Manchanda, J. - (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 1-10-1941, 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 per cent of the capital of the company as well as 30 per cent of the assessed total income. Accordingly a notice under Section 35 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 23-A of the Act and as such no additional super-tax under the Finance Act 1946. These objections were repelled and it was held by the Income-tax Officer that, (1) as the additional supertax was inadvertently 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/- 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 Harihar Gir v. Commr. of Income-tax Bihar and Orissa, (1941) 9 ITR 246: (AIR 1941 Pat 225 SB) in preference to the "decision of the Privy Council in Commr. of Income-Tax Bombay and Aden v. Khemchand Ramdas, (1938) 6 ITR 414 : (AIR 1938 PC 175) upon which the assessee had placed reliance for the proposition that even if there was no specific provisions for appeal, nevertheless as the assessee was 'denying his liability to be assessed', an appeal would lie.
(3.) 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." 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.;