Commissioner of Income Tax vs Balchand Malviya

G.G. Sohani, Actg. C.J.

By this reference u/s 256(1) of the Income Tax Act, 1961 ("the Act "), the Tribunal, Jabalpur Bench, Jabal-pur, has referred the following question of law to this court for its opinion:

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that because of the order of the Madhya Pradesh High Court in Miscellaneous Petition No. 15 of 1975 dated July 10, 1980 Balchand Malaiya and Others Vs. Income Tax Officer, A-Ward and Another, there was no scope for considering the first additional ground of appeal which was to the effect that the Appellate Assistant Commissioner had no jurisdiction to entertain the appeal against the impugned order of the Income Tax Officer ? "

The material facts giving rise to this reference briefly are as follows :

The assessee was assessed to Income Tax under the provisions of the Indian Income Tax Act, 1922 ("the 1922 Act"), in the status of a Hindu undivided family for the assessment years 1953-54 to 1956-57. It was urged before the Income Tax Officer on behalf of the assessee that a partition in the joint family had taken place but that claim put forward by the assessee u/s 25A of the 1922 Act was rejected by the Income Tax Officer. Aggrieved by the order passed by the Income Tax Officer, the assessee preferred an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner set aside the order passed by the Income Tax Officer and directed the Income Tax Officer to make the assessment in the manner provided by Sub-section (2) of Section 25A. Thereafter, the Income Tax Officer passed orders on July 8, 1974, for the assessment years in question. In pursuance of the assessment orders passed on July 8, 1974, demand notices were issued by the Income Tax Officer to all the members of the Hindu undivided family who filed a petition in this court which was registered as Miscellaneous Petition No. 15 of 1975 Balchand Malaiya and Others Vs. Income Tax Officer, A-Ward and Another, praying that the assessment orders passed by the Income Tax Officer be quashed and the demand notices which were issued in pursuance of these orders be also quashed. During the pendency of that petition, the karta of the Hindu undivided family has also filed appeals against the assessment orders passed on July 8, 1974, by the Income Tax Officer and the order dated January 17, 1979, passed by the Appellate Assistant Commissioner and the appeals were allowed. This fact was brought to the notice of this court when Miscellaneous Petition No. 15 of 1975 Balchand Malaiya and Others Vs. Income Tax Officer, A-Ward and Another, was being heard. A Division Bench of this court, by its order dated July 10, 1980, while disposing of the petition, held as follows (at p. 796):

" In view of the facts stated above, the relief claimed in the petition for quashing of the assessment orders dated July 8, 1974, passed by the Income Tax Officer for the years 1953-54, 1955-56, 1956-57 and 1958-59 does not survive because these orders have already been set aside by the Appellate Assistant Commissioner in appeal. As a consequence of the setting aside of these assessment orders by the Appellate Assistant Commissioner, the demand notices issued for the years 1956-57 and 1958-59 become invalid and cannot be enforced by the Department. These notices have, therefore, to be quashed. "

In the meanwhile, aggrieved by the orders passed by the Appellate Assistant Commissioner, the Revenue had preferred appeals before the Tribunal. When these appeals preferred by the Revenue before the Tribunal against the orders of the Appellate Assistant Commissioner came up for consideration, an additional ground was sought to be raised before the Tribunal on behalf of the Revenue that the appeals preferred by the assessee before the Appellate Assistant Commissioner were not maintainable. While dealing with this contention, the Tribunal held that in view of the order of this court in Miscellaneous Petition No. 15 of 1975, there was no scope for considering the issue raised by the Revenue that the appeals before the Appellate Assistant Commissioner were not competent. Aggrieved by this order passed by the Tribunal, the Revenue sought reference and it is at the instance of the Revenue that the aforesaid question of law has been referred to this court for its opinion.

Having heard learned counsel for the petitioner, we have come to the conclusion that this reference must bo answered in the affirmative and against the Revenue. If the Tribunal were to hold as urged by the Revenue that the Appellate Assistant Commissioner had no jurisdiction to hear the appeals in question, the effect of that order would be revival of the demand notices issued by the Income Tax Officer which have been quashed by this court by its order dated July 10, 1980, in Miscellaneous Petition No. 15 of 1975. The order that would be passed by the Tribunal would, in that case, be inconsistent with the decision of this court in Miscellaneous Petition No. 15 of 1975. The Revenue could have urged before this court in Miscellaneous Petition No. 15 of 1975 that the orders passed by the Appellate Assistant Commissioner in appeal were without jurisdiction but the Revenue did not choose to do so. Under these circumstances, the Tribunal, in our opinion, was right in holding that in view of the order passed by this court in Miscellaneous Petition No. 15 of 1975, there was no scope for considering the question as to whether the Appellate Assistant Commissioner had no jurisdiction to entertain the appeal against the impugned orders of the Income Tax Officer.

For all these reasons, our answer to the question referred to this court is in the affirmative and against the Revenue. In the circumstances of this case, parties shall bear their own costs of this reference.