Madhya Pradesh H.C : Whether, on the facts and in the circumstances of the case, the Tribunal overstepped its jurisdiction as available under s. 254(1) in entertaining the appeals ?

Counsel Appeared

B.K. Rawat, for the Revenue : B.L. Nema, for the Assessee

N.D. OJHA, C.J.:

The Tribunal, Jabalpur, has referred the following three questions to this Court for its opinion under s. 256(1) of the IT Act, 1961 (hereinafter referred to as “the Act “) :

“1. Whether, on the facts and in the circumstances of the case, the Tribunal overstepped its jurisdiction as available under s. 254(1) in entertaining the appeals ?

Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in freshly enquiring into the matter of assessment having been completed without the service of notices under s. 143(2) when such point did not arise out of the orders of the AAC ?

Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in directing that the taxes already paid should be refunded to the assessees in the absence of any claim by the assessees or order on the point by the lower authorities ?”

2. The facts in a nutshell which are necessary for answering these questions may be stated here. A notice under s. 143(2) of the Act was issued to the assessees by the ITO on 27th Feb., 1976. An order of assessment was passed by the ITO subsequently, a copy whereof has been attached as Annexure A. This order purports to be dt. 27th Feb., 1976. Paragraph 2 of the order states in unequivocal terms as follows : “In response to notice under s. 143(2), Shri Nawalkishore Share, private secretary of the assessee, appeared along with Shri V. C. Nema, Advocate, from time to time and explained the return.”

Aggrieved by the order of the ITO, the assessees preferred an appeal before the AAC. This appeal, it is not disputed even by learned counsel for the assessees, was allowed in its entirety by the AAC by his order dt. 9th Oct., 1979, a copy whereof has been attached as Annexure B-1 to the statement of the case. A second appeal was thereafter filed by the assessees before the Tribunal. The Tribunal allowed the second appeal by its order dt. 13th Oct., 1981. It held that the order of the ITO was void and non est inasmuch as it had been passed much before the receipt of notice by the assessees under s. 143(2) of the Act and their putting in appearance on 5th March, 1976. On an application being made by the CIT, however, the three questions mentioned above were referred by the Tribunal to this Court for its opinion.

3. It has been urged by learned counsel for the CIT that since the appeal filed by the assessees before the AAC had been allowed in its entirety, it could not be said that the assessees were persons “aggrieved” within the meaning of s. 253 of the Act and, consequently, the second appeal at their instance was not maintainable. Sec. 253(1) of the Act contemplates that any assessee “aggrieved” by any of the orders mentioned therein may appeal to the Tribunal. Emphasis has been placed by learned counsel on the word “aggrieved” as used in s. 253 of the Act. It was, on the other hand, urged by learned counsel for the assessees that since issuing of notice under s. 143(2) of the Act was a condition precedent for passing an order of assessment of the nature such as was passed in the instant case (no order of assessment having been passed under s. 143(1) of the Act), the order of assessment was void and non est and the second appeal challenging the said order could be filed because the assessees would be deemed to be “aggrieved” by a non est order. Whether or not a second appeal would lie in the circumstances, as urged by learned counsel for the assessees, is a question which, in our opinion, need not be gone into in this case because on the facts of the instant case, the said question cannot be said to arise. As seen above, the assessment order clearly stated that the assessees’ representative as also their counsel appeared “from time to time and explained the return”. A copy of the grounds of appeal before the AAC has been attached as a part of the statement of the case and its perusal indicates that no such ground was urged therein, that the order of assessment had been passed without hearing the representative and counsel for the assessees and that the statement of fact in this behalf in the order of assessment was incorrect. A copy of the grounds of appeal before the Tribunal has also been attached along with the statement of the case and its perusal also indicates that no such ground was raised therein. It is thus apparent that it was not the case of the assessees before the AAC or even before the Tribunal that the order of assessment had been passed without hearing the representative of the assessees and their counsel. The order of assessment clearly states that the hearing which was granted to the representative of the assessees and their counsel was “in response to notice under s. 143(2)” of the Act. It is thus obvious that the hearing was given consequent upon service of notice under s. 143(2) of the Act on the assessees. Even the order of the Tribunal indicates that the notice under s. 143(2) of the Act was served on the assessees and they put in appearance on 5th March, 1976, before the ITO. On that date, the ITO asked the assessees to furnish certain information. In response thereto, the assessees filed a letter dt. 11th March, 1976, furnishing the information required. Further, the memorandum of appeal filed on behalf of the assessees before the Tribunal indicates that only two grounds were raised before the Tribunal, namely: (i) That the assessment is back-date being illegal and bad in law. (ii) That the income is not properly charged as provided under s. 4 and, therefore, the entire tax paid should be refunded as provided under s. 237.

4. It thus appears that the case of the assessees themselves was that the assessment order which was purported to have been passed on 27th Feb., 1976, was back-dated meaning thereby that the order of assessment was not passed on 27th Feb., 1976, but was passed on a later date. The Tribunal, in place of accepting this plea which was raised on behalf of the assessees, held that the order of assessment had been passed before issue of notice under s. 143 of the Act and hearing the assessees which was indeed never their case. What transpires from these facts is that the order of assessment was passed either on 27th March, 1976, and due to some inadvertence, the date was mentioned as February, 1976, or on some other date in March, 1976, after notice under s. 143(2) of the Act had been served on the assessees and they had been heard. This conclusion of ours finds support from the assessees’ own case that the order was back-dated. On the facts and circumtances of this case, therefore, it is apparent that the order of assessment was passed after notice under s. 143(2) of the Act had been served on the assessees and their representative as well as their counsel had appeared before the ITO “from time to time and explained the return”. The order of assessment was, consequently, neither non est nor void. The second appeal filed by the assessees in the facts and circumstances of the case was not maintainable inasmuch as the order of the AAC was an order whereby the appeal preferred by them had been allowed in its entirety and they cannot be said to be “aggrieved” by the said order within the meaning of s. 253 of the Act.

In view of the foregoing discussion, our answer to question No. 1 is that on the facts and circumstances of the case, the Tribunal overstepped its jurisdiction as available under s. 254(1) in entertaining the appeal. Our answer to question No. 2 is that on the facts and circumstances of the case, the Tribunal was not justified in enquiring afresh into the matter of assessment having been completed without the service of notices under s. 143(2), when such a question did not arise out of the order of the AAC. Our answer to question No. 3 is that on the facts and circumstances of the case, the Tribunal was not correct in law in directing that the taxes already paid should be refunded to the assessee in the absence of any claim by the assessee or order on the point by the lower authorities.

In the circumstances of the case, however, there shall be no order as to costs.

[Citation : 171 ITR 14]