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Bansidhar Mohanti v. Commr. Of Income-Tax Opposite Party.

Orissa High Court
Sep 20, 1954
Judgment
Subsequent
References
CaseIQ
Case Information
CITATION CODES
citation codes
CASE NO.

S.J.C No. 4 of 1952

JUDGES

Hon'ble Mr. Justice Pitambar Mishra

ACTS

Income-tax Officer.7. But sub-s. (2) of that section

sub-s. (3) of S. 31. Sub-section (1) of S. 33

Section 66(1) of the Income-tax Act,

Section 30(2) of the Income-tax Act,

SECTION 31 INCOME TAX ACT

S. 31.9. Sub-section (4) of S. 33

INCOME TAX ACT

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Structured Summary of the Court's Opinion

Factual and Procedural Background

The Income-tax Appellate Tribunal referred a question of law to the High Court under Section 66(1) of the Income-tax Act. The central factual sequence given in the opinion is as follows:

  • The assessee was assessed to income-tax for the year 1946–1947 and a demand notice was served on 6 May 1948.
  • The assessee applied for a copy of the assessment order on 28 May 1948; the copy was supplied on 9 June 1948.
  • Under Section 30(2) of the Income-tax Act, after excluding time taken to obtain a copy of the assessment order, the appeal should have been filed by 18 June 1948.
  • The Appellate Assistant Commissioner (AAC) found the appeal to be prima facie barred by limitation, invited the assessee to show cause as to sufficient cause for delay, and, being dissatisfied with the explanation (the assessee said he suffered from rheumatism), refused to admit the appeal by order dated 3 September 1948.
  • The assessee then filed an appeal before the Appellate Tribunal. The Tribunal treated the AAC's order as an order under Section 30(2) and, holding that no appeal lay under Section 33, referred the matter to the High Court under Section 66(1).

Legal Issues Presented

  1. Whether, on the facts of this case, the order of the Appellate Assistant Commissioner refusing to admit an appeal that was admittedly barred by limitation was an order passed under Section 30(2) of the Income-tax Act or was an order passed under Section 31 of the Act.
  2. Whether, given the characterization of the AAC's order, the Appellate Tribunal had jurisdiction under Section 33 to entertain an appeal and/or to state a case to the High Court under Section 66(1).

Arguments of the Parties

Appellant's Arguments (as presented by Mr. Mohanty)

  • Relying on the decision in Champalal Asharam v. Commissioner of Income Tax, Bombay South (AIR 1954 Bom 112), Mr. Mohanty contended that where the Appellate Assistant Commissioner issues notice for the hearing of the appeal under Section 31 and thereafter refuses to condone the delay, that sequence of actions should be treated as an order under Section 31 (i.e., an admission followed by a revision) and therefore appealable to the Tribunal under Section 33.
  • Mr. Mohanty also sought an adjournment from the Tribunal to enable the assessee to move the Commissioner (under the remedy now described in the opinion as Section 33-A), indicating an intention to pursue revision before the Commissioner of Income-tax.

The opinion does not contain a detailed account of any opposing counsel's arguments in the same granular form. The AAC's and Tribunal's positions are described in the court's factual and analytic narrative rather than as adversarial pleadings.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Champalal Asharam v. Commissioner of Income Tax, Bombay South, AIR 1954 Bom 112 Held that when the AAC issued notice for hearing under S.31 and thereafter refused to condone delay, that sequence amounted to an order within S.31 and was appealable under S.33. The court distinguished the facts of that case from the present facts: in Champalal the AAC had issued notice under S.31 and heard the appeal on merits, whereas in the present case the AAC never admitted the appeal. Accordingly, the court did not adopt Champalal as controlling on the facts before it.
Gour Mohan Mullick … Applicant; v. Commissioner of Agricultural Income-Tax, West Bengal, AIR 1954 Cal 468 Taken (in some High Court decisions) to support that an order refusing to admit an appeal may, under some circumstances, amount to an order under S.31. The court noted this Calcutta decision but observed it may require modification in the light of the later Supreme Court decision (Commr. of Income Tax, Madras v. Arunachalam Chettiar). The court did not rely on it as authoritative over the Supreme Court's guidance.
Rama Narayan v. Commissioner of Income Tax, B. & O., AIR 1950 Orissa 205 Earlier Orissa High Court decision holding under similar circumstances that an order refusing to admit an appeal might amount to an order under S.31 (with some recognition that refusal to admit can be S.30(2)). The court referred to this decision, observing that the Orissa case recognized that where an appeal was not admitted as being time-barred the order would be an order under S.30(2) and not under S.31; thus it was not treated as overruling the strict construction adopted below.
Commissioner of Income Tax, Madras v. Arunachalam Chettiar, AIR 1953 SC 118 (Supreme Court) Established a strict construction of Sections 30, 31, 33 and 66(1): an order declining to admit an appeal is not an order under S.31; therefore the Tribunal lacks jurisdiction under S.33(4) to entertain an appeal against such an order and a reference under S.66(1) is incompetent. The court treated this Supreme Court decision as determinative of the statutory construction issue. It applied the principle broadly, holding that even where an appeal lay to the AAC (as opposed to facts in Arunachalam Chettiar), refusal to admit an appeal under S.30(2) does not convert the order into one under S.31; consequently the Tribunal had no jurisdiction and the reference under S.66(1) was improper.

Court's Reasoning and Analysis

The court's analysis proceeds from a textual reading of the statutory provisions and a consideration of the factual sequence in the present case:

  1. Statutory framework:
    • Section 30(1) confers a right of appeal against assessment in the circumstances set out by the Act.
    • Section 30(2) ordinarily requires appeals to be presented within thirty days of receipt of notice of demand but grants the Appellate Assistant Commissioner discretion to "admit" an appeal after the period has expired if satisfied there is "sufficient cause".
    • Section 31 prescribes the procedure to be followed by the Appellate Assistant Commissioner for hearing appeals; the court accepted that S.31 applies only after an appeal has been admitted under S.30(2).
    • Section 33(1) provides a further appellate right to the Appellate Tribunal against an order passed by the AAC under S.31; Section 33(4) prescribes the Tribunal's hearing procedure.
    • Section 66(1) allows the Tribunal, within sixty days of an order under S.33(4), to state a case for the High Court's decision, but that power arises only in relation to orders that fall within S.33.
  2. Application to facts:
    • The AAC did not admit the appeal at any stage; he invited the assessee to show cause and, being dissatisfied, refused to admit the appeal by order dated 3 September 1948.
    • Because S.31 ordinarily applies only after admission under S.30(2), an order refusing to admit an appeal under S.30(2) is, in normal circumstances, an order under S.30(2) and not an order under S.31.
    • Accordingly, the Tribunal had no appellate jurisdiction under S.33 to entertain the appeal against the AAC's refusal to admit it, and therefore no valid power to state a case under S.66(1) to the High Court in respect of such an order.
  3. Distinguishing contrary authorities:
    • The court distinguished Champalal Asharam on its facts: in that case the AAC had issued notice under S.31 and had heard the appeal on merits after calling for cause; the Bombay High Court treated the sequence as amounting to admission. Here, by contrast, the appeal was not admitted even at the preliminary stage.
    • The court observed that some High Courts had adopted a liberal construction to allow appeals from AAC refusals, but held that the Supreme Court's decision in Commissioner of Income Tax, Madras v. Arunachalam Chettiar required a stricter construction. The Supreme Court's reasoning was read to cover cases where an AAC refused to admit an appeal after declining to condone delay, and to deny appellate jurisdiction to the Tribunal in such circumstances.
  4. Available remedies:
    • The court noted the assessee was not without remedy: Section 33-A of the Act gives the Commissioner of Income-tax jurisdiction to revise orders passed by subordinate authorities, including the AAC, in cases where no appeal lies.
    • The court further observed that, in appropriate cases, the High Court's writ jurisdiction under Article 226 of the Constitution might be available where it is clear that the AAC has refused to exercise jurisdiction vested in him by law and no statutory alternative remedy exists; but the court declined to decide that question at length in this reference.

Holding and Implications

Holding: The court answered the referred question by holding that the order of the Appellate Assistant Commissioner refusing to admit the appeal was an order under Section 30(2) of the Income-tax Act and not an order under Section 31. Consequently, the Appellate Tribunal had no jurisdiction under Section 33 to entertain an appeal against that order, and no valid case could be stated to the High Court under Section 66(1).

Direct Consequences

  • The reference posed by the Tribunal under Section 66(1) was answered in favor of the characterization that the AAC's order was under S.30(2) and not S.31.
  • Both parties were ordered to bear their own costs.
  • The court made explicit that the assessee could have sought revision of the AAC's order under Section 33-A by applying to the Commissioner of Income-tax, and that Article 226 might be available in appropriate circumstances (though the court did not decide the latter point in this reference).

Broader Implications (as stated in the opinion)

The court applied and reaffirmed a strict construction of Sections 30, 31, 33 and 66(1), consistent with the Supreme Court decision in Commissioner of Income Tax, Madras v. Arunachalam Chettiar (AIR 1953 SC 118). The effect is to limit the circumstances in which an AAC's refusal to admit an appeal can be treated as an order under S.31 and therefore restricts the Tribunal's appellate jurisdiction under S.33 to orders that strictly fall within S.31. The opinion notes that various High Courts had sometimes adopted a more liberal approach, but the Supreme Court's ruling controls.

This summary is drawn exclusively from the provided opinion. Where the opinion did not supply detailed material (for example, adversarial responses from the respondent), such details have not been invented or inferred.

Show all summary ...

Narasimham, J.:— This is a reference by the Income-tax Appellate Tribunal under Section 66(1) of the Income-tax Act, for a decision by this Court of the following question of law:

“Whether on the above facts and circumstances of this case the order of the Appellate Assistant Commissioner not admitting the appeal which was admittedly barred by limitation was an order passed under Section 30(2) of the Income-tax Act, or was an order passed under S. 31 of the Act.”

2. The material facts are as follows: The assessee was assessed to income-tax for the year 1946-1947 and the demand notice was served on him on 6-5-1948. He applied for a copy of the assessment order on 28-5-1948 and it was supplied to him on 9-6-1948.

3. Under Section 30(2) of the Income-tax Act, he was entitled to file an appeal against the assessment order, before the Appellate Assistant Commissioner within thirty days of the date of receipt of the notice of demand after excluding the time taken for obtaining a copy of the assessment order. Thus the appeal should have been filed before the Appellate Assistant Commissioner on 18-6-1948.

4. As it appeared to be prima facie time barred the Appellate Assistant Commissioner called upon the assessee to satisfy him about the existence of sufficient cause for not presenting the appeal within the time limit. The assessee showed cause and stated that he suffered from rheumatism during the relevant period. His cause was, however, held to be not satisfactory and the Appellate Assistant Commissioner by his order dated 3-9-1948 refused to admit the appeal.

5. Thereupon, the assessee filed an appeal before the Appellate Tribunal who held that inasmuch as the Appellate Assistant Commissioner had dismissed the appeal under Section 30(2) of the Income-tax Act, no appeal lay before the Appellate Tribunal under S. 33 of that Act but it referred the case to the High Court under S. 66(1) of the Act.

6. Sub-section (1) of Section 30 of the Income-tax Act, confers on the assessee a right of appeal against an assessment made by the Income-tax Officer in various circumstances which it is unnecessary to describe in detail here. It may be assumed that in the present case the assessee had a right of appeal under that sub-section against the order of assessment of the Income-tax Officer.

7. But sub-s. (2) of that section says that the appeal shall ordinarily be presented within thirty days of receipt of the notice of demand relating to assessment and the last portion of that sub-section confers discretion on the Appellate Assistant Commissioner to ‘admit’ an appeal after the expiry of the period of limitation if he was satisfied that the appellant had sufficient cause for not presenting it within that period.

8. Section 31 describes in detail the procedure to be followed by the Appellate Assistant Commissioner for the hearing of the appeal. It was rightly conceded by Mr. Mohanty that the provisions of S. 31 would apply only after an appeal had been admitted under S. 30(2). After such admission the Appellate Assistant Commissioner may pass any order under sub-s. (3) of S. 31. Sub-section (1) of S. 33 confers on the assessee a further right of appeal to the Appellate Tribunal against an order passed by the Appellate Assistant Commissioner under S. 31.

9. Sub-section (4) of S. 33 describes the procedure to be followed by the Appellate Tribunal for the hearing of the appeal and for passing final orders thereon. Section 66(1) says that within sixty days of the date upon which an assessee is served with notice of an order passed by the Appellate Tribunal under sub-s. (4) of S. 33 he may require the Tribunal to state a case for the decision of the High Court. The Tribunal has purported to act in pursuance of this sub-section. It will be obvious from a mere reading of these sections that the jurisdiction of the Tribunal to state a case for the decision of the High Court under S. 66(1) arises only in respect of those orders of the Tribunal which come within the scope of S. 33 and further the jurisdiction of the Tribunal as an appellate authority under S. 33 arises only against those orders of the Appellate Assistant Commissioner which come within the scope of S. 31.

10. It has already been shown that S. 31 would ordinarily apply only after an appeal has been admitted by the Appellate Assistant Commissioner. An order of the Appellate Assistant Commissioner refusing to condone the delay in filing an appeal under S. 30(2) and refusing to admit the appeal would not ordinarily be an order under S. 31 but would be an order under S. 30(2). Consequently, the Tribunal had no jurisdiction to hear the appeal under S. 33 nor can a case be validly stated under S. 66(1).

11. Mr. Mohanti, however, contended relying on — ‘Champalal Asharam v. Commr. of Income Tax, Bombay South’, AIR 1954 Bom 112 (A) that once the Appellate Assistant Commissioner issued notice for hearing of the appeal under S. 31 and then refused to condone the delay his order would amount to an order under S. 31 which was appealable under S. 33.

12. The facts of that case are, however, slightly different from the facts of the present case. There it appears that before issuing notice for the hearing of the appeal under S. 31, the Appellate Assistant Commissioner had called upon the assessee to show cause for the delay in filing the appeal and then issued notice under S. 31 for the hearing of the appeal and had also heard the appeal on merits. On these facts, the Bombay High Court held that his order issuing notice for the hearing of the appeal would amount to admission of the appeal after condoning the delay and his subsequent order refusing to condone the delay and rejecting the appeal as time-barred would be an order revising his own previous order and would come within the scope of S. 31.

13. In the present case, however, the statement of facts as given by the Tribunal shows that the appeal was not admitted by the Appellate Assistant Commissioner even at the preliminary stage. He merely called upon the assessee to satisfy him about the existence of sufficient cause for not presenting the appeal within the time limit; as he was not satisfied with the cause shown he refused to admit the appeal. This case, therefore, would come within the intermediate stage of rejecting an appeal under S. 30(2) and not the subsequent stage of hearing an appeal on merits after he had decided to condone the delay. Thus, on facts this case can be clearly distinguished from the Bombay case.

14. Mr. Mohanti, however, relied on a Calcutta decision reported in — ‘Gour Mohan Mullick…Applicant; v. Commr. Of Agricultural Income-Tax, West Bengal….’, AIR 1954 Cal 468 (B) and also on an earlier decision of the Orissa High Court reported in — ‘Rama Narayan v. Commr. of Income Tax, B. & O.’, AIR 1950 Orissa 205 (C) where it was held under similar circumstances, that even an order refusing to admit appeal may amount to an order under S. 31. It is unnecessary to discuss these decisions in detail inasmuch as the views put forward in them may require modification in the light of the later decision of the Supreme Court reported in — ‘Commr. of Income Tax, Madras v. Arunachalam Chettiar’, AIR 1953 SC 118 (D) which I shall discuss in the next paragraph. But I may point out that in the Orissa case it was recognised that when an appeal was not admitted as being time-barred that order would be an order under S. 30(2) and not under S. 31.

15. From time to time various High Courts in India appear to have taken a somewhat liberal view as regards construction of Ss. 31 and 33 so as to confer a right of appeal on an assesses against the orders of an Appellate Assistant Commissioner refusing to admit an appeal under some circumstances. But in a recent decision of the Supreme Court cited above, a very strict construction was put on Ss. 30, 31, 33 and 66(1) and it was held that unless the order of the Appellate Assistant Commissioner could be held to come within the strict terms of S. 31, no appeal lay to the Tribunal under S. 33 and no reference to the High Court could be made under S. 66(1).

16. Doubtless, in that Supreme Court decision the main question for consideration was whether an appeal lay to the Appellate Assistant Commissioner under S. 30(1) where no assessment had been made on the assessee under S. 23 and no notice of demand had been served on him under S. 29. The Appellate Assistant Commissioner held that no appeal lay to him and declined to admit the appeal. But he suggested that a miscellaneous application might be made to the Tribunal against the order of the Income-tax Officer concerned. Thereupon, such an application was made to the Tribunal who passed orders in favour of the applicant revising the order of the Income-tax Officer. Their Lordships of the Supreme Court held that an order declining to admit an appeal passed by the Appellate Assistant Commissioner would not be an order under S. 31 & that consequently the Tribunal had no jurisdiction to entertain an appeal against that order under S. 33(4) and that a subsequent reference to the High Court under S. 66(1) would be incompetent.

17. It is true that the facts of that case are slightly different from the facts of the present case inasmuch as here an appeal lay to the Appellate Assistant Commissioner. But for the bar of limitation, the appeal would have been admitted as a matter of course and heard u/s. 31. I do not think this makes any essential difference as regards the principles laid down by their Lordships of the Supreme Court. In fact, in the penultimate paragraph of their judgment they made it clear that even if in that case an appeal lay to the Appellate Assistant Commissioner and he had declined to admit the appeal, thereby refusing to exercise jurisdiction vested in him by law such an order would not come within the scope of S. 31 so as to attract the appellate jurisdiction of the Tribunal under S. 33(1). These observations are wide enough to cover cases where the Appellate Assistant Commissioner refused to admit an appeal after declining to condone the delay in exercise of the discretionary power conferred on him by S. 30(2).

18. The assessee is, however, not without any remedy. Section 33-A of the Act confers on the Commissioner of Income-tax jurisdiction in those cases where no appeal lies, to revise all orders passed by subordinate authorities including the Appellate Assistant Commissioner. Hence, when the latter refused to exercise his discretion in favour of the assessee and to condone the delay the assessee could have applied to the Commissioner of Income-tax.

19. We notice from the paper book that the assessee's Advocate Mr. Mohanti asked for an adjournment from the Tribunal for the purpose of moving the Commissioner. But apparently, no such application was eventually made. Further, in appropriate cases this Court's jurisdiction under Article 226 of the Constitution may perhaps be invoked where it is clear that the Appellate Assistant Commissioner had refused to exercise jurisdiction vested in him by law and the Income-tax Act does not provide any alternative remedy against his order. It is, however, unnecessary to decide this question at great length in this reference. We are satisfied that the Tribunal took the correct view in holding that the assessee had no right of appeal against the order of the Appellate Assistant Commissioner which was an order under S. 30(2) and not under Section 31 of the Income-tax Act. The reference is answered accordingly. Both parties will bear their own costs.

Misra, J.:— I agree.

R.G.D

20. Order accordingly.

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