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TMI Blog1973 (1) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... and reserves, as there was no market quotation for the same. The Wealth-tax Officer, Company Circle I(3), Bombay, by his separate orders for the aforesaid years rejected the valuation of the said shares as claimed by the respondent and estimated their values on the basis of capitalisation of profits at 6% for the assessment year 1960-61 and on the basis of break-up value with certain modifications for the assessment years 1958-59 and 1959-60. The respondent, feeling aggrieved by the assessment orders passed by the Wealth-tax Officer, preferred appeals to the Appellate Assistant Commissioner of Wealth-tax and the Appellate Assistant Commissioner determined the values of the said shares on the basis of capitalisation of the investment income at 6% and of other income at 12 1/2%, with the result that he partly allowed the appeals of the respondent by his separate orders passed in three appeals dated November 10, 1961. Feeling aggrieved by the said orders of the Appellate Assistant Commissioner, the Wealth-tax Officer preferred appeals to the Income-tax Appellate Tribunal. The respondent did not prefer any appeal to the Tribunal. The Tribunal, by its consolidated order for the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ground that they were incompetent, by observing as follows: " There are three revision petitions relating to the assessment years 1958-59 to 1960-61. The orders of the Appellate Assistant Commissioner were the subject-matter of an appeal before the Appellate Tribunal. Applications for revision against the orders do not, therefore, lie in view of proviso (b) to section 25(1) of the Wealth-tax Act. The applications are, therefore, rejected." It was this order passed by the first appellant on August 12, 1964, that was challenged by the respondent in Miscellaneous Petition No. 42 of 1965, which he preferred on the original side of this court under article 226 of the Constitution. The said order was challenged on two grounds. In the first place, it was challenged on the ground that it had been passed in violation of principles of natural justice inasmuch as no opportunity was given to the respondent of being heard before the order was passed. Secondly, it was contended that on the basis of a wrong approach adopted by the Commissioner on the question of construction of the relevant proviso to section 25(1), the Commissioner had failed to exercise jurisdiction vested in him by l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner. Naturally, the Wealth-tax Officer himself being the assessing officer, there would be no question of his preferring an appeal to the Appellate Assistant Commissioner. Under section 24, an appeal has been provided for against the order of the Appellate Assistant Commissioner passed under section 23 to the Appellate Tribunal by both; sub-section (1) provides for an appeal being preferred by an assessee who feels himself aggrieved by the order of the Appellate Assistant Commissioner, while under sub-section (2) the Commissioner, if he is not satisfied about the correctness of any order passed by the Appellate Assistant Commissioner, has been empowered to direct the Wealth-tax Officer to prefer an appeal to the Appellate Tribunal against such an order. The period of limitation for preferring such appeal, either by the assessee or by the Commissioner through the Wealth-tax Officer, is sixty days from the date of the communication of the impugned order appealed against. Then comes the relevant provisions of section 25, the material portion whereof runs as follows: " 25. Powers of Commissioner to revise orders of subordinate authorities.(1) The Commissioner may, either of his own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Appellate Assistant Commissioner by the Wealth-tax Officer, that fact was sufficient to exclude the revisional jurisdiction of the Commissioner under section 25(1) of the Act. He contended that the view taken by Thakkar J., that the statutory right conferred upon an assessee under section 25 could not be allowed to be defeated at the volition of the Wealth-tax Officer by his preferring an appeal to the Appellate Tribunal was erroneous and was not warranted by the wording of proviso (b). In support of his contention, he relied upon the judgment of the Madras High Court in the case of C. Gnanasundara Nayagar v. CIT [1961] 41 ITR 375, where a similar question under proviso (c) to section 33A(2) of the Income-tax Act, 1961 (proviso (c) to section 33A(2) is similar to proviso (b) to section 25(1) of the Wealth-tax Act, 1957), was considered and the court took the view that an order of assessment could not be revised by the Commissioner on an application by the assessee under section 33A(2) of the Income-tax Act, if an appeal had been preferred against that order to the Appellate Tribunal. He pointed out that in that case, against the order passed by the Income-tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Running through the entire scheme is the basic concept of the unity of an order of assessment for purposes of appeal or revision." It is impossible to accept the contention of Mr. Joshi for the reasons which we shall presently indicate. We shall refer to the decision in C. Gnanasundara Nayagar v. CIT [1961] 41 ITR 375 (Mad), on which Mr. Joshi has relied, a little later, but dealing with the question on a plain reading Of the relevant provision, it seems to us clear that the phrase it where the order is the subject of an appeal before the Appellate Tribunal " in proviso (b) to section 25(1) must mean that the order is the subject of an effective appeal by the aggrieved party. Otherwise on the construction that is sought to be placed upon this proviso by Mr. Joshi, anomalous consequences not intended by the Legislature would follow. The scheme of the relevant sections, viz., sections 16, 23, 24 and 25, brings out two or three aspects very clearly. In the first place, section 23 provides for an appeal to the Appellate Assistant Commissioner against the order of the Wealth-tax Officer at the instance of the assessee alone, while under section 24, an appeal to the Appellate Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 25(1) should be read as meaning that the order is the subject of an effective appeal by the aggrieved party and the reason is that the scheme of the relevant provisions clearly gives two remedies to the assessee who may feel aggrieved by the order passed by the authorities subordinate to the Commissioner of Wealth-tax and the scheme also suggests that he should not have recourse to two remedies concurrently. If the assessee feels himself aggrieved by any order passed by the Appellate Assistant Commissioner, he may either go in appeal to the Appellate Tribunal or waiving his right to prefer the appeal to the Appellate Tribunal, he may approach the Commissioner for invoking his revisional powers but proviso (a) and proviso (b) to section 25(1) clearly suggests that the assessee should not have both the remedies at one and the same time. Implicit in the scheme is the position that the Commissioner shall refrain from exercising his revisional powers when an appeal is pending before the Tribunal and may exercise his powers in such a way as not to get in conflict with the orders passed by the Tribunal. If, therefore, two alternate remedies have been given to the assessee, his reme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome barred or rendered nugatory simply because the order of the Appellate Assistant Commissioner was the subject of an appeal before the Appellate Tribunal. We do not think such anomalous results were intended by the Legislature when it enacted proviso (b) to section 25(1) of the Act. In our view, therefore, on a consideration of the entire scheme of the relevant provisions of the Act, we are clearly of the view that the phrase " where the order is the subject of an appeal before the Appellate Tribunal " occurring in proviso (b) to section 25(1) must mean that the order is the subject of an effective appeal by the aggrieved party. Referring to the decision in C. Gnanasundara Nayagar v. CIT [1961] 41 ITR 375 (Mad), on which Mr. Joshi has relied, in our view, that decision is clearly distinguishable on facts and the major point of distinction lies in this, that whereas in that decided cage it was the assessee who had preferred an appeal first to the Appellate Assistant Commissioner and thereafter to the Appellate Tribunal, in which he had failed to seek the relief, which was sought by way of a revisional application to the Commissioner of Income-tax, in the instant case the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, and at the highest, the contention of the Department that the valuation of the shares should be enhanced was the subject-matter of appeal before the Appellate Tribunal. It was not disputed before us that in that appeal, the Tribunal could not in fact the Tribunal regretted that it could not grant the relief of reducing the valuation of the assets because the assessee had not preferred an appeal to it. On the facts of the present case, it is further clear that since the orders passed by the Appellate Assistant Commissioner were in favour of the assessee, as his appeals were partly allowed, he did not think of preferring an appeal to the Appellate Tribunal and instead, during the pendency of appeals by the Wealth-tax Officer to the Appellate Tribunal, he preferred to file the revisional applications under section 25(1) to the Commissioner of Wealth-tax. It is true that during the pendency of the appeal, the Commissioner of Wealth-tax could not have exercised his revisional powers. It is also true that had the appeals been allowed by the Tribunal, in the sense that the valuation had been enhanced, even then the Commissioner could not have granted relief to the assessee in exerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the appeal had been dismissed only on the ground of limitation, it was held that the order had not been made the subject of an appeal within the meaning of clause (c) of the proviso to section 33A(2). The Madras High Court had taken the view that the order could be said to have been made the subject of an appeal only when it is the subject-matter of an effective appeal and observed as follows (vide page 347 of the report): " When it was held that there was no appeal when the appeal filed was rejected on the ground it was barred by limitation, it would obviously be unsound to hold that where an appeal had been rejected as out of time, the order had been the subject of an appeal. Indeed, the words I subject of an appeal imply that the order appealed against has been decided on merits." Relying on these observations, this court, in Jagmohandas Gokaldas v. CWT [1963] 50 ITR 578, held that when the appeal before the Tribunal had been withdrawn, the order could not be said to be the subject of an appeal, meaning effective appeal, and as such there was no bar to the exercise of the revisional powers. Having regard to the above discussion, we are of the view that the construction so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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