Calcutta High Court
Commissioner Of Income-Tax vs Bengal Card Board Industries And ... on 13 June, 1988
Equivalent citations: [1989]176ITR193(CAL)
JUDGMENT Ajit K. Sengupta, J.
1. At the instance of the Commissioner of Income-tax, the following question of law has been referred to this court under Section 256(1) of the Income-tax Act, 1961 :
"Whether, on the facts and in the circumstances of the case, the appeal filed by the assessee before the Appellate Assistant Commissioner on October 9, 1975, for the assessment year 1974-75, would not come within the purview of Sub-section (4) of Section 249 of the Income-tax Act, 1961, which was inserted by the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975 ?"
2. The facts relating to this reference are shortly stated hereafter :
For the year under reference, the assessment was framed by the Income-tax Officer under Section 143(3) of the Act on July 31, 1975. Against the said order of the Income-tax Officer, the assessee preferred an appeal to the Appellate Assistant Commissioner on October 9, 1975. Meanwhile, Sub-section (4) was inserted in Section 249 of the Act by Section 59 of the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975. Under the said sub-section, an assessee is required to pay the undisputed tax into the Treasury in order to enable him to file an appeal before the Appellate Assistant Commissioner. Since, in the present case, the assessee had not paid the undisputed tax before filing the appeal to the Appellate Assistant Commissioner, the Appellate Assistant Commissioner dismissed the appeal as incompetent.
3. It was submitted before the Tribunal on behalf of the assessee that the provisions of Sub-section (4) of Section 249 of the Act, having come into force on October 1, 1975, would be applicable to the appeals for and from the assessment year 1976-77. It was submitted that since the year under reference is the assessment year 1974-75, the provisions of Sub-section (4) of Section 249 were not at all attracted. It was submitted on behalf of the Revenue that the provisions of Sub-section (4) of Section 249 of the Act would apply to all appeals filed after October 1, 1975. Therefore, since the assessee had filed the appeal before the Appellate Assistant Commissioner on October 9, 1975, the provisions of Sub-section (4) of Section 249 of the Act were clearly attracted in the assessee's case also. It was submitted that the Appellate Assistant Commissioner was fully justified in dismissing the appeal as incompetent.
4. The Tribunal, inter alia, held as follows :
"The right of appeal is a substantive right and, therefore, the same cannot be withdrawn or varied by any amendment which comes into effect after the end of the assessment year. It is now settled law that the law applicable for assessment is the law as on the 1st of April of that assessment year. If any authority is needed, reference may be made to the Privy Council decision in Maharajah of Pithapuram v. CIT, [ 1945] 13 ITR 221. What applies to assessment would apply to appeals also. We, therefore, feel that the right of the assessee in this regard will have to be determined with reference to the law as it stood on April 1, 1974. Any amendment, specifically so providing, will not apply to the appeal for this year."
5. The short question which calls for determination is whether the provisions contained in Section 249(4) regarding payment of the undisputed tax as a condition precedent for the maintainability of an appeal will govern the instant case. The right of appeal is a statutory right. It is a creature of the statute. The right of appeal is not merely a matter of procedure. It is a substantive right. This right is vested in an assessee when proceedings are first initiated and before a decision is given by the first court or the authority. For the purpose of the accrual of the right of appeal, the crucial and relevant date is the date of initiation of the assessment proceeding, i.e., the date of issue of notice under Section 143(2) of the Act. It is the law existing on the day the proceeding was first initiated which governs the exercise and enforcement of the right of appeal. A subsequent amendment cannot curtail this right. Where, on the date of initiation of the assessment proceeding, law permitted an appeal to be preferred without payment of the admitted tax liability, but subsequently, if the law is amended requiring deposit of the entire amount of admitted liability before the appeal is entertained, the right of appeal in such a case should be governed by the unamended law. The provisions of Sub-section (4) of Section 249 came into force with effect from October 1, 1975. Under the said sub section, the assessee is required to pay the undisputed tax, i.e., tax on the returned income, in order to enable him to file an appeal before the Appellate Assistant Commissioner. This new requirement regarding payment of tax on the income returned cannot be said to be merely to regulate the exercise of the assessee's pre-existing right of appeal. It, in effect, curtails the right itself and cannot be regarded as a mere rule of procedure. The provisions of Section 249(4) are substantive provisions. It is now well-settled that a statute pertaining to the right of appeal has to be given a liberal construction since it is remedial in nature. A right of appeal will not be restricted or denied unless such construction is unavoidable.
6. An appeal is a continuation of the original proceedings. Although the appeal was preferred on October 9, 1975, the right of the assessee to prefer an appeal accrued when the notice under Section 143(2) of the Act was issued or in any event when the assessment was made on July 31, 1975. The right of appeal having accrued to the assessee prior to October 1, 1975, when the amendment came into force, the date of filing of the appeal is neither relevant nor material. Law as it stood prior to October 1, 1975, shall, therefore, govern this case. For the reasons aforesaid, we are of the view that the provisions of Sub-section (4) of Section 249 of the Act cannot be applied to the facts of this case. We do not find any ground to interfere with the conclusion arrived at by the Tribunal, The question in this reference is, therefore, answered in the affirmative and in favour of the assessee and against the Revenue.
7. There will be no order as to costs.
K.M. yusuf, J.
8. I agree.