9911796707
TMI Blog1963 (4) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. That method, however, was not accepted by the Wealth-tax Officer and he rejected the valuation put by the petitioner on those assets. The Wealth- tax Officer adopted another method, estimated the value of those shares, and included that valuation in the value of net wealth estimated by the Wealth-tax Officer. Feeling aggrieved against the aforesaid orders of the Wealth-tax Officer the petitioner filed appeals against them before the Appellate Assistant Commissioner of Wealth-tax. The Appellate Assistant Commissioner rejected the appeals by his order dated May 1, 1959. Against the orders of the Appellate Assistant Commissioner the petitioner filed two appeals before the Appellate Tribunal on 16th July, 1959. One of the grounds raised related to the valuation of the assets on the aforesaid dates in which the petitioner had objected to the valuation placed on those shares by the Wealth-tax Officer. On 28th September, 1961, the Assistant Registrar of the Appellate Tribunal wrote a letter to the assessee, the material part of which is in the following terms: Sir, One of the grounds taken by you in the above Wealth-tax appeal involves valuation of shares. Section 24(6) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Appellate Tribunal in respect of both the assessments, but these appeals were later on withdrawn and dismissed as such by the Tribunal. Since the orders of the Wealth-tax Officer have been the subject of an appeal before the Appellate Tribunal under section 25(1), it is not possible for me to interfere at this stage. Both the petitions are rejected as incompetent. It is the aforesaid order of the Commissioner of Wealth-tax (respondent herein) which the petitioner seeks to get quashed by this petition under article 226 of the Constitution of India. The petitioner also prays that a direction, order or writ including a writ in the nature of mandamus be issued under article 226 of the Constitution of India directing the respondent to give an opportunity of hearing to the petitioner and to decide the case on merits. In order to appreciate the rival contentions raised on behalf of the petitioner and the respondent it would be convenient to produce the material part of section 25 of the Act: 25. (1) The Commissioner may, either of his own motion or on application made by an assessee in this behalf, call for the record of any proceeding under this Act in which an orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only when the Tribunal touches the order of the Appellate Assistant Commissioner, proceeds to go into the merits of the decision and pronounces its view on the correctness or otherwise of the order of the Appellate Assistant Commissioner. In other words, Mr. Palkhivala contends that unless the appeal has been decided on merits by the Tribunal, the order of the Appellate Assistant Commissioner is not the subject of an appeal within the meaning of the said proviso (b). Mr. Palkhivala has referred us to certain observations in A.V. Srinivasalu Naidu v. Commissioner of Income-tax([1948] 16 I.T.R. 341, 345). Mr. Joshi, appearing for the revenue, on the other hand, contends that under the scheme of the Act, an option is given to the assessee to follow either of the two remedies. He may either file an appeal before the Tribunal against the order of the Appellate Assistant Commissioner or he may file a revision before the Commissioner. The substantial right conferred on the assessee is a right of appeal. In revision it is discretionary to the Commissioner either to interfere or not. The assessee at the threshold has to decide which of the remedies he would pursue. Section 25 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Wealth-tax Officer shall be subordinate to the Commissioner of Wealth-tax and Inspecting Commissioner of Wealth-tax within the jurisdiction they perform their functions. Chapter VI deals with the provisions relating to appeals, revisions and references. Section 23 confers a right on an assessee to file an appeal against certain orders of assessment of the Wealth-tax Officer enumerated in sub-section (1). Sub- section (2) provides the period of limitation. Sub-sections (3) and (4) provide the procedure to be followed by the Appellate Assistant Commissioner in the disposal of the appeal. Sub-section (5) provides that in disposing of the appeal, the Appellate Assistant Commissioner may issue such orders as he thinks fit, which may include an order enhancing the assessment or the penalty. Section 24 confers on an assessee aggrieved by the order of the Appellate Assistant Commissioner made under section 23, a right to file an appeal to the Tribunal within 60 days of the date on which he is served with such an order. Sub-section (2) provides that the Commissioner may, if he is not satisfied as to the correctness of any order passed by an Appellate Assistant Commissioner under section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities subordinate to the Commissioner including the order of the Appellate Assistant Commissioner are made revisable by the Commissioner either on his own motion or at the instance of an assessee. It is, however, to be noticed that the right of appeal to the Appellate Assistant Commissioner against the order of the Wealth-tax Officer is conferred only on the assessee, but against the appellate order of the Appellate Assistant Commissioner, right to file an appeal is conferred both on an assessee as well as on the Commissioner, who can direct the Wealth- tax Officer to file an appeal to the Tribunal against the order of the Appellate Assistant Commissioner. Both the Appellate Assistant Commissioner as well as the Tribunal could enhance the penalty in exercise of their appellate powers. Having regard to the provisions of section 25, however, it is clear that an assessee feeling aggrieved by an order of the Appellate Assistant Commissioner has been given two alternative rights: he may either file an appeal against the order of the Appellate Assistant Commissioner to the Tribunal or instead he may file an application before the Commissioner to get the order of the Appellate Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an appeal, and this appears to be the intention of the legislature in enacting clause (b). Looking to the scheme of the Act, in our opinion, the right conferred on an assessee is two-fold: he can get the validity of the order of the Appellate Assistant Commissioner or the Wealth- tax Officer tested either at the hands of the appellate authority, viz., the Tribunal or the Appellate Assistant Commissioner, or get the validity of either of the orders tested at the hands of the Commissioner and unless the question as to the validity of the order complained against is looked into or scrutinised by the authorities concerned, viz., the appellate authority or the revisional authority, it cannot be said that the right conferred by the Act is fully exercised or exhausted. The construction which we have put on clause (b), in our opinion, would be in consonance with the aforesaid intention of the legislature enabling the assessee to exercise the rights conferred on him by the Act. Had the legislature intended that mere filing of a competent appeal, in which a decision could be given by the Assistant Appellate Commissioner would take away the revisional powers of the Commissioner conferred o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired, or, in the case of an appeal to the Appellate Tribunal, the assessee has not waived his right of appeal, or (b) where an appeal against the order has been made to the Appellate Assistant Commissioner, the appeal is pending before the Appellate Assistant Commissioner, or (c) the order has been made the subject of an appeal to the Appellate Tribunal: Provided further that the order by the Commissioner declining to interfere shall be deemed not to be an order prejudicial to the assessee. It will be seen that clause (c) of the proviso to sub-section (2) of section 33A corresponds to clause (b) of sub-section (1) of section 25 of the Act. There is, however, a slight difference in the language. In the Income- tax Act the words used are the order has been made the subject of an appeal , while instead of the words has been the word is is used in the Wealth-tax Act. Nothing, however, would turn on the slight difference in the phraseology. Clause (c) of the proviso to sub-section (2) of section 33A fell for consideration in A.V. Srinivasalu Naidu v. Commissioner of Incometax [1948] 16 I.T.R. 341. The facts of that case in brief were: An appeal to the Appellate Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. There was, therefore, no competent appeal before the Tribunal. The Tribunal had, therefore, dismissed the appeal as barred by time. There being thus no competent appeal filed by the assessee, the order of the Appellate Assistant Commissioner was not made subject of an appeal. Such, however, is not the case here. The appeal filed by the assessee before the Tribunal was not beyond the period of limitation prescribed for filing an appeal. It was a perfectly competent appeal. The petitioner could have obtained a decision on merits at the hands of the Tribunal. The order of the Appellate Assistant Commissioner, therefore, was the subject of an appeal within the meaning of proviso (b). It is indeed true that the facts of the present case and the facts with which the learned judges were concerned in A.V. Srinivasalu Naidu v. Commissioner of Income-tax* are not identical, but the question which we have got to consider is similar to one that fell for consideration in A.V. Srinivasalu Naidu v. Commissioner of Income-tax [1948] 16 I.T.R. 341, and that was the true meaning of the clause subject of an appeal to the Appellate Tribunal . The decision of the learned judges has not turned on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T.R. 341, of the aforesaid clause (c). Further, the interpretation we consider preferable will effectively secure the rights conferred on an assessee by sections 24 and 25 of the Act. As already stated the right conferred on an assessee is to get the validity of the order of the Appellate Assistant Commissioner tested in appeal at the hands of the Tribunal or tested at the hands of the Commissioner in revision. It is difficult to say that mere filing of a competent appeal without carrying the matter to a final decision would amount to a full exercise of that right. It would be seen that proviso (a) to sub-section (1) of section 25 enables the assessee to waive the right of appeal. It is true that that clause speaks of waiver of the right of appeal before the expiry of the period of limitation. But when the legislature permits an assessee to waive the right of appeal prior to the period of limitation, it can reasonably be assumed that the legislature did not intend to prohibit the assessee from waiving his right of appeal even when an appeal has been filed by the assessee unless it can definitely be said that in no event after the appeal has been filed, the assessee could withdraw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner came to know that another item of ₹ 89,796 had also escaped assessment and issued a fresh notice in respect of the said sum to the assessee. It is thereafter that the assessee applied for withdrawing the appeal and the question arose whether in the circumstances the assessee could withdraw the appeal. The matter ultimately went to the High Court and, following a decision in Rex v. Special Commissioners of Income Tax**, it was held that it was not open to the assessee, who had preferred an appeal, to withdraw the appeal so as to prevent the Appellate Assistant Commissioner from enhancing the assessment. It would be seen that the assessee was seeking to withdraw the appeal after the Appellate Assistant Commissioner had issued a notice to him to show cause why the assessment should not be increased on account of the escapement of income amounting to ₹ 89,796 from taxation. Facts in Rex v. Special Commissioners of Income Tax [1935] 20 Tax Cas. 381 in brief were: Notice of appeal to the Special Commissioners was given against an additional assessment to Income Tax, Schedule D, made upon a taxpayer in an estimated amount for the year 1925-26. In November, 193 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpayer can at his discretion at any time resile, subject to his obeying the precepts and so forth, and that he can at any moment prevent the Commissioners from ascertaining and settling the sum to be assessed by the simple process of intimating by word or by deed that he withdraws from the appeal, or rather that he withdraws the notice of appeal, and that there is no appeal pending at all. Lastly, Mr. Joshi referred us to the following observations of Lord Justice Romer at page 395: The question that we have to determine in this case is whether, when a taxpayer has served a notice of appeal and so brought into effect the machinery designed by section 133 for the purpose of completing the assessment, he can stop the further working of that machinery either by withdrawing the appeal or by refusing to be present at the hearing of the appeal. If that be right and he can in that way stop the working of the machinery, then, as it appears to me, he is in a position to prevent any final assessment being made upon him at all under the Act. That would be an extraordinary intention to impute to the Legislature. In my opinion that is not the effect of the Act. In my opinion the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on granting the permission for withdrawal of the appeal had at no stage been challenged by the Commissioner of Wealth-tax nor has it been stated in the affidavit in reply that the withdrawal was not bona fide or the withdrawal of the appeal was with the ulterior object of avoiding enhancement of the assessment. The Commissioner of Wealth-tax, in our opinion, therefore, in the circumstances of the case, was not justified in dismissing the revision application filed by the petitioner in limine on the ground that it was incompetent since the orders of the Wealth-tax Officer and the Appellate Assistant Commissioner have been the subject of an appeal before the Appellate Tribunal under section 25(1) of the Act. The order is, therefore, liable to be quashed. Mr. Joshi, however, contended that this court should not quash the order and direct the revision application to be heard by the Commissioner inasmuch as the writ granted by the court would be infructuous, the revision applications filed by the petitioner on December 14, 1961, being barred by time. It is true that the period of limitation prescribed for a revision application filed on behalf of the assessee is a period of on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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