Case: Commissioner Of Income Tax, Madras Vs. S. Chenniappa Mudaliar, Madurai

by the party or not. This provision, it was held, did not make it obligatory for the Appellate Tribunal to dispose of the appeal on merits. In this case again there was hardly much discussion and the Allahabad decision was simply followed. In (1960) 38 ITR 1 (Punj) the points raised were different and arose in a petition filed under Articles 226 and 227 of the Constitution. It does not appear that the validity of Rule 24 was canvassed.6. The scheme of the provisions of the Act relating to the Appellate Tribunal apparently is that it as to dispose of an appeal by making such orders as it things fit on the merits. It follows from the language of Section 33 (4) and in particular the use of the word "thereon that the Tribunal has to go into the correctness or otherwise of the points decided by the departmental authorities in the light of the submissions made by the appellant. This can only be done by giving a decision on the merits on questions of fact and law and not by merely disposing of the appeal on the ground that the party concerned has failed to appear. As observed in Hukumchand Mills Ltd. v. Commissioner of Income-tax, Central Bombay, 63 ITR 232 = (AIR 1967 SC 455 ) the word "thereon" in Section 33 (4) restricts the jurisdiction of the Tribunal to the subject-matter of the appeal and the words "pass such orders as the Tribunal thinks fit" include all the powers (except possibly the power of enhancement) which are conferred upon the Appellate Assistant Commissioner by Section 31 of the Act. The provisions contained in Section 66 about making a reference on questions of law to the High Court will be rendered nugatory if any such power is attributed to the Appellate Tribunal by which it can dismiss an appeal, which has otherwise been properly filed, for default without making any order thereon in accordance with Section 33 (4). The position becomes quite simple when it is remembered that the assessee or the Commissioner of Income-tax, if aggrieved by the orders of the Appellate Tribunal, can have resort only to the provisions of Section 66 so far as the questions of fact are concerned, the decision of the Tribunal is final and reference can be sought to the High Court only on questions of law. The High Court exercises purely advisory jurisdiction and has no appellate or revisional powers. The advisory jurisdiction can be exercised on a proper reference being made and that cannot be done unless the Tribunal itself has passed proper order under Section 33 (4). It follows from all this that the Appellate Tribunal is bound to give a proper decision on questions of fact as we as law which can only be done if the appeal is disposed of on the merits and not dismissed owing to the absence of the appellant. It was laid down as far back as the year 1953 by S. R. Das, J., (as he then was) in Commissioner of Income-tax, Madras v. Mtt. Ar. S. Ar. Arunachalam Chettiar, 23 ITR 180 = (AIR 1953 SC l18) that the jurisdiction of the Tribunal and of the High Court is conditional on there being an order by the Appellate Tribunal which may be said to be one under Section 33 (4) and a question of law arising out of such an order. The Special Bench, in the present case, while examining this aspect quite appositely referred to the observations of Venkatarama Aiyar, J. in Commissioner of Income-tax, Bombay v. Scindia Steam Navigation Co. Ltd., 42 ITR 589 = (AIR 1961 SC 1633 ) indicating the necessity of the disposal o the appeal on the merits by the Appellate Tribunal. This is how the learned Judge had put the matter in the form of interrogation:"How can it be said that the Tribunal should seek for advice on a question which it was not called upon to consider and in respect of which it had no opportunity of deciding whether the decision of the Court should be sought?"Thus looking at the substantive provisions of the Act there is no escape from the conclusion that under Section 33 (4) the Appellate Tribunal has to dispose of the appeal on the merits and cannot shortcircuit the same by dismissing it for default of appearance.7. Now although Rule 24 provides for dismissal of an appeal for the failure of appellant, to appear, the Rules at the material time did not contain any prevision for restoration of the appeal. Owing to this difficulty some of the High Courts had tried to find an inherent power in the Tribunal to set aside the order of dismissal (vide 22 ITR 104 = (AIR 1952 All 857 ) and (1960) 38 ITR 1 (Punj)). There is a conflict of opinion among the High Courts whether there is any inherent power to restore an appeal dismissed for default under the Civil Procedure Code, (Mulla, Civil Procedure Code, Vol. II, pp. 1583, 1584). It is unnecessary to resolve that conflict in the present case.It is true that the Tribunals powers in dealing with appeals are of the widest amplitude and have, in some cases, been held similar to and identical with the powers of an appellate court under the Civil Procedure Code. Assuming that for the aforesaid reasons the Appellate Tribunal is competent to set aside an order dismissing an appeal for default in exercise of its inherent power there are serious difficulties in upholding the validity of Rule 24. It clearly comes into conflict with sub-section (4) of Section 33 and in the event of repugnancy between the substantive provisions of the Act and a rule it is the rule which must give way to the provisions of the Act. We would accordingly affirm the decision of the Special Bench of the High Court and hold that the answer to the question which was referred was rightly given in the affirmative.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]5. Now Rule 24 cannot be said to be ultra vires sub-section (8) of Section 5A but what has to be essentially seen is whether it is repugnant to the provisions of Section 33 (4).The reasoning which prevailed with the Special Bench of the High Court in the present case, was that under Section 33 (4 ) the Tribunal is bound to dispose of the appeal on the merits, no matter whether the appellant is absent or not. Reference in particular was made to the remedies, namely, the provisions contained in Section 66 relating to reference on question of law and the further right of appeal to this court under Section 66A if the case is certified to be fit one for appeal. The Special Bench found it difficult to accept that by exercising the power to dismiss an appeal for default of appearance under Rule 24, these remedies which were open to an aggrieved party could be defeated or rendered infructuous. The fact that there was no provision in Rule 24 or any other Rule for restoring an appeal once it was dismissed for default was also considered weighty in the matter. The cases in which the validity of Rule 24 has been upheld may now be considered. In 22 ITR 104  = (AIR 1952 All 857  ) the discussion on the question of validity of the rule of somewhat meagre. It was no doubt said that Rule 24 did not in any way come into conflict with Sec. 33 (4) but hardly any reasons were given in respect of that view. It was recognised that there was no specific rule empowering the Tribunal to restore an appeal dismissed for default of appearance but it was observed that the Tribunal would have inherent jurisdiction to set aside such an order if satisfied with regard to the existence of a sufficient cause. According to 27 ITR 164   = (AIR 1955 Mad 39  ) a very wide power was given to the Appellate Tribunal by Section 33 (4) and it could pass any order which the circumstances of the case required. It was immaterial whether the opportunity of heing heard had been availed of by the party or not. This provision, it was held, did not make it obligatory for the Appellate Tribunal to dispose of the appeal on merits. In this case again there was hardly much discussion and the Allahabad decision was simply followed. In (1960) 38 ITR 1 (Punj) the points raised were different and arose in a petition filed under Articles 226 and 227 of the Constitution. It does not appear that the validity of Rule 24 was canvassed.6. The scheme of the provisions of the Act relating to the Appellate Tribunal apparently is that it as to dispose of an appeal by making such orders as it things fit on the merits. It follows from the language of Section 33 (4) and in particular the use of the word "thereon that the Tribunal has to go into the correctness or otherwise of the points decided by the departmental authorities in the light of the submissions made by the appellant. This can only be done by giving a decision on the merits on questions of fact and law and not by merely disposing of the appeal on the ground that the party concerned has failed to appear. As observed in Hukumchand Mills Ltd. v. Commissioner of Income-tax, Central Bombay, 63 ITR 232   = (AIR 1967 SC 455  ) the word "thereon" in Section 33 (4) restricts the jurisdiction of the Tribunal to the subject-matter of the appeal and the words "pass such orders as the Tribunal thinks fit" include all the powers (except possibly the power of enhancement) which are conferred upon the Appellate Assistant Commissioner by Section 31 of the Act. The provisions contained in Section 66 about making a reference on questions of law to the High Court will be rendered nugatory if any such power is attributed to the Appellate Tribunal by which it can dismiss an appeal, which has otherwise been properly filed, for default without making any order thereon in accordance with Section 33 (4). The position becomes quite simple when it is remembered that the assessee or the Commissioner of Income-tax, if aggrieved by the orders of the Appellate Tribunal, can have resort only to the provisions of Section 66 so far as the questions of fact are concerned, the decision of the Tribunal is final and reference can be sought to the High Court only on questions of law. The High Court exercises purely advisory jurisdiction and has no appellate or revisional powers. The advisory jurisdiction can be exercised on a proper reference being made and that cannot be done unless the Tribunal itself has passed proper order under Section 33 (4). It follows from all this that the Appellate Tribunal is bound to give a proper decision on questions of fact as we as law which can only be done if the appeal is disposed of on the merits and not dismissed owing to the absence of the appellant. It was laid down as far back as the year 1953 by S. R. Das, J., (as he then was) in Commissioner of Income-tax, Madras v. Mtt. Ar. S. Ar. Arunachalam Chettiar, 23 ITR 180   = (AIR 1953 SC l18) that the jurisdiction of the Tribunal and of the High Court is conditional on there being an order by the Appellate Tribunal which may be said to be one under Section 33 (4) and a question of law arising out of such an order. The Special Bench, in the present case, while examining this aspect quite appositely referred to the observations of Venkatarama Aiyar, J. in Commissioner of Income-tax, Bombay v. Scindia Steam Navigation Co. Ltd., 42 ITR 589   = (AIR 1961 SC 1633  ) indicating the necessity of the disposal o the appeal on the merits by the Appellate Tribunal. This is how the learned Judge had put the matter in the form ofcan it be said that the Tribunal should seek for advice on a question which it was not called upon to consider and in respect of which it had no opportunity of deciding whether the decision of the Court should belooking at the substantive provisions of the Act there is no escape from the conclusion that under Section 33 (4) the Appellate Tribunal has to dispose of the appeal on the merits and cannot shortcircuit the same by dismissing it for default ofNow although Rule 24 provides for dismissal of an appeal for the failure of appellant, to appear, the Rules at the material time did not contain any prevision for restoration of the appeal. Owing to this difficulty some of the High Courts had tried to find an inherent power in the Tribunal to set aside the order of dismissal (vide 22 ITR 104   = (AIR 1952 All 857  ) and (1960) 38 ITR 1 (Punj)). There is a conflict of opinion among the High Courts whether there is any inherent power to restore an appeal dismissed for default under the Civil Procedure Code, (Mulla, Civil Procedure Code, Vol. II, pp. 1583, 1584). It is unnecessary to resolve that conflict in the present case.It is true that the Tribunals powers in dealing with appeals are of the widest amplitude and have, in some cases, been held similar to and identical with the powers of an appellate court under the Civil Procedure Code. Assuming that for the aforesaid reasons the Appellate Tribunal is competent to set aside an order dismissing an appeal for default in exercise of its inherent power there are serious difficulties in upholding the validity of Rule 24. It clearly comes into conflict with sub-section (4) of Section 33 and in the event of repugnancy between the substantive provisions of the Act and a rule it is the rule which must give way to the provisions of the Act. We would accordingly affirm the decision of the Special Bench of the High Court and hold that the answer to the question which was referred was rightly given in theis nothing, either, express or implied, in the language of Section 33 (4) from which it could be held that the order of the Tribunal in an appeal must always be made on theSection 5A of the Act appears in Chapter 2A relating to the Appellate Tribunal.(1) to (4) provide for the constitution of the Tribunal and the appointment of its President and Members.(5) to (7) provide for the manner in which the benches of the Tribunal have to function.