COMMISSIONER OF INCOME-TAX VS KERALA TRANSPORT CO.
2002 P T D 1631
[242 I T R 263]
[Kerala High Court (India)]
Before Arijit Pasayat, C. J. and K. S. Radhakrishnan, J
COMMISSIONER OF INCOME‑TAX
versus
KERALA TRANSPORT CO.
Income‑tax References Nos. 174 of 1997 and 111 of 1998, decided on 29/11/1999.
Income‑tax‑‑‑
‑‑‑‑Appeal‑‑‑Nature of right of appeal‑‑‑Law applicable‑‑‑Effect of change in law‑‑‑Provision prior to 1‑4‑1989 that C.I.T. (Appeals) could condone non‑payment of admitted tax‑‑‑Discretion to condone non payment of admitted tax withdrawn w.e.f. 1‑4‑1989‑‑‑Assessment completed on 30‑3‑1989 and appeal filed on 26‑4‑1989 admitted by CIT (Appeals) condoning non‑payment of admitted tax‑‑‑Appeal was valid‑‑ Indian Income Tax Act, 1961, S.249.
A right .of appeal is not merely a matter of procedure: It is a matter of substantive right. This right of appeal from the decision of an inferior Tribunal to a superior Tribunal becomes vested in a party when proceedings are first initiated in, and before a decision is given by the inferior Court. A pre‑existing right of appeal .is not destroyed by an amendment if the amendment is not made retrospective by express words or necessary intendment, The fact that the pre‑existing right of appeal continues to exist must, in its turn, necessarily imply that the old law which created that right of appeal must also exist to support the continuation of that right. As the old law continues to exist for the purpose of supporting the pre‑existing right of appeal that old law must govern the exercise and enforcement of that right of appeal and there can then be no question of the amended provision preventing the exercise of, that right. A provision which is calculated to deprive an assessee of the unfettered right of appeal cannot be regarded as mere alteration in procedure. For the purposes of the accrual of the right of appeal the critical and relevant date is the date of initiation of the proceedings and not the decision itself. The position under section 249 of the Income‑tax Act, 1961, before and after amendment with effect from April 1, 1989, is as follows:
"249(4). No appeal under this Chapter shall be admitted unless at the time of filing of the appeal. ‑‑‑(a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or (b) where no return has been filed by the assessee the assessee has paid on amount equal to the amount of advance tax payable by him:
| Prior to 1‑4‑1989 Provided that on an Application made by the appellant Commissioner (Appeals) may for any good and sufficient reason to be recorded in writing exempt him from the operation of the provisions of this subsection. | With effect from 1‑4‑1989 Provided that, in a case falling under clause (b); DeputyCommissioner (Appeals) or, as the case may be, the Commissioner (Appeals) may, for any good and sufficient reason to, be recorded in writing, exempt him from the operation. of the provisions of that clause." |
The assessee filed its returns for the assessment year 1986‑87 on February 9, 1989. In response to the notice under section 143(2) of the Act, books of account were produced and finally the income was assessed at Rs.1,45,06,670. The demand after adjustment of advance tax and taking into account interest payable under sections 139(8), 215 and 216 came to Rs. 52,91,476. The matter was challenged in appeal before the Commissioner of Income‑tax (Appeals). The assessment was completed on March 30, 1989, and the appeal was filed on April 26, 1989. When the assessee filed a return of income‑tax to be paid under section 140‑A was Rs.13,68,006. When the appeal was preferred on April 26, 1989 also, the admitted tax was not paid. An application for condonation of delay alongwith another set of appeal papers was filed on June 22, 1989. Prior to that on June 20, 1989 the admitted tax had been paid. In the application for condonation of delay in filing the appeal, it was indicated that due to liquidity cash problems the payment could not be made earlier. In between the date of completion of assessment and the date on which the appeal was filed there was a change in law regarding the admissibility of appeals, with effect from April 1, 1989. As per the amended provisions, the powers of the Commissioner of Income‑tax (Appeals) and the Deputy Commissioner of Appeal, to condone the lapse of non‑payment of admitted tax was withdrawn. Therefore, according to the assessee, it had paid the tax due and another set of appellate papers were filed. Though in the application that was filed subsequently the plea of cash crunch had been raised, subsequently at the time of hearing was contended that he original appeal filed on April 26, 1989 should be taken as a valid appeal. The Commissioner of Income‑tax (Appeals) was of the view that it was a fit case for condoning the lapse in the payment of admitted tax at the time of filing the appeal and, accordingly, admitted the appeal. This was upheld by the Tribunal. On a reference:
Held, that the relevant question to decide the applicability of the provision is the date on which the lis for the dispute arose. In the case at hand, the lis could be stated to have commenced latest by the date when the notice under section 143(2) of the Act was issued, that is, a date prior to April 1, 1989. The Tribunal was justified in its conclusion that the appeal was to be entertained on the basis of law as it stood prior to April 1, 1989. The appeal was competent.
Garikapati Veeraya v. N. Subbiah Chowdhry (1957) AIR 1957 SC 540; Hoosem Kasam Dada (India) Ltd. v. State of Madhya Pradesh (1953) 4 STC 114; (1953) AIR 1953 SC 221;‑Kirpa Singh v. Rasalldar Ajaipal Singh (1928) AIR 1928 Lah. 627; Ramesh Singh v. Cinta Devi (1996) AIR 1996 SC 1560; (1996) 3 SC 142; Special Military Estates Officer v. Munivenkataramiah (1990) AIR 1990 SC 499; (1990) 2 SC 168; State of Bombay v. Supreme General Films Exchange Ltd. (1960) AIR 1960 SC 980 and Vithalbhai Naranbhai Patel.v. CST (1961) 12 STC 219; (1967) AIR 1967 SC 344 ref.
P.K.R. Memon and N.R.K. Nair of the Commissioner.
C. Kochumin Nair, S. Vinod Kumar and Dale P. Kurien for the Assessee.
JUDGMENT
ARIJIT PASAYAT, C.J.‑‑‑Though in I. T. R. No. 111 of 1998, a question of vital importance has been raised about the jurisdiction of the Tribunal to reconsider a question of limitation, while exercising powers under section 236 of the Income‑tax Act, 1961 (in short the "Act"), we do not think it necessary to go into that question in detail in view of the position as emerges in connected I.T.R. No. 174 of 1997. Reference to the factual aspects is necessary for adjudication of the question raised in that I.T.R. which we shall quote a little later.
The assessee filed its return for the assessment year 1986‑87 on February 9, 1989, declaring a total income of Rs.83,54,950. In response to the notice under section 143(2) of the Act, books of account were produced and finally the income was assessed at Rs.1,45,06,670. The demand after adjustment of advance tax and taking into account interest payable under sections 139(8), 215 and 216 came to'Rs.52,91,476. The matter was challenged in appeal before the Commissioner of Income‑tax (Appeals), Calicut (in short "the CIT(A)"). The assessment was completed on March 30, 1989, and the appeal filed was on April 26, 1989. Before going into the merits, the Commissioner of Income‑tax (Appeals) thought it necessary to adjudicate the question whether the appeal filed by the assessee was to be entertained. When the assessee filed a return of income‑tax to be paid under section 140A was Rs.13,68,006. When the appeal was preferred on April 26, 1989, also the admitted tax was not paid. An application for condonation of delay alongwith another set of appellate papers was filed on June 22, 1989. Prior to that on June 20, 1989, the admitted tax had been paid. In the application for condonation of delay in filing the Appeal, it was indicated that due to liquidity cash problems the payment could not be made earlier. In between the date of completion of assessment and the date on which appeal was filed on April 1, 1989, there was a change in law regarding the admissibility of appeal, with effect from April 1, 1989. As per the amended provisions, the powers of the Commissioner of Income‑tax (Appeals) and the. Deputy Commissioner of Appeals to condone the lapse of non‑payment of admitted tax has been withdrawn. Therefore, according to the assessee, it had paid the tax due and another set of appellate papers were filed. Though in the application that was filed subsequently, the plea of cash crunch had been raised, subsequently at the time of hearing it was contended that the original appeal filed on April 26, 1989, should be taken as the valid appeal. The Commissioner of Income‑tax (Appeals) was of the view that it was fit case for condoning the lapse in the payment of admitted tax at the time of filing the appeal and accordingly, admitted the appeal. The appeal was heard on the merits and was partly allowed. The Revenue preferred second appeal before the Income‑tax Appellate Tribunal, Cochin Bench, Cochin (in short, "the Tribunal"). The first ground of challenge was the conclusion of the Commissioner 'of Income‑tax (Appeals) regarding condonation of delay and admissibility of appeal. The Tribunal affirmed the conclusion of the Commissioner of Income‑tax (Appeals) though it indicated different reasons also.
At this juncture, it is necessary to take note of a few facts which are relevant so far jis I.T.R. No. 111 of 1998, is concerned. The application for reference filed by the Revenue was rejected on the ground that in view of the clear stipulations in section 256(1) of the Act specifying the period during which the reference application was to be filed, the application was clearly tried beyond the permissible limit. An application was filed by the Revenue seeking variation of the order on the ground that the conclusion regarding the delayed presentation of the reference application was not tenable. It was pointed out that the order of the Tribunal was sent to the Commissioner who originally had the jurisdiction over the assessee's case, but subsequently the jurisdiction lay in another Commissioner. The reference application was filed within the time permitted from the date of receipt of the order by the Commissioner who had the jurisdiction. The Tribunal thought that it had earlier committed a mistake in computing the period of limitation, and further observed that for its fault, the parties should not suffer and, therefore, recalled the order by holding that the application was not barred by time. It entertained the application for reference and has referred the following question for opinion:
"Whether, on the facts and in the circumstances of the case,‑
(i) The Commissioner (Appeals). is right and with the jurisdiction in entertaining the appeal and also in deciding the same on merits?
(ii) and, also in view of the words at the time of filing of the appeal occurring in section 249(4) of the Income‑tax Act, the Tribunal is right in law in holding that to an appeal filed after April 1, 1989, the provision prior to April 1, 1989, will apply?"
The same is the subject‑matter of adjudication in I.T.R. No. 174 of 1997. As indicated above, learned counsel for the assessee raised a point about the jurisdiction of the Tribunal to pass such an order in I.T.R. No.1l1 of 1998. But, we do not think it necessary to adjudicate that question.
Coming back to the reference filed by the Revenue, it is to be noted that the position under section 249 before the amendment and the after amendment with effect from April 1, 1989, is as follows:
"249(4). No appeal under this Chapter shall be admitted unless at the time of filing of the appeal,‑‑‑
(a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or
(b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him: .
Prior to 1‑4‑1989With effect from 1‑4‑1989 Provided that on an applicationProvided that, in a case falling made by the appellantunder clause (b); Commissioner (Appeals) may forDeputy Commissioner (Appeals) any good and sufficient reason toor, as the case may be, the be recorded in writing, exemptCommissioner (Appeals) may, him from the operation of thefor any good and sufficient provisions of this subsection.reason to be recorded in writing. exempt him from the operation of the provisions of that clause. |
The relevant question to decide the applicability of the provision is the date on which the lis for the dispute arose. In the case at hand, the lis can be stated to have commenced latest by the date when the notice under section 143(2) of the Act was issued that is a date prior to April 1, 1989. In Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh (1953) 4 STC 114; AIR 1953 SC 221, while considering a similar position relating to change of law affecting the right to appeal and requiring payment of tax admitted to be due as condition precedent for entertaining the appeal, the apex Court held that a right of appeal is not merely a matter of procedure. It is a matter of substantive right. This right of appeal from the decision of an inferior Tribunal to a superior Tribunal becomes vested in a party when proceedings are first initiated in and before a decision is given, by the inferior Court. A pre‑existing right of appeal is not destroyed by an amendment of the amendment is not made retrospective by express words or necessary intendment. The fact that the pre‑existing right of appeal continues to exist must, in its turn, necessarily imply that the old law which created that right of appeal must also exist to support the continuation of that right. As the old law continues to exist for the purpose of supporting the pre‑existing right of appeal that old law must govern the exercise and enforcement of that right of appeal and there can then be no question of the amended provision preventing the exercise of that right. A provision which is calculated to deprive an assessee of the unfettered right of appeal cannot be regarded as a mere alteration in procedure. For the purposes of the accrual of the right of appeal the critical and relevant date is the date. of initiation of the proceedings and not the decision itself.
At this juncture, it is also necessary to take note of another decision of the apex Court in Ramesh Singh v. Cinta Devi AIR 1996 SC 1560; (1996) 3 SCC 142 relating to maintainability of the appeal vis‑a vis a prescription mandating deposit of requisite amount as condition precedent for entertaining an appeal. Following the decision in Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh (1953) 4 STC 114; AIR 1953 SC 221; State of Bombay v. Supreme General Films Exchange Ltd. (1960) AIR 1960 SC 980 and Vithalbhai Naranbhai Patel v. CST (1961) 12 STC 219; AIR `1967 SC 344, it was observed that unless the new provision expressly or by necessary implication makes the provision retrospective in character, the right to appeal which is already crystallized will not be affected. This position was illuminatingly stated in Kirpa Singh v. Rasalldar Ajaipal Singh (1928) AIR 1928 Lah. 627 (FB). A vested right of appeal can be taken away by a subsequent enactment, if it so provides expressly or by necessary implication, as was observed by the apex Court in Garikapati Veeraya v. N. Subbiah Chowdhry (1957) AIR 1957 SC 540. An appeal is a continuation of assessment proceedings. The right of appeal is a substantive right which gets crystallized when assessment proceedings are initiated. The right of appeals is a substantive right conferred on a party by the statute. The conferring of a right of appeal is not circumscribed by the right being available at the time of the institution of the cause in the Court of the first instance. The right of appeal in a given case may already be available at the institution of the cause in the Court of the first instance or may even be subsequently conferred. In either situation, without any distinction such right is conferred by statute (see Special Military Estates Officer v. Munivekataramiah (1990) AIR 1990 SC 499; (1990) 2 SCC 168.
The above being the position in law, the Tribunal was justified in its conclusion that the appeal was to be entertained on the basis of law as it stood prior to April 1, 1989. The reference is accordingly answered in favour of the assessee and against the Revenue. In view of this answer, as indicated above, it is not necessary to answer the reference so far as I.T.R. No.111 of 1998, is concerned.
The I.T.Rs. are disposed of as above.
M.B.A./693/FCOrder accordingly.