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AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
  • E.R. Meyer with Balai Pal
  • N.C. Sen Gupta with Amarendra M. Mitra and Arunendra N. Basu
Judges
  • Chakravartti, C.J
  • Lahiri, J.
Acts
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
  • E.R. Meyer with Balai Pal
  • N.C. Sen Gupta with Amarendra M. Mitra and Arunendra N. Basu
Judges
  • Chakravartti, C.J
  • Lahiri, J.
Acts
See more information ...
Smart Summary

Structured Summary of the Opinion (Chakravartti, C.J.)

Factual and Procedural Background

The assessee, Messrs Sarkar & Co., faced assessments for the years 1945–1946 and 1946–1947. A central factual dispute was whether the business was owned by a partnership or by a Hindu undivided family; consequently the assessee applied for registration under Section 26‑A of the Income‑tax Act. The Income‑tax Officer, District III (2), held that the claim to treat the business as owned by a firm could not be entertained before a partition within the meaning of S.25‑A and therefore refused registration.

The assessee appealed to the Appellate Assistant Commissioner, who disposed of the appeals on 2‑2‑1950 in favour of the assessee. Prior to that, on 1‑10‑1948, the Commissioner had transferred the assessment file by order under S.5(5) read with S.5(7)(a) to the Income‑tax Officer, Non‑Companies (Income‑tax‑cum‑Excess Profits Tax), District Calcutta. Thus, at the time of the appeals' hearing before the Appellate Assistant Commissioner, the officer in charge of the file was the transferee Income‑tax Officer (Non‑Companies), not the original officer (District III (2)) who had made the assessment.

After the Appellate Assistant Commissioner ruled for the assessee, three appeals were filed by the Income‑tax Officer, District III (2), under direction of the Commissioner. The Tribunal, though inclined on merits to favour the Department, dismissed the appeals as incompetent on the ground that they had been filed by the Income‑tax Officer who was no longer seised of the case rather than by the Income‑tax Officer who was then seised.

The Commissioner of Income‑tax, West Bengal, sought a reference to this Court on a question of law asking whether the Tribunal was correct in holding that the Income‑tax Officer, Non‑Companies (to whom the case had been transferred) was the competent officer to file the appeals and not the Income‑tax Officer, District III (2), who made the assessments and had been directed by the Commissioner to appeal under Section 33(2).

Legal Issues Presented

  1. Whether, on the facts and circumstances of this case, the Appellate Tribunal was correct in holding that the Income‑tax Officer, Non‑Companies (Income‑tax‑cum‑Excess Profits Tax), to whom the case had been transferred by the Commissioner before the date of filing the appeals, was the officer competent to file the appeals, and not the Income‑tax Officer, District III (2), who had made the assessments and had been directed to appeal under Section 33(2) of the Income‑tax Act.
  2. Whether the Commissioner of Income‑tax can, by direction under S.33(2), require an Income‑tax Officer who is no longer seised of a case to file appeals in respect of that case (i.e., whether the Commissioner can split functions relating to the same assessment between different Income‑tax Officers).

Arguments of the Parties

Arguments advanced on behalf of the Commissioner (referred to Mr. Meyer)

  • At one stage Mr. Meyer argued that the Commissioner’s direction to the Income‑tax Officer, District III (2), to file the appeals amounted to a retransferral of the file to that officer, making the appeals competent.
  • He also relied on the statutory definition of “Income‑tax Officer” and suggested that construing the Commissioner’s power narrowly would cause practical inconvenience where a file had been transferred for administrative reasons.
  • Mr. Meyer subsequently conceded, however, that at the time of filing the appeals the assessment file was in fact with the Income‑tax Officer, Non‑Companies, and had not been retransferred to District III (2).

Tribunal's and Commissioner's factual position

  • The Tribunal held the appeals were incompetent because they were filed by the Income‑tax Officer, District III (2), who had no seisin of the case at the time of filing and because that officer was not an “aggrieved officer”.
  • The Commissioner, in the statement of facts for the Reference, admitted that when the appeal was filed the case was seised of the Income‑tax Officer, Non‑Companies (Income‑tax‑cum‑Excess Profits Tax), and not District III (2).

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court's analysis proceeded in several linked stages that are explicitly stated in the opinion:

  1. The Court rejected the Tribunal's second ground (that the appellant Income‑tax Officer must be an “aggrieved officer”) as irrelevant: qualification to maintain an appeal does not require that the officer himself feel a particular grievance.
  2. The Court examined Mr. Meyer’s submission that the Commissioner’s direction to District III (2) amounted to a retransfer of the file. The Court observed that neither the Tribunal nor the Commissioner had relied on retransferral as the basis for the Tribunal’s decision; indeed the Commissioner’s own statement admitted the transferee officer remained seised and Mr. Meyer later conceded the same. Accordingly the retransferral argument could not support competency of the appeals.
  3. The Court interpreted Section 33(2) of the Income‑tax Act, which authorises the Commissioner to "direct the Income‑tax Officer to appeal to the Appellate Tribunal." The Court emphasised the presence of the definite article "the" and concluded it points to the Income‑tax Officer who is concerned with the case at the time when the appeal is to be filed (i.e., the officer actually seised of the case).
  4. A more fundamental statutory construction point was then advanced: the Act permits the Commissioner to direct Income‑tax Officers to perform their functions in respect of such persons, classes of persons, incomes or areas as the Commissioner may direct (S.5(5)). The Court contrasted that language with S.5(6) (a power bestowed on the Central Board of Revenue), which expressly empowers the Board to specify functions to be performed by officers in respect of particular classes or areas. From this contrast the Court inferred that the Act contemplates allocation of responsibility by reference to persons/classes/areas as wholes, but does not authorise the Commissioner to split functions relating to the same assessee or the same assessment between different officers.
  5. Applying these principles, the Court concluded that the Commissioner could not, by directing an officer who was not seised, cause that officer to validly institute an appeal in respect of an assessment that, at the time of filing, was under the control of another officer. To allow such a practice would permit distribution of duties relating to the same assessment among different officers — a distribution the statute does not, in the Court’s view, authorise the Commissioner to effect.
  6. The Court briefly addressed the practical inconvenience argument raised by Mr. Meyer (that requiring the officer who made the assessment to remain responsible for subsequent appeals would be administratively inconvenient). The Court observed that practical convenience is not a relevant tool of statutory construction and noted that, in the case before it, there was no evident necessity to recall the original assessing officer to challenge the Appellate Assistant Commissioner’s order when the transferee officer was in charge of the file even before the Assistant Commissioner.

Holding and Implications

Holding: The Court answered the referred question in the affirmative — that is, the Appellate Tribunal was correct in holding that the Income‑tax Officer, Non‑Companies (to whom the case had been transferred and who was seised at the time of filing), was the officer competent to file the appeals and not the Income‑tax Officer, District III (2), who was no longer seised of the case.

Direct consequences for the parties: The appeals filed by the Income‑tax Officer, District III (2), were incompetent and the assessee is entitled to the costs of this Reference (the Court expressly ordered that the assessee would get the costs).

The opinion does not set out any broader doctrinal pronouncement beyond the statutory construction relied upon, nor does it expressly state that it creates a binding new precedent beyond the Court's ruling on the statutory interpretation and on the facts of the case.

Other formal points recorded in the opinion: Lahiri, J. agreed with the judgment. The final line records: "Answer in the affirmative."

Show full summary ...

    Commr. Of Income Tax West Bengal v. S. Sarkar & Co.

    The Judgment of the Court was delivered by

    Chakravartti, C.J:— This Reference involves a short question of procedure but it was said on behalf of the Commissioner of Income-tax that the question was one of importance.

    2. It appears that the Income-tax Officer had to deal with the assessment of the assessee, Messrs Sarkar & Co. for two assessment years, namely, 1945-1946 and 1946-1947. One of the points raised by the assessee in the appeals appears to have been that its business was owned by a partnership and not by a Hindu undivided family. Necessarily, there was also an application for registration of the partnership under Section 26-A of the Income-tax Act. The Income-tax Officer held that before the assessee had made a partition within the meaning of S. 25-A of the Act, the claim for the treatment of the business as a business owned by a firm could not be entertained and the claim for registration could not be allowed. The Income-tax Officer, who made that order was the Income-tax Officer, District III (2).

    3. Thereafter, the assessee preferred appeals to the Appellate Assistant Commissioner and that Officer disposed of the appeals on 2-2-1950. It appears that, in the meantime, the assessment file had been transferred to the Income-tax Officer, Non-Companies (Income-tax-cum-Excess Profits Tax), District Calcutta, by an order of the Commissioner made under S. 5(5), read with S. 5(7)(a) of the Act. That order was made on 1-10-1948. It will thus appear that even during the hearing of the appeals before the Appellate Assistant Commissioner, the Income-tax Officer in charge of the assessment file was no longer the Income-tax Officer, District III (2), but the other Income-tax Officer to whom the assessment file had been transferred.

    4. The Appellate Assistant Commissioner held in favour of the assessee and thereafter three appeals were preferred by the Income-tax Officer, District III(2), under the direction of the Commissioner. It is not necessary to refer to the view which the Tribunal came to take on the merits of the appeals. It appears that although the Tribunal was inclined to hold in favour of the Department on the merits of the case, it nevertheless dismissed the appeals on the ground that having, been filed by the Income-tax Officer, District 111(2), Calcutta, who was no longer in seisin of the case and not by the Income-tax Officer, Non-Companies (Income-tax-cum-Excess Profits Tax), who had such seisin, the appeals were incompetent. The Commissioner of Income-tax, West Bengal, thereafter required the Tribunal to refer to this Court a question of law and a question in the following terms was referred:

    “Whether on the above facts and circumstances of this case the Appellate Tribunal was correct in holding that the ??? competent to file the appeals was the Income-tax Officer, Non-Companies, E.P.T, to whom the case of the respondent had been transferred by the Commissioner of Income-tax, West Bengal, before the date of the filing of the appeals and not the Income-tax Officer, District III (2), Calcutta, who made the assessments and passed the order refusing registration of the respondent and who had been directed to appeal to the Appellate Tribunal under Section 33(2) of the Income-tax Act, by the said Commissioner of Income-tax?”

    5. The Tribunal took the view that an appeal by the Income-tax Officer, District III (2), could not be regarded as a good appeal, inasmuch as at the time of filing the appeal, he had no seisin over the assessee's case and he was also not an “aggrieved officer”, competent to file an appeal. I may say at once that the second ground given by the Tribunal is pointless, because in order to be qualified to maintain an appeal, it is not necessary that the appellant Income-tax Officer should himself feel some particular grievance.

    6. As regards the other point, Mr. Meyer suggested at one stage of his argument that the very direction of the Commissioner to the Income-tax Officer, District III(2), to file the appeals amounted to a retransfer of the file to him and that therefore the appeals were competent. That, however, does not seem to have been the basis upon which the Tribunal had proceeded at the hearing of the appeals and which had been accepted by the Commissioner of Income-tax himself. It is only necessary to make an extract from the statement of facts contained in the application for a Reference.

    “The Tribunal, however”, observed the Commissioner of Income-tax, “by their order dated 21-8-1951, have dismissed the appeal on the technical ground that it was not filed by the Income-tax Officer, Non-Companies (Income-tax-cum-Excess Profits Tax) District, who was seised of the case at the time of filing the appeal.”

    7. The Commissioner of Income-tax therefore was admitting in the clearest possible terms that when the appeal was filed, it was the Income-tax Officer, Non-companies (Income-tax-cum-Excess Profits Tax) District. Calcutta, who was still in seisin of the case and the assessment file had not been re-transferred to the Income-tax Officer, District III(2). Mr. Meyer himself conceded subsequently that such indeed was the position.

    8. On the above facts, the question is whether the Commissioner of Income-tax was entitled to direct the Income-tax Officer, District 111(2), to prefer the appeal and whether the appeal preferred by that Officer under such direction was competent. Mr. Meyer referred to the definition of ‘Income-tax Officer’ as given in the Act, but I do not see that the definition leads anybody anywhere. The provision under which the Commissioner directs an Income-tax Officer to file an appeal against an order of an Appellate Assistant Commissioner is contained in S. 33(2) of the Act which says that the Commissioner

    “may, if he objects to an order passed by the Appellate Assistant Commissioner under S. 31, direct the Income-tax Officer to appeal to the Appellate Tribunal.”

    9. To my mind, the definite article “the” points to the Income-tax Officer who is concerned with the case at the time when the appeal is to be filed. The section does not say that the Commissioner, may direct “an” Income-tax Officer. I need not however rest my decision on that ground alone, because it appears to me that there is a more fundamental one, on which the view of the Tribunal must be upheld.

    10. If the contention advanced on behalf of the Commissioner of Income-tax is to be accepted, it will amount to holding that the Commissioner of Income-tax can, if he likes, authorise one Income-tax Officer to perform some functions with regard to a particular assessment and at the same time authorise another Income-tax Officer to perform certain other functions with regard to the same assessment. It must not be forgotten that an appeal at the instance of the Commissioner of Income-tax is also a proceeding in the course of the completion of an assessment. If the Act had authorised the Commissioner of Income-tax to distribute the functions relating to the same assessment of the same assessee between different Income-tax Officers, no objection could have been taken to the order made by the Commissioner of Income-tax in the present case, subject to what S. 33(2) means.

    11. It appears, however, that while the Act has provided that the Income-tax Officers shall perform their functions in respect of such persons or classes of persons or of such incomes or classes of income or in respect of such areas as the Commissioner of Income-tax may direct, it has not provided that the Commissioner of Income-tax can also direct an Income-tax Officer to perform only some of the functions in respect of a particular person or classes of persons or some particular person's income or classes of income and direct at the same time one or more other Income-tax Officers to perform the remaining functions. Such a power has been conferred by the Act only on the Central Board of Revenue by sub-s. (6) of S. 5. The language of S. 5, sub-s. (5), which deals with the power of the Commissioner is that the Income-tax Officers

    “shall perform their functions in respect of such persons or classes of persons or of such incomes or classes of income or in respect of such areas as the Commissioner of Income-tax may direct.”

    12. It will be noticed that persons, classes of persons, incomes, classes of income and areas are taken as whole. In striking contrast is the language of sub-s. (6) of the same section which deals with the power of the Central Board of Revenue. That sub-section provides that

    “The Central Board of Revenue may by notification in the official Gazette, empower…………… Income-tax Officers to perform such functions in respect of such classes of persons or such classes of income or such areas as may be specified in the notification.”

    13. It will be noticed that sub-s. (6) is expressed by reference to functions in respect of persons or income or areas, whereas sub-s. (5) is expressed by reference not to functions in respect of persons or incomes or areas, but by reference to persons or incomes or areas themselves. It seems to me to be perfectly clear that the Act does not contemplate that the Commissioner of Income-tax can distribute the functions in respect of the same assessee or the same assessment of the same assessee as between different Income-tax Officers, asking one Officer to proceed with his assessment and asking another to take appeals before the Appellate Tribunal.

    14. In my opinion, even apart from the true meaning of S. 33(2), the view taken by the Tribunal is in complete accordance with what appears to me to be the true intention of the Act.

    15. Mr. Meyer submitted that unless such power were conceded to the Commissioner of Income-tax, great inconvenience might often result where the exigencies of an assessment case required its transfer to a particular Income-tax Officer. Considerations of convenience are hardly relevant when we are to interpret the Act, but I may observe that, in the present case at least, I do not see how it was necessary or imperative to recall the Income-tax Officer, District 111(2), to the scene for the purpose of challenging the Appellate Assistant Commissioner's order before the Appellate Tribunal while the transferee Officer appears to have been in charge of the case even before the Appellate Assistant Commissioner. It is true that the former officer had made the assessment order but it can hardly be necessary for purposes of good administration that an officer, making an assessment, should be detained to defend it in all subsequent proceedings even though he may have been transferred in the meantime to another circle and the file taken over by another Officer. But as I have said, such considerations are not even pertinent while the question is one of construction of the Act.

    16. For the reasons given above, the answer to the question referred must be in the affirmative and we answer it accordingly. The assessee is entitled to and will get the costs of this Reference.

    Lahiri, J.:— I agree.

    K.S.B

    17. Answer in the affirmative.

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    Comments

    Commr. Of Income Tax West Bengal v. S. Sarkar & Co.
    (Aug 17, 1954)