R.N.GURTU J. - (1.) THE Income-tax Tribunal on the application of the assessee has referred for the opinion of this court under section 66(1) of the Indian Income-tax Act, 1922, the following question of law : Whether, on a true interpretation of the proviso to sub-section (1) of section 30 and sections 31 and 33 of the Indian Income-tax Act, the appeal preferred by the assessee before the Appellate Tribunal was not competent ?
(2.) THE facts stated by the Tribunal, so far as they are relevant, are that the income-tax and super-tax payable by the assessee for the assessment year 1954-54 was Rs. 73,167-13-0. By a demand notice issued under section 29 of the Indian Income-tax Act, the Income-tax Officer called upon the assessee to pay the tax on or before the 8th of July, 1955. As the tax was not paid on or before the due date, the Income-tax Officer passed an order on the 27th of January 1956, under sub-section (1) of section 46 of the Act and imposed a penalty of Rs. 5,000. Against this last mentioned order the assessee preferred an appeal before the Appellate Assistant Commissioner on the 15th of February, 1965. On the date on which the appeal was filed the assessee had not paid the tax that was due from him. THE Appellate Assistant Commissioner by his order dated the 15th of May, 1956, held that, as the tax had not been paid on the date on which the appeal was filed, the appeal was incompetent. None the less he considered the matters which had been raised before him also on merits. THE appeal was dismissed. The assessee then preferred a second appeal before the Appellate Tribunal challenging the order of the imposition of penalty and the order of the Appellate Assistant Commissioner. The departmental representative raised a preliminary objection about the maintainability of the appeal. It was contended before the Tribunal that the order passed by the Appellate Assistant Commissioner was not one under section 31 of the Act and the appeal preferred before the Tribunal was therefore incompetent. The Tribunal, for reasons recorded by it in its order dated the 13th March, 1957, upheld the preliminary objection and held that the appeal before the Tribunal was not maintainable. The Tribunal held that as the Appellate Assistant Commissioner had refused to exercise jurisdiction to entertain the appeal, the order passed by him was under sub-section (1) of section 30 of the Act and was not an order under section 31 of the Act, and that the appeal before the Tribunal was therefore incompitent. The Tribunal obsereved that it was only against orders passed by the Appellate Assistant Commissioner under section 28 or section 31 of the Indian Income-tax Act that an appeal could be preferred before the Appellate Tribunal. In arriving at this conclusion the Tribunal relied on the ruling of the Supreme Court in Commissioner of Income-tax v. Arunachalam Chettiar, AIR 1953 SC 118. The Tribunal also referred to another ruling of the Supreme Court in Mela Ram and Sons v. Commissioner of Income-tax, 1956 AIR(SC) 367 but held that this latter ruling was not applicable to the facts of this case. In this reference it has been contended, on the one hand, that the order passed by the Appellate Assistant Commissioner was under section 31, and on the other that it was under section 30. If the order of the Appellate Assistant Commissioner was passed under section 30, no appeal would lie to the Appellate Tribunal. On the other hand, if it was passed under section 31, an appeal would lie. Section 30(1), inter alia, provides for an appeal against an order under sub-section (1) of section 46 of the Act.
(3.) THERE is a proviso to section 30(1) which runs as follows : Provided that no appeal shall lie against an order under sub-section (1) of section 46 unless the tax has been paid. Sub-section (2) of section 30 runs as follows : 30.(2) The appeal shall ordinarily be presented within thirty days of the payment of the tax deducted under sub-section (3A), (3B) or (3C) of section 18 or of receipt of the notice of demand relating to the assessment or penalty objected to or of the order in writing notifying the amount of total income on which the determination under sub-section (5) of section 23 was based and the apportionment thereof between the several partners or of the loss computed under section 24 or of the intimation of the refusal to pass an order under sub-section (1) of section 25A, or to register a firm under section 26A, or of the date of the refusal to make a fresh assessment under section 27, or of the intimation of an order under sub-section (1) of section 23A or under section 48, 49 or 49F, as the case may be; but the Appellate Assistant Commissioner may admit an appeal after the expiration of the period if he is satisfied that the appellant had sufficient cause for not presenting it within that period. Sub-section (3) of section 30 is to the following effect : 30.(3) The appeal shall be in the prescribed form and shall be verified in the prescribed manner. Section 31 provides for the hearing of appeals by Appellate Assistant Commissioners. Sub-section (3) of section 31 provided that : 31.(3) In disposing of an appeal the Appellate Assistant Commissioner may, in the case of an order of assessment, - (a) confirm, reduce, enhance or annual the assessment, or (b) set aside the assessment and direct the Income-tax Officer to make a fresh assessment after making such further inquiry as the Income-tax Officer thinks fit or the Appellate Assistant Commissioner may direct.... And in the case of an appeal from an order under sub-section (1) of section 46, confirm or cancel such order or vary it so as either to enhance or reduce the penalty. It is contended on behalf of the assessee that when the Appellate Assistant Commissioner passed his order dated the 15th May, 1956, on his appeal, the order was passed under section 31 and not under section 30 of the Act. It is contended that even though no tax had been paid as required by the proviso to section 30(1), there was an appeal against an assessment under this Act before the Appellate Assistant Commissioner who heard it under section 31 and in the course of hearing he passed his order rejecting the appeal because the tax had not been paid. It is contended that any orders passed on an appeal which has been filed must be passed under section 31, as also an order rejecting an appeal on the ground that the tax has not been paid. It is contended that the proviso to section 30(1) does not state that if the tax has not been paid, the Appellate Assistant Commissioner may pass an order under section 30 rejecting the appeal. It is contended that whether the tax has been paid or not as provided in the proviso, there would still be a preferred appeal which appeal had to be heard by the Appellate Assistant Commissioner under section 31 and it is under that section that the Appellate Assistant Commissioner would be acting when he passed an order rejecting the appeal on the ground that no tax had been paid. It is also contended that it is under section 31 that the Appellate Assistant Commissioner would pass his order admitting an appeal which was filed after the expiry of the period of limitation if he was satisfied that the appellant had sufficient cause for not presenting it within the period and also it is under section 31 that he would reject the appeal on the ground that it was not in the prescribed form. In other words, it is contended that an order by the Appellate Assistant Commissioner holding that there was no reason for excusing delay under under section 30(2) of the Income-tax Act and rejecting the appeal as time-barred, was an order passed under section 31 and in consequence an appeal will lie from that order to the Appellate Tribunal, and that it would make no difference whether the order of dismissal of the appeal is made before or after the appeal is admitted. It is contended that an appeal presented out of time is an appeal and an order dismissing it as time-barred, is one passed in appeal. It is also contended that the disposal of objections based on section 30, sub-section (3), would be under section 31 and not under section 30. It is also contended that an order rejecting an appeal on the ground that the tax had not been paid amounts to an objection of a preliminary character raised at the hearing of the appeal and that the order of the Appellate Assistant Commissioner on that objection would also be an order under section 31. So far as the first two of the last three mentioned contentions are concerned, they are fully supported by the observations of their Lordships of the Supreme Court in Mela Ram and Sons v. Commissioner of Income-tax, 1956 AIR(SC) 367. Their Lordships of the Supreme Court in that case observed that there was abundant authority for the proposition that section 31 should be liberally construed so as to include not only orders passed on a consideration of the merits of the assessment, but also orders which dispose of the appeal on preliminary issues such as limitation and the like. It was observed : ... a right of appeal is a substantive right, and is a creature of the statute. Section 30(1) confers on the assessee a right of appeal against certain orders, and an order of assessment under section 23 is one of them. The appellant therefore had a substantive right under section 30(1) to prefer appeals against orders of assessment made by the Income-tax Officer. Then, we come to section 30(2), which enacts a period of limitation within which his right is to be exercised. If an appeal is not presented within that time, does that cease to be an appeal as provided under section 30(1) ?. It is well established that rules of limitation pertain to the domain of adjectival law, and that they operate only to bar the remedy but not to extinguish the right. An appeal preferred in accordance with section 30(1) must, therefore, be an appeal in the eye of law, though having been presented beyond the period mentioned in section 30(2) it is liable to be dismissed in limine. There might be a provision in the statute that at the end of the period of limitation prescribed, the right would be extinguished, as for example, under section 28 of the Limitation Act; but there is none such here. On the other hand, in conferring a right of appeal under section 30(1) and prescribing a period of limitation for the exercise thereof separately under section 30(2), the legislature has evinced an intention to maintain the distinction well-recognised under the general law between what is a substantive right and what is a matter of procedural law. ;