1963 (2) TMI 47 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Tribunal was justified in not admitting the appeals filed by the assessee in respect of the revision of its assessments for the assessment years 1944-45, 1945-46, and 1946-47.

Detailed Analysis:

Issue 1: Justification of the Tribunal in Not Admitting the Appeals

Facts and Background:
The applicant-firm was the managing agent of Globe Theatres Ltd., Calcutta, entitled to a remuneration of Rs. 2,000 per month and 25% of the net profits. The Income-tax Officer, however, allowed only Rs. 2,000 per month and 10% of the net profits as permissible expenses under section 10(2)(xv) of the Indian Income-tax Act, disallowing the balance. The entire amount was assessed as the taxable income of the applicant-firm. The Appellate Tribunal initially held that the entire amount was income but exempt from income-tax under a Central Government notification. The Income-tax Officer revised the assessments accordingly. The assessee disagreed with the adjustments and appealed to the Appellate Assistant Commissioner, who upheld the Income-tax Officer's recomputation. The applicant-firm then filed second appeals, which the Tribunal did not admit, leading to the present reference.

Tribunal's Decision:
The Tribunal held that the recomputation by the Income-tax Officer was not an assessment under section 23 and thus, no appeal lay before the Appellate Assistant Commissioner under section 30. The Tribunal relied on the Supreme Court ruling in Commissioner of Income-tax v. Arunachalam Chettiar.

Legal Question:
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not admitting the appeals filed by the assessee in respect of the revision of its assessments for the assessment years 1944-45, 1945-46, and 1946-47?"

Analysis:
The High Court analyzed the provisions of the Indian Income-tax Act, particularly sections 23, 30, and 33. Section 23 deals with the assessment of income, section 30 provides the right to appeal, and section 33 allows further appeals to the Appellate Tribunal.

Arguments:
- Assessee's Argument: The principles in Arunachalam Chettiar were impliedly overruled by the Supreme Court in Melaram & Sons v. Commissioner of Income-tax. The assessee argued that the Tribunal misapplied the earlier decision and that the appeals should have been admitted.
- Revenue's Argument: The Revenue contended that the Tribunal correctly applied the Supreme Court's decision and that the appeals were not maintainable.

Court's Findings:
The Court found that the Tribunal misapplied the Supreme Court's decision in Arunachalam Chettiar. The Court noted that the decision in Arunachalam Chettiar was distinguishable and that the Tribunal's order directing the Income-tax Officer to revise the assessments was within the scope of section 33(4). The Income-tax Officer, in revising the assessments, acted under section 23, and thus, the order was appealable.

Conclusion:
The High Court held that the Tribunal should have admitted the appeals filed by the assessee. The Court answered the reference in the negative, in favor of the assessee, stating that the Tribunal was not justified in refusing to admit the appeals. The Court emphasized that the right of appeal is substantive and cannot be taken away unless expressly provided.

Separate Judgments:
Both judges agreed on the conclusion, with one judge providing a detailed analysis of the procedural aspects and the other emphasizing the substantive right of appeal.

Final Decision:
The question was answered in the negative, and the Tribunal was directed to admit the appeals. The parties were instructed to bear their respective costs.