1973 (1) TMI 17 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Commissioner to entertain revisional applications.
2. Interpretation of proviso (b) to section 25(1) of the Wealth-tax Act.
3. Principles of natural justice and the right to be heard.

Detailed Analysis:

1. Jurisdiction of the Commissioner to entertain revisional applications:

The core issue in this case was whether the Commissioner of Wealth-tax had the jurisdiction to deal with and dispose of on merits the revisional applications preferred by the respondent, given that the orders of the Appellate Assistant Commissioner were the subject of appeals preferred by the Wealth-tax Officer under section 24(2) of the Wealth-tax Act.

The court examined the relevant provisions of the Wealth-tax Act, particularly sections 16, 23, 24, and 25. Section 16 empowers the Wealth-tax Officer to assess the net wealth of an assessee. Sections 23 and 24 provide for appeals against the orders of the Wealth-tax Officer and the Appellate Assistant Commissioner, respectively. Section 25 allows the Commissioner to revise orders of subordinate authorities either on his own motion or on an application by the assessee, provided the order is not prejudicial to the assessee.

The court concluded that the Commissioner had jurisdiction to entertain the revisional applications because the appeals preferred by the Wealth-tax Officer to the Appellate Tribunal did not constitute an effective appeal by the aggrieved party (the respondent). The court emphasized that the phrase "where the order is the subject of an appeal before the Appellate Tribunal" in proviso (b) to section 25(1) must mean an effective appeal by the aggrieved party, not merely any appeal.

2. Interpretation of proviso (b) to section 25(1) of the Wealth-tax Act:

Proviso (b) to section 25(1) of the Wealth-tax Act states that the Commissioner shall not revise any order where the order is the subject of an appeal before the Appellate Assistant Commissioner or the Appellate Tribunal. The court had to determine whether this proviso barred the Commissioner from entertaining the revisional applications when the appeal to the Tribunal was filed by the Wealth-tax Officer and not by the respondent.

The court held that the proviso should be interpreted to mean that the order must be the subject of an effective appeal by the aggrieved party (the respondent) for the bar to apply. This interpretation prevents anomalous consequences and ensures that the statutory right conferred upon an assessee under section 25 is not defeated by the volition of the Wealth-tax Officer.

The court distinguished the case from the decision in C. Gnanasundara Nayagar v. CIT, where the bar applied because the appeal to the Tribunal was filed by the assessee himself. In this case, the appeal to the Tribunal was filed by the Wealth-tax Officer, and the respondent had not waived his right to file a revisional application.

3. Principles of natural justice and the right to be heard:

The respondent challenged the Commissioner's order on the ground that it was passed in violation of the principles of natural justice, as no opportunity was given to the respondent to be heard. The court noted that the Commissioner had rejected the revisional applications in limine without giving the respondent an opportunity to present her case.

The court agreed with the respondent's contention and held that the order was passed in violation of the principles of natural justice. The Commissioner should have given the respondent an opportunity to be heard before rejecting the revisional applications.

Conclusion:

The court dismissed the appeal by the Commissioner of Wealth-tax and upheld the judgment of Thakkar J., which set aside the Commissioner's order and directed the Commissioner to dispose of the revisional applications in accordance with law. The court emphasized that the phrase "where the order is the subject of an appeal before the Appellate Tribunal" in proviso (b) to section 25(1) must mean an effective appeal by the aggrieved party, and the statutory right of the assessee to invoke revisional jurisdiction should not be defeated by the Wealth-tax Officer's appeal. The court also underscored the importance of adhering to the principles of natural justice by providing the respondent an opportunity to be heard.