- (1.)THIS is a case stated under section 66(2) of the Income-tax Act, 1922 (hereinafter referred to as the Act). The question referred is: "Whether the Tribunal was legally right in its view that in the circumstances the order passed by the Appellate Assistant Commissioner was not an order under section 31 of the Income tax Act and as such no appeal lay against that order?
(2.)THE material facts are these: The assessee-company was incorporated in September, 1936, as a private limited company. It was converted into a public company with effect from October 1, 1941, and since then it is being assessed as such. The company was carrying on business in the sale of hessian and gunnies. The relevant assessment year is 1946-47. The original assessment for the relevant assessment year was completed on the 20th of March, 1947, on an income of Rs. 1,71,694 which was reduced in appeal to Rs. 1,41,487. The successor Income-tax Officer on going through the assessment records found that no additional super-tax under the Finance Act of 1946 had been levied upon the assessee. According to him, this was leviable as the dividend declared exceeded both 5% of the capital of the company as well as 30% of the assessed total income. Accordingly, a notice under section 36 of the Act was issued on the 6th August, 1947 (not 1954 as stated in the statement of the case). The assessee raised two objections, one, that the provisions of section 35 were not applicable and the other on the merits that the company was not one which could be deemed to be a company in which the public are substantially interested within the meaning of the explanation to sub-section (1) of section 23A of the Act and as such no additional super tax under the Finance Act, 1946, was leviable. These objections were repelled and it was held by the Income tax Officer that, (1) as the additional super-tax was inadvertantly not levied by his predecessor, the provisions of section 35 of the Act were attracted, and (2) on the merits, even though no share had in fact been transferred during the relevant year, they were nevertheless freely transferable by the holders to other members of the public and as such it was a company in which the public were substantially interested and therefore additional super-tax was leviable. He accordingly purported to rectify the assessment under section 35 by adding to the assessment already made, the sum of Rs. 30,310-8-0 as additional super-tax by an order dated the 16th of January, 1948.
The assessee went up in appeal against the order which purported to be under section 35. The Appellate Assistant Commissioner without going into the question as to whether the order was really one under section 35 or not refused to entertain the appeal relying upon the decision of the Patna High Court in Sri Mahant Harihar Gir v. Commissioner of Income-tax in preference to the decision of the Privy Council in Commissioner of Income-tax v. Khemchand Ramdas upon which the assessee had placed reliance for the proposition that even if there was no specific provision for appeal, nevertheless, as the assessee was "denying his liability to be assessed", an appeal would lie. Against the order of the Appellate Assistant Commissioner dated 24th April, 1948, holding that the appeal was incompetent, the assessee went up in revision under section 33A (2) to the Commissioner of Income-tax. The Commissioner by his order dated 26th December, 1951, held that, as the assessee was denying his liability to be assessed to additional super-tax, the appeal filed before the Assistant Commissioner was not against the order under section 35 but against the original assessment as modified by the order under section 35. The operative portion of his order reads:

"I, therefore, set aside the order of the Appellate Assistant Commissioner of Income tax and direct him to restore the appeal to his register and decide the same on merits."

(3.)THEREUPON , the matter once again went back to the Appellate Assistant Commissioner and he (successor Appellate Assistant Commissioner) again dismissed the appeal as incompetent, notwithstanding the clear directions of the Commissioner of Income tax to dispose of the appeal on merits, holding that (1) the Commissioner was wrong in thinking that the appeal against the original assessment was pending and therefore the enhancement made under section 35 of the Act to the income assessed could be dealt with as a part of the original assessment order and (2) that no appeal was provided under the Act against an order under section 35 of the Act. The assessee took the matter in second appeal to the Tribunal. The Tribunal, while expressing its surprise that the Appellate Assistant Commissioner should have defied the order of the Commissioner of Income-tax by holding that the Commissioner of Income tax had no jurisdiction to restore the appeal to his file which he had rejected as incompetent, yet itself went on to hold, relying upon the observations of the Supreme Court in Commissioner of Income tax v. Arunachalam Chettiar that as the appellate Assistant Commissioner had refused to exercise jurisdiction and entertain an appeal, the order passed by him was clearly not an order under section 31 of the Act but one under section 30 and as such no appeal lay to the Tribunal. Hence, this reference at the instance of the assessee.