1966 (12) TMI 2 - HC - Income Tax

It is well settled that the test whether a certain order is final within the meaning of Art. 133(1)(b)of Constitution of India is whether that order finally disposed of the rights of the parties covered by the proceeding

Summary

Issues:
- Appeal under article 133(1)(a) and (c) of the Constitution of India
- Whether the appeal involves a substantial question of law
- Validity of notices issued under section 34 of the Income-tax Act
- Finality of the order appealed against under article 133 of the Constitution of India
- Effect of supervening bar of limitation on the finality of the order

Analysis:

The judgment delivered by the court pertained to applications under article 133(1)(a) and (c) of the Constitution of India. The court emphasized that for an appeal to be considered under article 133(1)(a), it must involve a substantial question of law. In this case, the court found it challenging to certify the presence of such a question. The dispute arose from the validity of notices issued under section 34 of the Income-tax Act. The court outlined the background of the case involving the estate of a deceased individual and subsequent tax assessments initiated by the Income-tax Officer. The court highlighted that the legality of the notices was questioned, leading to a writ petition by the legal representatives of the deceased.

The court ruled that the failure to issue notices to all legal representatives invalidated the notices served on some parties. This decision rendered the notices issued under section 34 of the Income-tax Act legally flawed. Consequently, the department could no longer proceed with the assessments based on the impugned notices. However, due to the limitation period expiring, the Income-tax Officer was unable to issue fresh notices to rectify the situation. The central issue revolved around determining whether the order appealed against constituted a final order under article 133 of the Constitution of India.

The court clarified that for an order to be deemed final under article 133, it must conclusively dispose of the rights of the parties involved. In this instance, the court concluded that the order declaring the notices as invalid did not address the substantive tax liability or rights of the assessee. As a result, the order did not finally determine the rights and liabilities of the parties, failing to meet the criteria for a final order under article 133. The court rejected the argument that the order should be considered final due to the bar of limitation hindering further proceedings under the Income-tax Act.

In light of the above analysis, the court dismissed the petitions, citing that the order appealed against was not final within the scope of article 133 of the Constitution of India. The court reiterated that an order must directly impact the rights and liabilities of the parties to qualify as final, regardless of any subsequent events or statutory limitations. Consequently, the court declined to grant leave for the appeal under article 133(1)(c) and upheld the dismissal of the petitions with costs.