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Bhartia Steel and Engineering Co. Pvt. Ltd. Vs. Income-tax Officer, 'K' Ward and Ors. (26.04.1974 - CALHC) - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberCivil Rule No. 4079(W) of 1973
Judge
Reported in[1974]97ITR154(Cal)
ActsIncome Tax Act, 1961 - Sections 254, 255 and 271(1); ;Constitution of India - Article 226; ;Indian Income Tax Act, 1922
AppellantBhartia Steel and Engineering Co. Pvt. Ltd.
Respondentincome-tax Officer, 'K' Ward and Ors.
Appellant AdvocateSanjoy Bhattacharyya, Adv.
Respondent AdvocateManas Nath Ray, Adv.
Cases ReferredKing v. Income
Excerpt:
- .....1961. being aggrieved by the said order, the company preferred an appeal before the income-tax appellate tribunal.2. the company also moved an application before this court under article 226 of the constitution challenging the impugned order of penalty dated february 24, 1967, on the ground that the proceedings for the assessment year 1960-61 having been initiated and completed under the income-tax act, 1922, the penalty proceedings under the income-tax act, 1961, were not competent. on this application of the company, a rule was issued being matter no. 104 of 1968, bhartiya steel and engineering co. (p.) ltd. v. income-tax officer, : [1971]81itr156(cal) . the said rule came up for hearing before k. l. roy j. on october 9, 1969, and on november 19, 1969. the counsel appearing for the.....
Judgment:

Murari Mohan Dutt, J.

1. The petitioner is a company incorporated under the Indian Companies Act. The company is an assessee under the Income-tax Act and was assessed for the assessment year 1960-61 under Section 23(3) of the Indian Income-tax Act, 1922. The total income computed by the Income-tax Officer for the said assessment year is Rs. 6,91,067. The company preferred an appeal against the assessment order to the respondent No. 3, the Inspecting Assistant Commissioner of Income-tax, Range V. In the course of the proceedings before respondent No. 3, the company was served with a notice under Section 274(2) read with Section 271 of the Income-tax Act, 1961, for the assessment year 1960-61, as in the opinion of respondent No. 3, the company had concealed the particulars of its income or deliberately furnished inaccurate particulars of such income for the assessment year 1960-61. Thereafter, by his order dated February 24, 1967, respondent No. 3 imposed a penalty of Rs. 1,04,000 upon the company under Section 271(1)(c) of the Income-tax Act, 1961. Being aggrieved by the said order, the company preferred an appeal before the Income-tax Appellate Tribunal.

2. The company also moved an application before this court under Article 226 of the Constitution challenging the impugned order of penalty dated February 24, 1967, on the ground that the proceedings for the assessment year 1960-61 having been initiated and completed under the Income-tax Act, 1922, the penalty proceedings under the Income-tax Act, 1961, were not competent. On this application of the company, a rule was issued being Matter No. 104 of 1968, Bhartiya Steel and Engineering Co. (P.) Ltd. v. Income-tax Officer, : [1971]81ITR156(Cal) . The said rule came up for hearing before K. L. Roy J. on October 9, 1969, and on November 19, 1969. The counsel appearing for the income-tax department pointed out to the learned judge that since an appeal had also been preferred to the Tribunal against the order of penalty, the application under Article 226 was not maintainable in law. It may be stated here that at the time when the maintainability of the application had been challenged on behalf of the department, there were four unreported decisions of this court and two reported decisions, one of the Bombay High Court and the other of the Gujarat High Court holding that no penalty could be imposed under the provisions of the Income-tax Act, 1961, under Section 271(1)(c) read with Section 274(2) thereof, in respect of matters arising out of the assessment made under the provisions of the Income-tax Act, 1922. It is alleged that in view of the said High Court decisions, the company was advised to withdraw the appeal preferred by it before the Tribunal, so that there could be no question as to the maintainability of the application under Article 226 and the interest of the company would not also be prejudiced. The company made an application before the Appellate Tribunal praying for withdrawal of the appeal. The prayer portion of the application was to the following effect:

'But now that the aforesaid matter in the hon'ble High Court would be coming up tomorrow for final hearing, we would be highly obliged if an order be made allowing us to withdraw the appeal.'

The Tribunal by its order dated December 2, 1969, allowed the company to withdraw the appeal. In consequence, the appeal was dismissed for non-prosecution.

3. At the hearing of the rule before this court, on behalf of the revenue reliance was placed on an unreported judgment of the Supreme Court in the case of Jain Brothers v. Union of India, : [1970]77ITR107(SC) since reported in 77 I.T.R. 107, wherein the Supreme Court considered the question of imposition of penalty under the Income-tax Act, 1961. It was held by the Supreme Court that the imposition of penalty was not illegal or invalid. The unreported decisions of this court as also the decisions of the Bombay and the Gujarat High Courts stood impliedly overruled by the said decision of the Supreme Court in Jain Brothers's case. In view of the said Supreme Court decision directly on the point, K. L. Roy J. dismissed the application of the company under Article 226 and discharged the rule. Thus the attempt of the company to get the same relief from this court on the basis of the said High Court decisions was foiled and the company did not get any opportunity to represent its case against the penalty on merits before the Tribunal.

4. The certified copy of the judgment of K. L. Roy J. discharging the rule was obtained by the company on February 23, 1970. It is alleged that, thereafter, the managing director of the company, Mr. Bhagwandas Jaiswal, under whose direction the manager and other officers of the company had to proceed, was lying so seriously ill that he could not even speak until the end of the month of November, 1970. Further, it is alleged that Mr. Upadhya, the manager of the company, was also away from Calcutta on a long leave. On January 7, 1971, the company made an application before the Appellate Tribunal praying for recalling its order dated December 2, 1969, and for the restoration of the appeal. It was also prayed that the delay in filing the said application for restoration of the appeal might be condoned. The Tribunal dismissed the said application of the Company for restoration of the appeal on two grounds,, namely, that (1) the application was filed after inordinate delay, and that (2) it had no jurisdiction to recall its order. Thereafter, the company moved this court under Article 226 of the Constitution and obtained the present rule. The company has prayed for quashing the order of the Tribunal allowing the company to withdraw the appeal and dismissing the appeal for non-prosecution and also the order of the Tribunal refusing to recall the said order dismissing the appeal for non-prosecution.

5. The principal contention of the company is that the order of the Tribunal allowing the company to withdraw the appeal was without jurisdiction and as such a nullity. It is contended that the Tribunal was under a duty to dispose of the appeal on merits and that it had no power either to dismiss the appeal for default or to dismiss the same for non-prosecution, even though the company asked for the withdrawal of the appeal.

6. In support of this contention Mr. Sanjoy Bhattacharya, learned advocate for the company, has placed strong reliance on the decision of the Court of Appeal in King v. Income-tax Special Commissioners, [1936] 1 K.B. 487, [1935] 20 T.C. 379 (C.A.). In that case, it was held that an assesses gave a notice of appeal to the Special Commissioners of Income-tax. Before the appeal was disposed of the assessee gave a notice withdrawing the appeal. In holding that the appeal could not be withdrawn, it was observed by Lord Wright M.R.:

'This is all I need say on the general procedure where there is noquestion of an appeal, and I may note here at once, that in making theassessment and in dealing with the appeals, the Commissioners are exercisingstatutory authority and a statutory duty which they are bound to carryout. They are not in the position of judges deciding an issue between two particular parties. Their obligation is wider than that. It is to exercise their judgment on such material as comes before them and to obtain any material which they think is necessary and which they ought to have, and on that material to make the assessment or the estimate which the law requires them to make. They are not deciding a case inter partes ; they are assessing or estimating the amount on which, in the interests of the country at large, the taxpayer ought to be taxed. '

In Commissioner of Income-tax v. Rai Bahadur Hardutroy Motilal Chamaria, : [1967]66ITR443(SC) it has been observed by the Supreme Court that it is well established that an assessee having once filed an appeal cannot withdraw it. In other words, the assessee having filed an appeal and brought the machinery of the Act into working cannot prevent the Appellate Assistant Commissioner from ascertaining and settling the real sum to be assessed, by intimation of his withdrawal of the appeal. Even if the assessee refused to appear at the hearing, the Appellate Assistant Commissioner can proceed with the inquiry and if he finds that there has been an under-assessment, he can enhance the assessment. The Supreme Court has also referred to the above decision of the Court of Appeal in King v. Income-tax Special Commissioners.

7. It thus follows from the decisions cited above that the assessee cannot withdraw an appeal. Consequently, the appellate authority cannot allow such withdrawal as has been observed in the said decision of the Court of Appeal, that the taxing authorities are not deciding a case inter partes and that they are assessing or estimating the amount on which, in the interests of the country at large, the taxpayer ought to be taxed. It is, therefore, obvious that the Appellate Tribunal, acted without jurisdiction in allowing the application of the company praying for withdrawal of the appeal. The Appellate Tribunal was under an obligation to dispose of the appeal on merits.

8. On behalf of the respondents, it is urged that as the company itself asked for the withdrawal of the appeal, it does not lie in the mouth of the company to say that the order of the Appellate Tribunal allowing withdrawal of the appeal was without jurisdiction. The company made the application under the circumstances stated hereinabove. It is true that it was on the prayer of the company that the Appellate Tribunal allowed the appeal to be withdrawn and dismissed the same for non-prosecution but the question is whether the assessee is estopped by its conduct from challenging the jurisdiction of the Appellate Tribunal. It is a well-established principle of law that jurisdiction cannot be conferred by consent of parties. If, under the Income-tax Act, the Tribunal had to dispose of theappeal on merits and had no power to allow withdrawal of the appeal on the prayer of the company, in my view, it is no argument that such withdrawal having been allowed on the prayer of the company itself the order of the Tribunal, though invalid, will have to be upheld as valid. There is no estoppel against a statute and an order which is invalid on the ground of want of jurisdiction cannot become valid by consent. In my opinion, the company is not precluded from challenging the jurisdiction of the Tribunal in allowing it to withdraw the appeal. The said order is a void order.

9. It is next contended on behalf of the respondents that the application under Article 226 out of which the present rule arises, having been filed after inordinate delay, should be dismissed on that ground, alone. It has been already stated that one of the grounds on which the Tribunal has dismissed the application of the company for restoration is the inordinate delay made by the company in making that application. The Tribunal was also not satisfied that the managing director pf the company was lying seriously ill and that it was his illness which prevented the company from filing the application for restoration within a reasonable time after the previous rule was discharged by K. L. Roy J. The main reason was that the certificate which was produced before the Tribunal was lacking in details as to when the managing director came under the treatment of the doctor who issued the certificate. In this court, a medical certificate has been annexed to the writ petition as annexure 'K'. It appears from this certificate (annexure 'K') that B. D. Jaiswal, the managing director of the company, was confined to bed on account of enlarged prostate and he had to undergo a surgical operation. He had an attack of paralysis of the right side of the body including the face due to high blood-pressure, in the month of July, 1967, as a result of which he was completely bed-ridden since then and could not speak properly. It has been certified by the doctor that from December, 1967, to November, 1970, the condition of Jaiswal was grave and he was advised complete rest in bed. The correctness of this certificate has been denied by the respondents. I do not, however, find any reason to disbelieve the certificate granted by the medical practitioner. In this connection, it may be pointed out that at the hearing of the previous rule, on behalf of the company, it was prayed that liberty might be given to the company to make an application to the Tribunal for restoration of its appeal. It was observed by K. L. Koy J.:

'I do not think that this court has any power to give any such direction. The petitioner is at liberty to make such application to the Tribunal for restoration of its appeal as it may be advised.'

It is thus apparent that at the hearing of the previous rule, the company contemplated to make an application for restoration before the Tribunal. The company also took a certified copy of the judgment of this court on February 23, 1970. The application for restoration was, however, made on January 7, 1971. There can be no doubt that there was an inordinate delay in making the application before the Tribunal. The question is whether this court will dismiss the application under Article 226 on the ground of delay. In my opinion, from the facts and circumstances stated above, it is clear that the company could not take steps in the matter of restoration of the appeal or in moving this court Under Article 226 on account of the illness of its managing director. The Tribunal has, however, rightly said that it has no jurisdiction to recall its order dismissing the appeal for non-prosecution,

10. For the reasons stated above, I am of the view that the order of the Tribunal allowing the company to withdraw the appeal and, in consequence, dismissing the appeal for non-prosecution was without jurisdiction and, as such, invalid. The company has given sufficient explanation for not taking steps for the restoration of the appeal or for moving this court earlier. As the order of the Tribunal was without jurisdiction and invalid, it must be held that the appeal is still pending. Accordingly, I direct that a writ in the nature of certiorari issue quashing the order of the Tribunal dated December 2, 1969, annexure 'G' to the writ petition. Further, I direct that a writ in the nature of mandamus issue commanding the Tribunal to dispose of the appeal being I. T. A. No. 363/67-68 (assessment year 1960-61) on merits after giving the company an opportunity of being heard. The rule is made absolute, but there will be no order as to costs.


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