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TMI Blog1973 (9) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner accepted the claim and allowed the appeal. The Wealth-tax Officer, therefore, took the matters in further appeal before the Tribunal where in the course of hearing of the appeals, a contention was raised on behalf of the revenue, though not urged in the grounds of the memo of appeals, that as no notice of the date of effective hearing of the appeals was given to the Wealth-tax Officer, the order of the Appellate Assistant Commissioner was bad in law. This contention found favour with the Tribunal, as it was of the opinion that the Wealth-tax Officer being a party to the proceedings, should have been afforded an opportunity of being heard by service of the notice of the date of effective hearing, since such right is implicit in the scheme of the Wealth-tax Act or in any case on principles of natural justice and fair play because the Appellate Assistant Commissioner was an independent judicial officer who is not supposed to assume the role of a Wealth-tax Officer and the counsel of the department. The Tribunal having regard to the proceedings before the Appellate Assistant Commissioner found that the proceedings-sheet contains an order of giving notice to the Wealth-tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee who has a right conferred under section 31 to prefer an appeal against the order of assessment made by the Income-tax Officer. If the assessee does not choose to appeal, the order of assessment becomes final subject to any power of revision that the Commissioner may have under section 33B of the Act. Therefore, it would be wholly erroneous to compare the Powers of the Appellate Assistant Commissioner with the powers possessed by a court of appeal under the Civil Procedure Code (underlining is ours). The Appellate Assistant Commissioner is not an ordinary court of appeal. It is impossible to talk of a court of appeal when only one party to the original decision is entitled to appeal and not the other party, and in view of this peculiar position the statute has conferred very wide powers upon the Appellate Assistant Commissioner once an appeal is preferred to him by the assessee. It is necessary also to emphasise that the statute provides that, once an assessment comes before the Appellate Assistant Commissioner, his competence is not restricted to examining those aspects of the assessment which are complained of by the assessee ; his competence ranges over the whole asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e." The Supreme Court referred to the decision of the Bombay High Court in Narrondas Manordass's case, where the Bombay High Court has considered the scope of the powers of the Appellate Assistant Commissioner under section 31(3). In Narrondas Manordass's case 3 the Bombay High Court has observed is under : "Now, in order to understand what the competence of the Appellate Assistant Commissioner is and what are the powers conferred upon the Appellate Assistant Commissioner, it is necessary to bear in mind certain salient facts. It is only the assessee who has a right conferred upon him to prefer an appeal against the order of assessment passed by the Income-tax Officer. If the assessee does not choose to appeal, the order of assessment becomes final subject to any power of revision that the Commissioner might have under section 33B of the Income-tax Act. Therefore, it would be wholly erroneous to try and compare the powers of the Appellate Assistant Commissioner with the powers possessed by a court of appeal under the Civil Procedure Code. The Appellate Assistant Commissioner is not an ordinary court of appeal in the sense in which that expression is understood in the Civil Proced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to it under the Estate Duty Act as to whether the Board of Revenue acted within their powers when they declined to admit the fresh contentions raised at the time of hearing of the appeal before them, Mr. Justice Ramanujam, speaking for the court, observed as under : "It is well established that an appeal before the Appellate Assistant Commissioner or before the Tribunal is a rehearing, and the appellate authority has got all the powers of the assessing authority." Similarly, in Commissioner of Income-tax v. Kanpur Coal Syndicate, the court in the context of the question-whether when, the Income-tax Officer in his discretion assessed an association of persons to income-tax, the Appellate Assistant Commissioner in appeal or the Income-tax Appellate Tribunal in further appeal can set aside that order and direct him to assess the members of that association individually-observed as under: "Under section 31(3)(a) in disposing of such an appeal the Appellate Assistant Commissioner may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment ; under clause (b) thereof he may set aside the assessment and direct the Income-tax Officer to make a fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Commission (1953-54), volume II, while dealing with the role of the Appellate Assistant Commissioner, the Commission has observed in paragraph 70 at page 236 as under: "We are, therefore, of the opinion that, all things considered, the balance of advantage lies in leaving the existing structure unchanged. The demand for transferring the Appellate Assistant Commissioners away from the control of the Central Board of Revenue arises, in our opinion, from lack of a proper appreciation of the crucial fact that the assessment proceedings before the Income-tax Officer are not of the nature of judicial proceedings and that the Appellate Assistant Commissioner, socalled, is in essence not, and was never meant to be, anything more than a reviewing and revising departmental authority within the income-tax department. The Appellate Assistant Commissioners go through the accounts themselves, receive additional evidence, examine the facts, review the whole assessment, and enhance it if income has been under-assessed. It is unfortunate that this basic fact was lost sight of when the term Appellate Assistant Commissioner was first used in 1939. The misunderstanding could probably have been avoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings before the Appellate Assistant Commissioner an appeal in the sense in which it is understood in civil courts. It is merely a rehearing and reappraising of the assessment already made by the Income-tax Officer. It was contended that a dispute between a taxpayer and the State is not a dispute between a taxpayer and the Income-tax Officer. The Income-tax Officer is not a party in the sense in which we understand it in civil courts. The powers of the Appellate Assistant Commissioner being plenary powers of appeal are conterminous with the powers of the Income-tax Officer and he is also, as the Income-tax Officer is, a party and a judge, though in appeal he is re-considering and revising the assessment already made. On behalf of the revenue, these contentions were contested. It was urged on behalf of the revenue that the correct role of the Income-tax Officer is that of a party, investigator and judge and once he completes the assessment work, he ceases to be a judge, but he none the less remains a party. To say that before the Appellate Assistant Commissioner, there are no two parties, is over-simplification of the matter. There are two parties before the Appellate Assistant Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revenue, that there are limitations on the powers of this appellate authority, namely, that he cannot travel beyond the returns of the assessee or the record of the assessment proceedings, as they are before the Income-tax Officer, while exercising his appellate jurisdiction as an appellate authority for purposes, of enhancing assessment. But none the less he is not in the position of a judge deciding a dispute. He is an appellate as well as a revising authority and his powers are much wider than the powers of an appellate court under the Civil Procedure Code or the Criminal Procedure Code. He can, subject, to the limitations stated above, do whatever the Income-tax Officer could have done and his appellate powers are plenary powers including the power of reassessment. The Tribunal was, therefore, not right when it observed that the Wealth-tax Officer has a right to represent the revenue before the Appellate Assistant Commissioner as a matter of course because the Appellate Assistant Commissioner was a judge deciding a dispute between the assessee concerned and the revenue. Having regard to the second proviso to section 31(3) of the Indian Income-tax Act (as amended in 1939) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be urged that, therefore, consequently, he has a right of being heard as a matter of course before the Appellate Assistant Commissioner. In our opinion, if such a right was intended to be conferred on the assessing officer, the legislature could have certainly made a suitable provision in the Act concerned. The very absence of such a provision under the Wealth-tax Act indicates that, though the legislature was aware of similar provisions under the Indian Income-tax Act, Excess Profits Tax Act and the Business Profits Tax Act, which were put on the statute book prior to the Wealth-tax Act, and when such a provision was incorporated in the Income-tax Act of 1961, which was placed on the statute book after the Wealth-tax Act, the legislature, however, did not think it fit to make an express provision confirming such a provision of service of notice by the Appellate Assistant Commissioner to the Wealth-tax Officer so as to grant him a consequential right of hearing in appeal before him. Mr. Kaji, therefore, made an attempt by drawing our attention to the provision contained in section 23(3) where on filing of an appeal the Appellate Assistant Commissioner has to fix a day and place for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We do not intend to suggest hereby that, if there is a practice in the department that a notice of lodging of an appeal or a notice of hearing of the appeal is given to the Wealth-tax Officer, it should be discouraged or discontinued. We also do not intend to say that the Appellate Assistant Commissioner, whenever he feels it necessary to hear the Wealth-tax Officer, should not do it. It should also be noted that sub-section (3)(a) of section 23 of the Wealth-tax Act has been brought on the statute book by the Taxation Laws Amendment Act, 1972, whereby the Appellate Assistant Commissioner has been placed under an obligation in an appeal, where the valuation of an estate is objected to, to ear the Valuation Officer who has made the valuation under section 16A, or in any other case, on a request being made in this behalf by the Wealth-tax Officer, any Valuation Officer nominated for that puroose by the Wealth-tax Officer. Though this provision is inserted after the relevant a ssessment years, it indicates that whenever the legislature thought fit to give a specific right of hearing to any of the officers under the Wealth-tax Act, it has made an appropriate provision in that behalf. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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