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Judgment
Satyanakayana Rao J.
The question referred to us u/s 66(1) of the Indian Income Tax Act by the Income Tax Appellate Tribunal is:
Whether on the facts and in the circumstances of the case the order of the Appellate Assistant Commissioner, rejecting the appeal on the ground
that it was time barred was not an order u/s 31 of the Indian Income Tax Act and against which no appeal lay to the Tribunal.
The following facts relevant for the consideration of the question are taken from the statement of the case by the Appellate Tribunal. The
assessees are the joint receivers appointed by the High Court for the management of the estate of the late Md. Umar Sahib of Madras. The
receivers were, however, discharged after the application for reference u/s 66(1) was filed before the Tribunal and in their place, the heirs of the
deceased were brought on record as respondents. For the accounting year 1943 a return of the income was made treating the estate as one single
unit. The heirs, however, raised the contention that the assessment should be made upon them individually in proportion to the shares of the Income
which they obtained from the estate to which they succeeded. While that assessment was pending enquiry before the Income Tax Officer, for the
subsequent year 1944, a return was again submitted by the assessees for separate assessment. The claim of the assessees for separate assessment
was rejected by the Income Tax Officer for the two years. Against the order of the Income Tax Officer, appeals were preferred to the Appellate
Assistant Commissioner and they were pending. For the accounting year 1945 again a similar claim was made by the heirs in their return submitted
to the Income Tax Officer, and following the previous decision, the Income Tax Officer again negatived the claim. Against this order also there was
an appeal to the Appellate Assistant Commissioner, which was filed on the 28th September 1946. The appeal was however out of time by 64
days. In a covering letter which they submitted to the Appellate Assistant Commissioner along with the memorandum of appeal, the assessees
prayed for the condo nation of the delay on the ground that the staff which received the order of the Income Tax Officer mislaid it and omitted to
bring it to the notice of the assessees for the purpose of filing the appeal. The Appellate Assistant Commissioner was not satisfied with that
explanation and therefore rejected the appeal on llth October 1948. An appeal was thereafter preferred to the Appellate Tribunal against the order
of the Ap- pellate Assistant Commissioner rejecting the appeal. This appeal also was filed out of time but the Appellate Tribunal condoned the
delay accepting the explanation offered by the assessees. When the appeal was taken up for hearing by the Tribunal, the departmental
representative raised the preliminary objection that no appeal lay as the order of the Appellate Assistant Commissioner rejecting the appeal was an
order u/s 30 of the Income Tax Act which was not appeasable and that therefore the Tribunal had no Jurisdiction to hear and dispose of the
appeal. The Tribunal did not accept the contention, as in their opinion, the order of the Appellate Assistant Commissioner rejecting the appeal as
time barred was a disposal of the appeal, and as the only section which empowered the Appellate Assistant Commissioner to dispose of an appeal
was Section 31, the order of the Appellate Assistant Commissioner should be treated as one made u/s 31 of the Act. Therefore, the order, it was
held by the Appellate Tribunal, was appealable. In the result the Tribunal allowed the appeal of the assessees and set aside the order of the
Appellate Assistant Commissioner and remitted the case back for hearing. The question set out above was referred to this Court at the instance of
the Income Tax Commissioner.
On behalf of the Commissioner it was contended by Mr. Rama Rao Sahib, the learned advocate, that the order of the Appellate Assistant
Commissioner was not one coming within Section 31 of the Act, and that, therefore the appeal to the Appellate Tribunal was incompetent. This
argument is founded on the assumption, that Section 31 of the Act applies only to such appeals which are presented within the prescribed period
or dealt with by the Assistant Commissioner after admitting appeal by condoning the delay, and that the section has no application to any orders
passed by the Appellate Assistant Commissioner at a stage anterior to It. In support of this contention, learned counsel relied on certain decisions
of the Bombay and Allahabad High Courts. On behalf of he assessees, reliance was placed upon the view taken by the Patna High Court, which, it
was claimed, was also supported by a decision of the Judicial Committee.
Before an examination of the decisions cited on either side it would be convenient to refer to the provisions of the Act relating to appeals and to
examine the scheme underlying, these provisions. Under the Income Tax Act of 1922, before its amendment in 1939 and the introduction of the
present Section 33, an appeal against the assessment order to the Assistant Commissioner was provided u/s 30 of the Act. The first sub-section to
that section contained a proviso that no appeal shall lie in respect of an assessment made under Sub-section (4) of Section 23, or under that sub-
section read with Section 27. Sub-section (2) of Section 30 provided that the appeal shall ordinarily be presented within thirty days of receipt of
the notice of demand relating to the assessment and power was also conferred upon the Assistant Commissioner to admit an appeal after the
expiration of the period, if he was satisfied that there was sufficient cause for not presenting the appeal within the prescribed period. Sub-section
(3) required that the appeal should be in the prescribed form and should be verified in the prescribed manner. Section 31 laid down the procedure
for disposing of the appeal and also the powers of the appellate authority in disposing of an appeal. A further appeal to the Commissioner was
provided by Section 32 in a limited class of cases. There was then no further appeal to Income Tax appellate tribunal as it was not constituted; and
it was only under the present Section 33 that such a provision was made In respect of orders u/s 31, it was open u/s 65 to require the
Commissioner to refer to the High Court a question of law arising out of such an order or decision, and if he refused to do so under Sub-clause 3
of Section 68, an application to the High Court could be made to requite the Commissioner 10 state a case, ''this was altered in 1939, to some
extent. The right of appeal u/s 30, of the Act against the orders OF the Income Tax Officer relating to assessment to the Assistant Commissioner is
continued by Section 30. The proviso to Sub-section 1 in the old Act barring appeals against assessment orders u/s 23(4) has now been omitted
and other provisos have been added, Sub-clause (2) to Section 30, requiring that the appeal should ordinarily be presented within 30 days of the
receipt of demand levying the assessment and the-power of the Appellate Assistant Commissioner ta admit an appeal after the expiration of the
period of 30 days if there was sufficient cause for not presenting it within that period, remains unaltered. Sub-clause (3) was also retained. The
procedure to-be followed and the powers to be exercised by the Assistant Commissioner acting as an appellate authority are retained u/s 31
though amplified to some extent. A second appeal is now provided to an Appellate Tribunal u/s 33 of the Act against orders passed by the
Appellate Assistant Commissioner u/s 31. As we are now concerned only with an assessment order, we are not referring to the other provisions in
Sections 30 and 31 of the Act. The power to be exercised and the procedure to be followed by the Appellate Tribunal is also stated in Section 33.
Under the present scheme, therefore, a further appeal to the Appellate Tribunal lies only if an order falls u/s 31 of the-Act or u/s 28 and not
otherwise. We are not in the present case concerned with Section 28. The appeal therefore to the Appellate Tribunal can be justified only if It is
established that the order of the Appellate Assistant Commissioner rejecting the appeal is really one which was and could have-been passed u/s 31
of the Act.
The point for determination is whether the narrow construction put upon Section 31 by the Bombay and Allahabad High Courts should be
preferred to the liberal construction placed upon that section-by the Patna High Court. A form is prescribed by Section 30 and rules were made
under the rule making power for presenting an appeal. After an appeal is so presented, the appellate authority may have to consider certain
questions of a preliminary nature, not touching the merits of the order appealed against. Such questions are, for example whether the appeal was
presented in time, and"" whether there was sufficient cause to condone the delay, whether an appeal conformed to the formalities prescribed by the
rules or not, and whether art appeal was or was not barred by any of the provision of the Act and so on. These questions, though in a sense they
may relate to the appeal, do not reality concern the merits of the appeal i.e., the question whether the order appealed against was correct or not.
There is no definition of an appeal in the Income Tax Act. While construing the word ""appeal"" in the third column in Article 182 of the Limitation
Act, Sir Dinshaw Mulla observed in ''Nagendranath Dey v. Sureshchandra Dey'', 59 I. A. 283 :
There is no definition of appeal in the Civil P. C., 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.
There is no particular reason for not accepting: and applying this definition of an appeal under the Income Tax Act. The appeal may be an irregular
appeal or an incompetent appeal or even may be an appeal which was presented out of time. But still the Appellate Court has to apply Its mind
before it rejects the appeal on a preliminary ground that no case for condoning the delay was made out or that the formalities required of law have
not been compiled with or that the appeal was incompetent. In considering these questions the appellate Court is undoubtedly exercising an
appellate power and not a power which is outside it. No doubt u/s 30(2) of the Act power is given to condone the delay if sufficient cause is made
out. But suppose a sufficient cause is not made out, then what is the kind of order which the ap-pellate court is authorised to make and under
which section of the Act. Which is the section of the Act that empowers the appellate Court to consider and weigh the reasons put forward in
Justification of the filing of the appeal out of time and to come to a decision and reject the appeal? The Act does not specifically empower the
Appellate authority to reject an appeal which is out of time or which did not comply with the formalities or even an appeal which was incompetent.
Pushed to its logical conclusion, the argument on behalf of the Income Tax Commissioner would lead to the result that in such cases, the appellate
Court would have no power at all to reject the appeal. This could not have been the result contemplated by the Legislature and that was for the
reason that after the section conferring a right of appeal and empowering the appellate authority to excuse the delay if sufficient cause is made out
and admit an appeal, there follows the section which defines the powers of the appellate . Court and prescribes the procedure to be adopted in
disposing of the appeal. Even in respect of the preliminary questions it cannot be doubted and indeed it was not disputed, that the appellate Court
is bound to hear the appellant after fixing a date for hearing which section confers such a power except it be Section 31? The Legislature, in our
opinion, thought that all suck matters are covered by Section 31 which defines the procedure to be adopted and the power to be exercised by the
Appellate Tribunal and therefore no other specific provision was made in the Act in that behalf.
This view is to a large extent supported by the observations of the Judicial Committee in ''Commr. of Income Tax, Bombay Presidency and
Aden v. Khemchand Bamdas'', 65 Ind App 236. The view taken before the decision of the Privy Council in some of the High Courts was that
under the proviso to Section 30, which is now omitted, an order by the Appellate Assistant commissioner, that an appeal against an order of
assessment u/s 23(4) was incompetent as such an appeal was barred by the proviso, and that a reference u/s 6 in such a case was precluded as
the order was not one u/s 31. In the case before the Judicial Committee above referred to, the Income Tax Officer made an assessment first u/s 23
(4) and revised it later in view of a later order of the Commissioner declaring that the registration of a firm was invalid and passed a fresh order of
assessment u/s 23(4) and made the asses-sees liable to super-tax u/s 55 of the Act. One of the questions considered was whether the later order
was one against which an appeal to the Assistant Commissioner was competent. In dealing with this contention, their Lordships observed at page
251:
If it was made, as the Commissioner has found, in purported exercise of the powers given by Section 23, Sub-section 4, the assessee
nevertheless had a right of appeal to the Assistant Commissioner u/s 30 and the Commissioner was in error when he quashed the proceedings on
that appeal.
For as was truly said by Sir Shadi Lal in ''Duni Chand v. Commissioner of income tax'', 10 Lah 696:
The mere fact that the assessment purports to have been made under that sub-section does not shut out the appeal; it must be shown that tbe
circumstances of the case bring it within the scope of that sub-section.
As a preliminary to the application of the old proviso to Section 30 barring a right of appeal, it was always necessary when the assessee
complained to see whether the circumstances of the case were such as would have Justified action on the part of the Income Tax Officer of making
an assessment under the best judgment rule in Section 23(4). If the circumstances did not warrant it, the assessment would be unsustainable. If on
the contrary, the circumstances assumed to have existed by the Income Tax Officer, did in fact exist, the order would be correct and the appeal
would be incompetent. It cannot be said therefore that because an appeal was incompetent, an order disposing of the appeal as being incompetent
is not appealable. These are all no doubt Questions of a preliminary nature to be determined by the appellate authority in the exercise of its
appellate powers. The decision of Sir Shadi Lal which had the approval of the Judicial Committee was the foundation of the view taken by the
Patna, High Court, In the earliest of the cases in ''Ananda v. Commissioner of Income Tax, B & O'', 11 Pat 187. In the light of the decision of the
Judicial Committee the earlier decision of the Allahabad High Court in JOT RAM SHER SINGH Vs. COMMISSIONER OF Income Tax,
UNITED PROVINCES., which was based upon the Pull Bench decision of the Rangoon High Court in ''In Adbul Bari v. Commissioner of
income tax'', Burma 9 Hang 281 seems to us erroneous. The Rangoon Full Bench disagreed to a considerable extent from the view taken in ''Duni
Chand v. Commissioner of income tax'', 10 Lah 596. To accept the limited and narrow construction for which the counsel for the Commissioner of
Income Tax contends that the ""appeal"" in Section 31 must be understood as meaning only an appeal which was competent and was presented in
time or which was admitted after the delay was condoned and which also complied with all the formalities, is to leave the appellate Court
powerless to decide the preliminary points for there is no specific enumeration of the power in the scheme of the Act. It would also deprive the
aggrieved party of a remedy and make him helpless even in cases where the order of the Appellate Assistant Commissioner was obviously wrong
and unjust. There is no reason to restrict the meaning of the word ""appeal"" in Section 31 to an appeal which complied with all the requirements of
the law and was ripe for consideration on the merits of order appealed against. The expression ""hearing of the appeal"" and ""disposing of the
appeal"" In Sub-els. 1 and 2 of Section 31 and the power to make further inquiry may all equally apply to the preliminary stages as well as the
subsequent stages of the hearing of an appeal.
The argument however most strongly pressed was that in enumerating the powers in Sub-section 3 to Section 31 power to reject an appeal was
not expressly mentioned, which, it was claimed, was an indication that the preliminary stages of an appeal and the disposal and hearing of it were
not within the purview of Section 31. We are unable to agree with this view. 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. When pressed, learned counsel
however was forced to concede that if an appeal, though out of time, was admitted by mistake and at the hearing an objection was taken by the
respondent which was upheld, the order rejecting the appeal at that stage would fall u/s 31. One of the decisions of the Allahabad High Court even
held that once the delay was condoned and the appeal was admitted, but later, on the objection of the respondent, it was found that the
condonation of the delay at the earlier stage proceeded on a mistake, an order rejecting the appeal at that stage would be one u/s 31. It is also
stated that if a date for the hearing of the appeal was axed and the appeal was heard, the order might possibly fall u/s 31. If the argument in
support of the Allahabad view were correct, where is the power u/s 31 to reject an appeal even under those circumstances? It must be conceded
that the order of rejection under such circumstances would amount to confirmation of the order of the Income Tax Officer. The difficulty arises
according to the argument advanced on behalf of the Income Tax Commissioner only in cases where the delay was not condoned by the Appellate
Assistant Commissioner and when he deals with the matter ex parte. In such a case, it is said that the order would be outside the purview of
Section 31. It is difficult to make a distinction in the manner suggested. It only shows and reinforces the argument that all the powers exercised and
exercisable by the appellate authority are derived u/s 31 and that the language of Section 31 is wide enough to cover the two stages of the hearing
of the appeal whether It related to questions of a preliminary nature or whether it related to the merits of the appeal. The decision of the Allahabad
High Court in JOT RAM SHER SINGH Vs. COMMISSIONER OF Income Tax, UNITED PROVINCES., , already referred to was followed
by the same Court in SHIVNATH PRASAD Vs. COMMISSIONER OF INCOME TAX, CENTRAL AND UNITED PROVINCES., in
which the question was whether an order rejecting an appeal by the Assistant Commissioner as time barred was within the purview of Ss. 31, 32
or 33 of the Income Tax Act as ifc stood before 1939 and the High Court could direct the Commissioner to state a case u/s 66 of the Act. It was
held that the order was not within Section 31 or any other section. It was an appeal filed out of time and the delay in presenting was not condoned
and the appeal was non-existent; the question of the power to reject an appeal under any particular section of the Act was not considered by the
learned Judges. An order rejecting an appeal on the ground of limitation was not considered to be an order confirming an assessment within the
meaning of Section 31. According to the learned Judges an order confirming an assessment is an order which has reference to the assessment and
which affirms it; in other words an express affirmation of the order of assessment should be made. All that the section says is that in disposing of an
appeal, the Appellate Assistant Commissioner may in the case of an order of assessment confirm the order; if the appeal is rejected or if the appeal
is dismissed it tantamounts ""to a confirmation of the order. It is not the form in which the judgment is pronounced that matters, but the substance
and the consequence of the dismissal or rejection of the appeal. In a recent decision of the same Court in SPECIAL MANAGER, COURT OF
WARDS, NARAINDAS NARSINGHDAS Vs. COMMISSIONER OF Income Tax, U. P., , there are observations doubting the correctness of
the decision in SHIVNATH PRASAD Vs. COMMISSIONER OF INCOME TAX, CENTRAL AND UNITED PROVINCES., though obiter,
for it was found even by the Appellate Tribunal that the case was not one in which the delay should be excused on the merits, as they were not
satisfied with the sufficiency of the grounds for condoning the delay. After referring to a decision of the Patna High Court to the contrary, this is
what the learned Judges state at page 212: ""The other view at the same time may be possible that even though the period of limitation is prescribed
u/s 30 and the power to grant extension is also given in that section the power is really exercised u/s 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. This question may assume some
importance to a case where the appeal was within time but the Appellate Assistant Commissioner made a mistake and refused to admit it on the
ground that the appeal was barred by limitation or the question might well have to be seriously considered in a case where there was sufficient
cause for condonation of the delay and the exercise of the discretion by the Appellate Assistant Com- missioner was considered to be perverse. In
the case before us, however, both the Appellate Assistant Commissioner as well as the Appellate Tribunal considered the case on the merits and
both were of the opinion that there were no sufficient grounds for the condonation of the delay..... in the circmstances of the case, there is no point
in having the question further considered by a larger Bench.
There are two decisions of the same Court in 1951. In Mohd. Naim Mohd. Alam Vs. The Commissioner of Income Tax, , the first of the cases,
the Appellate Assistant Commissioner admitted an appeal but subsequently dismissed It on the ground that the appeal was time-barred. This order
was passed after issue of notice to the assessee fixing a date and place of hearing of the appeal and the order was treated as one falling u/s 31
which was appealable. The reason given by the learned Judges was that after the admission of the appeal the only section that would apply at the
time of the hearing was Section 31. They however expressly ""refrained from expressing any opinion on the larger question for they observed at
page 62:
We do not want to go into the larger question whether an order refusing to condone the delay u/s 30(2) and thereafter rejecting the memorandum
of appeal is an order u/s 30 (2) of the Indian Income Tax Act or, is an order u/s 31 of the Act.
The second decision is reported at page 63 as the The Municipal Board Vs. The Commissioner of Income Tax, C.P. and Berar, . The distinction
was drawn in that case between an appeal which was dismissed ''in limine'' on the ground of limitation in which case the order would be u/s 30 (2)
and an appeal which was admitted and after fixing a date and place of hearing was dismissed as time-barred in which case it would be an order u/s
31 (1). On the facts it was a case where the appeal was dismissed ''in limine''. Therefore It was held that there was no appeal. The distinction if we
may say so with respect, between the two cases seems to be very thin.
The Bombay High Court in COMMISSIONER OF Income Tax, BOMBAY CITY Vs. MYSORE IRON and STEEL WORKS., , followed
the Allahabad view. It was also a case where the Appellate Assistant Commissioner refused to condone the delay. The learned Judges refused to
follow the Patna view and preferred the view taken by the Allahabad Court. With great respect we are unable to agree with the view taken by the
learned Judges of the Bombay High Court. At page 480 the learned Chief Justice) after examining the scheme of the Act, observes:
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; end 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 B. 31 deals only with such appeals which are presented within the prescribed period or admitted
after the delay had 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.
This in substance is also the argument advanced en behalf of the Income Tax Commissioner by Mr. Ramarao Sahib.
Considerable light 13 thrown on the question which we are considering in this reference by the decision of the Full Bench in ''K. Ananda v.
Commissioner of Income Tax, B & O'', 11 Pat 187. It was a case which arose under the old proviso to Section 30 barring a right of appeal in
respect of en assessment order u/s 23(4). The observations of the learned Judges are in consonance with the principles laid down by the Privy
Council In ''income tax Commissioner v. Khemchand Ramdas'', 65 I. A. 236, already referred to. Courtney-Terrell C. J. observed at page 202:
It is undoubtedly the duty of the Assistant Commissioner when the order Of the Income Tax Officer comes before him on appeal to decide
whether or not he is precluded by the Act from going into the amount or rate of the assessment or the liability of the assessee, and, if he is so
precluded, he must reject the appeal. In so rejecting the appeal he is, in my opinion, u/s 31 ''disposing of an appeal'' and such disposal is a
proceeding In connection with an assessment under this Act.
The observations of Fazl All J. (as he then was) are more pertinent. At page 215 the learned Judge states:
The Assistant Commissioner did not summarily dismiss the appeal but fixed a date and place for hearing the assessee and after dealing with the
point as to whether the assessee was liable to be taxed under the Act or not, confirmed the assessment on the ground that the assessment had been
rightly made u/s 33 (4). The question is whether this order or decision was or was not one u/s 31. The learned Assistant Government Advocate
contends that once It is found that no appeal lay to the Assistant Commissioner, the order passed by that Officer cannot be regarded as one
passed u/s 31. Now Section 31 provides that the Assistant Commissioner may in disposing of the appeal confirm, reduce, enchance or annul the
assessment or may set It aside and direct the Income Tax Officer to make ft fresh assessment after making such further inquiry as the Income Tax
Officer thinks fit. In this case the Assistant Commissioner passed an order which Is at least in form an order u/s 31. In passing the order the
Assistant Commissioner also purported to act as the ordinary appellate authority and as far as I am aware there is no section in the Income Tax
Act except Section 31 under which the order could have been passed. It appears to me, therefore, that the moment such an order is produced
before the Commissioner of Income Tax, the assessee is entitled to ask him, If he so wishes, to refer such questions of law as arise out of it to the
High Court u/s 66 (2) ...... u/s 31, the Assistant Commissioner has the power to allow the appeal as well as to reject it and the mere fact that he
rejects it on the grouud that in his opinion no appeal lies will be no ground for treating the order as one not passed u/s 31.
Again at page 219 after referring to a decision of the Calcutta High Court under Article 119 of the Limitation Act of 1877 which had to construe
whether there has been an appeal as in ''Nagendranath De v. Sureshchandra Dey'', 59 I. A. 283 the learned Judge adopts the reasoning in ''Wazir
Mahton v. Lulit Singh'', 9 Cal 100'' and states:
That case, it is true, was decided with reference to a wholly different Statute but the reasoning which was adopted there is, in my opinion, also
applicable to this case and I think that where an appeal has been actually preferred to the appellate authority and where it has been disposed of by
such authority, the order passed in such a proceeding may, without straining the actual words of the section, be regarded as an order u/s 31 or
Section 32 as the case may be.
The observations of Sir Shadi Lal in ''Duni Chand v. Commissioner of income tax'', 10 Lah 595'' which had the approval of the Privy Council were
reliad on. In a later case of the same Court in MAHARANI GYAN MANJARI KUARI, DOWAGER MAHARANI OF HATHWA Vs.
COMMISSIONER OF INCOME TAX BIHAR AND ORRISA., , an appeal was rejected by the Appellate Assistant Commissioner on the
ground that it was not in the prescribed form. It was hold that the order of the Appellate Assistant Commissioner was within Section 31 of the Act
and that the appeal was competent. Manohar-lal, J., who delivered the judgment''of the Court quoted ''in extenso'' from the decision of the Pull
Bench in ''Kunwarji Ananda v. Commissioner of Income Tax, B & O.'' 11 Pat 187, in support of his view. At page 65 occurs the following extract
from Dhavle, J''s. judgment which gives the basis of the decision:
Where, however, the Assistant Commissioner holds that an appeal is barred by the proviso, (referring to the old proviso to Section 30), it has
been urged by the learned Counsel for the Income Tax Department that there is no order passed u/s 31 and that consequently the assessee is not
entitled to resort to the provisions of Sub-sections (2) and (3) of Section 66 for coming up to the High Court on questions of law. It appears to me
that this contention is unsound. If the order be not an order u/s 31, there Is no other section in the Act under which it can come. It is true that
Section 31 deals with the hearing of the appeals; but does this necessarily mean a hearing of the appeal on the merits.
The view taken by the Patna High Court In our opinion, for the reasons already mentioned is correct. Under the Civil Procedure Code, it was
held that if an appeal was rejected either on the ground of limitation or for a similar reason that the order of rejection was appealable as a decree --
See ''Ayyama v. Nagabhooshanam'', 16 Mad 285, ''Zamindar of Tuni v. Bennayya'', 22 Mad 155, ''Samintha lyer v. Venkatasubba Aiyar'', 27
Mad 21 in which ''Gulab Rai v. Mangilal'', 7 All 42 was followed -- See also ''Kantaimathi Animal v. Ganesa lyer; 59 Mad 805. But a Full Bench
of our Court in ''Re: Kayambu Pillai'', ILR (1941) Mad 904, held that an order dismissing an appeal for non-compliance of the order requiring
security for coats and an order dismissing an appeal for -non-payment of court-fee are hot decrees and are not appealable as such. The decisions
in ''Ayyanna v. Nagabhooshanam'', 16 Mad 285, and ''Zamindar of Tuni v. Bunnayya'', 22 Mad 155 were distinguished. There is a recent decision
of Subba Rao, J., in A. Vs. SREENIVASALU NAIDU v. COMMISSIONER OF Income Tax MADRAS., , which at first sight seems to be
against the view which we have taken. The question which the learned Judge had to deal related to the construction of Section 33-A (2) of the
Income Tax Act. The Commissioner is authorised by that section to exercise the power of revision but subject to certain restrictions provided in
the section itself. The Commissioner has no power under that proviso to revise the order:
(a) Where an appeal against the order lies to the Appellate Assistant Commissioner or to the Appellate Tribunal but has not been made, the time
within which such appeal may be made has not expired, or, in the case of an appeal to the Appellate Tribunal, the assessee has not waived his right
of appeal, or
(b) where an appeal against the order has been made to the Appellate Assistant Commissioner, the appeal is pending before the Appellate
Assistant Commissioner, or
(c) the order has been made the subject of an appeal to the Appellate Tribunal.
In that case an appeal to the Appellate Tribunal u/s 33 against an order of the Appellate Assistant Commissioner was dismissed as time-
barred. Thereafter the assessee applied to the Commissioner u/s 33-A (2) to revise the order of the Appellate Assistant Commissioner. He
declined to entertain the application on the ground that the order of the Appellate Assistant Commissioner had already been made the subject of an
appeal to the Appellate Tribunal. The assessee then applied to the High Court u/s 45. of the Specific Relief Act for directing the Commissioner to
hear and determine the question. The objection raised was that the order of the Appellate Assistant Commissioner was made the subject of an
appeal to the Appellate Tribunal though it was dismissed as being out of time and therefore the Commissioner could not be compelled to exercise
the power of revision u/s 33-A (2). In the context in which the expression occurs it Is clear that the bar to the exercise of the revisional Jurisdiction
was the actual pendency of an appeal before the Appellate Assistant Commissioner, or that there was a disposal on merits by the Appellate
Tribunal and therefore it should not be again made the subject of revisional jurisdiction of the Commissioner. It was therefore rightly held by the
learned Judge, if we may say so with respect, that a mere dismissal of an appeal ''in timine on the ground of limitation did not attract the bar to the
exercise of the revisional jurisdiction and therefore a mandamus was issued. Reference was made in that Judgment to the decision of Madhavan
Nair, J., in ''Bayya Reddi v. Gopalarao'', 57 Mad 741 and of the Judicial Committee, In ''Nagendranath De v. Sureshchandra De'', 59 I. A. 283.
The- decision, in our opinion, does not support to any extent the contention of Mr. Rama Rao Sahib, in ''Bayya Reddi v. Gopalrao'', 57 Mad 741.
no doubt the appeal memorandum was rejected as being out of time and the view that there was no appeal within'' the meaning of Article 183 of
the Limitation Act was based on the fact at under the Madras Amendment which introduced new Sub-section 3 to Rule 1 of Order XLJ Civil
Procedure Code, it was necessary to decide the application u/s 5 of the Limitation Act to excuse the delay before the appeal is admitted. The view
therefore taken by the learned Judge in that case car; be justified on the ground. But that does not help the contention of Mr. Kama Rao Sahib.
We are therefore of opinion that the order of the Appellate Assistant Commissioner lejecting the appeal was one u/s 31 of the income taxi Act
and was appealable to the Appellacc Tribunal. The question referred to us must therefore be answered in the affirmative and in favour of the
assessee. As the assessee has succeeded in this reference, he is entitled to his costs which we fix at Rs. 250. (To be shared by the respondents
between them.)