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TMI Blog1966 (11) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... n the 20th of March, 1947, on an income of Rs. 1,71,694 which was reduced in appeal to Rs. 1,41,487. The successor Income-tax Officer on going through the assessment records found that no additional super-tax under the Finance Act of 1946 had been levied upon the assessee. According to him, this was leviable as the dividend declared exceeded both 5% of the capital of the company as well as 30% of the assessed total income. Accordingly, a notice under section 36 of the Act was issued on the 6th August, 1947 (not 1954 as stated in the statement of the case). The assessee raised two objections, one, that the provisions of section 35 were not applicable and the other on the merits that the company was not one which could be deemed to be a company in which the public are substantially interested within the meaning of the explanation to sub-section (1) of section 23A of the Act and as such no additional supertax under the Finance Act, 1946, was leviable. These objections were repelled and it was held by the Income-tax Officer that, (1) as the additional super-tax was inadvertantly not levied by his predecessor, the provisions of section 35 of the Act were attracted, and (2) on the meri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act to the income assessed could be dealt with as a part of the original assessment order and (2) that no appeal was provided under the Act against an order under section 35 of the Act. The assessee took the matter in second appeal to the Tribunal. The Tribunal, while expressing its surprise that the Appellate Assistant Commissioner should have defied the order of the Commissioner of Income-tax by holding that the Commissioner of Income-tax had no jurisdiction to restore the appeal to his file which he had rejected as incompetent, yet itself went on to hold, relying upon the observations of the Supreme Court in Commissioner of Income-tax v. Arunachalam Chettiar that as the Appellate Assistant Commissioner had refused to exercise jurisdiction and entertain an appeal, the order passed by him was clearly not an order under section 31 of the Act but one under section 30 and as such no appeal lay to the Tribunal. Hence, this reference at the instance of the assessee. It is no doubt true that the right of appeal is one which is a creature of statute and there is no inherent right of appeal but by placing reliance on this proposition the authorities below were merely begging the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudicate upon the merits of the appeal on the short ground that the proviso to section 30(1) bars an appeal in such a case. " Notwithstanding the fact that there was an express provision barring an appeal, at that time, against an order under section 23(4) of the Act, nevertheless, it was held that an appeal would not be shut out merely on the ground that the order purported to be one under section 23(4) of the Act. A Full Bench of the Patna High Court in Kunwarji Ananda v. Commissioner of Income-tax, also when faced with the question as to whether an order refusing to entertain an appeal was one under section 30, sub-clause (1) or under section 31, held, by a majority, that an order of the Assistant Commissioner dismissing an appeal and holding that no appeal lies is an order passed under section 31. The learned Chief Justice in the leading judgment observed : " Whatever the technical legal considerations the general duty of the court to stand between the subject and the Crown in the matter of illegal taxation forces me to regard this contention as very unattractive, and it is, in my opinion, unsound. It is undoubtedly the duty of the Assistant Commissioner when the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as the assessees were concerned, their assessment for the relevant year had become final and conclusive subject only to the passing by the Commissioner of an order under section 33 of the Act. The Commissioner having substantially cancelled the order registering the firm by his order dated 13th February, 1928, directed the Income-tax Officer to take necessary action. Consequent upon the Commissioner's order, the Income-tax Officer levied super-tax by his order dated the 4th May, 1929, demanding super-tax of Rs. 5,468-12-0. A notice of demand was also served upon the assessee. Against that order an appeal was filed under section 30(1) asking that order to be set aside. That appeal was not entertained as being incompetent. The Judicial Committee holding that an appeal did lie observed that " . . . section 30(1) giving a right to appeal to the Assistant Commissioner in the case of an assessee denying his liability to be assessed under the Act, which must mean in that context 'charged with tax under the Act', is as applicable to super-tax as it is to ordinary income-tax." If the matter had rested there, there would have been no difficulty in holding that an appeal lay but in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention cannot prevail. The Commissioner's powers under section 33, can only be exercised subject to the provisions of the Act of which the provisions in sections 34 and 35 are in this respect of the greatest importance. . . ." Finally it was concluded: " For the order could only be justified, if at all, as one made, not under section 23(4) but under either section 34 or section 35. If it was made as the Commissioner has found, in purported exercise of the powers given by section 23(4), the assessee nevertheless had right of appeal to the Assistant Commissioner under section 33 and the Commissioner was in error when he quashed the proceedings on that appeal. " Therefore, by merely holding that the appeal was not competent would not make it any the less an order under section 31 of the Act. In Commissioner of Income-tax v. Jagdish Prasad Ramnath the court took the view that though there was no appeal provided against an order levying penal interest under section 18A(8), nevertheless, the order of the Income-tax Officer imposing penal interest was an order under section 31 as a part of the assessment order and therefore it was an order under section 31 which was appeala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the jurisdiction and binding on the Income-tax Officer. ' The High Court declined to answer this reference on the ground that the order of the Tribunal was not one passed in an appeal under section 33(1), and that in consequence, the reference under section 66(1) was itself incompetent. The correctness of this decision was challenged on appeal to this court, and, in affirming it, this court observed : ' ... when on 19th November, 1945, the Appellate Assistant Commissioner declined to admit the appeal, the assessee did not prefer any appeal but only made a miscellaneous application before the Appellate Tribunal. There is no provision in the Act permitting such an application. Indeed, in the statement of the case the Appellate Tribunal states that in entertaining that application and correcting the error of the Income-tax Officer it acted in exercise of what it regarded as its inherent powers. There being no appeal under section 33(1) and the order having been made in exercise of its supposed inherent jurisdiction, the order cannot possibly be regarded as one under section 33(4) and there being no order under section 33(4) there could be no reference under section 66(1) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liminary issues, such as limitation and the like. " After this decision of the Supreme Court, explaining Arunachalam Chettiar's case there cannot be any doubt that an order such as the one in the present case passed by the Appellate Assistant Commissioner was an order under section 31 and not under section 30 as the assessee in substance was denying his liability to super-tax. A reference may also be made to the decision of the Calcutta High Court in Kooka Sidhwa and Co. v. Commissioner of Income-tax, where the aforesaid two cases of the Supreme Court in the cases of Arunachalam Chettiar and Mela Ram were considered and reconciled and it was held that the Madras High Court has misread the decision in Arunachalam Chettiar's case and in applying the principle of that case to the facts in the case of M. M. P. L. S. Ramaswami Chettiar v. Commissioner of Income-tax. It was further pointed out that the substance of the order should be looked into to decide whether an appeal lies and an order passed by the Income-tax Officer revising the assessment made originally under section 23 of the Act under the direction of the Appellate Tribunal would partake the character of a fresh assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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