1972 (9) TMI 15 - SC - Income Tax

Person contending that the person to whom he has made the payment was not a non-resident - provisions of s. 30(1A) cannot be applied - we allow this appeal set aside the order of the Appellate Bench of the Allahabad High Court and remand the case back to that court for deciding the appeal afresh

Summary

Issues: Jurisdiction of the Income-tax Officer to determine residency status of a firm; Competency of appeal under section 30(1A) of the Income-tax Act.

In this case, the appellant was directed by the Income-tax Officer to pay tax on a sum remitted as selling commission to a firm in Indonesia. The appellant contended that the firm was not a non-resident firm, but the Income-tax Officer disagreed. The Appellate Assistant Commissioner rejected the appeal on the grounds of non-compliance with conditions under section 30(1A). The Tribunal upheld this decision. The High Court, in a writ petition, initially ruled in favor of the appellant, stating the firm was not non-resident. However, the Appellate Bench reversed this decision, asserting that the Income-tax Officer had the jurisdiction to determine the residency status. The Supreme Court disagreed, emphasizing that a quasi-judicial authority cannot assume jurisdiction by deciding a jurisdictional fact erroneously. The Court held that the Appellate Bench's conclusion was incorrect, and the High Court had the authority to review such decisions through a writ of certiorari.

Regarding the competency of appeal under section 30(1A), the revenue argued that the appellant could have appealed if the tax amount had been deposited. However, the Court noted that this provision does not apply when the appellant disputes the non-resident status of the firm. If the appellant's contention is correct, they could not have deducted tax from a non-resident firm. Consequently, the Court allowed the appeal, set aside the Appellate Bench's order, and remanded the case for a fresh decision, enabling the appellant to present all relevant points. The costs of the appeal were to be borne by the appellant.