Madhya Pradesh High Court
Commissioner Of Income-Tax vs Princess Sarla Kumari And Anr. on 7 August, 1987
Equivalent citations: [1988]171ITR14(MP)
Author: N.D. Ojha
Bench: N.D. Ojha
JUDGMENT N.D. Ojha, C.J.
1. The Income-tax Appellate Tribunal, Jabalpur, has referred the following three questions to this court for its opinion under section 256(1)of the Income-tax Act, 1961 (hereinafter referred to as " the Act");
"1. Whether, on the facts and in the circumstances of the case, the Tribunal overstepped its jurisdiction as available under Section 254(1) in entertaining-the appeals ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in freshly enquiring into the matter of assessment having been completed without the service of notices under Section 143(2) when such point did not arise out of the orders of the Appellate Assistant Commissioner ?
3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in directing that the taxes already paid should be refunded to the assessees in the absence of any claim by the assessees or order on the point by the lower authorities ?"
2. The facts in a nutshell which are necessary for answering these questions may be stated here. A notice under Section 143(2) of the Act was issued to the assessees by the Income-tax Officer on February 27, 1976. An order of assessment was passed by the Income-tax Officer subsequently, a copy whereof has been attached as annexure A. This order purports to be dated February 27, 1976. Paragraph 2 of the order states in unequivocal terms as follows :
"In response to notice under Section 143(2), Shri Nawalkishore Share, private secretary of the assessee, appeared along with Shri V.C. Nema, Advocate, from time to time and explained the return."
3. Aggrieved by the order of the Income-tax Officer, the assessees preferred an appeal before the Appellate Assistant Commissioner. This appeal, it is not disputed even by learned counsel for the assessees, was allowed in its entirety by the Appellate Assistant Commissioner by his order dated October 9, 1979, a copy whereof has been attached as annexure B-1 to the statement of the case. A second appeal was thereafter filed by the assessees before the Tribunal. The Tribunal allowed the second appeal by its order dated October 13, 1981. It held that the order of the Income-tax Officer was void and non est inasmuch as it had been passed much before the receipt of notice by the assessees under Section 143(2) of the Act and their putting in appearance on March 5, 1976. On an application being made by the Commissioner of Income-tax, however, the three questions mentioned above were referred by the Tribunal to this court for its opinion.
4. It has been urged by learned counsel for the Commissioner of Income-tax that since the appeal filed by the assessees before the Appellate Assistant Commissioner had been allowed in its entirety, it could not be said that the assessees were persons "aggrieved" within the meaning of Section 253 of the Act and, consequently, the second appeal at th.eir instance was not maintainable. Section 253(1) of the Act contemplates that any assessee "aggrieved" by any of the orders mentioned therein may appeal to the Appellate Tribunal. Emphasis has been placed by learned counsel on the word "aggrieved" as used in section 253 of the Act. It was, on the other hand, urged by learned counsel for the assessees that since issuing of notice under Section 143(2) of the Act was a condition precedent for passing an order of assessment of the nature such as was passed in the instant case (no order of assessment having been passed under Section 143(1) of the Act), the order of assessment was void and non est and the second appeal challenging the said order could be filed because the assessees would be deemed to be "aggrieved" by a non est order. Whether or not a second appeal would lie in the circumstances, as urged by learned counsel for the assessees, is a question which, in our opinion, need not be gone into in this case because on the facts of the instant case, the said question cannot be said to arise. As seen above, the assessment order clearly stated that the assessees' representative as also their counsel appeared " from time to time and explained the return". A copy of the grounds of appeal before the Appellate Assistant Commissioner has been attached as a part of the statement of the ca,se and its perusal indicates that no such ground was urged therein, that the order of assessment had been passed without hearing the representative and counsel for the assessees and that the statement of fact in this behalf in the order of assessment was incorrect. A copy of the grounds of appeal before the Tribunal has also been attached along with the statement of the case and its perusal also indicates that no such ground was raised therein. It is thus apparent that it was not the case of the assessees before the Appellate Assistant Commissioner or even before the Tribunal that the order of assessment had been passed, without hearing the representative of the assessees and their counsel. The order of assessment clearly states that the hearing which was granted to the representative of the assessees and their counsel was " in response to notice under Section 143(2)" of the Act. It is thus obvious that the hearing was given consequent upon service of notice under section 143(2) of the Act on the assessees. Even the order of the Tribunal indicates that the notice under Section 143(2) of the Act was served on the assessees and they put in appearance on March 5, 1976, before the Income-tax Officer. On that date, the Income-tax Officer asked the assessees to furnish certain information. In response thereto, the assessees filed a letter dated March 11, 1976, furnishing the information required. Further, the memorandum of appeal filed on behalf of the assessees before the Tribunal indicates that only two grounds were raised before the Tribunal, namely :
(i) That the assessment is back-dated, being illegal and bad in law.
(ii) That the income is not properly charged as provided under Section 4 and, therefore, the entire tax paid should be refunded as provided under Section 237.
5. It thus appears that the case of the assessees themselves was that the assessment order which was purported to have been passed on February 27, 1976, was back-dated meaning thereby that the order of assessment was not passed on February 27, 1976, but was passed on a later date. The Tribunal, in place of accepting this plea which was raised on behalf of the assessees, held that the order of assessment had been passed before issue of notice under Section 143 of the Act and hearing the assessees which was indeed never their case. What transpires from these facts is that the order of assessment was passed either on March 27, 1976, and due to some inadvertence, the date was mentioned as February, 1976, or on some other date in March, 1976, after notice under Section 143(2) of the Act had been served on the assessees and they had been heard. This conclusion of ours finds support from the assessees' own case that the order was back-dated. On the facts and circumstances of this case, therefore, it is apparent that the order of assessment was passed after notice under Section 143(2) of the Act had been served on the assessees and their representative as well as their counsel had appeared before the Income-tax Officer "from time to time and explained the return". The order of assessment was, consequently, neither non est nor void. The second appeal filed by the assessees in the facts and circumstances of the case was not maintainable inasmuch as the order of the Appellate Assistant Commissioner was an order whereby the appeal preferred by them had been allowed in its entirety and they cannot be said to be "aggrieved" by the said order within the meaning of Section 253 of the Act.
6. In view of the foregoing discussion, our answer to question No. 1 is that on the facts and circumstances of the case, the Tribunal overstepped its jurisdiction as available under Section 254(1) in entertaining the appeal. Our answer to question No. 2 is that on the facts and circumstances of the case, the Tribunal was not justified in enquiring afresh into the matter of assessment having been completed without the service of notices under Section 143(2), when such a question did not arise out of the order of the Appellate Assistant Commissioner. Our answer to question No. 3 is that on the facts and circumstances of the case, the Tribunal was not correct in law in directing that the taxes already paid should be refunded to the assessees in the absence of any claim by the assessees or order on the point by the lower authorities.
In the circumstances of the case, however, there shall be no order as to costs.