Case: Messrs Mela Ram &amp; Sons Vs. The Commissioner Of Income-Tax,Punjab

1. The appellant is a firm carrying on business at Ludhiana in the Punjab. The Income tax Officer assessed its income for 1945-1946 at Rs. 71,186, and on 17-9-1947 a notice of demand was served on it for Rs. 29,857-6-0 on account in income-tax andappellant preferred an appeal against the assessment, and it was actually received in the office of the Appellate Assistant Commissioner on 5-11-1947, It was then out of time by 19 days, but the appeal was registered as No. 86, and notice for hearing under S. 31, Income tax Act was issued for 13-12-1947, and after undergoing several adjournments, it was actually heard on 1-10-1948. For the year 1946-1947, the Income-tax Officer assessed the income of the firm at Rs. 1,09,883, and on 29-9-1947 a notice of demand was severed on it for Rs. 51,313-14-0 on account of income-tax andappellant preferred an appeal against this assessment, and it was actually received in the office of the Appellate Assistant Commissioner on 5-11-1947, and it was then 7 days out of time. It was registered as No. 89, and notice for hearing under S. 31 was issued for 24-6-1948. Eventually, it was heard along with Appeal No. 86 on 1-10-1948.At the hearing, the Department took the objection that the appeals were presented out of time, and were therefore liable to be dismissed. The appellant prayed for condonation of the delay on the ground that following on the partition of the country the conditions were very unsettled and that curfew order had been promulgated and was in force, that the post office did not accept registered letters and that the traffic on the Grand Trunk Road was closed, and that in view of these exceptional circumstances, it had sufficient cause for not presenting the appeals in31-12-1948 the Appellate Assistant Commissioner passed orders in both the appeals, holding that there was not sufficient ground for condoning the delay, and rejecting them in limine. These orders were purported to be passed under S. 31 read along with S. 30(2) of the Act.3. Against these orders, the appellant preferred appeals under S. 33 of the Act to the Appellate Tribunal, which by its order dated 4-4-1950 dismissed them on the ground that the orders of the Assistant Commissioner were in substance passed under S. 30(2) and not under S. 31 and that no appeal lay against them under S. 33. On the applications of the appellant, the Tribunal referred under S. 66(I), Income-tax Act the following question for the decision of the High Court of Punjabin the circumstances of the case appeals lay to the Tribunal against orders of the Appellant Assistant Commissioner dismissing the appeals against the assessments for the years 1945-1946 and 1946-1947 inreference was heard by Khosla and Harnam Singh, JJ., who held following an earlier decision of that Court in - Dewan Chand v. Commr. of Income-tax, 1952 Punj 203 (AIR V. 39) (A) that the orders of the Appellate Assistant Commissioner were under S. 30(2) and not appealable under S. 33. Certificate to appeal to this Court against this order having been refused by the High Court, the appellant applied for and obtained leave to appeal to this Court under Art. 136 of the Constitution, and that is how the appeal comes before us.

Reasoning: In this context, the point sought to be raised by the learned Attorney-General did not arise at all for decision, and the observations in answer thereto cannot be read as a pronouncement on the question of the maintainability of the appeal, much less as a decision that an order dismissing an appeal as barred by limitation is one under S. 30(2). Accordingly, the question whether an order dismissing an appeal as barred by limitation falls under S. 30 (2) or S. 31 remains unaffected by the observations in 1953 SC 118 (AIR V 40) (P).13. Then against, under the provisions of the Act, limitation is not the only preliminary ground on which an appeal could be disposed of without a consideration of the merits. Section 30(3) provides that an "appeal shall be in the prescribed form and shall be verified in the prescribed manner". If that Appellate Assistant Commissioner holds that the appeal does not comply with the requirements of this enactment and rejects it on that ground, the order must be one made under S. 31, since S. 30(3) makes no provision for such an order, as does S. 30 (2) in the case ofis thus abundant authority for the position that S. 31 should be liberally construed so as to include not only orders passed on a consideration of the merits of the assessment but also orders which dispose of the appeal on preliminary issues, such as limitation and the like.14. The learned Solicitor-General sought to get over these decisions by taking up the position that S. 31 (3) (a) construed in its literal and ordinary sense conferred jurisdiction on the Appellate Assistant Commissioner only to pass orders on the merits of the assessment, that it was not therefore open to him to entertain any question which did not directly relate to such merits, and that accordingly he could not hear or decide any issue of a preliminary nature such as limitation and dispose of the appeal on the basis of the finding on thatconceded that this contention would run counter to numerous authorities, but argued that they were all wrong. Having given due consideration to this contention we are of opinion that it is not well founded.15. Taking the plea of limitation - which is what we are concerned with in this appeal - when there is a judgment or order against which the statute provides a right of appeal but none is preferred within the time prescribed therefor, the respondent acquires a valuable right, of which he cannot be deprived by an order condoning delay and admitting the appeal behind hiswhen such an order is passed exparte, he has aright to challenge its correctness at the hearing of the appeal. That is the position under the general law (vide - Krishnasami v. Ramasami, 1917 PC 179 (AIR V 4) (T), and there is nothing in the provisions of the Income-tax Act, which enacts a differentif an appeal is admitted without the fact of delay in presentation having been noticed, clearly it must be open to the Department to raise the objection at the time of the hearing of the appeal. That would also appear to be the practice obtaining before the Income-tax Tribunal as appear from the decisions cited before us, and that, in our opinion, is right.Similar considerations would apply to other objections of a preliminary character, such as one based on S. 30, sub-s (3). We should be slow to adopt a construction which deprives parties of valuable rights. We are therefore of opinion that contentions relating to preliminary issues are open to consideration at the time of the hearing of the appeal, and that the jurisdiction of the Appellate Assistant Commissioner is not limited to the hearing of the appeal on the merits of the assessmentthis view, the orders of the Appellate Assistant Commissioner holding that there were no sufficient reasons for excusing the delay and rejecting the appeals as time-barred would be orders passed under S. 31 and would be open to appeal, and it would make no difference in the position whether the order of dismissal is made before or after the appeal is admitted.16. The question referred must accordingly be answered in the affirmative.