Chimmonlall Rameshwarlall v. The Commissioner Of Income Tax (Central), Calcutta .

The Judgment of the Court was delivered by

N.H Bhagwati, J.— These four appeals with special leave granted by this Court under Article 136 of the Constitution are directed against the orders, dated 8-6-1951, of the Income Tax Appellate Tribunal, Bombay A in Reference Applications Nos. 737, 738, 739 and 740 of 1949-50 and arise under the following circumstances:

2. The appellants were at all material times a Hindu undivided family of which Rameshwarlal Ganeriwalla is the Karta. As a result of certain transactions which need not be detailed here Rameshwarlal Ganeriwalla became the creditor of the Nawab Bahadur of Murshidabad in a large sum of over Rs 6,38,000 by about 1928-29. Sometime in 1933, an Act named Murshidabad Estate Administration Act, 1933 (Act 23 of 1933) was enacted under the provisions whereof the estate of the Nawab Bahadur was taken over by the authorized Manager. The debt due by the Nawab Bahadur to Rameshwarlal Ganeriwalla was admitted by the Board of Revenue in a sum of Rs 5,42,173 as on 1-4-1934 and the Manager from time to time made payments by way of dividends to the appellants indicating in the covering letters how the payments were to be appropriated. The appellants for the Assessment Years 1938-39 to 1941-42 submitted Income Tax returns in the first of which they did not mention any part of the money which they had received from the Manager and in the rest of which they mentioned certain amounts as having been received by them. When the Income Tax Officer discovered that certain money had been received by the appellants from the Manager he issued a notice under Section 34 of the Income Tax Act in regard to the Assessment Year 1938-39. When these income tax returns were considered by the ITO he came to the conclusion that certain sums had been received by the appellants from the Manager by way of interest which were liable to assessment and he accordingly included those sums in the assessment orders which he passed for those several years. These assessment orders were passed by the Income Tax Officer on the respective dates, 20-3-1943, 31-3-1944, 30-11-1944 and 31-10-1945. The appellants preferred appeals against these orders, being Income Tax Appeal Nos. 2.CC. II/43-44, Income Tax Appeals Nos. 8 and 22.CC-II/44-45, and Income tax Appeal No. 13.CC-II/45-46 and the Appellate Assistant Commissioner by his order, dated 13-6-1947 and 18-7-1947 disposed of all these four appeals confirming the orders which had been passed by the ITO. The appellants carried further appeals against these orders of the Appellate Assistant Commissioner to the Income Tax Appellate Tribunal being Appeals Nos. 1890, 1895, 1897 and 1898 of 1947-48. The Income Tax Appellate Tribunal by its order dated 3-12-1949 dismissed Income Tax Appeal No. 1895 of 1947. Income Tax Appeal No. 1896 of 1947-48 was dismissed on 7-11-1949 and the two other appeals, being Income Tax Appeals Nos. 1897 and 1898 of 1947-48, were also dismissed on 3-12-1949.

3. The appellants thereafter applied to the Income Tax Appellate Tribunal under Section 66(1) of the Income Tax Act requiring the said Tribunal to state cases and refer certain questions of law to the High Court at Calcutta, for its opinion. These applications were registered as Reference Applications Nos. 737 to 740 of 1949-50. These applications were dismissed by the Income Tax Appellate Tribunal by its order dated 8-6-1951.

4. The Appellants thereupon applied to the High Court under Section 66(2) of the Income Tax Act praying for a Rule upon the Respondent to show cause why the Income Tax Appellate Tribunal should not state cases relating to the above four assessment proceedings and refer certain questions of law to the High Court. Rules were issued by the High Court as prayed for. But on the Income Tax References Nos. 90, 91, 92 and 93 of 1951 coming up for hearing before it the High Court by its order dated 15-6-1953 discharged the said Rules. The appellants thereafter filed four Petitions for special leave to appeal against the aforesaid orders of the Income Tax Appellate Tribunal dated 8-6-1951 in Reference Applications Nos. 737 to 740 of 1949-50 in which leave was granted by this Court, by its order dated 27-9-1954. Hence these appeals.

5. After the appeal paper-book had been filed as also the statement of cases by the respective parties to these appeals, the respondent on the eve of the hearing that is, on 19-2-1959, made an application before this Court for leave to file a supplementary statement of case which application was granted by this Court at the hearing. In the said supplementary statement of case it was urged on behalf of the respondent that the appellants not having filed any appeals either against the orders of the Income Tax Appellate Tribunal under Section 33(4) of the Income Tax Act or against the orders of the High Court under Section 66(2) of the Act refusing the applications of the appellants to require the Tribunal to state the case, could not be allowed to maintain the present appeals. It was submitted that what the appellants sought to do was in effect to call in question the correctness of the decision of the High Court under Section 66(2) of the Act by appealing directly to this Court against the Tribunal's rejection of their applications under Section 66(1) of the Act, without appealing against the High Court's orders under Section 66(2) of the Act. It was further submitted that whatever may be the scope of the appeal by special leave directly against an appellate order of the Income Tax Tribunal under Section 33(4) of the Act, it was not open to the appellants to canvass the correctness in law or in fact of such order in an appeal against an order under Section 66(1) of the Act refusing to state the case, the only matter open for discussion in these appeals, if any, being whether and if so, what question of law arose for determination out of the Tribunal's order under Section 33(4) of the Act.

6. These appeals came up for hearing and final disposal before a Division Bench of this Court, on 24-2-1959. At the very outset the learned Solicitor-General appearing for the respondent raised a preliminary objection to the hearing of the appeals on merits Mr A. Vishwanath Sastry, appearing for the appellants, replied to the said preliminary objection and after hearing both the parties, the Court made the following order:

“Let the preliminary objection raised by the learned Solicitor-General to the hearing of the appeals on merits be referred to a larger Bench to be constituted by the Hon'ble Chief Justice. This question is being raised repeatedly.”

7. This is how the appeals have come up for hearing and final disposal today before this Bench.

8. It is significant to observe that the present appeals have been filed, though with special leave, not against the orders of the Income Tax Appellate Tribunal under Section 33(4) of the Act nor against the orders of the High Court under Section 66(2) of the Act refusing the statement of the case but only against the orders of the Income Tax Appellate Tribunal dated 8-6-1951, in Reference Applications Nos. 737 to 740 of 1949-50 that is against the orders of the Tribunal refusing to state a case on applications made to it under Section 66(1) of the Act. The procedure laid down in the Income Tax Act having provided for an application under Section 66(2) of the Act to the High Court at the instance of the party aggrieved by the order made by the Tribunal under Section 66(1) of the Act, it is extremely doubtful if an appeal would be entertained against such an order under Section 66(1) of the Act even under the jurisdiction which we exercise under Article 136 of the constitution howsoever wide it maybe. We do not, however, want to base our decision here only on this aspect of the question. In the present case the circumstance of very great materiality and significance which stares the appellants in the face is that in regard to this very point there is a considered judgment of the High Court delivered by it on the applications made by the appellants to it under Section 66(2) of the Act which came to the conclusion that no question of law arose out of the order of the Tribunal, which judgment stands, not having been appealed against in any manner whatever by the appellants. The result of our going into these appeals before us on the merits would be either to confirm the judgment which has been pronounced by the High Court or to differ from it. If we did the former the appellants would be out of Court, if, however, perchance we came to the contrary conclusion and accepted the latter view, namely, that the High Court was wrong in not granting the applications of the appellants under Section 66(2) of the Act there would be two contrary decisions, one by the High Court and the other by us and we would be in effect, though not by the proper procedure to be adopted by the appellants in that behalf, setting aside the judgment of the High Court. This is an eventuality which we cannot view with equanimity. It is contrary to all notions of comity of courts and even though we are a Court which could in certain events set aside and overrule the decisions of the High Court concerned, we cannot bypass the normal procedure which is to be adopted for this purpose and achieve the result indirectly in the manner suggested by the appellants. We, therefore, think that in the circumstances here it would be inappropriate on our part to enter upon an adjudication of these appeals on merits. We would, therefore, dismiss these appeals without anything more.

9. In the peculiar circumstances of this case however, and particularly having regard to the facts that the appeal paper-books and statements of case had already been filed and both the parties had come prepared for hearing on the merits of the appeals before this Court, before this preliminary objection was urged on behalf of the respondent, we feel that the interests of justice will be served if we make an order that each party do bear his own costs of these appeals and we order accordingly.