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Income‑tax Reference No. 14 of 1965, decided on 17th October 1968.
Firm‑‑Assessment on ,firm‑.Separate appeals by partners ‑ Whether competent ‑‑‑ Appeal ‑ Limitation Order served on one partner‑Appeal by another partner‑Time taken by appellant for obtaining copy of order‑Whether can be excluded‑ Indian Income‑tax Act, 1922, Ss. 30(1), second proviso & 67‑A.
B and M, two partners of a dissolved firm, filed separate appeals against the assessment order passed on the firm, the order having been served on S, the third partner. M's appeal was held to be incompetent as B had preferred an appeal already and also barred by limitation. The Tribunal held that the appeal was competent and also within time and directed rehearing of the appeal. On a reference:
Held, (1) under the second proviso to section 30(1) of the Indian Income‑tax Act, 1922, every partner has a right of appeal against the order passed on the firm and hence separate appeals by different partners against the same assessment order are competent
(2) under section 67‑A of the Indian Income‑tax Act, 1922 the time taken for obtaining a copy of the order appealed against has to be excluded even though it is not obligatory to file the copy of the order along with the memorandum of appeal ;
(3) the decision of the Tribunal was, therefore, right.
[Case‑Law referred.]
Shanti Bhushan and Dr. R. R. Misra for the Commissioner.
Deokinandan Agarwal for the Assessee.
There existed a firm consisting of four partners. Among the partners were Babu Ram, Satya Deo and Mahabir Prasad. The firm was dissolved on October 22, 1957. The firm was assessed as such fog assessment years 1957‑58 and 1958‑59. There were two separate appeals filed against the assessment orders. In the first instance, an appeal was filed by Babu Ram, partner. That appeal was disposed of by the Appellate Assistant Commissioner on July 28, 1962. In the meanwhile, another partner, Mahabir Prasad, filed an independent appeal on May 5, 1962. The appeal of Mahabir Prasad was dismissed by the Appellate Assistant Commissioner on January 8, 1963, on two grounds. Firstly, the appeal was barred by time. Secondly, in view of the prior appeal filed by Babu Ram, partner, another appeal by Mahabir Prasad was not maintainable. Against the decision of the Appellate Assistant Commissioner, Mahabir Prasad went up in further appeal before the Income‑tax Appellate Tribunal, Delhi Bench C". The Tribunal reversed the decision of the Appellate C, Assistant Commissioner on both the points. The Tribunal held that Mahabir Prasad's appeal was within time, and was maintainable in spite of the fact that another appeal had been previously filed by Babu Ram. The Tribunal, therefore, directed rehearing of the appeal by Mahabir Prasad.
Being dissatisfied with the Tribunal's decision, the Commis sioner of Income‑tax, U. P., applied for a reference to this Court. Accordingly, the Tribunal has referred to this Court the following questions of law :
"(1) Whether, on the facts and in the circumstances of the case, the appeals filed by the partner, Mahabir Prasad, before the Appellate Assistant Commissioner are valid under the second proviso to section 30(1)
(2) Whether, on the facts and in the circumstances of the case the appeals filed by the said Mahabir Prasad were within time "
Section 30 of the Indian Income‑tax Act, 1922 (hereinafter referred to as the Act), provides for an appeal against an assess ment order. Subsection (1) of section 30 states:
Any assessee objecting to the amount of income assessed under section 23 . . . . . may appeal to the Appellate Assistant Commissioner against the assessment . . . . .
Provided further that where the partners of a firm are individually assessable on their shares is the total income of the firm, any such partner may appeal to the Appellate Assistant Commissioner against any order of an Income‑tax Officer determining the amount of the total income or the loss of the firm or the apportionment thereof between the several partners, but in respect of matters which are deter mined by such order may not appeal against tire assessment of his own total income : . . . :
It is common ground that Mahabir Prasad as a partner was entitled to file an appeal under the second provise to subsection (1) of section 30 of the Act. But, according to the Commissioner of Income‑tax, U. P., that right of Mahabir Prasad was extinguished by the fact that Babu Ram had filed an appeal previously. We do not see hoax Mahabir Prasad's right of appeal can be extinguished by the mere fact that another appeal had been filed by another partner, Babu Ram. Babu Ram and Mahabir Prasad were both partners of the dissolved firm. They both had a right of appeal under the second proviso to section 30(1) of the Act. Ordinarily, there should be no difficulty in consolidating such appeals filed by two different partners of a dissolved firm. Some difficulty may arise in a partner files an appeal after the decision of an appeal by another partner. But no such difficulty arose in We instant case. At first Babu Ram filed his appeal. Subsequently, Mahabir Prasad filed his appeal on May 5, 1962. The two connected appeals were pending before the Appellate Assistant Commissioner in May 1962. Babu Ram's appeal was not disposed of till July 28, 1962. There wag thus no difficulty in consolidating the two appeals and disposing of them by one order at any time between May 5, 1962 and July 28, 1962. We agree with the Tribunal that Mahabir Prasad's appeal was competent under the second proviso to section 30(1) of the Act.
On the question of limitation, the relevant facts are these. Demand notice was served upon Satya Deo, partner, on March 27, 1962. Mahabir Prasad applied for a copy of the assessment order on April 19, 1962. He got the copy on May 3, 1962. The appeal was filed by Mahabir Prasad on May 5, 1962. The question is whether Mahabir Prasad's appeal was within limitation.
The period of limitation is thirty days. The appeal was filed 39 days after service of notice upon Satya Deo. The Appellate Assistant Commissioner assumed that service upon Satya Deo is to be deemed to be service upon Mahabir Prasad. It is to be noted that Satya Deo was served with the demand notice several years after the dissolution of the firm. It is, therefore, doubtful whether service upon Satya Deo can be treated as service of the demand notice upon Mahabir Prasad. Even if it is assumed that Mahabir Prasad was constructively served with the demand notice on March 27, 1962, matters do not materially improve for the Commissioner of Income‑tax.
We must bear in mind that Mahabir Prasad spent 15 days in obtaining a copy of the assessment order. The question arises whether Mahabir Prasad is entitled to exclude that period of 15 days for computing limitation.
Mahabir Prasad relied upon section 67‑A of the Act. Section 67‑A stated:
"In computing the period of limitation prescribed for an appeal under this Act or for an application udder section 66, the day on which the order complained of was made, and the time requisite for obtaining a copy of such order, shall be excluded."
Dr. Misra, appearing for the department contended that Mahabir Prasad is not entitled to exclude the time in obtaining a copy, because it was not necessary for the appellant to file a copy of the assessment order along with the memorandum of appeal. Reliance is placed upon a decision of the Punjab High Court in T. N. Swami & Co. v. Commissioner of Income tax ((1952) 21 I T R 487). It was held in that case that since no certified copy of the appellate order of the Tribunal had to be filed along with an application under section 66(1) and as the appellate order of the Tribunal was communicated to the assesses by means of a certified copy, the Tribunal was right In not excluding the time taken for obtaining a copy of its order.
In that judgment we find a reference to a decision of a Full Bench of the Lahore High Curt in Punjab Co‑operative Bank Ltd. v. Official Liquidators, Punjab Cotton Press Co. Ltd. ((1941) 11 Comp. Cas. 254). It was held in that case that the appellant was entitled to exclude the time requisite for obtaining a copy of the judgment appealed against even though under the Rules of the High Court no copy of the judgment had to be filed with the memorandum of appeal.
We are in respectful agreement with the decision of the Full Bench of the Lahore High Court. The language of section 67‑A of the Act is plain. It is expressly mentioned in the section that the period spent in obtaining a copy of the impugned order shall be excluded. Such exclusion is not subject to any condition that it should be obligatory to file a copy of the impugned order with the memorandum of appeal. The Tribunal in the instant case was, therefore, justified in excluding the time taken by Mahabir Prasad in obtaining a copy of the assessment order. After excluding such period, his appeal was within limitation.
We answer both the questions referred to this Court in the affirmative, and in Mahabir Prasad's favour. The Commis sioner of Income tax, U. P., shall pay to Mahsbir Prasad Rs. 200 as costs of this reference.
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