TMI Blog1978 (7) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... ars that the books of account of the petitioner-firm were not properly maintained for the period from 1st January, 1971, to 30th June, 1972. In any case, Kundanlal and Bhikarilal, who were major partners of the firm, since at that time Harinarayan was minor, maintained that the accounts were being kept by Bhaiyalal and they were not concerned with the accounts and did not know anything about them. It further appears that on 16th June, 1972, Mr. Girase, Sales Tax Officer at Nagpur, paid a surprise visit to the place of business of the petitioner-firm and seized several account books along with some documents. It also appears that the residence of the partners of the firm was also searched and some incriminating documents were recovered during that search. Now it seems that the returns for the period from 1st January, 1971, to 31st December, 1971 (hereinafter referred to as the first period), had been filed earlier on behalf of the petitioner-firm. The Sales Tax Officer took up proceedings under sub-section (3) of section 33 of the Bombay Sales Tax Act, 1959 (hereinafter referred to as "the Act"). With regard to the return for the first period, he compared the entries in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uppression of the turnover for the second period also and proceeded to levy tax and penalty in regard to that period. He levied tax of Rs. 81,745.71 together with total penalty of Rs. 37,572.26 with regard to the second period under his order dated 26th March, 1973. Apparently, these orders were passed by the Sales Tax Officer in pursuance of his powers under section 33 of the Act. Being aggrieved by the assessment of tax and the levy of penalty by the Sales Tax Officer, under his abovesaid orders, the petitioner-firm preferred two appeals for the abovesaid two periods before the concerned Assistant Commissioner, by virtue of section 55(1)(a) of the Act. The Assistant Commissioner, while deciding the two appeals, was of the view that the Sales Tax Officer had fallen into error in estimating the turnover of sales and purchases on the basis of the consumption of electricity, inasmuch as the Sales Tax Officer did not take into consideration the fact that the mill of the petitioner-firm had not been working continuously throughout the period of assessment but only during a part of it. The Assistant Commissioner was of the view that the Sales Tax Officer had not taken into consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May, 1974, to show cause. Obviously, these two notices were issued by the Deputy Commissioner in exercise of his power of revision conferred on him under section 57 read with section 20(6) of the Act. In reply to these two notices, the petitioner-firm took a preliminary objection to the Deputy Commissioner exercising his power of revision during the pendency of the appeals before the Tribunal. The Deputy Commissioner by his order dated 12th September, 1972, rejected the preliminary objection raised by the petitioner-firm in respect of the said two notices. It may be mentioned here that the Deputy Commissioner while passing this order, considered at length the various submissions which had been urged on behalf of the petitioner-firm. The Deputy Commissioner, while rejecting the preliminary objection, relied mainly on the decision of the Tribunal in the case of Motor and Machinery Manufacturers Ltd., in which the Tribunal had held that the Deputy Commissioner of Sales Tax could revise an order against which an appeal is pending before the Tribunal. Against this order of the Deputy Commissioner, the petitioner-firm preferred two separate appeals before the Tribunal, being Appeals Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder this order, the Tribunal was of the view that it would not be proper to decide the said second appeals at that stage and thereby defeat the "right of revision" conferred by the statute on the Commissioner. In short, therefore, the Tribunal thought it fit to keep these second appeals pending till the Deputy Commissioner would dispose of the revisional proceedings before him. The present petition has been filed under articles 226 and 227 of the Constitution against the order passed by the Deputy Commissioner on 12th September, 1975, rejecting the preliminary objection raised by the petitioner-firm and also against the order passed by the Tribunal on 27th October, 1977, dismissing the two appeals preferred by the firm against the said order of the Assistant Commissioner. The petition is also directed against the notices issued by the Deputy Commissioner in exercise of his power of revision on 24th April, 1974, and the petitioner prays for quashing all these orders as illegal, invalid and lacking in jurisdiction. The main contention of the petitioner in this petition is that the Tribunal ought not to have relied on the decision of this Court in Commissioner of Sales Tax v. Motor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bench on these two counts and to proceed to decide the question ourselves on the basis of the submissions made by him. He submitted that he would only request us to refer the matter to a larger Bench for reconsideration of the view taken by the Division Bench in the abovesaid case. Before we go to the main controversy in this petition, we may dispose of the two objections which have been raised by Mr. Mor on behalf of the respondents with regard to the maintainability of this petition. These two objections are stated in paragraphs 2 and 3 of the submissions which have been made in writing on behalf of the respondents. It is firstly contended that under section 61 of the Act, it is open to an assessee who is aggrieved by the order passed by the Tribunal to require the latter to refer to the High Court any question of law arising out of the order passed by it and where the Tribunal agrees with the assessee, it has to refer the matter to the High Court. It is urged that the issue involved in the present petition is purely a question of law and if the petitioner was not satisfied with the view which had been taken by the Tribunal with regard to the competency of the Commissioner to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary objection and also the order passed by the Tribunal in the appeal cannot be said to be an order which affects the liability of the petitioner to pay tax or penalty or to forfeiture of any sum or which affects the recovery of any amount from it under section 39 of the Act. In other words, the order which the Tribunal was dealing with in appeal and the order which it passed itself was not of the nature contemplated by sub-section (1) of section 61 of the Act. Hence the question of the petitioner calling upon the Tribunal to make a reference to the High Court on the question of law involved in the appeal before it would not arise. In short, therefore, this was not a case which would be covered by subsection (1) of section 61 of the Act and it was not open to the petitioner to resort to the said provision for seeking a reference to the High Court. Mr. Mor submitted that the order passed by the Tribunal in appeal confirms the power of revision of the Deputy Commissioner and hence it affects the petitioner's liability to pay the tax and penalty and, in that sense, it is an order which falls within the category of the orders contemplated by sub-section (1) of section 61 of the Act. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner, to the Tribunal. (2) In the case of an order passed in appeal by an Assistant Commissioner, a second appeal shall lie, at the option of the appellant, either to the Commissioner or to the Tribunal. (3) Every order passed in appeal under this section, shall subject to the provisions of sections 57, 61 and 62, be final. (4) Subject to the provisions of section 60, no appeal shall be entertained unless it is filed within sixty days from the date of the communication of the order appealed against. (5) No appeal, against an order of assessment with or without penalty, or against an order imposing a penalty, or against an order directing the forfeiture of any tax collected by a dealer, shall ordinarily be entertained by an appellate authority, unless such appeal is accompanied by satisfactory proof of the payment of the tax with or without penalty, or, as the case may be, of the payment of the penalty, or the amount forfeited, in respect of which the appeal has been preferred: Provided that, an appellate authority may if it thinks fit, for reasons to be recorded in writing, entertain an appeal against such order- (a) without payment of the tax with penalty (if any), or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal) within four months from the date of the communication of the order, may call for and examine the record of any such order, and pass such order thereon as it thinks just and proper. (2) Where an appeal lies under section 55 and no appeal has been filed, no proceedings in revision under this section shall be entertained upon application. (3) No order shall be passed under this section which adversely affects any person, unless such person has been given reasonable opportunity of being heard. (4) If the Tribunal rejects any application for revision under this section, the Tribunal shall record the reasons for such rejection." The scheme of section 55, as would be clear from the plain reading of it, is that first appeals are provided from original orders passed by a Sales Tax Officer, an officer subordinate to him, an Assistant Commissioner, a Deputy Commissioner, Additional Commissioner or the Commissioner. If the original order is passed by a Sales Tax Officer or any officer subordinate to him, then the first appeal lies to the Assistant Commissioner. If the original order is passed by an Assistant Commissioner, the appeal would lie to the Commissioner, but if the origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f communication of the order which is sought to be revised and that no order in revision should be made by him after the expiry of five years from that date, viz., the date of communication of the order sought to be revised. It would, therefore, appear that these are the two termini with regard to the time within which it would be open to the Commissioner to exercise his power of revision. At this stage it would be pertinent to note that the Commissioner can exercise the power of revision not only with respect to an original order but also with regard to an order passed in appeal. So far as the Tribunal is concerned, it can revise an order of the Commissioner which term presumably would include the officers subordinate to the Commissioner who exercise such powers and perform such duties of the Commissioner as are conferred or imposed on them by or under the Act. However, the Tribunal can exercise this power only on an application made to it and that too within four months from the date of communication of the order sought to be revised. It would, therefore, appear that the Tribunal cannot revise any order suo motu and can exercise this power only on an application from an aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Mr. Joshi was that under section 55(2) of the said Act a right was conferred on the assessee to go by way of second appeal against an order passed in appeal by the Assistant Commissioner either to the Commissioner or to the Tribunal and that such a right could not be taken away by the Commissioner exercising the powers of revision under sub-section (1) section 57. We are unable to see any force in this contention. If the Commissioner has been given the power of revision suo motu, we fail to see how, merely because as a result of the exercise of such power the assessee might be deprived of his chance of going by way of second appeal, this can make a difference to the construction of these provisions. Moreover, it is not as if the assessee is helpless against an order passed by the Commissioner in exercise of his powers of suo motu revision under section 57(1) of the said Act. It is common ground before us that, even against such an order, the assessee could go by way of appeal to the Tribunal under the provisions of section 55(1)(c) of the said Act and hence we fail to see how this consideration is at all material in the construction of the provisions before us. The final con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appeal against the order passed by one of the sales tax authorities and if during the pendency of that appeal the Commissioner or for the matter of that the authorities exercising the power of revision under section 57 of the Act, are allowed to exercise such a power on the order under appeal, it would be tantamount to making the appeal infructuous inasmuch as if during the pendency of the appeal the order under appeal is revised, that order would no more subsist and there would be nothing on which the appellate authority could give its decision. It is in this way that Mr. Manohar submits that the exercise of the power of revision by the revisional authorities under section 57 during the pendency of the appeal would take away the right of the assessee to file appeal. Mr. Manohar submitted that though section 57 of the Act does not expressly put any limitations on the power of the revisional authority in a case when an appeal has been preferred against the order which it wants to revise such a limitation will have to be assumed in order to avoid a conflict between the provisions of sections 55 and 57. According to Mr. Manohar, if there is a conflict between two sections or two p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he law prevailing at the date of institution of the suit or proceeding and not by the law that prevails at the date of its decision or at the date of the filing of the appeal. (v) This vested right of appeal can be taken away only by a subsequent enactment, if it so provides expressly or by necessary intendment and not otherwise." It would be pertinent to note that in both these cases before the Supreme Court the question for consideration before it was whether a right of appeal which had been conferred by an earlier statute was taken away by a subsequent statute particularly when the latter statute was not made retroactive. The question before the Supreme Court was whether an existing right of appeal under a previous statute would come to an end because of a contrary provision in a latter statute simply on its enactment, without any express or implied intention on the part of the legislature to indicate that the latter statute was to operate retrospectively. It was in this context that the Supreme Court observed in these cases that the vested right of appeal can be taken away only by a subsequent enactment if it so provides expressly or by necessary intendment and not otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... destroying the right of appeal conferred by the Act on an assessee under section 55 of the Act. It is not possible to see as to how there would be a conflict of provisions of jurisdiction if these two sections are properly construed in their context. A similar argument had been advanced before the Division Bench in Motor Machinery Manufacturers' case[1976] 38 S.T.C. 78. and had been repelled by that Bench. If we analyse the contention of Mr. Manohar a bit closely, it would appear that on the analogy of his submissions the power of the Commissioner, or for the matter of that the relevant sales tax authorities, conferred on them under section 57 of the Act would be, in given cases, completely negatived and rendered ineffective. If it can be said that the Commissioner by exercising his power of revision can pre-empt or destroy the right of appeal of the assessee, the same can be said with greater force in favour of the assessee. If the Commissioner cannot exercise his power of revision pending a second appeal against an order passed by one of the sales tax authorities in first appeal, as is being contended on behalf of the petitioner, he (the Commissioner) would be completely debar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly when the legislature invested the Commissioner with the power of revision, it could not have intended such a situation to arise where an assessee could preclude the Commissioner effectively and entirely from exercising the power of revision. In other words, if the construction which is sought to be put on sections 55 and 57 by Mr. Manohar is accepted, it may lead to the anomalous situation that the Commissioner would never be able to exercise his power in cases where the original order or the appellate order has been passed to the detriment of the revenue. In our view, the legislature could never have intended such a result when it invested the Commissioner with the power of revision. Obviously, this power has been vested in the Commissioner not only to set right the matters in which injustice has been done to an assessee but also to correct and rectify any prejudicial order to the revenue passed by his subordinate. In our view, therefore, the limitation which is sought to be placed on the power of the Commissioner under the guise of harmonious construction of sections 55 and 57 could not have been intended by the legislature. At this stage it may be noted that section 57 does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal had been empowered to exercise revisional jurisdiction against an order of the Commissioner [not being an order passed under sub-section (2) of section 55 in second appeal], it was conceivable that if a Deputy Commissioner or an Additional Commissioner were to pass an order against the original order made by an Assistant Commissioner under clause (b) of subsection (1) of section 55, such an order of a Deputy Commissioner or an Additional Commissioner would be open to the revisional jurisdiction, both of Commissioner acting under clause (a) of sub-section (1) of section 57 as well as of Tribunal under clause (b) of sub-section (1) of section 57 and, therefore, the two authorities having the same revisional jurisdiction are likely to come to a conflicting decision. In our view, the apprehension that such overlapping of jurisdiction of the two authorities would lead to a conflicting decision is rather far-fetched and, in practice, it could be shown as unfounded. If the order passed by the lower authorities, such as Assistant Commissioner, Deputy Commissioner or Additional Commissioner, which is intended to be revised, happens to be in favour of an assessee, then, there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the authorities on whom such revisional jurisdiction has been conferred by the enactment would exercise their revisional jurisdiction harmoniously. In a case where the Commissioner sought to exercise such revisional jurisdiction when the matter was already pending in appeal or revision before the Tribunal, it is inconceivable that the Commissioner would seek to proceed with his revisional power in case of it being brought to his attention by the assessee that the matter was already pending before the Tribunal. Even if he sought to do so, we may point out that any order passed by him would again be subject to the revisional jurisdiction of the Tribunal and, therefore, no real prejudice could be caused to the assessee. In our view, therefore, the anomaly of overlapping jurisdiction leading to a conflicting decision does not present any difficulty in placing the interpretation which we have placed on the provisions of section 20(5) and section 20(6) of the Act." What has been said in the passage quoted above with regard to the overlapping revisional jurisdiction of the Commissioner and the Tribunal could be said with equal force with regard to the overlapping jurisdiction of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the appeal in respect of the assessment year 1949-50. In the meanwhile it appeared to the Commissioner of Income-tax that the firm which had been granted renewal of registration was not a firm which could be registered under the Income-tax Act as one of the partners was a minor. He, therefore, took action under section 33B(1) of the said Act and issued a notice to the assessee to show cause why the assessment made under section 23(3) and the registration granted under section 26A should not be cancelled. After hearing the parties, the Commissioner cancelled the orders passed by the Income-tax Officer under sections 23(3) and 26A of the said Act and directed the Income-tax Officer to refuse to renew the registration of the firm for the said three years. The Income-tax Officer was further directed to make fresh assessment for each of the said three years. In view of this direction, the Income-tax Officer passed fresh assessment orders without giving the assessee any notice of hearing. The matter came up before the High Court in a reference under section 66 of the said Act. It appears that three questions of law were referred to the High Court, first of them being: "Whether, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the department in agitating any question before the Appellate Assistant Commissioner which in its opinion should be agitated and decided in the interest of public revenue. Now, it is clear that when an appeal is pending before the Appellate Assistant Commissioner, the Income-tax Officer has the right to be heard either in person or by a representative, and the very point which the Commissioner has taken and on which he has given his decision under section 33B could have been urged under the directions of the Commissioner before the Appellate Assistant Commissioner. It is only when no remedy is open to the Commissioner to revise the order of the Income-tax Officer that this jurisdiction under section 33B arises. But when a legal remedy is given to him to get the orders of the Income-tax Officer revised, he cannot requisition to his aid the power conferred upon him under section 33B. Once the appeal with regard to the year 1949-50 was pending before the Appellate Assistant Commissioner the Commissioner was given the full right to get the order of the Income-tax Officer revised in any manner he thought necessary in the interest of public revenue. He had to satisfy the Appellate A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the subsequent order of assessment merge in the appellate order? If, in law, the order of registration can be said to merge in the final appellate order, then clearly the Commissioner's revisional power cannot be exercised in respect of it. This question arises in respect of the registration order in regard to the two assessment years 1947-48 and 1948-49. The other question which also falls to be decided is whether the order of registration in respect of the assessment year 1949-50 can be made the subject-matter of the exercise of the Commissioner's revisional power even though the assessee's appeal against the assessment for the said year is pending before the Appellate Assistant Commissioner at the material time." With regard to the first question, the Supreme Court held that an order granting registration to a firm was not amenable to the appellate jurisdicdiction of the Appellate Assistant Commissioner and, this being so, such an order stood outside his jurisdiction and did not strictly form part of the proceedings before him and hence such an order did not merge in the appellate order. With regard to the second question which corresponded to the additional question raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is that the view taken by the High Court must be reversed and the first question framed by the Tribunal as well as the additional question framed by the High Court must be answered in favour of the appellant." (Emphasis* supplied). It would thus appear that the Supreme Court has reversed the finding of the High Court on the additional question framed by it. Mr. Manohar submitted that even though the Supreme Court had in appeal reversed the judgment of the High Court, the observations which the Division Bench of the High Court had made in the passage quoted above had not been disapproved by the Supreme Court and, therefore, it continued to be good law in so far as the point covered by it is concerned. It is difficult to uphold this contention of Mr. Manohar in the face of the underlined portion from the passage of the judgment of the Supreme Court extracted above. In our opinion, if the Supreme Court were inclined to approve the said view of the High Court it would not have been pleased to make the abovesaid observations and would have reversed the finding of the High Court on the additional question simply on the ground that the order of the Income-tax Officer granting registra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every original order, yet he submitted that the language of the section itself would suggest that such a right of appeal was conferred on the revenue as much as on the assessee. He pointed out that section 55 in terms does not make a distinction between an assessee or the revenue. He submitted that the section was so worded that it would take in its ambit an appeal by the department also. In this connection, he drew our attention to subsection (6) of section 55, wherein the appellate authority has been given power of enhancing the assessment. Mr. Manohar submitted that this could not be so unless and until the legislature intended that the revenue could also have a right of appeal because, according to Mr. Manohar, if that was not so, there would be no occasion for the appellate authority to exercise the power of enhancement of the assessment or penalty in an appeal filed by the assessee himself. Mr. Manohar further drew our attention to section 246 of the Income-tax Act, 1961, in order to contrast the language of that section with that of section 55 of the Act. Mr. Manohar submitted that sub-section (1) of section 246 of the Income-tax Act specifically provides for an appeal by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be appealed against. According to Mr. Mor, the provision in sub-section (4) clearly indicates that the appeal contemplated by section 55 is only by an assessee and not by the revenue. Mr. Mor has also, relying on sub-section (5) of section 55, submitted that the question of depositing the tax or penalty at the time of filing the appeal, as required by this sub-section, would be a condition precedent which would operate in the case of an appeal by an assessee and not by a department. Lastly Mr. Mor also placed reliance on the proviso to sub-section (6) of section 55 and submitted that the word "appellant" occurring therein clearly indicates that the power of enhancement of assessment or tax conferred on the appellate authority under subsection (6) of section 55 could be exercised in an appeal filed by the assessee, who would be the appellant within the meaning of the proviso and to whom this proviso gives the right of being heard with regard to the assessment or penalty. Mr. Mor submitted that the proviso properly construed, would afford an adequate reply to the argument on behalf of the petitioner that the power of enhancement of assessment or penalty bestowed by sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case[1953] 23 I.T.R. 420., the Division Bench of this Court had observed that the revisional power could not be exercised by the Commissioner because an alternate remedy was available. In other words, that decision of the Division Bench appears to lay down the principle that when legal remedy is given to get the adverse order revised, then the power of revision should not be requisitioned in aid by the Commissioner. However, as we have pointed out above, the Supreme Court has not approved of this view when this matter went in appeal before it. As already seen, the Supreme Court has observed that whether or not the revisional power can be exercised in a given case must be determined solely by reference to the terms of the section conferring that power and the courts would not be justified in imposing additional limitations on the exercise of the said power on hypothetical considerations of policy or extraordinary nature of the power. It would, therefore, appear that the view that when an alternate remedy is available, revisional power could not be exercised, is not upheld by the Supreme Court in the abovesaid case. As pointed out by the Supreme Court, the scope and the ambit of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms it did under clause (b) of subsection (1) of section 57, it could not have intended to put such serious limitations on his power. We, therefore, find that the contention that the Commissioner should not be allowed to exercise his revisional powers simply because it is possible for the department to appeal against the order which he wants to revise is not sound. The next contention of Mr. Manohar is that the right of the assessee to prefer two appeals against an adverse order would be curtailed as in a given case that right would be reduced to a right of one appeal only. In this connection he pointed out that if an order is passed by the Sales Tax Officer, the assessee would have a right to file an appeal not only before the Assistant Commissioner, but also before the Tribunal. But if the Commissioner revises his order before an appeal is filed or decided by the Assistant Commissioner, the assessee could only have a right of appeal before the Tribunal under clause(c) of sub-section (1) of section 55 as the order in revision will be passed by the Deputy Commissioner, the Additional Commissioner or the Commissioner. Mr. Manohar, therefore, submitted that the power of revision co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power of the Commissioner by bringing in various considerations which we have discussed above. As pointed out, the power, which has been conferred by section 57, will have to be determined on the terms of section itself and, as we have seen, there is nothing in this section which would indicate that this power cannot be exercised because of the limitations which are sought to be put on it. We, therefore, find that the view taken by the Division Bench of this Court in Motor Machinery Manufacturers' case[1976] 38 S.T.C. 78. does not require reconsideration. In the result, therefore, we find that there is no substance in this petition and it deserves to be dismissed. The petition is dismissed and the rule is discharged. In the circumstances of the case, there will be no order as to costs. At this stage Mr. Manohar prays for certificate of fitness for appeal to the Supreme Court. Since we have given our decision in this case on the basis of the various decisions of the Supreme Court, we do not think that this case involves a substantial question of law of general importance which needs to be decided by the Supreme Court. In the circumstances, therefore, we reject the prayer for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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