M.M.P.L.S. Ramaswami Chettiar vs The Commissioner of Income tax

Rajagopala Ayyangar, J.—The question referred to this Court for its determination u/s 66 (1) of the Indian Income Tax Act is:

Whether the assessment, for 1941-42 assessment year completed on 24th March, 1942, having become final, relief u/s 25(4) claimed by the

assessee on his application, dated 16th March, 1950, is due and requires investigation on facts?

The facts necessary to understand the question raised are briefly these. P.S.R.M. Ramaswami Chettiar constituted with his son Subramaniam

Chettiar, a Hindu undivided family. There was a partition in the family between the father and the son on the 14th of March, 1941, the terms and

conditions of which were embodied in a deed executed between the parties on the 9th of April, 1941. This division was accepted by the

departmental authorities u/s 25-A of the Act on 28th January, 1942, in respect of the assessment for the year 1941-42. The year of account for

the assessee was the Tamil year and the relevant accounting year was 13th April, 1940 to 13th April, 1941. The assessment of the family for the

year 1941-42 in respect of the income for the period from 13th April, 1940 was completed on 24th March, 1942. There were, however, appeals

to the Appellate Assistant Commissioner against this assessment, and a remand and it was finally completed by an order of the Income Tax

Officer, dated 15th April, 1944. That assessment has become final, and no appeal has been preferred up till now against that assessment order.

While so, by a petition dated 20th August, 1948, Ramaswami Chettiar claimed that the foreign business of the family had suffered tax under the

provisions of the Indian Income Tax Act, VII of 1918, and, as such the family was entitled to the (benefit of the provision enacted in Section 25(4)

of the Act for the period 13th April, 1940 to 14th March, 1941. The Commissioner of Income Tax, Madras, refused to re-open this assessment

and passed an order to that effect on 15th November, 1948. Ramaswami Chettiar then moved the Central Board to grant the necessary relief,

which was denied by the Commissioner. The Central Board also declined this request.

Thereupon on the 16th of March, 1950, he filed, what we can only term as a miscellaneous application before the Income Tax Officer, Special

Circle, Madurai. After setting out the history of the unsuccessful applications made by him to the Commissioner and to the Central Board this

application stated:

Under the Act there is no time limit for presenting an application u/s 25(4)

and then it continued:

It is respectfully submitted that the question really involved was not taken into consideration in rejecting the claim by the Central Board

and finally it wound up with a prayer:

to reconsider your petitioner''s claim and render justice.

It will be seen that this was not an application contemplated by any of the provisions of the Indian Income Tax Act; and it is for this reason that

we have termed it a miscellaneous petition.

The Income Tax Officer referred to the previous orders on the subject by the departmental authorities and rejected the claim for relief. Against

that order Ramaswami Chettiar preferred an appeal to the Appellate Assistant Commissioner, Tiruchirapalli, who held that the appeal was

incompetent, as it was not covered by any of the provisions of Section 30 of the Indian Income Tax Act.

Ramaswami Chettiar took the matter on further appeal to the Appellate Tribunal. The Tribunal held that the Appellate Assistant Commissioner

was wrong in holding that no appeal lay to him. It held that the claim for relief was barred by limitation, and so it considered that no useful purpose

would be served by remanding the matter to the Assistant Commisioner and dismissed the appeal. The Tribunal, however, stated the question

which we have set out above for the determination of this Court.

Learned Counsel for Ramaswami Chettiar, the applicant, addressed to us elaborate arguments regarding the proper construction of Section

25(4) and contended that for the benefit contemplated by the first part of Section 25(4) there was no period of limitation prescribed by the Act,

and that he could at any time come forward and remind the Income Tax Officer of his statutory duties, to give effect to the provision of Section

25(4) and grant him the relief provided by that provision. We are not satisfied that these submissions are correct in law. But we do not propose to

say anything about the point in view of a preliminary objection which was raised to this reference by the learned Counsel for the Commissioner,

and which we consider is well-founded.

Mr. Rama Rao Sahib formulated his point that this reference was incompetent on the ground, that from the order passed on the application

presented by Ramaswami Chettiar to the Income Tax Officer, whose terms we have set out above, no appeal lay to the Appellate Assistant

Commissioner; and that consequently no appeal lay to the Tribunal from the order of the Assistant Commissioner and therefore there was no

competent order of the Tribunal u/s 33(4) to enable the Tribunal to sta1e a case for the determination of this Court.

The point raised by the learned Counsel is fully established by the decision of the Supreme Court in Commissioner of Income Tax, Madras Vs.

Mtt. Ar. S. Ar. Arunachalam Chettiar, . As the legal position is not challenged by the learned Counsel for the petitioner, we do not consider it

necessary to set out this decision in full. The benefit under the first part of Section 25(4) is certainly one to which an assessee who satisfies the

terms of that provision is entitled, and that benefit can be afforded to him in the assessment. If in an appeal against an assessment order, the proper

interpretation or effect of Section 25(4) comes up for consideration, the assessee can certainly in his appeal have the decision of the Income Tax

Officer on that point adjudicated in the appellate Court and so on up to this Court. But the petition filed by Ramaswami Chettiar in the present case

is certainly not one of those enumerated in the Act, and no appeal therefore lies from the order passed adversely to the applicant in such an

application as the same is not covered by Section 30 of the Act. The Appellate Assistant Commissioner was, therefore, right in the view, that no

appeal lay to him. In this view we uphold the preliminary objection and decline to answer the question referred to this Court. As the applicant has

failed in this Reference he must pay the costs. Counsel''s fee Rs. 250.