Court rules in favor of petitioner, overturns Commissioner's decision on appeals under Indian Income-tax Act

Krishna Flour Mills Ltd. Versus Commissioner of Income-Tax, Mysore

Krishna Flour Mills Ltd. Versus Commissioner of Income-Tax, Mysore - [1965] 55 ITR 259 Issues: Interpretation of clause (c) of the proviso to sub-section (2) of section 33A of the Indian Income-tax Act, 1922.

Analysis:
The judgment revolves around the interpretation of clause (c) of the proviso to sub-section (2) of section 33A of the Indian Income-tax Act, 1922. The petitioner, a partnership firm, sought registration under section 26A for the assessment years 1950-51 and 1951-52, but its applications were rejected by the Income-tax Officer. Subsequent appeals to the Income-tax Appellate Assistant Commissioner and the Income-tax Appellate Tribunal were unsuccessful, with the Tribunal dismissing the appeals as time-barred. The petitioner then approached the Commissioner of Income-tax under clause (2) of section 33A, which was rejected on the grounds that the matter had already been appealed before the Tribunal. The central question was whether the Commissioner's interpretation of the law was correct, specifically regarding the phrase 'the order has been made the subject of an appeal to the Appellate Tribunal.'

The court referred to the Madras High Court decision in A.V. Sreenivasalu Naidu v. Commissioner of Income-tax, which established that an order is considered the subject of an appeal only when it is the subject of an effective appeal. The court highlighted that if an appeal is not admitted or is dismissed due to being filed after the prescribed time, the order cannot be deemed the subject of an appeal. The judgment emphasized the importance of uniformity in interpreting All India statutes, particularly fiscal statutes, and noted that the interpretation established in previous cases should be followed unless there are compelling reasons to deviate from it. The court cited subsequent decisions that upheld the interpretation set in Sreenivasalu Naidu's case, indicating a consistent judicial understanding of the provision.

Ultimately, the court held that the Commissioner had erred in his interpretation of the law and failed to exercise the jurisdiction vested in him under section 33A(2) of the Indian Income-tax Act, 1922. Consequently, the court allowed the petitions, set aside the impugned order, and directed the Commissioner to handle the petitioner's applications under section 33A(2) in accordance with the law. The judgment concluded by stating that no costs were awarded, and the petitions were allowed.