Messrs Mela Ram & Sons v. the Commissioner of Income-tax, Punjab
VENKATAr.AMA AYYAR J.--The appellant is a firm
carrying on business at Ludhiana in the Punjab. The
Income-tax Officer assessed its income for 1945-1946
at Rs. 71,186, and on 17-9-1947 a notice of demand
was served on it for Rs. 29,857-6-0 on account of in
come-tax and super-tax. The appellant preferred an
1956
Messrs Mela Ram
and Sons
v.
The Commissioner
of Income-tax,
Punjab
1956
Messrs Mela Ram
and Sons
v.
The Commissioner
of lnconie-tax,
Punjab
Venkatarama
Ayyar J.
appeal against the assessment, and it was actually
received in the office of the Appellate Assistant Com
missioner on 5-ll-1947. It was then out of time by
19 days; but the appeal was registered as No. 86, and
notice for hearing under section 31 was issued for
13-12-1947, and after undergoing several adjourn
ments, it was actually heard on 1-10-1948. For the
year 1946-1,947, the Income-tax Officer assessed the
income of the firm at Rs. 1,09,883, and on 29-9-1947 a
notice of demand was served on it for Rs. 51,313-14-0
on account of income-tax and super-tax. The appel
lant preferred an appeal against this assessment, and
it was actually received in the office of the Appellate
Assistant Commissioner on 5-ll-1947, and it was then
7 days out of time. It was registered as No. 89, and
notice for hearing under section 31 was issued for
24-6-1948. Eventually, it was heard along with
Appeal No. 86 on 1-10-1948.
At the hearing, the Department took the objection
that the appeals were presented out of time, and were
therefore liable ~o be dismissed. The appellant
prayed for condonation of the delay on the ground
that following on the partition of the country the
conditions were very unsettled, that curfew order had
been promulgated and was in force, and that the post
office did not accept registered letters, and that the
traffic on the Grand Trunk Road was closed, and that
in view of these exceptional circumstances, it had
sufficient cause for not presenting the appeals in time.
On 31-12-1948 the Appellate Assistant Commissioner
passed orders in both the appeals, holding that there
was not sufficient ground for condoning the delay,
and rejecting them in limine. These orders were pur
ported· to be passed under section 31 read along with
section 30(2).
Aga,inst these orders, the appellant preferred ap
peals under section 33 of the Act to the Appellate
Tribunal, which by its order dated 4-4-1950 dismissed
them on the ground that the orders of the Assistant
Qommissioner were in substance passed under section
30(2) and not under section31, and that no appeal
lay against them under section 33. On the applica-
S.C.R. SUPREME COURT REPORTS 169
tions of the appellant, the Tribunal referred under 1956
section 66(1) of the Income Tax Act the following M M 1 R
question for the decision of the High Court of es~~d ;:,. am
Punjab: v.
"Whether in the circumstances of the case The Commissioner
appeals lay to the Tribunal against orders of the 0/ Income-tax,
Appellate Assistant Commissioner dismissing the Punjab
appeals against the assessments for the years 1945- Venkatarama
1946 and 1946-1947 in limine". AyyarJ.
The reference was heard by Khosla and Harnam Singh
JJ., who held following an earlier decision of that
court in Dewan Chand v. Commissioner of Income-
tax(1) that the orders of the Appellate Assistant Com-
missioner were under section 30(2) and not appealable
under section 33. Certificate to appeal to this Court
against this order having been refused by the High
Court, the appellant applied for and obtained leave
to appeal to this Court under article 136 of the Con-
stitution, and that is how the appeal comes before
us.
The provisions of the Act bearing on the question
may now be referred to. Section 30(1) confers ~n the
assessee a right of appeal against orders passed under
the sections specified therein. Section 30(2) provides
that the appeal shall ordinarily be presented within
thirty days of the order of assessment, but the Appel
late Assistant Commissioner may admit an appeal
after the expiration of the period if he is satisfied
that the appellant had sufficient cause for not pre
senting it within that period. Section 30(3) provides
that "the appeal shall be in the prescribed form and
shall be verified in the prescribed manner". Section
31(1) enacts that "the Appellate Assistant Commis
sioner shall fix a day and place for the hearing of the
appeal, and may from time to time adjourn the hear
ing". Section 31(3) specifies the orders that may be
passed in appeals according as they are directed
against orders passed under the one or the other of
the sections of the Act which are specified in section
30(1). When the appeal is against an order of assess
ment under section 23-and this is what we are con-
(1) [1951] 20 I T.R. 621.
1956
Messrs Mela Ram
and Sons
v.
The Commissioner
of Income-tax,
Punjab
Venkatarama
AyyarJ.
170 SUPREME COURT REPORTS (1956]
cerned with in this appeal-it is provided in section
31(3), clauses (a) and (b) that in disposing of the ap
peal the Appellate Assistant Commissioner may (a)
confirm, reduce, enhance or annul the assessment, or
(b) set aside the assessment and direct the Income
tax Officer to make a fresh assessment after making
such further enquiry as the Income-tax Officer thinks
fit. Section 33(1) enacts that,
"Any assessee objecting to an order passed by an
Appellate Assistant Commissioner under section 28 or
section 31 may appeal to the Appellate Tribunal
within sixty days of the date on which such order is
communicated to him". ·
Stated succinctly, section 30 confers a right of appeal
on the assessee, section 31 provides for the hearing
and disposal of the appeal, and section 33 confers a
right of further appeal against orders passed under
section 31.
Now, on these provisions the question is whether
an order dismissing an appeal presented under sec
tion 30 as out of time is one under section 30(2) or
under section 31 of the Act. If it is the former, there
is no appeal provided against it; if it is the latter, it
is open to appeal under section 33. On this question,
there has been a sharp conflict of opinion among diff
erent High Courts and even among different Benches
of the same High Court. The Bombay High Court
has held that when an appeal is presented out of time,
and there is no order of condonation of delay under
section 30(2), there is, in law, no appeal before the
Appellate Assistant Commissioner, and that an order
by him rejecting the appeal does :q.ot fall within sec
tion 31 and is not appealable: Commissioner of In
come-tax v. Mysore Iron an<l Steel Works(') and K. K.
Porbun<lerwalla v. Commissioner of Income-tax('); but
that if the appeal is admitted after an order of con
donation is made under section 30(2), an order sub
sequently passed dismissing it on the ground of limi
tation would be one under section 31 and would be
appealable under section 33, and the result will be
the same even when the appeal is admitted without
(I) [1949J 17 LT.I\. 478. (2) [1952] 21 LT.I\. 63.
S.C.R. SUPREME COURT REPORTS 171
any order of condonation under section 30(2): 1956
Champalal Asharam v. Commissioner o' I ncome-tax(1). 'J Messrs Mela Ram
The High Court of Allahabad has also taken the same and Sons
view, and held that an order refusing to condone v.
delay and rejecting an appeal before it was admitted The Commissioner
was not one under section 31 and was notappealable: o/ focome·tax,
Vide Shivnath Prasad v. Commissioner of Income-tax, Pun;ab
Central and U. P. (2) and Municipal Board, Agra V • Vcukatarama
Commissioner of Income-tax, U. P.(3); but that an AyyarJ.
order dismissing the appeal as time-barred after it
had been admitted was one under section 31 and was
appeable: Mohd. Nain Mohd. Alam v. Commissioner
of Income-tax('). The High Court of Punjab has held
following Shivnath Prasad v. Commissioner of Income-
tax, Central and U. P.(2) and Commissioner of Income-
tax v. Mysore Iron and Steel Works(5) that when the
Appellate Assistant Commissioner declines to condone
delay and rejects the appeal, it is one under section
30(2) and not appealable. It has further held that
even if the appeal had been admitted without an
order of condonation and dismissed at the hearing on
the ground of limitation, it would not be under sec-
tion 31, because the scheme of the Act contemplated
that an order to be passed under that section must
relate to the merits of the assessment. It is on this
decision that the judgment under appeal is based.
It may be mentioned that the decision in Dewan
Chand v. Commissioner of Income-tax( 6) was dissented
from in a recent decision of the Punjab High Court in
General Agencies v. Income-tax Commissioner(7).
In Commissioner of Income-tax v. Shahzadi Begum(8),
the Madras High Court has held that an order declin
ing to excuse delay and rejecting the appeal is one
under section 31, whether it is made before the appeal
is admitted or after, and that an appeal which is iiled
out of time is, nonetheless, an appeal for purposes
of section 31, and that an order dismissing it would
be appealable under section 33. In Gour Mohan
(1) [1953) 23 I.T.R. 464.
(8) [1951) 19 I.T.R. 68.
(5) [1949] 17 I.T.R. 478.
(7) A.I R. 1956 Punjab 26.
(2) [1935] S I.T.R. 200.
(4) [1951] 19 I.T.R. 58.
(6) [1951] 20 I.T.R. ~1.
(8) [1952] 21 I.T.R. 1.
1956
Messrs Mela Ram
and Sons
v.
The Commissioner
of lncome 4 tax,
Punjab
Venkatarama
AyyarJ.
172 SUPREME COURT REPORTS (1956]
Mullick v. OommisBioner of Agricultural Income-tax('),
the Calcutta High Court has, after a full discussion,
come to the conclusion that an order of dismissal on
the ground of limitation at whatever stage was one
which fell under section 31. It is unnecessary to refer
to the views expressed in decisions of other High
Courts, as the point now under discussion did not
directly arise for decision therein.
The question is which of these views is the correct
one to adopt. We start with this that under section
33 it is only orders uuder section 31 that are appeal
able. The· question therefore narrows itself to this
whether an order declining to condone delay and dis
missing the appeal as barred by time is an order
under section 31. It will be, if it is passed in appeal
against an order of assessment, and is one which
affirms it. Now, the conflicting views expressed by
the several High Courts centre round two points: (1)
when an appeal is presented out of time and there
has been a refusal to condone delay under section ·
30(2), is an order rejecting it as time-barred one
passed in appeal; and (2) if it is, is such an order one
confirming the assessment within section 31(3)(a)?
On the first point, as already stated, it has been
held by the Bombay High Court that while an order
dismissing an appeal as time-barred after it is ad
mitted is one under section 31, a similar order passed
before it is .admitted is one under section 30(2). The
ratio of this distinction is stated to be that in law
there is no appeal unless 'it is presented in time, and
if presented beyond time, unless the delay is excused.
In Commissioner of Income-tax v. Mysore Iron and
Steel Works(•), Chagla, C.J. stated the position thus:
"An assessee has a statutory right to present an
appeal within thirty days without any order being
required from the Appellate Assistant .Commissioner
for admission of that appeal. But if the time pres
cribed expires, then that statutory right to present
an appeal goes; and an appeal can only be enter
tained provided it is admitted by the Appellate
Assistant Commissioner after condoning the delay.
(1) [1952] 22 I.T.R. 181. (2) [1949] 17 I.T.R. 476.
S.C.R. SUPREME COURT REPORTS 173
Therefore before an appeal could be admitted in this
case, an order from the Appellate Assistant Commis
sioner was requisite that the delay had been condoned
and it was only on such an order being made that
the appeal could be entertained by the Appellate
Assistant Commissioner. Now section 31 deals only
with such appeals which are presented within the
prescribed period or admitted after the delay has been
condoned, and the procedure laid down in section 31
with regard to the hearing of appeals only applies to
such appeals. Therefore, in my opinion, when the
Appellate Assistant Commissioner refused to condone
the delay, there was no appeal before him which he
could hear and dispose of as provided under section
31 of the Act. Section 33 then gives the right of
appeal to the assessee from an order made by the
Appellate Assistant Commissioner either under sec
tion 28 or under section 31. Therefore the Legislature
did not give the right of appeal to the assessee against
an order made by the Appellate Assistant Commis
sioner under section 30 of the Act".
Learned counsel for the appellant disputes the correct
ness of the last observation that an order of the
Appellate Assistant Commissioner refusing to con
done the delay is one under section 30(2), and
contends that the only order that could be passed
under that section was one excusing delay, and an
order refusing to condone it will fall outside it, and
that such an order could only be made under section
31. We find it difficult to accede to this contention.
When power is granted to an authority to be exer
cised at his discretion, it is necessarily implicit in the
grant that he may exercise it in such manner as the
circumstances might warrant. And if the Appellate
Assistant Commissioner has a discretion to excuse
the delay, he has also a discretion in appropriate
cases to decline to do so. We are therefore of opinion
that the refusal to excuse delay is an order under sec
tion 30{2).
But the question still remains whether the view
taken in Commissioner of Income-tax v. Mysore Iron
2S
1956
Messrs Mela Ram
and Sons
v.
The Commissioner
of Income-tax,
Punjab
Venkatarama
Ayyarj.
174 SUPREME COURT REPORTS (1956]
19j6 and Steel Works(1) and K. K. Porbunderwalla v. Gom-
Messrs Mela Ram missioner of Income-tax(') that an appeal which is filed
and sons beyond the period of limitation is, in the eye of law,
v. no appeal, unless and until there is a condonation of
The Commissioner delay, and that, in consequence, an order passed
of Inc011~·tax, thereon cannot be held to be passed in appeal so as to
Pun1ab fall within section 31 is right. Now, a right of appeal
Venkatarama is a substantive right, and is a creature of the statute.
Ayyar J. Section 30(1) confers on the assessee aright of appeal
against certain orders, and an order of assessment
under section 23 is one of them. The appellant there
fore had a substantive right under section 30(1) to
prefer appeal.a against orders of assessment made
by the Income-tax Officer. Then, we come to section
30(2), which enacts a period of limitation within which
this right is to be exercised. If an appeal is not
presented within that time, does that cease to be an
appeal as provided under section 30(1 )? It is well
established that rules of limitation pertain to the
domain of adjectival law, and that they operate only
to bar the remedy but not to extinguish the right. An
appeal preferred in accordance with section 30(1) must,
therefore, be an appeal in the eye of law, though
having been presented beyond the period mentioned
in section 30(2) it is liable to be dismissed in limine.
There might be a provision in the statute that at the
end of the period of limitation prescribed, the right
would be extinguished, as for example, section 28 of
the Limitation Act; but there is none such here. On
the other hand, in conferring a right of appeal under
section 30(1) and prescribing a period of limitation
for the exercise thereof separately under section 30
(2), the legislature has evinced an intention to main
tain the distinction well-recognised under the gene
ral law between what is a substantive right and what
is a matter of procedural law. In Nagendranath Dey v.
Buresh Chandra Dey('), Sir Dinshaw Mulla constru
ing the word 'appeal' in the third column of article
182 of the Limitation Act observed:
"There is no definition of appeal in the Civil Pro-
(1) [1949) 17 I.T.R. 478. (2) [1952) 21 I.T.R. 63.
(3) 59 I.A. 288, 287.
S.C.R. SUPREME COURT REPORTS 170
cedure Code, but their Lordships have no doubt that 1956
any. application b:y a party .to an 8:Ppellate Court, Messrs Mela Ram
askmg it to set aside or revise a decision of a su bor- and sons
dinate Court, is an appeal within the ordinary accep- v.
tation of the term, and that it is no less an appeal The Commissioner
because it is irregular or incompetent". 0! 11 1e~-tax,
These observations were referred to with approval Pun;ab
and adopted by this Court in Raja Kulkarni and others Venkatarama
v. The State of Bombay(1). In Promotho Nath Roy v. AyyarJ.
Wr A. Lee(~), an order dismissing an application as
barred by limitation after rejecting an application
under section 5 of the· Limitation Act to excuse the
delay in presentation was held to be one "passed on
appeal" within the meaning of section 109 of the
Civil Procedure Code. On the principles laid down
in these decisions, it must be held that an appeal pre-
sented out of time is an appeal, and an order dismiss-
ing it as time-barred is one passed in appeal.
Then, the next question is whether it is an order
passed under section 31 of the Act. That section is
the only provision relating to the hearing and dis
posal of appeals, and if an order dismissing an appeal
as barred by limitation is one passed in appeal, it
must fall within section 31. And as section 33 con
fers a right of appeal against all orders passed under
section 31, it must also be appealable. But then, it
is contended that in an appeal against assessment
the only order that could be passed under section 31
(3)(a) is one which confirms, reduces, enhances or
annuls the assessment, that such an order could be
made only on a consideration of the merits of the
appeal, and that an order dismissing it on the ground
of limitation is not within the section. That was the
view taken in Dewan Chand v. Commissioner of ln
come-tax(3). But there is practically a unanimity of
opinion among all the other High Courts that to fall
within the section it is not necessary that the order
should expressly address itself to and decide on the
merits of the assessment, and that it is sufficient that
the effect of the order is to conftrm the assessment
(1) [1954] S.C.R. 884, 888. (2) A.I.R.-1991 Cal. 415.
{S) [1951] 20 I.T.R. 621.
7956 as when the appeal is dismissed on a preliminary
Messrs Mela Ram point. In Commissioner of Income-tax v. Shahzadi
and Sons Begum('), Satyanarayana Rao, J. said:
v. "If the appeal is dismissed as incompetent or is
The Comm;ssioner rejected as it was filed out of time and no sufficient
01 Income.tax, cause was established, it results in an affirmation of
Punjab the order appealed against".
venkatarama In Gour Mohan Mullick v. Commissioner of Agricul-
AyyarJ. tural Income-tax(•), construing sections 34, 35 and 36
of the Bengal Agricultural Income-Tax Act which are
in terms identical with those of sections 30, 31 and
33 of the Indian Income-Tax Act, Chakravarti, J.
observed:
"I would base that view on the ground that the
order, in effect, confirmed the assessment or, at any rate,
disposed of the appeal and was thus an order under
section 35, because what that section really contem
plates is a disposal or conclusion of the appeal and
the forms of orders specified in it are not exhaustive.
An appellate order may not, directly and by itself,
confirm, or reduce or enhance or annul an assess
ment and may yet dispose of the appeal. If it
does so, it is immaterial whether the ground is a
finding that the appeal is barred by limitation or
a finding that the case is not a fit one for exten
sion of time or both".
This reasoning is also the basis of the decisions of the
Bombay and Allahabad High Courts which hold that
an order rejecting an appeal on the ground of limita
tion after it had been admitted is one under section
31, though there is no consideration of the merits of
the assessment. Thus, in K. K. Porbunderwalla v.
Commissioner of Income-tax('), Chagla, C. J. observed:
" .... although the Appellate Assistant Commis
sioner did not hear the appeal on merits and held
that the appeal was barred by limitation his order
was under section 31 and the effect of that order was to
confirm the assessment which had been made by the
Income-tax Officer".
In Special Manager of Court of Wards v. Commissioner
(1) [1952) 21I.T.R.1. (2) [1952] 22 I.T.R. 181.
(8) [1952] 21 I.T.R. 68.
S.C.R. SUPREME COURT REPORTS 177
of Income-tax(1), the Allahabad High Court stated 1956
that the view was "possible that even though the Messrs Mela Ram
period of limitation is prescribed under section 30 and Sons
and the power to grant extension is also given in that v.
section the power is really exercised under section 31 Tlzc Commissionef'
as the Appellate Assistant Commissioner when he de- 0! 111ccme-tax,
cides not to extend the period of limit a ti on may be Punjab
said in a sense to have confirmed the assessment".
The respondent relied on a later decision of the
Allahabad High Court in Mahabir Prasad Niranjanlal
v. Commissioner of Income-tax( 2), wherein it was held
by the learned Judges, departing from the previous
course of authorities of that court, that an order of
the Appellate Assistant Commissioner dismissing an
appeal as time-barred was one under section 30(2) and
not under section 31, and was therefore not appeal-
able. This conclusion they felt themselves bound to
adopt by reason of certain observations of this Court
in Commissioner of Income-tax, Madras v. Mtt. Ar. S.
Ar. Arunachalam Chettiar( 3). But when read in the
context Qf the point that actually arose for decision
in that case, those observations lend no support to
the conclusion reached by the learned Judges. There,
the facts were that an appeal was preferred by the
assessee under section 30(1) against an order of the
Income-tax Officer, and thaL was dismissed by the
Appellate Assistant Commissioner on 19-11-1945 as
incompetent. No appeal was filed against this order,
and it became final. But acting on a suggestion made
in the order dated 19-11-1945, the assessee filed an
original miscellaneous application before the Appel-
late Tribunal for relief, and by its order dated
20-2-1946 the Tribunal set aside the findings of the
Income-tax Officer, and directed him to make a fresh
computation. Then, on the application of the Com-
missioner of Income-tax. the Tribunal referred to the
High Court under section 66(1) of the Income-tax
Act the following question:
"Whether in the facts and circumstances of the
case, the order of the Bench dated 20th February,
(11 [1950] 18 I.1'.R. 204, 212. (2) [1055] 27 J.T.R 268.
(3) [1953) S.C.R. 4G3, 474-475,
Vc11katara11ia
Ayyar J.
1956
Messrs Mtla Ram
and Sons
v.
The Commiss,oner
of lncomc·tax,
Punjab
Venkatarama
AyyarJ.
178 SUPREME COURT REPORTS [1956)
1946 in the miscellaneous application is an appro
priate order and is legally valid and passed within
the jurisdiction and binding on the Income-tax
Officer".
The High Court declined to answer this reference on
the ground that the order of the Tribunal was not
one passed in an appeal under section 33(1), and that
in consequence, the reference under section 66(1) was
itself incompetent. The correctness of this decision
was challenged on appeal to this Court, and in affirm
ing it, this Court observed:
" ........ when on 19th November 1945, the Appel-
late Assistant Commissioner declined to admit the
appeal, the assessee did not prefer any appeal but
only made a miscellaneous application before the
Appellate Tribunal. There is no provision in the Act
permitting such an application. Indeed, in the state
ment of the case the Appellate Tribunal states that in
entertaining that application and correcting the error
of the Income-tax Officer it acted in exercise of what
it regarded as its inherent powers. There being no
appeal under section 33(1) and the order having been
made in exercise of its supposed inherent jurisdiction,
the order cannot possibly be regarded as one under
section 33(4) and there being no order under section
33(4) there could be no reference under section 66(1)
or (2), and the appellate Court properly refused to
entertain it".
There is, of course, nothing in the decision itself
which bears on the point now under discussion. But
certain observations occurring at pages 474 and 475
were referred to by the learned Judges as leading to
the conclusion that an order dismissing an appeal as
barred by time would fall under section 30(2). Now,
those observations came to be made by way of answer
to a new contention put forward by the learned
Attorney-General in support of the appeal. That
contention was that the miscellaneous application
presented to the Tribunal might be treated as an ap
peal against the order dated 19-11-1945, in which case
the order passed thereon on 20-2-1946 would fall
under section 33(4) and the reference would be com-
S.C.R. SUPREME COURT REPORTS 179
petent. In disagreeing with this contention, this 1956
Court observed that the appeal to the Appellate Assist- lriessrs Mela Ram
ant Commissioner was incompetent under section and Sons
30(1 ), that even if it was competent, the order dated v.
19-11-1945 was not one contemplated by section 31, The Commissioner
and there could be no appeal against such an order 01 bicom~·ta.r,
under section 33(1). Now, it should be noticed that Pzmiab
the question actually referred under section 66(1) was vc,,katarama
the correctness and legality of the order passed in a Ayyar J.
miscellaneous application and not of any order made
in an appeal preferred under section 33(1). In this
context, the point sought to be raised by the learned
Attorney-General did not arise at all for decision,
and the observations in answer thereto cannot be
read as a pronouncement on the question of the main
tainability of the appeal, much less as a decision that
an order dismissing an appeal as barred by limitation
is one under section 30(2). Accordingly, the ques-
tion whether an order dismissing an appeal as barred
by limitation falls under section 30(2) or section 31
remains unaffected by the observations in Commis-
sioner of Income-tax, Madras v. J.vltt. Ar. S. Ar. Aruna-
chalarn Ohettiar(1).
Then again, under the provisions of the Act, limi
tation is not the only preliminary ground on which
an appeal could be disposed of without a considera-
;r tion of the merits. Section 30(3) provides that an
"appeal shall be in the prescribed form and shall be
verified in the prescribed manner". If the Appellate
Assistant Commissioner holds that the appeal does
not comply with the requirements of this enactment
and rejects it on that ground, the order must be one
made under section 31, since section 30(3) makes no
provision for such an order, as does section 30(2) in
the case of limitation. All the orders under section
31 being appealable under section 33, the order of
dismissal for non-compliance with section 30(3) must
also be appealable, and it was so decided in Maharani
Gyan Manjari Kuari v. Commissioner of lncome-tax(2).
How is this view to be reconciled with the contention
that section 31 contemplates only orders on the
(1) (1953] S.C.R. 463. (2) (1944) 12 I.T.R. 50.
7956 me:r'its of the assessment and not on preliminary
issues? Vide also the decision in Kunwarji Ananda v. Mess1's Mela Ram
andSons Commissioner of Income-tax('), which was followed in
v. Maharani Gyan Manjari Kuari v. Commissioner of
Th• Commissioner Income-tax('), and in Ramnarayana Das Mandal v.
oflnco"'.e-tax, Commissioner of Income-tax('). There is thus abun-
P~b dant authority for the position that section 31 should
Venkatarama be liberally construed so as to include not only orders
;lyyar J. passed on a consideration of the merits of the assess
ment but also orders which dispose of the appeal on
· preliminary issues, such as limitation and the like.
The learned Solicitor-General sought to get over
these decisions by taking up the position that section
31 (3) (a) construed in its literal and ordinary sense,
conferred jurisdiction on the Appellate Assistant
Commissioner only to pass orders on the merits of
the assessment, that it was not therefore open to him
to entertain any question which did not directly re
late to such merits, and that accordingly he could
not hear or decide any issue of a preliminary nature
such as limitation, and dispose of the appeal on the
basis of the finding on that issue. He conceded that
this contention would run counter to numerous
authorities, but argued that they were all wrong.
Having given due consideration to this contention,
we are of opinion that it is not well-founded.
Ta.king the plea of limitation-which is what we are
concerned with in this appeal-when there is a judg
ment or order against which the statute provides aright
of appeal but none is preferred within the time pres
cribed therefor, the respondent acquires a valuable
right, of which he cannot be deprived by an order
condoning delay and admitting the appeal behind his
back. And when such an order is passed ex parte, he
has a right to challenge its correctness at the hearing
of the appeal. That is the position under the general
law (vide Krishnasami Panikondar v. Ramasami
Chettiar('), and there is nothing in the provisions of
the Income Tax Act, which enacts a different principle.
(1) I L.R. 11Patn•187;,A.I.R. 1981 P•tna 306; 5 I.T.C. 417.
(2) (1944) 12 I.T.R. 69. (S) (1950) 18 I.T.R. 660.
(4) (1918) I.L.R. 41 Mad. 412; 45 I.A. 26,
S.C.R. SUPREME COURT REPORTS 181
Therefore, if an appeal is admitted without the fact 7956
of delay in presentation having been noticed, clearly Messrs Mela Ram
it must be open to the Department to raise the objec- and Sons
tion at the time of the hearing of the appeal. That ....
would also appear to be the practice obtaining before The Commissioner
the Income-tax Tribunal, as appears from the deci- of Income-tax,
sions cited before us, and that, in our opinion, is right. Pu,.jab
Similar considerations would apply to other objec- Venkatarama
tions of a preliminary character, such as one based Ayyar J.
on section 30, sub-section (3). We should be slow to
adopt a construction which deprives parties of valu-
able rights. We are therefore of opinion that conten-
tions relating to preliminary issues are open to con
sideration at the time of the hearing of the appeal,
and that the jurisdiction of the Appellate Assistant
Commissioner is not limited to the hearing of the
appeal on the merits of the assessment only. In this
view, the orders of the Appellate Assistant Commis-
sioner holding that there were no sufficient reasons
for excusing the delay and rejecting the appeals as
time-barred would be orders passed under section 31
and would be open to appeal, and it would make
no difference in the position whether the order of
dismissal is made before or after the appeal is
admitted.
The question referred must accordingly be answered
in the affirmative. This appeal will therefore be
allowed, and the order of the court below set aside.
The appellant will have his costs here and in the
court below.
24