R B JODHA MAL KAUTHIALA vs COMMISSIONER OF Income Tax DELHI.

R. B. Jodha Mal Kuthiala (hereafter referred to as the assessed) is a partnership firm and the dispute in this case relates to the accounting period ended 31st October, 1954, relevant to the assessment year 1955-56. The assessed field its loss return for the assessment year 1955-56 on October 16, 1959. On that day the time prescribed by section 22 (2A) of the Indian Income Tax Act, 1922, for filing the loss return, had expired and neither the assessed asked for an extension of time nor was the same granted by the Income Tax Officer suo motu. The Income Tax Officer treated the return as invalid and said :

&quto;As such the return field by the assessed is invalid and is accordingly field.&quto;

The Income Tax Officer, Therefore, did not actually compute the profit or loss of the assessed. The assessed preferred an appeal to the Appellate Assistant Commissioner and contended that the return field by it was a valid one. The Appellate Assistant Commissioner decided that the appeal u/s 30 of the Act was not competent and also expressed agreement with the Income Tax Officer that the return was not valid. The assessed preferred an appeal to the Income Tax Appellate Tribunal and contended that : (i) the return field by the assessed was a valid one and the Income Tax Officer should have processed the return and computed the loss; and (ii) the order of the Income Tax Officer amounted to computing the loss at zero and since section 30 in terms provides a right of appeal, the appeal was competent. The Tribunal decided that the Income Tax Officer treated the return as invalid and refused to deal with the merits or to apply his mind thereto and consequently the said order could not be constructed as an order computing the loss at nil. The Tribunal observed :

&quto;No computation is possible till the Income Tax Officer takes consigns of the return field and examines the account-books and other relevant material in exercise of the powers vested in him. What has happened in the present case is that the Income Tax Officer refused to exercise his powers and to compute the loss with respect to the returns submitted by the assessed. Had he applied his mind to that return and made an assessment, for ought we know, he would have computed some profit instead of loss, or even if he had computed a loss it would be difficult to say the extent thereof. Hence, when the Income Tax Officer has refused to apply his mind, it cannot be held that he should be deemed to have applied his mind and further he be deemed to have computed the loss at zero.&quto;

In the result, the Tribunal held that the appeal before the Appellate Assistant Commissioner was incompetent. In these circumstances, the Tribunal referred u/s 66(1) of the Act the following question of law to this court :

&quto;Whether the appeal filed by the assessed before the Appellate Assistant Commissioner is competent u/s 30 of the Income Tax Act ?&quto;

The assessed prayed before the Tribunal to refer another question, namely : &quto;Whether his ignoring the same would not be construed as computing the assesseds loss an nil ?&quto;; but the Tribunal felt that this question was covered by the question referred and set out herein before.

There is no inherent right of appeal and its existence must depend on the terms of the statute. In case there is any ambiguity, the relevant provision must be construed in favor of the right. The question, Therefore, turns on the interpretation of section 30. The relevant part of section 30 reads :

Any assessed objecting to the amount of income assessed u/s 23 or section 27, or the amount of loss computed u/s 24 or the amount of tax determined u/s 23 or section 27, or denying his liability to be assessed under this Act..... may appeal to the Appellate Assistant Commissioner.....&quto;

In this case the Income Tax Officer never applied his judicial mind to the merits of the case. He merely declined to entertain the return. There has, Therefore, been neither assessment of income u/s 23 nor computation of loss u/s 24 nor determination of the amount of tax u/s 23. The right of appeal conferred by section 30 is not general but is confined only to orders expressly specified in the section. The order of the Income Tax Officer clearly falls outside the pale of section 30. In such circumstances it may be open to an assessed to invoke the revisional jurisdiction of the Commissioner, but in the cannot appeal. The Tribunal was, under the circumstances, right in the view it took, and we, accordingly, answer the question in the negative and against the assessed. There will, however, be no order as to costs.

Question answered in the negative.