The Commissioner of Income Tax vs Mysore Iron and Steel Works

M.C. Chagla, C.J.—This reference raises a very short point as to the construction of Sections 30 and 31 of the Indian Income Tax Act, and the facts necessary to be stated are that the Income Tax Officer made an assessment on the assesses on March 16, 1946, and the notice of demand was served on the assesses on April 6, 1946. The assesses wanted to prefer an appeal against that assessment, and the appeal was received in the office of the Appellate Assistant Commissioner, B-Range, on June 3, 1946.

Now u/s 30 a statutory right is given to the assesses to prefer an appeal against an order of assessment made by the Income Tax Officer, but a time limit is prescribed within which the appeal has to be preferred, and that time limit is thirty days. Therefore admittedly when the appeal was presented, the appeal was out of time. On that, the assesses made an application to the Appellate Assistant Commissioner for condoning the delay. The Appellate Assistant Commissioner refused to condone the delay and declined to entertain the appeal. From this order of the Appellate Assistant Commissioner an appeal was preferred to the Appellate Tribunal, and the Appellate Tribunal took the view that the order passed by the Appellate Assistant Commissioner was an order u/s 31 of the Indian Income Tax Act and not an order u/s 30 of the Act and that an appeal lay from that order to condone the delay; and the Appellate Tribunal directed the Appellate Assistant Commissioner to hear the appeal on merits. From that order of the Appellate Tribunal this reference arises, and a question has been submitted by the Tribunal to us for decision, namely, whether the appeal before the Appellate Tribunal against the order of the Appellate Assistant Commissioner was competent?

Now, the scheme under Sections 30 and 31 of the Act is fairly clear. An assesses 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. 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 u/s 31 of the Act. Section 33 then gives the right of appeal to the assesses from an order made by the Appellate Assistant Commissioner either u/s 28 or u/s 31. Therefore the Legislature did not give the right of appeal to the assesses against an order made by the Appellate Assistant Commissioner u/s 30 of the Act.

Now Mr. Banaji has contended that in refusing to condone the delay the Appellate Assistant Commissioner has really dismissed his appeal and confirmed the order of assessment. In my opinion, that is an entirely erroneous contention because the Appellate Assistant Commissioner can only confirm an assessment and make an order of confirmation or dismissal of the appeal provided the appeal is presented within time or been admitted after condonation of delay and is heard and disposed of on merits. In this case we do not reach the stage of Section 31 at all. The appeal never came to be admitted, and no question can possibly arise of an order made by the Appellate Assistant Commissioner confirming the assessment made by the Income Tax Officer.

Mr. Banaji has relied on two judgments of the Patna High Court which, in my opinion, really have no bearing on the facts before us. One is Kunwarji Ananda v. Commissioner of Income Tax, Bihar and Orissa ILR (1931) Pat. 187 There a full bench of the Patna High Court considered an order made by the Assistant Commissioner that the appeal did not lie because it fell u/s 23(4) of the old Income Tax Act; and the Court held that such an order fell u/s 31 of the old Act as it was an order disposing of the appeal. Now, it is important to note that in that case the appeal was admitted. It was within time, and after it was admitted, a preliminary issue was raised as to whether the appeal lay as it fell u/s 23(4) of the old Income Tax Act. It was from the order on the preliminary point that an appeal was preferred to the Commissioner, and on those facts the Court held that it was an order u/s 31 of the old Act. But as I have pointed out earlier, in the case before us there is no question of the appeal being disposed of either on the preliminary point or on merits, because the appeal was never admitted.

Then there is the case of Maharani Gyan Manjari Kuari v. Commissioner of Income Tax (1943) 12 ITR 59 That was a case where the assesses had failed to prefer an appeal in the prescribed form to the Appellate Assistant Commissioner of Income Tax, and the Appellate Assistant Commissioner refused to admit the appeal holding that the appeal was not in the prescribed form. The Patna High Court merely followed the earlier decision of their own Court to which I have referred and came to the conclusion that the order made by the Appellate Assistant Commissioner was an order u/s 31. We have looked in vain through this judgment to find any reason suggested why the order made by the Appellate Assistant Commissioner refusing to entertain the appeal because it was not in proper form fell u/s 31 of the old Act. With respect to the Patna High Court, we cannot accept that decision if the effect of the decision is that even though an Appellate Assistant Commissioner may refuse to entertain an appeal, that order should be deemed to be an order disposing of the appeal u/s 31 as if the appeal had been admitted. But there is a direct decision of the Allahabad High Court, and that is reported in SHIVNATH PRASAD Vs. COMMISSIONER OF INCOME TAX, CENTRAL AND UNITED PROVINCES., . Although the case was under the old Act, it dealt with the very question with which we are dealing now and there also the Assistant Commissioner had refused to condone the delay and the Allahabad High Court held that the order made by the Assistant Commissioner was riot u/s 31 but it was an order made u/s 30 and, therefore, no appeal lay to the Appellate Tribunal. We, with respect, entirely agree with the view taken by the Allahabad High Court and also the reasoning on which that decision is based.

The result is that we must hold that there is no appeal from the order of the Appellate Assistant Commissioner refusing to condone the delay u/s 30, Sub-section (2), of the Income Tax Act.

The answer to the question will, therefore, be in the negative.

Assessee to pay the costs.

Tendolkar, J.

I agree.