MESSRS MELA RAM & SONS vs. THE COMMISSIONER OF INCOME-TAX, PUNJAB

CIVIL APPEAL No. 17/1954Supreme Court[1956] 1 S.C.R. 16621 February 1956Bench: 3 JudgesAuthor: SUDHI RANJAN DAS, NATWARLAL HARILAL BHAGWATI, T.L. VENKATARAMA AIYYAR16 pages
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What were the facts?

The appellant firm, Messrs Mela Ram & Sons, filed appeals against income-tax and super-tax assessments for the years 1945-1946 and 1946-1947. These appeals were filed beyond the prescribed time limit under Section 30(2) of the Indian Income Tax Act, 1922. The Appellate Assistant Commissioner (AAC) initially numbered the appeals and issued notices for hearing under Section 31. During the hearing, the Department objected that the appeals were time-barred. The appellant requested condonation of delay, citing the unsettled conditions post-partition, but the AAC rejected this prayer and dismissed the appeals as time-barred on December 31, 1948. The appellant then appealed to the Income Tax Appellate Tribunal under Section 33, which dismissed these appeals, holding that the AAC's orders were under Section 30(2) and not appealable under Section 33. The High Court, on a reference, upheld this view. The matter reached the Supreme Court via a special leave appeal.

What did the Supreme Court hold?

The Supreme Court held that orders of the Appellate Assistant Commissioner dismissing appeals as time-barred fall under Section 31 of the Act and are therefore appealable under Section 33. The Court reasoned that a right of appeal is a substantive right. An appeal presented out of time, if admitted, is still an appeal, and an order dismissing it as time-barred is an order passed in appeal. Section 31 is the provision governing the hearing and disposal of appeals. The Court clarified that Section 31 is not limited to orders deciding the merits of the assessment but also includes orders disposing of appeals on preliminary issues, such as limitation. It makes no difference whether the dismissal order is passed before or after the appeal is admitted. The Court found the revenue's contention that Section 31 only covers merits to be unfounded and contrary to established precedents. Consequently, the Supreme Court allowed the appeal, setting aside the High Court's order.

What were the issues?

1. Whether an order by the Appellate Assistant Commissioner dismissing an appeal presented under Section 30 of the Indian Income Tax Act, 1922, as out of time, is an order passed under Section 30(2) or Section 31 of the Act, and consequently, whether such an order is appealable under Section 33. Assessee's contentions: The appellant argued that an order dismissing an appeal as time-barred, after the appeal had been admitted and notices issued for hearing, is an order passed in appeal under Section 31, and therefore appealable under Section 33. They relied on the principle that a right of appeal is a substantive right and that orders disposing of appeals on preliminary issues, like limitation, are covered by Section 31. Revenue's contentions: The revenue contended that an order dismissing an appeal solely on the ground of limitation, without considering the merits of the assessment, is an order passed under Section 30(2) and not under Section 31, and thus not appealable under Section 33. They argued that Section 31(3)(a) confers jurisdiction only for orders on the merits of the assessment.

Which sections of the Income-tax Act were involved?

Section 28,Section 30(1),Section 30(2),Section 30(3),Section 31,Section 31(1),Section 31(3),Section 33,Section 66(1)

AI-generated summary — verify with the full judgment below

1956 February 21 166 SUPREME COURT REPORTS (1956] MESSRS MELA RAM & SONS v. THE COMMISSIONER OF INCOME-TAX, PUNJAB. [S. R. DAS, C.J., BHAGWATI and VENKATARAMA AYXAR JJ.) Indian Income Tax Act, 1922 (XI of 1922), ss. 28, 80(1)(2), 81, 83-Assessment of Income-tax-Notice of demand-Appeal against assessmenf,-Received in Appellate Assistant Commi!sioner's Office out of time-Prayer for condonation of delay rejected-Order of Assistant Oomm.issioner dismissing an appeal as out of ti~-Whether one under s. 30( 2) or under s. 81 of the Act-Whether appeal competent therefrom. The appellant firm filed appeals against orders assessing it to income-tax and super-tax for the years 1945·1946 and 1946·1947 beyond the time prescribed by s. 30(2) of the Income-tax Act. The appeals were numbered, and notices were issued for their hearing under s.

31.

At the hearing of the appeals before the Appellate Assistant Commissioner, the Department took the objection that the appeals were barred by time. The appellant prayed for condonation of delay, but that was refused, and the appeals were dismissed as time-barred. The appellant then preferred appeals against the orders of dismiss

The order continues below.

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