MAHARANI GYAN MANJARI KUARI DOWAGER MAHARANI OF HATHWA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference by the Income-tax Appellate Tribunal under Section 66 (1) of the Indian Income-tax Act for the opinion of the Court of the following questions :-

(2.) THE facts of the case lie in a very narrow compass. For the accounting period 1937 and 1938 the assessee was assessed on the 1st of August 1940 for a sum of Rs. 65,300. THE very short order of the Income-tax Officer states that the assessee was served with the notice under Section 22 (2) and 34 on the 24th January 1940, but she did not comply with the notice. Against this order the assessee preferred a memorandum of appeal on the 18th January 1941 to the Appellate Assistant Commissioner of Income-tax. But he refused to admit the appeal and rejected it on the ground that the appeal was not in the Form 16 prescribed in Rule 21 of the Boards Rules. He says that paragraph 2 of the prescribed form which requires that the notice of demand attached to the memorandum was served upon the assessee on a certain date had been altered to the notice of demand was not served on the petitioner. Upon this, assessee claimed, as stated by the Assistant Commissioner, that she had a right to appeal against an amount of tax charged even though there should be defect in the form of the appeal which she was unable to remedy because she never received the demand notice at all and only came to know of the tax charged by the Income-tax Officer in the course of the proceedings under Section 46 (2) of the Income-tax Act. It was also submitted to him by the assessee that in the special or extraordinary circumstances this requirement of attaching the demand notice to the appeal form must be waived. THE Assistant Commissioner took the view that this requirement of the Boards Rule was imperative and that the appeal filed in the altered form and without the demand notice being attached thereto was not maintainable - the Assistant Commissioner did not find that the notice of demand had actually been served on the assessee. He thus refused to entertain the appeal by his order dated the 31st of August 1941. Against this decision the assessee appealed to the Appellate Income-tax Tribunal under Section 33, Indian Income-tax Act. That Tribunal apparently were in sympathy with the assessee but found that they were unable to assume jurisdiction over this appeal for the simple reason that this order of the Appellate Assistant Commissioner complained against was not an order under Section 31 and observed that it was no doubt unfortunate that in respect of orders passed under Section 30 even though capricious the legislature had not provided any right of appeal to the higher authority. At page 11 they also made these observations : Without expressing any opinion regarding the finding of the Appellate Assistant Commissioner that the appeals were not in the proper form we should state that it may not be possible in certain cases for the person to file the notice of demand as it may have been destroyed or lost and to give the date of service of the notice of demand as it might not have been actually served on him.

(3.) DHAVLE, J., also gave a concurrent view which I desire to quote from page 225 : If the decision of the Assistant Commissioner be in favour of the assessee, there can be no question that the appeal must be heard on the merits and that the order disposing of the appeal will be an order under Section 31, so as to attract the operation of sub-section (2) and (3) of Section 66. Where, however, the Assistant Commissioner holds that an appeal is barred by the proviso, it has been urged by learned Counsel for the Income-tax Department that there is no order passed under Section 31 and that consequently the assessee is not entitled to resort to the provisions of sub-sections (2) and (3) of Section 66 for coming up to the High Court on question of law. It appears to me that this contention is unsound. If the order be not an order under Section 31, there is no other section in the Act under which it can come. It is true that Section 31 deals with the hearing of the appeal, but does this necessarily mean a hearing of the appeal on the merits ? A hearing on the preliminary question whether an appeal lies is just as much an exercise of jurisdiction by the appellate authority as a hearing on the merits. Nor can it be definitely said, having regard to the scheme of the Act, that the legislature must have intended to bar not only appeal but also proceedings under Section 66 in the case of assessments under sub-section (4) of Section 23. The defaults that bring sub-section (4) of Section 23 into play have before now actually given rise to questions of law, and I see nothing improbable or incongruous in the legislature disallowing appeals against assessments while leaving it open to the assessee to obtain a reference to the High Court under sub-sections (2) and (3) of Section 66 on questions of law arising out of the order of the Assistant Commissioner rejecting an appeal on the ground that it is barred by the proviso to sub-section (1) of Section 30. .... Section 66 does not in terms require as a foundation an appellate order on the merits but only an order under Section 31.