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TMI Blog1961 (10) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... t made on him on the basis of a resident and ordinarily resident was wrong. The Appellate Assistant Commissioner made an order under section 31(2) of the Act directing the Income-tax Officer to make a further enquiry with regard to the residence to the assessee and directed him further to recompute the income after examination of the evidence and accounts to be produced by the assessee. Apparently, even at the stage when the Appellate Assistant Commissioner made this order, the Income-tax Officer objected to the letting in of fresh evidence at that stage, but that objection was overruled by the Appellate Assistant Commissioner. In due course, the Income-tax Officer made his remand report. The appeal came to be heard by another Appellate Assistant Commissioner before whom the assessee again pressed the grounds taken by him, one relating to his liability to assessment as resident and ordinarily resident, and the other, the quantum of the assessment. The Appellate Assistant Commissioner examined the merits of these contentions and found against the assessee on the question of residence. With regard to the quantum, as against the total income of ₹ 88,000 estimated by the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Officer had failed to exercise his individual judgment properly and that no other ground of attack of such as assessment would be open to the assessee. Apparently, it is suggested that it is not even open to the assessee to deny his liability to assessment at the appellate stage if he had not taken that ground at the stage of the assessment. It is further contended that any ground of attack upon such an order, which would bring in any relief which it was open to the assessee to ask for in an application under section 27, would not be open to the assessee in an appeal directed against the assessment only. These contentions call for close examination. There can be no denying the fact that in the present case the Income-tax Officer was justified in making a best of judgment assessment under section 23(4) of the Act. It is beyond dispute that a special notice as required under section 22(2) had been served upon the assessee in compliance with which he failed to submit a return. It is again undisputed that the notice issued under section 22(4) of the Act calling upon the assessee to produce accounts and documents failed to evoke any response. It is under these circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or tax assessed. Decisions have however laid it down that the scope of an appeal directed against the assessment under section 23(4) is somewhat different from an appeal arising from a proceeding under section 27 of the Act. We shall now consider the exact extent in which the two rights of appeal differ from each other. In Naba Kumar Singh Dudhuria v. Commissioner of Income-tax [1944] 12 I.T.R. 327, it was pointed out by the Calcutta High Court, while dealing with the claim of the assessee that he had two independent rights of appeal, that there is an inherent limitation with regard to the scope of an appeal from an order under section 27. The learned judges say: Coming now to the provisions of the Income-tax Act, section 30 gives the assessees the right to object to the amount of income assessed under section 23 or section 27. They may also object to the amount of tax determined under these sections and they may appeal if they object to the refusal of the Income-tax Officer to make a fresh assessment under section 27. To that extent only has the proviso in the same section of the Act prior to the amendment been limited. What the assessees are apparently trying to do now a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter under section 27 of the Act, but filed an appeal to the Appellate Assistant Commissioner against the order of assessment under section 23(4). It was argued before the learned judges that, even in a quantum appeal, the assessee had the right to urge before the appellate authority that there were good reasons for his not having been able to comply with the notice under section 22(4). This argument was repelled. The learned judges observed: In some cases it might be that all the facts were already before the Income-tax Officer and it was not likely that he would change his mind. But in the majority of cases it would be useful for an assessee to have an opportunity to place the facts afresh so that, if the Income- tax Officer was not prepared to change his mind, the Appellate Assistant Commissioner or the Tribunal might be able in the light of the facts to consider whether there was sufficient justification for non-compliance with the notice under section 22(4). Before the amendment of section 30 of the Income-tax Act, the position was that the order of the Income-tax Officer making an assessment under section 23(4) was final, but if the assessee had made an application, under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l conclusion was as stated above, the observations made by the learned judges are of some importance as indicating the reasons for limiting the scope of the jurisdiction of the Appellate Assistant Commissioner to make a remand and in particular the limitations upon such an order of remand. They observed: Now, the power of the Appellate Assistant Commissioner arises under section 31(2) and that power is that before disposing of any appeal he may make such further enquiry as he thinks fit or cause further enquiry to be made by the Income-tax Officer. It is contended on behalf of the assessees that the legislature has not thought fit to put any limitation upon the power of the Appellate Assistant Commissioner to make or cause to be made any further inquiry, and if in order to dispose of an appeal against a best judgment assessment the Appellate Assistant Commissioner thinks it necessary to have the books of account of the assessees examined, he has the power to do so and his jurisdiction cannot be challenged. On the other hand, it is contended-- and with considerable force--that conferring such power upon the Appellate Assistant Commissioner would really be stultifying the whole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a best judgment assessment without producing the books, and if they find that the best judgment assessment is not in their favour and the production of the books of account which they have suppressed may result in an assessment more favorable to them, then ask for the examination of their books. We also appreciate the point of view of the department that the weight to be attached to the books of account which have not been produced at the proper time must always be very slight. But what we are considering in this reference is not the right of the assessees to produce their books, but it is the power and the jurisdiction of the Appellate Assistant Commissioner to direct the Income-tax Officer to look into these books of account. The right that the assessees had to produce their books of account was taken away when their appeal under section 27 was dismissed. They could not insist of the assessment being made on the basis of their books of account. But the question of the jurisdiction and the power of the Appellate Assistant Commissioner is entirely a different one. Even though in practice it may be in extremely rare cases that the Appellate Assistant Commissioner would direct th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properly directed and that a capricious and unjustified assessment should not be made. To that extent the decision is in favour of the assessee. But what happened in that particular case was that the assessee had moved by way of section 27 and had appealed against the order of the refusal of the Income-tax Officer to cancel the assessment under that section. In that appeal, the Appellate Assistant Commissioner took the view that the assessee had not shown any satisfactory reasons for the non-compliance with the notices and that, therefore, the best of judgment assessment made on the materials before the Income-tax Officer was validly made. Having come to that conclusion in appeal from an order under section 27, it was, to say the least, inconsistent on the part of the Appellate Assistant Commissioner to come to a contrary view in the appeal against the quantum of assessment, where he thought fit to afford an opportunity to the assessees to produce their accounts and to direct the Income-tax Officer to make an assessment on the basis of those accounts, that is to say, an assessment not under section 23(4) but under section 23(3). It was under those peculiar circumstances that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mane to an application under section 27. It is true that the wording of section 31 defining the powers of the Appellate Assistant Commissioner in dealing with an appeal before him is not limited in any manner. But nevertheless, section 31 cannot be read divorced from section 30, which creates the right of appeal. An appeal is a creature of statue and, if one is not provided, there can be no inherent right of appeal in an assessee. But, at the same time, we cannot imagine that the legislature has chosen to give not one but two appeals in respect of the same subject-matter to an assessee. That was undoubtedly at the back of the minds of the learned judges who decided Girdher Javer and Co. v. Commissioner of Income-tax [1953] 24 I.T.R. 540, when they pointed out the scope of an appeal arising from section 27 and an appeal directed against the assessment under section 23(4). Though a reading of section 31 defining the jurisdiction of the Appellate Assistant Commissioner would appear to give an unfettered right to deal with all matters that would arise in the appeal before him, where the legislature has dealt with the rights of the assessee under different heads and provided for a diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The first question is whether it is open to the assessee to raise the question of non-liability to be assessed when such a contention had not been taken before the Income-tax Officer. We can find nothing in any of the relevant provisions of the Act which places any fetter upon the right of the assessee to deny his liability to be assessed at all (as distinct from his liability to be assessed under section 23(4) in the appeal before the Appellate Assistant Commissioner. The powers of the Appellate Assistant Commissioner are far greater than those of the Tribunal. The entire assessment is before him. Though in a case to which section 27 might be attracted his jurisdiction might be limited somewhat, we can see nothing in section 31 or in any other provision which denies the right of the assessee to question his liability to be assessed. The mere fact that that ground was not taken before the Income-tax Officer is not sufficient to our minds to deny this right to the assessee. Indeed section 30 specifically provides for an appeal on this ground. Under sub- section (2A) of section 31, the Appellate Assistant Commissioner may allow an appellant to go into any ground of appeal not spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d he apparently refused to consider the remand report on the ground that the remand was beyond the jurisdiction of his predecessor in office. We are firmly of the view that it was not open to the succeeding Appellate Assistant Commissioner to deal with the matter in a manner which was really a function of a superior appellate authority. These officers, the Income-tax Officer or even the Appellate Assistant Commissioner, have no powers to review their own orders and any final order passed by them is subject to an appeal to the next higher authority, the Appellate Tribunal. If the order of remand made by the Appellate Assistant Commissioner was in any way erroneous the succeeding Appellate Assistant Commissioner had no jurisdiction to rectify it but should have left it to the department to take the matter up in appeal to the Appellate Tribunal if it thought fit. We are not called upon the examine whether the Appellate Assistant Commissioner, who finally disposed of the appeal, though he might have made observations about the jurisdiction of his predecessor, did or did not deal with the appeal before him within the scope of the powers vested in him under section 31 of the Act and whet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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