed out, rule 6 of the rules framed under section 49A of the Act with reference to Ceylon specifically provided for an appeal against the order of the Income-tax Officer refusing to grant the relief claimed by an assessee. Section 49A is not one of the sections enumerated in section 30(2) of the Act, which confers on the assessee the right to appeal to the Assistant Commissioner against the orders of the Income-tax Officer. Section 48 of the Act is the general section dealing with the refunds, and an order under section 48 is appealable under section 30(2) of the Act. While section 30 of the Act provides for a right of appeal, section 31 of the Act confers powers on the Assistant Commissioner to dispose of appeals preferred to him. That the appeal to the Assistant Commissioner was competent was never in issue. The contention of the Department was that the disposal of that appeal was not in exercise of the powers conferred on the Assistant Commissioner by section 31 of the Act, and that, therefore, section 33(1) could not have been invoked by the Assessee. Section 33(1) of the Act provides for an appeal against an order of an Appellate Assistant Commissioner passed under section 31 of the Act. Therefore, the question for determination is, whether the order in this case that was passed by the Assistant Commissioner could be viewed as an order passed under section 31 of the Act.
In Wallace Brother and Co. Ltd. V. Commissioner of Income-tax : 26ITR241(Bom) , Chagla, C.J., pointed out that, though section 30 did not enumerate section 49A of the Act, the claim even with reference to section 49A being essentially one for refund, falling within the scope of section 48 of the Act, the order of the Income-tax Officer refusing relief claimable under section 49A would be a case of refusal of refund falling within the scope of Section 48 of the Act, and, therefore, appealable under section 30(2) of the Act. Of course, if an order of the Income-tax Officer is appealable under section 30(2) of the Act, that the order on appeal is one passed under section 31 of the Act can admit of no doubt.
In Burma Oil Co. Ltd. v. Income-tax Appellate Tribunal : 33ITR794(Cal) , Sinha, J., of the Calcutta High Court referred to Wallace Brothers and Co. v. Commissioner of Income-tax : 26ITR241(Bom) , and he was apparently of the same view, that a claim for refund based on section 49A would also fall within the scope of section 48 of the Act. Alternatively Sinha, J., held at page 798-799 :
'Section 31 speaks in general way as to how appeals should be heard before the Appellate Assistant Commissioner, and is not confined to appeals in respect of matters mentioned in section 30 only. Consequently, an appeal under rule 6, which has been framed in exercise of power under section 49A of the Act, would be governed by section 31, and such appeals must be heard in the manner laid down in section 31.... If that be so, section 33 applies to such appeals and there would lie an appeal to the Appellate Tribunal.'
If we may say so, with respect, we are in agreement with the view taken by Sinha, J., that independent of any reference to section 48 of the Act, a disposal of an appeal preferred under rule 6 is still a disposal of the appeal under section 31 of the Act. Section 30 of the Act confers the right of appeal in certain cases. Similarly, rule, 6 confers a right of appeal. Section 31 deals with the powers of the Assistant Commissioner to dispose of appeals. It is an appeal disposed of by the Assistant Commissioner, however the appeal came before him, that matters in deciding whether a further; appeal to the Tribunal lies. Since section 31 of the Act is the only provision for disposal of appeals of which; the Assistant Commissioner can take cognizance, the requirements of section 33 were satisfied in this case and the appeal to the Tribunal was competent.
We are also in agreement with the principle laid down by the learned judges of the Bombay High Court, that it would really be a case of refusal of refund for which section 48 of the Act provides, and that the Income-tax Officers order should be viewed as an order under section 48 of the Act, falling within the scope of section 30 (2).
We answer the first question in the affirmative and in favour of the assessee.
When this reference came on first before us, we pointed out to the learned counsel for the assessee and the Department that nearly five years have elapsed since the order of the Tribunal, and at least now an effort should be made to find out what precisely was the position in Ceylon. After some correspondence, information was placed before us, to the details of which we need not refer in view of the course we to propose to take. The Tribunal was not quite sure whether the refusal of the Income-tax Officer was justified but none the less it confirmed the order, giving, however, the assessee an opportunity of claiming relief after producing the certificate of finality. It should be remembered that the rules themselves do not require the production of a certificate of finality from Ceylon. All that the rules require is that the Income-tax Officer must be satisfied that the assessee has been assessed to tax in Ceylon and that he had paid the assessed tax. The assessee explained his difficulty in obtaining the finality certificates called for and these difficulties were obviously real. The assessee left Ceylon in 1947. The assessee could certainly claim that, if he is unable to produce the finality certificates asked for, he should not be barred from proving to the satisfaction of the Income-tax Officer that the assessee had been taxed in the relevant years and that he had paid the tax. It was really for the Tribunal to decide on the material placed before it whether, in the circumstances of the case, despite the failure of the assessee to produce the finality certificates, there was material on which the Department could be satisfied that the assessee had been assessed to tax in Ceylon and he had also paid the tax. The Tribunal did not go into the question, whether any mode of proof other than the production of finality certificates was possible, in the circumstances of the case, to satisfy the Income-tax Officer that the assessee had been taxed in Ceylon, and that he had paid the tax.
With the material made available to the Department by the correspondence to which we have adverted, the details of which we have not referred to, the Tribunal should be in a better position to decide whether the assessee satisfied the requirements of rule 8. In effect, it should be remembered the order of the Tribunal kept the proceedings open. Only they were left open before the Income-tax Officer with the further stipulation that the finality certificate should be produced. The more appropriate procedure for the Tribunal to have adopted was to decide whether the requirements of rule 3 has been satisfied or not.
In form our answer to question No. 3 will be that it is for the Tribunal to decide on the material on record whether the requirements of rule 3 have been satisfied. That, in effect, means the Tribunal will have to hear the appeal afresh and dispose of it according to law.
The assessee will be entitled to the costs of this reference. Counsels fee Rs. 250.
Reference answered accordingly.