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TMI Blog1956 (10) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Appellate Tribunal dated December 17, 1953, under which it was held that section 40 of the Hyderabad Income-tax Act ceased to have effect by virtue of section 13(1) of the Indian Finance Act, 1950, and no appeal could be entertained under the Income-tax Act, the remedy of the assessee being elsewhere, the assessee has also filed an application for the issue of a writ of certiorari quashing the order of the Income-tax Officer imposing penalty as being without jurisdiction or for any other appropriate writ. From the statement of the case it appears that the assessee, a registered firm carrying on business in oil at Khammamet, was assessed to income-tax for the Fasli year 1356 (1st October, 1946, to 30th September, 1947) on February 10, 1950, on an income of ₹ 7,63,725 which included, according to the Income-tax Officer, the concealed income amounting to ₹ 1,26,590. It further appears that on December 22, 1949, the said officer issued a notice to the assessee under section 40(4) of the Hyderabad Income-tax Act, calling upon it to show cause why a penalty should not be imposed. After hearing the assessee, a penalty of ₹ 42,000 was levied on October 31, 1951, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, or for any subsequent year, or, as the case may be, the levy, assessment and collection of the tax on profits of business for any chargeable accounting period ending on or before the 31st day of March, 1949. The question is whether the legislature, by saving the Hyderabad Income-tax Act for the purposes of levy, assessment and collection of income-tax and super-tax, saved the power of levying penalty also under section 40 of the Hyderabad Income-tax Act. The first thing to be noticed under sub-section (1) of section 13 is that the words levy, assessment and collection are used in relation to income-tax and super-tax. Therefore, these words cannot be read except as governing the levy, assessment and collection of income-tax or super-tax and the words levy and collection cannot, as contended, refer also to imposition of penalty and collection thereof. No doubt their Lordships of the Privy Council, in the case of Commissioner of Income-tax v. Khemchand Ramdas [1938] 6 ITR 414 , 416 have pointed out, that one of the peculiarities of most Income-tax Acts is that the word 'assessment' is used as meaning sometimes the computation of income, sometimes the determinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... four which were not extended to Jammu and Kashmir, saved those repealed provisions so as not to affect (a) the previous operation of the corresponding law, or (b) any penalty, forfeiture or punishment ordered in respect of an offence committed against any such law, or (c) any investigation, legal proceeding or remedy in respect of such penalty, forfeiture or punishment, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed, as if the Act had not been passed. The Parliament, therefore, was fully aware of the necessity to save the provisions relating to penalty where any Act repealed authorised the imposition and collection of such penalty. It is for this reason that when the Hyderabad Income-tax Act, along with the other Part B States Taxation Laws, was repealed, the saving in sub-section (1) of section 13 did not have the effect of saving the provisions of section 40 of the Hyderabad Income-tax Act or any similar provisions in any other Act repealed thereby. If the Legislature had intended to keep alive the Hyderabad Income-tax Act for all purposes including the levy of penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to the conclusion that there is no jurisdiction, then the appellate authority can say so and set aside the order and if it comes to a different conclusion it can confirm the action of the subordinate authority and dismiss the appeal. In other words, where any authority acts without jurisdiction, its decision can be challenged in the same way as it could have been challenged if it had acted within its jurisdiction, i.e., an appeal would lie from such a decision to the authority to which an appeal would have lain if the decision had been within jurisdiction. An appellate authority, therefore, would be an authority of competent jurisdiction in such a case. In Ebrahim Aboobaker and Another v. Custodian General of Evacuee Property, New Delhi [1952] SCR. 696, it was contended that no court of a limited jurisdiction can give itself jurisdiction by a wrong decision on a point collateral to the merits of the case upon which the limit of its jurisdiction depends and that the questions involved in the appeal before the respondent were collateral to the merits of the case. Mahajan, J., as he then was, after citing with approval the observations of Lord Esher, M.R., in Reg. v. Income-tax C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to decide whether the Income-tax Officer had the power to levy penatly or not. In these circumstances, our answer to question No. 1 is in the negative, viz., that the Income-tax Officer did not have the power to impose a penalty under section 40(1) of the Hyderabad Income-tax Act by virtue of the said provision having been repealed by the Indian Finance Act, 1950. The answer to question No. 2 is in the affirmative and the answer to question No. 3 is in the negative, namely, that the Appellate Assistant Commissioner can entertain the appeal in which the question of the power of the Income-tax Officer to impose a penalty could be challenged and any decision given by him could not be said to be without jurisdiction, and that order of the Income-tax Officer can be set aside by the Appellate Tribunal. While answering the questions referred to us by the Tribunal as aforesaid, we direct the Income-tax Appellate Tribunal at Bombay under article 227 to pass necessary orders to the Income-tax Officer setting aside his order imposing a penalty as a logical consequence of the view it has taken regarding the absence of power in the Income-tax Officer to levy a penalty. We would have also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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