Messrs Mela Ram & Sons Vs. The
Commissioner of Income-Tax, Punjab [1956] INSC 15 (21 February 1956)
AIYYAR, T.L. VENKATARAMA DAS, SUDHI RANJAN
BHAGWATI, NATWARLAL H.
CITATION: 1956 AIR 367 1956 SCR 166
ACT:
Indian Income Tax Act,1922 (XI of
1922),ss.23,30(1)(2),31, 33-Assessment of Income-tax-Notice of demand-Appeal
against assessment-Received in Appellate Assistant Commissioner's Office out of
time-Prayer for condonation of delay rejectedOrder of Assistant Commissioner
dismissing an appeal as out of time-Whether one under s. 30(2)or under s. 31 of
the ActWhether appeal competent there from.
HEADNOTE:
The appellant firm filed appeals against
orders assessing it to income-tax and super-tax for the years 1945-1946 and
1946-1947 beyond the time prescribed by s. 30(2) of the Income-tax Act. The
appeals were numbered, and notices were issued for their hearing under s. 31.
At the hearing of the appeals before the Appellate Assistant Commissioner, the
Department took the objection that the appeals were barred by time. The
appellant prayed for condonation of delay, but that was refused, and the
appeals were dismissed as timebarred. The appellant then preferred appeals
against the orders of dismissal to the Tribunal under s. 33 of the Act, and the
Tribunal dismissed them on the ground that the orders of the Assistant
Commissioner were in substance passed under s. 30(2) and not under s. 31 of the
Act and that no appeal lay against them under s. 33 of the Act.
On a reference under s. 66(1) of the Act the
High Court held that the orders of the Appellate Assistant Commissioner were
made under s. 30(2) and were not appealable under s. 33 of the Act.
On appeal by special leave to the Supreme
Court the question for determination was whether an order dismissing an appeal
presented under s. 30 as out of time was one under s. 30(2) or under s. 31 of
the Act because if it was the former there was no appeal provided against it;
if it was the latter it was open to appeal under s. 33.
Held that the orders of the Appellate
Assistant Commissioner fell within s. 31.
A right of appeal is a substantive right and
is a creature of the statute. S. 30(1) confers on the assessee a right of
appeal against certain orders and an order of assessment under s. 23 is one of
them. The appellant had therefore a substantive right under s. 30(1) to prefer
appeals against orders of assessment made by the Income Tax Officer.
167 An appeal presented out of time is an
appeal and an order dismissing it as time-barred is one passed in appeal.
Section 31 is the only provision relating to
the hearing and disposal of appeals and if an order dismissing an appeal as
barred by limitation as in the present case is one passed in appeal it must
fall within s. 31 and as s. 33 confers a right of appeal against all orders
passed under s. 31, it must also be appealable.
To fall within s. 31 it is not necessary that
the order should expressly address itself to and decide on the merits of the
assessment and it is sufficient that the effect of the order is to confirm the
assessment as when the appeal is dismissed on a preliminary point.
An order rejecting an appeal on the, ground
of limitation after it had been admitted is one under s. 31, though there is no
consideration of the merits of the assessment.
Held therefore that the orders of the
Appellate Assistant Commissioner holding that there were no sufficient reasons
for excusing the delay and rejecting the appeals as timebarred would be orders
passed under s. 31 and would be open to appeal, and it would make no difference
in the position whether the orders of dismissal were made before or after the
appeals were admitted.
Commissioner of Income-tax, Madras v. Mtt.
`r. S. Ar. Arunachalam Chettiar, ([1953] S.C.R. 463), explained.
Case-law discussed.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 17 of 1954.
Appeal by Special Leave from the Judgment and
Order-dated the 11th day of June 1951 of the Punjab High Court in Civil
Reference No. 2 of 1951.
Hardyal Hardy and Sardar Singh, for the
appellant.
C. K. Daphtary, Solicitor-General of India
(G. N. Joshi and R. H. Dhebar, with him) for the 'respondent.
1956. February 21. The Judgment of the Court
was delivered by VENKATARIAMA AYYAR J.--The appellant is a firm carrying on business
at Ludhiana in the Punjab. The Income-tax Officer assessed its income for
1945-1946 at Rs. 71,186, and on 17-9-1947 a notice of demand -was served on it
for Rs. 29,857-6-0 on account of income-tax and super-tax. The appellant
preferred an 168 appeal against the assessment, and it was actually received in
the office of the Appellate Assistant Commissioner on 511-1947. It was then out
of time by 19 days; but the appeal was registered as No. 86, and notice for
hearing under section 31 was issued for 13-12-1947, and after undergoing
several adjournments, it was actually heard on 1-10-1948.
For the year 1946-1947, the Income-tax
Officer assessed the income of the firm at Rs. 1,09,883, and on 29-9-1947 a
notice of demand was served on it for Rs. 51,313-14-0 on account of income-tax
and super-tax. The appellant preferred an appeal against this assessment, and
it was actually received in the office of the Appellate Assistant Commissioner
on 5-11-1947, and it was then 7 days out of time. It was registered as No. 89,
and notice for hearing under section 31 was issued for 24-6-1948. Eventually,
it was heard along with Appeal No. 86 on 1-10-1948.
At the hearing, the Department took the
objection that the appeals were presented out of time, and were therefore liable
to be dismissed. The appellant prayed for condonation of the delay on the
ground that following on the partition of the country the conditions were very
unsettled, that curfew order had been promulgated and was in force, and that
the post office did not accept registered letters, and that the traffic on the
Grand Trunk Road was closed., and that in view of these exceptional
circumstances, it bad sufficient cause for not presenting the appeals in time.
On 31-12-1948 the Appellate Assistant Commissioner passed orders in both the
appeals, holding that there was not sufficient ground for condoning the delay,
and rejecting them in limine. These orders were purported to be passed under
section 31 read along with section 30(2).
Against these orders, the appellant preferred
appeals under section 33 of the Act to the Appellate Tribunal which by its
order dated 4-4-1950 dismissed them on the ground that the orders of the
Assistant Commissioner were in substance passed under section 30 (2) and not
under section 31 and that no appeal lay against them under section 33, On the
applications of the appellant, the Tribunal referred under section 66(1) of the
Income Tax Act the following question for the decision of the High Court of
Punjab:
"Whether in the circumstances of the
case appeals lay to the Tribunal against orders of the Appellate Assistant
Commissioner dismissing the appeals against the assessments for the years
19451946 and 1946-1947 in limine".
The reference was beard by Khosla and Harnam
Singh JJ., who held following an earlier decision of that court in Dewan Chand
v. Commissioner of Incometax(1) that the orders of the Appellate Assistant
Commissioner were under section 30(2) and not appealable under section 33.
Certificate to appeal to this Court against this order having been refused by
the High Court, the appellant applied for and obtained leave to appeal to this
Court under article 136 of the Constitution, and that is how the appeal comes
before US. The provisions of the Act bearing on the question may now be
referred to. Section 30(1) confers on the assessee a right of appeal against
orders passed under the sections specified therein. Section 30(2) provides that
the appeal shall ordinarily be presented within thirty days of the order of
assessment, but the Appellate Assistant Commissioner may admit an appeal after
the expiration of the period if he is satisfied that the appellant bad
sufficient cause for not presenting it within that period. Section 30(3)
provides that "the appeal shall be in the prescribed form and shall be
verified in the prescribed manner".
Section 31(1) enacts that "the Appellate
Assistant Commissioner shall fix a day and place for the hearing of the appeal,
and may from time to time adjourn the hearing".
Section 31(3) specifies the orders that may
be passed in appeals according as they are directed against orders passed under
the one or the other of the sections of the Act which are specified in section
30(1). When the appeal is against an order of assessment under section 23-and
this is what we are con(1) (1951] 20 1 T.R. 621, 170 corned with in this
appeal-it is provided in section 31(3), clauses (a) and (b) that in disposing
of the appeal the Appellate Assistant Commissioner may (a) confirm, reduce,
enhance or annul the assessment, or (b) set aside the assessment and direct
the. Income tax Officer to make a fresh assessment after making such further
enquiry as the Income-tax Officer thinks fit. Section 33(1) enacts that,
"Any assessee objecting to an order passed by an Appellate Assistant
Commissioner under section 28 or section 31 may appeal to the Appellate
Tribunal within sixty days of the date on which such order is communicated to
him".
Stated succinctly, section 30 confers a right
of appeal on the assessee, section 31 provides for the hearing and disposal of
the appeal, and section 33 confers a right of further appeal against orders
passed under section 31, Now, on these provisions the question is whether an
order dismissing an appeal presented under section 30 as out of time is one
under section 30(2) or under section 31 of the Act. If it is the former, there
is no appeal provided against it; if it is the latter, it is open to appeal
under section 33. On this question, there has been a sharp conflict of opinion
among different High Courts and even among different Benches of the same High
Court. The Bombay High Court has held that when an appeal is presented out of
time, and there is no order of condonation of delay under section 30(2), there
is, in law, no appeal before the Appellate Assistant Commissioner, and that an
order by him rejecting the appeal does not fall within section 31 and is not
appealable: Commissioner of Income-tax v. Mysore Iron and Steel Works(1) and K.
K. Porbunderwalla v. Commissioner of Income-tax(2); but that if the appeal is
admitted after an order of condonation is made under section 30(2), an order
subsequently passed dismissing it on the ground of limitation would be one
under section 31 and would be appealable under section 33 and the result will
be the same even when the appeal is admitted without (1) .[1949] 17 I.T.R. 478,
(2) [1952] 21 I.T.R. 63.
171 any order of condonation under section
30(2): Champalal A sharam v. Commissioner of Income-tax(1).
The High Court of Allahabad has also taken
the same view, and held that an order refusing to condone delay and rejecting
an appeal before it was admitted was not one under section 31 and was not
appealable: Vide Shivnath Prasad v.
Commissioner of Income-tax, Central and U.
P.(3) and Municipal Board, Agra v. Commissioner of Income-tax, U. P.( 3 ); but
that ail order dismissing the appeal as time-barred after it had been admitted
was one under section 31 and was appeable: Mohd. Nain Mohd. Alam v.
Commissioner of Incometax(1). The High Court of Punjab has held following
Shivnath Prasad v. Commissioner of Incometax, Central and U. P.(2) and
Commissioner of Incometax v. Mysore Iron and Steel Works(5) that when the
Appellate Assistant Commissioner declines to condone delay and rejects the
appeal, it is one under section 30(2) and not appealable.
It has further held that even if the appeal
bad been admitted without an order of condonation and dismissed at the hearing
on the ground of limitation, it would not be under section 31, because the
scheme of the Act contemplated that an order to be passed under that section
must relate to the merits of the assessment. It is on this decision that the
judgment under appeal is based It may be mentioned that the decision in Dewan
Chand v. Commissioner of Income-tax(6) was dissented from in a recent decision
of the Punjab High Court in General Agencies v. Income-tax Commissioner(7) .
In Commissioner of Income-tax v. Shahzadi
Begum the Madras High Court has held that an order-declining to excuse delay
and rejecting the appeal is one under section 31, whether it is made before the
appeal is admitted or after, and that an appeal which is filed out of time is,
nonetheless, an appeal for purposes of section 31, and that an order dismissing
it would be appealable under section 33. In Gour Mohan (1) [1953] 23 I.T.R.
464, (3) [1951] 19 I.T.R. 63.
(5) [1949] 17 I.T.R. 478.
(7) A.I R. 1956 Punjab 26.
(2) [1936] 3 I.T.R. 200.
(4) [1951] 19 I.T.R. 58.
(6) [1951] 20 I.T.R. 621.
(8) [1952] 21 I.T.R. 1.
172 Mullick v. Commissioner of Agricultural
Income-tax(1), the Calcutta High Court has, after a full discussion, come to
the conclusion that an order of dismissal on the ground of limitation at
whatever stage was one which fell under section 31. It is unnecessary to refer to
the views expressed in decisions of other High Courts, as the point now under
discussion did not directly arise for decision therein.
The question is which of these views is the
correct one to adopt. We start with this that under section 33 it is only orders
under section 31 that are appealable. The question therefore narrows itself to
this whether an order declining to condone delay and dismissing the appeal as
barred by time is an order under section 31. It will be, if it is passed in
appeal against an order of assessment, and is one which affirms it. Now, the
conflicting views expressed by the several High Courts centre round two points:
(1) when an appeal is presented out of time and there has been a refusal to
condone delay under section 30(2), is an order rejecting it as time-barred one
passed in appeal; and (2) if it is, is such an order one confirming the
assessment within section 31(3)(a)? On the first point, as already stated, it
has been held by the Bombay High Court that while an order dismissing an appeal
as time-barred after it is admitted is one under section 31, a similar order
passed before it is admitted is one under section 30(2). The ratio of this
distinction is stated to be that in law there is no appeal unless it is
presented in time, and if presented beyond time, unless the delay is excused.
In Commissioner of Income-tax v. Mysore Iron and Steel Works(2), Chagla, C.J.
stated the position thus:
"An asseesee 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; and an
appeal can only be entertained provided it is admitted by the Appellate Assistant
Commissioner after condoning the delay.
(1) [1952] 22 I.T.R. 131.
(2) [1949] 17 I.T.R. 478.
173 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 section 31 deals only with such appeals which are presented
within the prescribed period or admitted after the delay has 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.
Section 33 then gives the right of appeal to the assessee from an order made by
the Appellate Assistant Commissioner either under section 28 or under section
31. Therefore the Legislature did not give the right of appeal to the assessee
against an order made by the Appellate Assistant Commissioner under section 30
of the Act".
Learned counsel for the appellant disputes
the correctness of the last observation that an order of the Appellate
Assistant commissioner refusing to condone the delay is one under section
30(2), and contends that the only order that could be passed under that section
was one excusing delay, and an order refusing to condone it will fall outside
it, and that such an order could only be made under section 31.
We find it difficult to accede to this
contention. When power is granted to an authority to be exercised at his
discretion, it is necessarily implicit in the grant that he may exercise it in
such manner as the circumstances might warrant. And if the Appellate Assistant
Commissioner has a discretion to excuse the delay, he has also a discretion in
appropriate cases to decline to do so. We are therefore of opinion that the
refusal to excuse delay is an order under section 30(2.).
But the question still remains whether the
view taken in Commissioner of Income-tax v. Mysore Iron 23 174 and Steel
Works(1) and K. K. Porbunderwalla v Commissioner of Income-tax (2) that an
appeal which is filed beyond the period of limitation is, in the eye of law, no
appeal, unless and until there is a condonation of delay, and that, in
consequence, an order passed thereon cannot be held to be passed in appeal so
as to fall within section 31 is right.
Now, a right of appeal is a substantive
right, and is a creature of the statute. Section 30(1) confers on the assessee
a right of appeal against certain orders, and an order of assessment under
section 23 is one of them. The appellant therefore had a substantive right
under section 30(1) to prefer appeals against orders of assessment made by the
Income-tax Officer. Then, we come to section 30(2), which enacts a period of
limitation within which this right is to be exercised. If an appeal, is not
presented within that time, does that cease to be an appeal as provided under
section 30(1)? It is well established that rules of limitation, pertain to the
domain of adjectival law, and that they operate only to bar the remedy but not
to extinguish the right. An appeal preferred in accordance with section 30(1)
must, therefore, be an appeal in the eye of law, though having been presented
beyond the period mentioned in section 30(2) it is liable to be dismissed in
limine. There might be a provision in the statute that at the end of the period
of limitation prescribed, the right would be extinguished, as for example,
section 28 of the Limitation Act; but there is none such here. On the other
hand, in conferring a right of appeal under section 30(1) and prescribing a
period of limitation for the exercise thereof separately under section 30 (2),
the legislature has evinced an intention to maintain the distinction well recognised
under the general law between what is a substantive right and what is a matter
of procedural law.
In Nagendranath Dey v. Suresh Chandra Dey(3)
Sir Dinshaw Mulla construing the word ' appeal' in the third column of article
182 of the Limitation Act observed:
"There is no definition of appeal in the
Civil Procedure Code, 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".
These observations were referred to with
approval and adopted by this Court in Raja Kulkarni and others v. The State of
Bombay(1). In Promotho Nath Roy v. W. A. Lee(2), an order dismissing an
application as barred by limitation after rejecting an application under
section 5 of the Limitation Act to excuse the delay in presentation was held to
be one "passed on appeal" within the meaning of section 109 of the
Civil Procedure Code. On the principles laid down in these decisions, it must
be held that an appeal presented out of time is an appeal, and an order
dismissing it as time-barred is one passed in appeal.
Then, the next question is whether it is an
order passed under section 31 of the Act. That section is the only provision
relating to the hearing and disposal of appeals, and if an order dismissing an
appeal as barred by limitation is one passed in appeal, it must fall within
section 31.
And as section 33 confers a right of appeal
against all orders passed under section 31, it must also be appealable.
But then, it is contended that in an appeal
against assessment the only order that could be passed under section 31 (3)(a)
is one which confirms, reduces, enhances or annuls the assessment, that such an
order could be made only on a consideration of the merits of the appeal, and
that an order dismissing it on the ground of limitation is not within the
section. That was the view taken in Dewan Chand v. Commissioner of
Income-tax(3). But there is practically a unanimity of opinion among all the
other High Courts that to fall within the section it is not necessary that theorder
should expressly address itself to and decide on the merits of the assessment,
and that it is sufficient that the effect of the order is to confirm the
assessment (1) [1954] S.C.R. 384, 388. (2) A.I.R. 1921 Cal. 415.
(3) [1951] 20 I.T.R. 621.
176 as when the appeal is dismissed on a
preliminary point. In Commissioner of Income-tax v. Shahzadi Begum(1),
Satyanarayana Rao, J. said:
"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".
In Gour Mohan Mullick v. Commissioner of
Agricultural Income-tax(2), construing sections 34, 35 and 36 of the Bengal
Agricultural Income-Tax Act which are in terms identical with those of sections
30, 31 and 33 of the Indian Income-Tax Act, Chakravarti, J. observed:
"I would base that view on the ground
that the order, in effect, confirmed the assessment or, at any rate, disposed
of the appeal and was thus an order under section 35, because what that section
really contemplates is a disposal or conclusion of the appeal and the forms of
orders specified in it are not exhaustive. An appellate order may not, directly
and by itself, confirm, or reduce or enhance or annul an assessment and may yet
dispose of the appeal.
If it does so, it is immaterial whether the
ground is a finding that the appeal is barred by limitation or a finding that
the case is not a fit one for extension of time or both".
This reasoning is also the basis of the
decisions of the Bombay and Allahabad High Courts which bold that an order
rejecting an appeal on the ground of limitation after it had been admitted is
one under section 31, though there is no consideration of the merits of the
assessment. Thus, in K.
K. Porbunderwalla v. Commissioner of
Income-tax(3), Chagla, C. J. observed:
``.... although the Appellate Assistant
Commis sioner did not hear the appeal on merits and held that the appeal was
barred by limitation his order was under section 31 and the effect of that
order was to confirm the assessment which bad been made by the Income-tax
Officer".
In Special Manager of Court of Wards v. Commissioner
(1) [1952] 21 I.T.R. 1. (2) [1952] 22 I.T.R. 131.
(3) [1952] 21 I.T.R. 63.
177 of Income-tax(1), the Allahabad High
Court stated that the view was "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".
The respondent relied on a later decision of
the) 'Allahabad High Court in Mahabir Prasad Niranjanlal v.
Commissioner of Income-tax(2), wherein it was
held by the learned Judges, departing from the previous course of authorities
of that court, that an order of the Appellate Assistant Commissioner dismissing
an appeal as time-barred was one under section 30(2) and not under section 31,
and was therefore not appealable. This conclusion they felt themselves bound to
adopt by reason of certain observations of this Court in Commissioner of
Income-tax, Madras v. Mtt. Ar. S. Ar. Arunachalam Chettiar(3). But when read in
the context of the point that actually arose for decision in that case, those
observations lend no support to the conclusion reached by the learned Judges.
There, the facts were that an appeal was preferred by the assessee under
section 30(1) against an order of the Income-tax Officer, and that was
dismissed by the Appellate Assistant Commissioner on 19-11-1945 as incompetent.
No appeal was filed against this order, and it became final. But acting on a
suggestion made in the order dated 19-11-1945, the assessee filed an original
miscellaneous application before the Appellate Tribunal for relief, and by its
order dated 20-2-1946 the Tribunal set aside the findings of the Income tax
Officer, and directed him to make a fresh computation.
Then, on the application of the Commissioner
of Income-tax, the Tribunal referred to the High Court under section 66(1) of
the Income-tax Act the following question:
"Whether in the facts and circumstances
of the case, the order of the Bench dated 20th February, (1) [1950] 18 I.T.R.
204, 212. (2 ) [1955] 27 I.T.R. 268.
(3) [1953] S.C.R. 463: 474-475, 178 1946 in
the miscellaneous application is an appropriate order and is legally valid and
passed within the jurisdiction and binding on the Income-tax Officer".
The High Court declined to answer this
reference on the ground that the order of the Tribunal was not one passed in an
appeal under section 33(1), and that In consequence, the reference under
section 66(1) was itself incompetent. The correctness of this decision was
challenged on appeal to this Court, and in affirming it, this Court observed:
........ when on 19th November 1945, the
Appellate Assistant Commissioner declined to admit the appeal, the assessee did
not prefer any appeal but only made a miscellaneous application before the
Appellate Tribunal.
There is no provision in the Act permitting
such an application. Indeed, in the statement of the case the Appellate
Tribunal states that in entertaining that application and correcting the error
of the Income-tax Officer it acted in exercise of what it regarded as its
inherent powers. There being no appeal under section 33(1) and the order having
been made in exercise of its supposed inherent jurisdiction, the order cannot
possibly be regarded as one under section 33(4) and there being no order under
section 33(4) there could be no reference under section 66(1) or (2), and the
appellate Court properly refused to entertain it".
There is, of course, nothing in the decision
itself which bears on the point now under discussion. But certain observations
occurring at pages 474 and 475 were referred to by the learned Judges as
leading to the conclusion that an order dismissing an appeal as barred by time
would fall under section 3O(2). Now, those observations came to be made by way
of answer to a new contention put forward by the learned, Attorney-General in
support of the appeal. That contention was that the miscellaneous application
presented to the Tribunal might be treated as an appeal against the order dated
19-11-1945, in which case the order passed thereon on 20-2-1946 would fall
under section 33(4) and the reference would be competent. 'In disagreeing with
this contention, this Court observed that the appeal to the Appellate Assistant
Commissioner was incompetent under section 30(1), that even if it was
competent, the order dated 19-11-1945 was not one contemplated by section 31,
and there could be no appeal against such an order under section 33(1). Now, it
should be noticed that the question actually referred under section 66(1) was
the correctness and legality of the order passed in a miscellaneous application
and not of any order made in an appeal preferred under section 33(1). In this
context, the point sought to be raised by the learned, Attorney General did not
arise at all for decision, and the observations in answer thereto cannot be
read as a pronouncement on the question of the maintainability of the appeal,
much less as a decision that an order dismissing an appeal as barred by
limitation is one under section 30(2).
Accordingly, the question whether an order
dismissing an appeal as barred by limitation falls under section 30(2) or
section 31 remains unaffected by the observations in Commissioner of
Income-tax, Madras v. Mtt. Ar. S. Ar. Arunachalam Chettiar(1).
Then again, under the provisions of the Act,
limitation is not the only preliminary ground on which an appeal could be
disposed of without a consideration of the merits. Section 30(3) provides that
an "appeal shall be in the prescribed form and shall be verified in the
prescribed manner". If the Appellate Assistant Commissioner holds that the
appeal does not comply with the requirements of this enactment and rejects it
on that ground, the order must be one made under section 31, since section
30(3) makes no provision for such an order, as does section 30(2) in the case
of limitation.
All the orders under section 31 being
appealable under section 33, the order of dismissal for noncompliance with
section 30(3) must also be appealable, and it was so decided in Maharani Gyan
Manjari Kuari v. Commissioner of Income tax(2) . How is this view to be
reconciled with the contention that section 31 contemplates only orders on the
(1) [1953] S.C.R. 463.
(2) (1944) 12 I.T.R. 59.
180 merits of the assessment and not on
preliminary issues? Vide also the decision in Kunwarji Ananda v. Commissioner
of Income-tax(1), which was followed in Maharani Gyan Manjari Kuari v.
Commissioner of Income-tax(2), and in Ramnarayana Das Mandal v. Commissioner of
Income-tax(3). There is thus abundant authority for the position that section
31 should be liberally construed so as to include not only orders passed on a
consideration of the merits of the assessment but also orders which dispose of
the appeal on preliminary issues, such as limitation and the like.
The learned Solicitor-General sought to get
over these decisions by taking up the position that section 31(3) (a) construed
in its literal and ordinary sense, conferred jurisdiction on the Appellate
Assistant Commissioner only to pass orders on the merits of the assessment,
that it was not therefore open to him to entertain any question which did not
directly relate to such merits, and that accordingly he could not hear or
decide any issue of a preliminary nature such as limitation, and dispose of the
appeal on the ,basis of the finding on that issue. He conceded that this
contention would run counter to numerous authorities, but argued that they were
all wrong. Having given due consideration to this contention, we are of opinion
that it is not well-founded.
Taking the plea of limitation-which is what
we are concerned with in this appeal when there is a judgment or order against
which the statute provides a right of appeal but none is preferred within the
time prescribed there for, the respondent acquires a valuable right, of which
he cannot be deprived by an order condoning delay and admitting the appeal
behind his back. And when such an order is passed ex part the has a right to
challenge its correctness at the bearing of the appeal. That is the position
under the general law (vide Krishnasami . Panikondar v. Ramasami Chettiar(4),
and there is nothing in the provisions of the Income Tax Act, which enacts a
different principle.
(1) I L.R. 11 Patna 187; A.I.R. 1931 Patna
306; 5 I.T.C.
(2) [1944]12 I.T.R. 59. (3) (1950) 18 I.T.R.
660.
(4) [1918] I.L.R. 41 Mad. 412; 45 I.A. 25.
181 Therefore, if an appeal is admitted
without the fact of delay in presentation having been noticed, clearly it must
be open to the Department to raise the objection at the time of the hearing of
the appeal. That would also appear to be the practice obtaining before. the
Income-tax Tribunal, as appears from the decisions cited before us, and that,
in our opinion, is right. Similar considerations would apply to other
objections of a preliminary character, such as one based on section 30,
sub-section (3). We should be slow to adopt a construction which deprives
parties of valuable rights. We are therefore of opinion that contentions
relating to preliminary issues are open to consideration at the time of the
hearing of the appeal, and that the jurisdiction of the Appellate Assistant
Commissioner is not limited to the bearing of the appeal on the merits of the
assessment only. In this view, the orders of the Appellate Assistant
Commissioner holding that there were no sufficient reasons for excusing the
delay and rejecting the appeals as time-barred would be orders passed under
section 31 and would be open to appeal, and it would make no difference in the
position whether the order of dismissal is made before or after the appeal is
admitted.
The question referred must accordingly be
answered in the affirmative. This appeal will therefore be allowed, and the
order of the court below set aside. The appellant will have his costs here and
in the court below.
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