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TMI Blog1969 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... along with one P. D. Asher. The assessee sold on December 21, 1954, his entire holding in two companies to Asher and some of his relations. These sales resulted in a profit of Rs. 72,515 and Rs. 3,14,100 respectively. The Income-tax Officer assessed these amounts to tax for the assessment year 1956-57 under section 10(5A) of the Act as compensation earned for parting with the effective power of management. The assessment was upheld by the Appellate Assistant Commissioner. The assessee appealed to the Appellate Tribunal. After some adjournments the appeal was finally fixed for hearing on August 26, 1958. On that date no one was present on behalf of the assessee nor was there any application for an adjournment. On August 28, 1958, the Tribunal dismissed the appeal for default of appearance. This the Tribunal purported to do under rule 24 of the Appellate Tribunal Rules, 1946, as amended by notification dated January 26, 1948. Five weeks after the disposal of the appeal the assessee filed a petition before the Appellate Tribunal praying for its restoration. It was stated, inter alia, in that petition that it was owing to some misapprehension on the part of the assessee's auditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing, the Tribunal may, in its discretion, either dismiss the appeal for default or may hear it ex parte." This rule was amended by means of a notification dated January 26, 1948, and it took the following shape: "Where on the day fixed for hearing or any other day to which the hearing may be adjourned, the appellant does not appear when the appeal is called on for hearing, the Tribunal may dismiss the appeal for default." The rule contained no provision for restoring an appeal dismissed for default. The Special Bench of the High Court noticed the previous history of rule 24 as also the terms in which it came to be framed after the passing of the Income-tax Act, 1961, which enables the Tribunal, in its discretion, either to dismiss the appeal for default or to hear it ex parte in case of non-appearance of the parties and further enables the Tribunal to set aside the dismissal on sufficient cause being shown for non-appearance. After referring to various decided cases and examining the relevant provisions of the Act, the Special Bench summed up the position thus: "To sum up the position, the Appellate Tribunal is the appointed machinery under the Act for finally deciding que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have also been pressed in support of the appellant's contention. Now section 5A of the Act appears in Chapter IIA relating to the Appellate Tribunal. Sub-sections (1) to (4) provide for the constitution of the Tribunal and the appointment of its President and Members Sub-sections (5) to (7) provide for the manner in which the Benches of the Tribunal have to function. Sub-section (8) is to this effect: "Subject to the provisions of this Act, the Appellate Tribunal shall have power to regulate its own procedure and the procedure of Benches of the Tribunal in all matters arising out of the discharge of its functions, including the places at which the Benches shall hold their sittings." The powers, functions and duties of the Appellate Tribunal are set out in sections 28, 33, 35, 37, 48 and 66. For our purpose reference may be made only to sections 33 and 66. Sub-sections (1) and (2) of section 33 give a right to the assessee and the Commissioner to appeal to the Appellate Tribunal against the order passed by the Appellate Assistant Commissioner within sixty days of the communication of his order. Under sub-section (2A) the Tribunal can admit an appeal after the expiry of sixty d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... weighty in the matter. The cases in which the validity of rule 24 has been upheld may now be considered. In Shri Bhagwan Radha Kishen v. Commissioner of Income-tax, the discussion on the question of validity of the rule is somewhat meagre. It was no doubt said that rule 24 did not in any way come into conflict with section 33(4) but hardly any reasons were given in respect of that view. It was recognised that there was no specific rule empowering the Tribunal to restore an appeal dismissed for default of appearance but it was observed that the Tribunal would have inherent jurisdiction to set aside such an order if satisfied with regard to the existence of a sufficient cause. According to Ravula Subba Rao v. Commissioner of Income-tax, a very wide power was given to the Appellate Tribunal by section 33(4) and it could pass any order which the circumstances of the case required. It was immaterial whether the opportunity of being heard had been availed of by the party or not. This provision, it was held, did not make it obligatory for the Appellate Tribunal to dispose of the appeal on merits. In this case again there was hardly much discussion and the Allahabad decision was simply fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal is disposed of on the merits and not dismissed owing to the absence of the appellant. It was laid down as far back as the year 1953 by S. R. Das J. (as be then was) in Commissioner of Income-tax v. Arunachalam Chettiar that the jurisdiction of the Tribunal and of the High Court is conditional on there being an order by the Appellate Tribunal which may be said to be one under section 33(4) and a question of law arising out of such an order. The Special Bench, in the present case, while examining this aspect, quite appositely referred to the observations of Venkatarama Aiyar J. in Commissioner of Income-tax v. Scindia Steam Navigation Co. Ltd. indicating the necessity of the disposal of the appeal on the merits by the Appellate Tribunal. This is how the learned judge had put the matter in the form of interrogation: "How can it be said that the Tribunal should seek for advice on a question which it was not called upon to consider and in respect of which it had no opportunity of deciding whether the decision of the court should be sought ?" Thus looking at the substantive provisions of the Act there is no escape from the conclusion that under section 33(4) the Appellate Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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